Trade Bill

Baroness Neville-Rolfe Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, it is exciting to be on the speakers’ list twice—once physically and once virtually—but I will trouble noble Lords with my thoughts only once. I start by giving a warm welcome to the right reverend Prelate the Bishop of Blackburn. I was glad to hear him mention the contrasting miracles of graphene and “Strictly Come Dancing”. He will be a great addition to our House.

This Bill is not very different from the Bill introduced in this House in 2018 on which I spoke at some length. It provides for the continuity of EU trade agreements where possible on a bilateral basis and sets up the UK-only arrangements for procurement and an independent trade remedies authority. Not much has changed, although some of the Lords amendments have been stripped out.

However, the context is very different. Boris Johnson has become Prime Minister—a welcome change—and won a decisive election victory. We have left the EU and the nature of any FTA with the EU makes our international trading arrangements even more important. Continuity arrangements have been agreed and scrutinised effectively by the EU Committee of this House. We have produced 22 reports on 50 different Brexit-related agreements, and I thank our brilliant clerks.

Trade negotiations with Japan, Australia, New Zealand and the US are very active and the Department for International Trade has been strengthened enormously, most recently with the addition of former Australian Prime Minister Tony Abbott, whom I had the pleasure of meeting on an earlier visit to the UK. I am now chairman of the UK-ASEAN Business Council—one of my interests in the register—and can assure noble Lords that in the ASEAN region, which is dynamic and growing, he is well regarded for the important trade agreements he concluded in Asia.

We have also welcomed my noble friend the Minister, with his global business experience, to his role, and at last today we heard his maiden speech. He has an amazing record and network, but for me the most important qualities he highlighted were clear thinking and decisiveness. These should be much valued in our Government today.

I welcome the return of this Bill and the Minister’s clear introduction and look forward to supporting its rapid passage through our House. I have a particular interest in data and intellectual property and thank the Alliance for IP for its usual briefing. I know that these areas are important to the noble Lords, Lord Stevenson and Lord Clement-Jones, and I look forward to working with them on the usual cross-party basis.

I sympathise with many of the points made about parliamentary scrutiny and hope to bring to our debates my experience on trade issues within the EU in the European Parliament and on the European Union Committee. I also endorse everything my noble friend Lord Naseby said, his practical ideas on export promotion and the intriguing ideas of the noble Lord, Lord Berkeley, on rail rolling stock. Like the noble Baroness, Lady Burt of Solihull, I care a lot about the role of small business in trade.

[The Deputy Speaker (Lord Duncan of Springbank) (Con)]

The next speaker is the noble Lord, Lord Freyberg. I am sorry but we cannot hear him at all. We may have to move on to the next speaker and return to the noble Lord, Lord Freyberg, afterwards. I call the next speaker, the noble Baroness, Lady Chakrabarti.

Corporate Insolvency and Governance Bill

Baroness Neville-Rolfe Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

[Lord Holmes of Richmond [V]]

I am pleased to speak in support of Amendment 48 from my noble friend Lady Fookes. As ever, she makes a point that is pertinent and clear, and that is absolutely required at this stage. In doing so, I also congratulate my noble friend Lord Blencathra and the members of the Delegated Powers Committee on all their work in this area. As other noble Lords have said, the Government are in listening mode on this. That can be only a good thing, and it is largely down to the persuasive power of my noble friend.

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I thank my noble friend the Deputy Leader for his many amendments, designed to moderate the overuse of delegated powers in this important legislation. The legislation is vital to easing the burden of events on businesses, especially smaller or less well-capitalised businesses, of which sadly there are more every day.

I was particularly concerned about the lack of an end date for the use of the emergency powers, but government Amendment 49 appears to meet my concern. I also thank my noble friend Lady Fookes, the noble Baroness, Lady Taylor, and others for their effective scrutiny.

[Lord Fox]

My Lords, this will be something of a novelty but I am going to be gracious. As is appropriate, I congratulate the Government on bringing forth Amendment 49, as did the noble Baroness, Lady Neville-Rolfe, and on sweeping away as many as possible of the Henry VIII clauses, as they are known. My noble friend Lady Barker set out the challenge for this Bill and the reasons for retaining some powers to change and mutate it as it goes forward. Because of the haste and scale of the Bill, there is a great challenge from non-conventional businesses, so to speak.

The point about museums is a very good example of where it is a question not just of the future of the museum but the future integrity of a collection, which suddenly becomes an asset. While it may not be possible to save a museum, it should be possible to save a collection—but, when very many collections are going up for sale at the same time, clearly the capacity to deal with that is eliminated; that is just one very niche example of the challenge for the Government. In this set of amendments, the Government have shown an ear to the debate and have reacted accordingly.

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[Lord Hain [V]]

My Lords, I was very happy to add my name to Amendment 15, which has been spoken to so eloquently and with unrivalled expertise and authority on this matter by the noble Baroness, Lady Altmann. I am very concerned about the threat to the Pension Protection Fund. I am proud to say that it started life under the last Labour Government in 2005, and I was subsequently Secretary of State for Work and Pensions. It is an important lifeboat, but it could be threatened if the consequences of insolvency, particularly with defined benefits, rebound into the PPF.

Although I welcome the concessions and responses that the Minister has made through these amendments, and what he has said as a result of the arguments put by the noble Baronesses, Lady Altmann and Lady Bowles, and others, including my noble friends Lady Drake and Lady Warwick, I still think there is a real risk involved. I hope that today, he will give greater recognition to that fact and that he and the Secretary of State will be vigilant in ensuring that the Government are fully cognisant of their concerns about the future viability of the vital Pension Protection Fund.

[Baroness Neville-Rolfe [V]]

My Lords, I come to this from a slightly different point of view, and I rise to express some concern at the scale of amendments on pensions in this already finely balanced Bill. They may make life difficult for investors, creditors and the forces of enterprise that we need if our economy is ever going to recover from the dreadful coronavirus crisis. While understanding and accepting the government amendments and agreeing on the need for vigilance— in the words of the noble Lord, Lord Hain—I urge the Minister to go no further and not to accept Amendment 15. It gives too much power to the Pension Protection Fund and could have the perverse consequences of delay, burden and cost to pension funds and to businesses that are in trouble but have a sustainable future.

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[Baroness Altmann [V]]

My Lords, I will be brief. I very much support the wise words of my noble friend Lord Hodgson of Astley Abbotts and the noble Lord, Lord Vaux. I welcome Amendments 37 and 38, and I cannot quite understand the reluctance of the Government to agree to this amendment; I know that there has been significant discussion on it.

Clearly, any pre-pack can have positive effects, but the transparency and oversight issues, particularly in the current emergency environment, surely require some modicum of independent oversight. We have the pool ready to go and are in a position where we could anticipate problems, rather than trying to deal with them after they have arisen, when it is too late for the small creditors that could be so damaged by the egregious practices that we in this House have all heard about, and many noble Lords have previously explained.

I hope that my noble friend can give sufficient reassurances to the House on this issue. However, I will support Amendment 45, should that not be possible.

[Baroness Neville-Rolfe [V]]

My Lords, I thank the Minister very warmly for accepting the amendment on pre-packs that I put down in Committee, on which I had the help of the British Property Federation. The amendment was designed to restore the power in the Small Business, Enterprise and Employment Act. Amendments 37 and 38 have been drafted by parliamentary counsel and use a much more elegant formula to amend the original Insolvency Act, but to the same effect and with the same deadline of June 2021. I would like an assurance from my noble friend the Minister that that power will be used and that it will be able to deal with some of the pre-pack issues.

I would like to thank my noble friend Lord Hodgson, who has demonstrated his admirable virtuosity—he is not merely an expert on pubs and demography, as the House knows, but on insolvency, as well as many other things. I also support the thrust of his amendment. I should add that, without his oratory and argument last week, we would not have made the progress that we have.

[Lord Palmer of Childs Hill [V]]

My Lords, I support wholeheartedly the amendment from the noble Lord, Lord Hodgson. It seems sensible, and I hope that the Government will accept it. Having heard a previous speaker do so, I must declare my interest as a chartered accountant.

Many speakers in today’s debate have drawn a difference between selling or transferring a business and selling a company. The idea of a pool was meant to be a sort of bridge between the two, so that the business can survive—but there is of course a danger that it can be taken advantage of. When Vince Cable set out this principle, on the advice of Teresa Graham, it was to set up a pool. It might perhaps be useful to read into the debate the members of the oversight group, which comprises representatives of the founding parties of the pool: R3, the Association of Business Recovery Professionals; the Association of Chartered Certified Accountants; the British Property Federation; the British Printing Industries Federation; the Chartered Accountants Regulatory Board; the Chartered Institute of Credit Management; and the Institute of Chartered Accountants. It is a long, long list.

To ask that one member of the pre-pack pool should say that the transaction is not unreasonable seems a sensible move to deal with what we believe will be a tsunami of liquidations and business problems, and it shows another way of skinning the cat rather than just using a monitor or going straight into liquidation. So I heartily support the amendment in the name of the noble Lord, Lord Hodgson.

Corporate Insolvency and Governance Bill

Baroness Neville-Rolfe Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Baroness Kennedy of Cradley (Lab) [V]]

My Lords, I shall speak in support of Amendments 2, 42 and 5. Amendments 2 and 42 seek to make it explicit and clear to all relevant stakeholders involved in a moratorium that the monitor is expected to be independent from the company under consideration. The proposed moratorium is intended to give struggling companies breathing space to turn their businesses around and suspend, for example, a number of actions by creditors, such as chasing debts through the courts or enforcing securities, for as long as the moratorium is in force. To build confidence in the system, the monitor, who decides if the moratorium will help rescue the company, has to be independent of the company under consideration.

It is not unreasonable to assume that creditors will be worried that such a moratorium will be subject to abuse. The monitor is a safeguard in this regard, but will the monitor be able to allay creditor fears if they are perceived not to be independently minded and not to have conflicts? Having a high degree of control over which debts can be paid and which properties can be sold means independence is critical, especially as creditors can apply to courts if they disagree with these decisions. Surely, if the Bill is explicit about the monitor’s independence, it will give greater confidence to all concerned. I hope the Minister will support the intention behind the amendments and set out in his response how the Government will ensure that that independence is achieved.

Finally, I support Amendment 5 in the name of my noble friend Lord Lennie. It is right that once a company enters a restructuring process, there are mandatory talks with trade unions and those who represent employees. Having the right to be fully consulted and having access to the same information that goes to the courts will help ensure the protection of workers in the event of restructuring in an insolvency. I hope the noble Lord will address this too in his response.

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I shall be brief. I agree with the question of the noble Lord, Lord Stevenson, about the need for clarity on timing and other issues on the moratorium. I was very interested in the comments of the noble and learned Lord, Lord Hope, on how we might proceed. I look forward to the Minister’s response on all the issues raised in this vast group, including on the interests of small business and on the notion of my noble friend Lord Leigh that we focus on businesses, and saving trading businesses, rather than on companies. I think we should listen to those with real experience of the market.

As my noble friend the Minister knows, I support the Bill and look forward to helping to get it through in a way that does not have unacceptable, perverse consequences, including addressing the concerns rightly articulated by my noble friend Lord Hodgson on the use of delegated powers.

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[Lord Wallace of Tankerness (LD) [V]]

My Lords, I am very pleased to follow the noble Baronesses, Lady Fookes and Lady Taylor of Bolton, who are both my colleagues on the Constitution Committee. I have added my name to the amendments that have been spoken to in the previous two contributions, and that carry on the theme of both my noble friend Lady Northover and the noble Lord, Lord Blencathra, about the wide powers in the Bill. As indicated by the noble Baroness, Lady Taylor, the Constitution Committee accepts that there is a need for temporary emergency arrangements to protect business and the economy in the current pandemic crisis. But the committee also stresses, in its seventh report, published last Friday, that:

“During times of crisis and emergency it is all the more important to be vigilant about constitutional principles, such as the rule of law and parliamentary accountability. The need for an urgent response to COVID-19 does not justify Parliament neglecting its duty to consider the constitutional implications of the legislation presented to it.”


As speakers have already mentioned, there are very wide Henry VIII powers in the Bill, not least in Clause 18, which Amendments 66 and 70 seek to address. The Constitution Committee in a report in the 2017-19 Session specifically looked at the use of delegated powers, and said that Henry VIII powers are

“a departure from constitutional principle. Departure from constitutional principle should be contemplated only where a full and clear explanation and justification is provided”.

One looks in vain here for some full and clear explanation. Rather, we are told, in the delegated powers memorandum:

“There are no specific plans to use the power to make temporary changes at present, but it is likely that its use will be considered where representations have been made by industry or where discussions with key stakeholders have identified areas where urgent legislation could help save otherwise viable businesses or mitigate the impact of the pandemic otherwise.”


That is not exactly what one would call an intimation of specific intent.

Notwithstanding these misgivings, Amendments 66 and 70 are relatively modest, so I hope that they will commend themselves to the Government. The noble Baronesses, Lady Taylor and Lady Fookes, have already explained how they will work. In Amendment 66, we seek that a review should take place and report to Parliament. We have reviews of the current emergency regulations, and we find that they are more often shared with the Downing Street press briefing than with Parliament, but this modest amendment would require a report to Parliament. Amendment 70 would see a sunset clause in effect no later than 30 April 2022. The amendment probably to be spoken to later in this group by the noble Baroness, Lady Neville-Rolfe, would have an earlier sunset clause, and I must say I find that somewhat attractive. In the Government trying to take powers like this, they should adhere to constitutional principle. When such widespread powers are sought, they should be well and truly limited in their effect.

[Baroness Neville-Rolfe]

My Lords, I am glad to follow my noble friend Lord Blencathra, chairman of the Delegated Powers Committee, and other experts on delegated powers. I am sure that we will get a helpful response from my noble friend the Minister on these wider powers. As has been said, I will speak on Clause 39 stand part and the Northern Ireland equivalent, Clause 40.

I tabled these amendments with the help of our excellent Bill clerks, alongside my Amendments 68 and 74, which I may not now need to move as my questions are exploratory in nature; that may help us to make progress. I want to open up a discussion on time limits, particularly of the emergency measures. As I said at Second Reading, I support all these measures, but they change the balance of corporate law and can make life more difficult for the lenders and investors that businesses need for success.

I am very concerned about the powers of extension, which I do not believe will be properly scrutinised if used. Some are more contentious than others; the noble and learned Lord, Lord Hope, raised a good point about wrongful trading, and, as I said, even delays in annual general meetings and corporate filings are unwelcome. These provide vital transparency and the opportunity for probing questions to be asked of companies. If the Opposition’s proposal to extend the emergency measures to the end of September is accepted, I see no need for an extension to the various emergency powers, and certainly not of the easy kind proposed. So that I can consider my position on Report on the various amendments that we are discussing, I would like more details from the Minister on the use of the powers of extension; more of an analysis of the downsides of the emergency measures, as well as their obvious advantages; and details of the criteria that will be applied if and when an extension of power is used, how any costs will be assessed and when the arrangements will sunset completely.

Clauses 21 and 22 seem very elastic—a pseudo-sunset clause, as my noble friend Lady Fookes said—which is not what we are looking for on these emergency measures.

[Lord Adonis [V]]

I have nothing to add.

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[Lord Fox]

My Lords, I rise with some trepidation following four experts on pensions. I shall speak to Amendment 118, which bears my name alongside those of the noble Baroness, Lady Altmann, and my noble friend Lady Bowles. Before that, I want to pick up on the point just made by the noble Baroness, Lady Altmann, on asset pledges in her Amendment 27.

That is important for two reasons. First, if the asset pledge falls in the case of an insolvency, pensioners will of course miss out, but, secondly, it is a challenging time for pension trustees even if they are operating within solvent companies today. Asset pledges have been used so that companies do not have to funnel direct cash flow into their pension funds, leaving that cash flow available for them to invest in the expansion of the business. If the Bill stays as it is and I was a pension fund trustee, I would go back to the company funding the pension and say, “That asset pledge is no longer worth the paper upon which it is written. I need more cash”. It is not in the interests of that business and, frankly, nor of this country for that cash to be siphoned off and taken out of investment for growth. That is an important point and the noble Baroness was wise to have raised it.

As the Minister knows, if a business goes bust with an underfunded DB scheme, the pension debt ranks alongside other unsecured creditors such as banks. This Bill dramatically changes that.

We all received an email late yesterday that seems to indicate movement on the Government’s part, and about that we should be very pleased, but it is difficult to tell how far and to what level that movement is going without the relevant amendments. Today, a second rabbit was pulled from the Minister’s hat and we were told that there will movement around banks and financial institutions. It is difficult to see what is going up and what is going down in terms of the movement, so we shall have to wait to see what the amendments say. The Minister could probably say today whether the Government intend to restore the level of access that the PPF and therefore pensioners had as creditors, at the very least to what it was before the Bill was drafted, or whether we are going to be somewhere between that and where we are now.

The email that we received yesterday uses fairly passive words. We are told that under a moratorium the PPF will be given rights to “information”; we are told that, under restructuring, it will receive “copies of”—it sounds like they are added to the “cc” list of the email going round—subject to appropriate constraints. I concede that, under a moratorium, the PPF is given the right to challenge the actions. I have the right to challenge actions, but will it have any powers to make that challenge stick? There is an awful lot of haze in this. It is clear that there has been some movement in the Government’s position. The sooner the Minister can table the relevant amendments, and the sooner he can clarify whether pensioners will be as well off as they are now or better off or worse, the better.

[Baroness Neville-Rolfe [V]]

My Lords, I have not yet seen the email or of course the amendments, so I have nothing to add at this stage but look forward to studying them.

[Lord Adonis [V]]

I have nothing to add on this group.

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[Lord Mendelsohn [V]]

My Lords, I reinforce my support for Amendment 56, in my name and those of my noble friends Lord Hendy, Lord Hain and Lord Monks, and Amendment 59, in the name of my noble friend Lord Stevenson of Balmacara. I had intended to introduce amendments in these areas, but these are far better crafted than I could ever have achieved.

I would like the Minister to address the operation of these arrangements, the changes to the status of different creditors and how these will be properly balanced to operate as intended, rather than to allow abuse and preserve value in the deal, and how changing creditor status provides for a successful rescue of the company.

We have to appreciate that monitors, moratoriums and restructurings under this legislation are still likely to be in a minority of cases, especially if the comparisons for evaluations, or evaluating the condition of the business, provide both a high bar and ample scope to game the outcome. The majority of cases will still be covered under a going concern administration, whether that leads to a pre-pack liquidation sale or a scheme of arrangements to maintain the company. In many circumstances, the need for protections is even greater.

The new restructuring regime, which should be significantly more attractive, has created a lot of complications by relying on the model of creditor-in-possession financing rather than debtor-in-possession financing. The crucial difference is that this means that external financing is encouraged and given super-priority status, while unsecured creditors can be further disadvantaged by both existing debts and further trading risks. Debtor-in-possession arrangements generally encourage existing shareholders, creditors and finance holders to participate in the future rescue of the business. The amendments would ensure that in this layering of priorities, the weakest in line are not the ones that the system continues to place at a disadvantage. It is important that the Minister should indicate whether the Government are willing to provide extra protections for unsecured creditors and workers who have an unsecured credit with the business.

Have the Government considered a debtor-in-possession financing model and will they consider allowing this in the future? In the spirit of providing a floor to support unsecured creditors, what flexibility can they look for in the system and how are they expected to operate, so that they can participate in the future upside, be that an equity upside or an arranged scheme, thereafter?

Finally, I support the amendments tabled by the noble Baronesses, Lady Bowles and Lady Neville-Rolfe. Can the Minister make it clear how these decisions will be reviewed and what role the Government expect the Insolvency Service to play in order to make sure that abuses can be dealt with and that all forms of creditor can be properly balanced and ensured?

[Baroness Neville-Rolfe [V]]

My Lords, as time is short, I will focus on my Amendment 60. A court of administration normally involves pre-packs, and that is why, with the support of my noble friend Lady Altmann, I want to provide a quick and easy way of ensuring that the power we gave HMG in the Small Business, Enterprise and Employment Act 2015 can be restored. This power was the victim of a sunset clause and a delay in making the necessary regulations. There are later amendments that we may reach today on pre-packs and the encouragement of the pre-pack pool. All of them reflect the fact that a group of us across the House who spoke at Second Reading, including the noble Lords, Lord Vaux and Lord Mendelsohn, think that we need early action on pre-packs. I imagine that we are all rather disappointed—although the usual opportunity for a discussion in the Bishops’ Bar is not available—by the Minister’s response at Second Reading. His suggestion was that strengthening professional standards and existing regulation would be adequate, and if not, there could be legislation at a future date —a sort of mañana.

My amendment is very simple: it would give the Government back the power to make the necessary regulation on pre-packs but it would sunset that power after a year, both to provide the incentive for speedy resolution of this issue and to avoid any unwelcome use of the delegated power for other purposes down the line. I would obviously be delighted if the simple sunset clause I have used in Clause 62 might also help us to consider and find a path to resolving some of the important delegated powers issues we were discussing earlier; I am very hopeful that the Government will be listening in that regard.

I hope that my noble friend the Minister and his department will listen to those of us who have concerns and agree to amend the Bill to deal with the pre-pack issue, perhaps in the way that I have proposed.

[The Deputy Chairman of Committees]

The noble Lord, Lord Adonis, does not seem to be in his place in the Chamber, so we will go to the noble Baroness, Lady Altmann.

Horizon: Sub-postmaster Convictions

Baroness Neville-Rolfe Excerpts

Thursday 11th June 2020 Lords Chamber

[Lord Callanan]

Well, we are committed to getting to the bottom of this scandal. I can tell noble Lords that, yes, the Post Office has committed to co-operate fully with the inquiry; Ministers will expect it to do that. We expect others involved to co-operate with the inquiry as well, and if we need to take further action to make sure that they co-operate, we will be prepared to look at that.

[Baroness Neville-Rolfe (Con) [V]]

The Horizon case is an appalling matter. It was, as I have mentioned before, the most worrying issue that I had to deal with as a Minister, because it involved many respectable individuals with no record of criminal activity, many of whom we now find have had their lives ruined. Does my noble friend agree that the immediate need, from information already available, is to remove the Post Office’s unusual right to act as prosecutor itself, and to do this forthwith?

Corporate Insolvency and Governance Bill

Baroness Neville-Rolfe Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I support my noble friend the Minister on the measures being taken here and elsewhere on business support.

Timeliness is everything in a crisis. I commend the Minister on the speed of the measures that we are debating, although I remain frustrated at the tin-eared refusal elsewhere in government to reduce social distancing from two metres to one metre and the extraordinary introduction of quarantine at our borders, which was needed in February or March but is an act of self-harm today. The problem is that both are decimating businesses. So, I particularly support the emergency arrangements in the Bill. They allow closed annual general meetings, delay filing deadlines for Companies House, and temporarily remove personal liability for wrongful trading and the threat of winding-up petitions. I speak as a director with an interest—I draw your Lordships’ attention to my entry in the register—a chartered secretary and a fellow of the Global Governance Institute.

However, company law has been built up over generations. Rapid changes can alter the balance of our much-admired corporate regulatory framework. The pension funds and insurance companies on which we depend need the opportunity to probe accounts at Companies House, especially in a fast-moving market with the sale of a struggling company sometimes being the right solution. Shareholders need to be able to hold companies to account at annual general meetings. The Bill rightly sunsets these provisions but there are powers of extension. I ask the Minister to promise that he will be sparing in their use. If not, their understandable use retrospectively to help firms from the start of the cliff edge in sales could be questioned.

The main provisions in the Bill bring forward long-planned changes in insolvency law. It is a little cheeky to use what is essentially an emergency measure for these reforms. However, I confess to doing the same many years ago when I led the work on the Food Safety Act. This reforming legislation had been in the famous Whitehall drawer for nearly 10 years when Mrs Edwina Currie precipitated a crisis by wrongly asserting that most eggs had salmonella. Our Bill then secured an immediate slot.

I note that the insolvency provisions have secured good support, having been honed in industry exchanges. They have become urgent because many companies may now be heading for insolvency as a result of our severe Covid controls. The changes give them breathing space now and if they suffer in future, but it is worth reading the impact assessment prepared by BEIS, which it kindly took me through. The net benefit is an impressive £1.92 billion when discounted over 10 years, but that netting-off hides costs of £2.9 billion, which someone must find.

We want to make absolutely sure that the Bill is fit for purpose. I understand that in one of the most difficult areas, discouraging the extraction of ransom payments is precedented in utilities and IT. I ask the Minister for an appraisal and costing of that experience before we reach Committee.

Another issue was raised with me by the British Property Federation. It wants steps taken to reinstate the provision in Section 129 of the small business Act 2015 on pre-packaged administration, which expired unexpectedly, I believe as a result of the Covid emergency. Can we solve that in this Bill?

Finally, I cannot end without commenting on one area in which I have been the most vocal and which was also the subject of legislation that I took through the House: the timely payment of smaller suppliers, and the Small Business Commissioner. Can my noble friend the Minister summarise current expectations on the scale of payment delay and advise on any plans for updated legislation at a future date?

Artistic Content: Copyright Protection

Baroness Neville-Rolfe Excerpts

Monday 2nd March 2020 Lords Chamber

[Lord Callanan]

As the noble Earl will be aware, most trade deals contain a number of paragraphs on cultural exchanges and creative industries. I am sure that that will be the case with the EU agreement and with the US agreement.

[Baroness Neville-Rolfe (Con)]

My Lords, with the onward march of the digital revolution and our pre-eminence in artistic areas such as music and arts, copyright is becoming ever more important. Can the Minister give us an assurance that intellectual property has a high priority in policy-making for this Government? However we attack that in any particular trade deal, the overall point is to protect our artistic success and endeavour everywhere.

[Lord Callanan]

Of course, my noble friend makes a very important point. As I said earlier, we have one of the strongest copyright protection frameworks in the world. Many of these are subject to international agreements, such as the TRIPS agreement. We will continue to engage in international fora and make sure that artists and creators have protection for their works.

Economic Environment: Growth and Jobs

Baroness Neville-Rolfe Excerpts

Thursday 11th July 2019 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

That this House takes note of the case for creating an environment which encourages (1) business growth, and (2) job creation, especially in relation to the tax system.

[Baroness Neville-Rolfe (Con)]

My Lords, I am honoured and delighted to be leading this debate at such an important time for our country. Of course, most of our thoughts are on the next 100 days, which will make a huge difference to our future and the 66 million people and 5.7 million businesses on these islands, but whatever happens to Brexit the success of business is important to everyone whether, say, they sit in the NHS in Salisbury or in a retirement home in Scarborough. This is because business produces the wealth on which we all depend.

I would like to reflect more deeply on this point. There are many excellent things about being appointed to the House of Lords, especially the chance to scrutinise legislation in a way that is not practicable in the House of Commons. However, I have to say that I have been disappointed by our failure to understand commercial interests and their importance to wealth creation and to the UK’s position in the world. However, I am comforted by the fact that, although no one is guiltless on this matter, attitudes in the Conservative Party are somewhat better than they are elsewhere. We should not underestimate the significance of a culture where enterprise is valued.

The same attitude seems to permeate society at large where too much attention is given to dividing up the cake and to regulating in ways that reduce it than to ensuring it increases. Growth was only 0.3% in the three months to May, despite annual population growth of 0.6%, and output per hour, the key measure of productivity, is now at best flatlining. Against this challenging background, I will explore some of the drivers of growth and what is getting in the way. A key question is whether our tax system helps the economy to grow in both absolute and relative terms. Does it help with our international competitiveness at a time when we will need to trade more broadly? Are we encouraging the magic of digital growth and taxing it fairly?

Before starting my main themes, I should like to thank the Library staff, who, as always, have been unfailingly helpful in assisting me to prepare for this debate.

I turn, first, to certainty. Businesses need to know where the country is going, and at present capital is being held on balance sheets rather than invested. Ask almost any CEO and they will say that US and other firms are holding back from investment. In March, many sought a delayed Brexit as they did not want a no-deal scenario, but I fear that we are now reaching a stage where delay in reaching a conclusion on Brexit is itself possibly the greatest negative factor affecting the economy. Businesses also fear the chaos and extreme socialism of the present Labour leadership. For all those reasons, the economy, hitherto resilient, particularly on employment, is now slowing.

On fiscal responsibility, there is an arms race of new ideas for taxation among both Conservative leaders and the Labour Party. Unfortunately, the necessary lodestone of fiscal responsibility is missing. We must not now put at risk all the good work that we have done in reducing the deficit created by the financial crisis. The national debt is still far too high, at £1.8 trillion, and it costs us £37.5 billion a year—money that could be put to better use.

The tax system is also creaking under the weight of its own complexity. Because I believe in taxing broadly and thinly, I think that we should keep VAT. However, there are hundreds of complications that have taken the entire tax code up to 10 million words—an estimate from the Institute of Chartered Accountants of Scotland, where I am off to after this debate. That is double what it was in 2009, according to the Telegraph. With a simpler approach, we could have avoided some embarrassments. I refer, for example, to Making Tax Digital, to those trading with the EU finding it so difficult to get the tax codes they need to export post Brexit and to the wretched loan charge fiasco.

On regulatory burdens, the complexity of the tax system, when allied with a confusing and growing regulatory system in sector after sector, leads to the dampening of business growth, whatever the underlying strength of the economy. It is no coincidence that labour productivity has been so poor since the crash in areas such as financial services and energy, where there has been so much new regulation. Noble Lords should beware of new uncosted, complex regulation in new areas if we are to retain international competitiveness.

I turn to education and digital education. Having studied what drives growth for so long, both at Tesco and as a Minister—like my noble friend Lord Henley—at the business department, and later at the Treasury, I am convinced that the most important driver of long-term efficiency and productivity is education. I welcome many of the Government’s reforms, including Teach First, and the improvement in standards, especially, for example, in London primaries. However, the schools are too full because the impact of immigration was not provided for under our short-term accounting system.

We are not preparing properly for the future. The apprenticeship levy was meant to herald the sort of vocational education that I have seen operate well in Germany and Austria. However, as was apparent when reading between the polite lines of last Thursday’s debate—which, sadly, I missed—it is a mess. It is not business led as it should be, and the levy in some cases has become simply yet another tax charge on the medium and large businesses that supply most of our quality jobs. Many fine businesses take the view that they are putting in much more than they gain. The apprenticeship levy needs to be turbocharged and simplified, and I await the Government’s review, which I welcome, with some trepidation.

Even more seriously, we are not preparing properly for the digital revolution, which will destroy some jobs as automation and AI take off. This must be balanced by a vast investment in digital skills in schools, alongside literacy and maths, and in higher education, apprenticeships and on-the-job training; otherwise, growth will bring jobs losses, not the job creation that we all seek.

Infrastructure is not for today’s debate but I support the Government’s infrastructure fund, which is another productivity driver. We just need to get on with building the roads, digital networks, housing and rail facilities in the Government’s plans. More competence is as important as more money.

I must refer to the Taylor review of working practices, to which my noble friend the Minister very helpfully drew my attention when we met earlier in the week. This analyses how to improve working practices to the advantage of all. I was particularly struck by section 4, on management-employee relations, where the objective is that workers are engaged and heard, which I know is so important. On the same theme—I refer to my business interests as listed on the register—I am a director of Capita plc, which has recently appointed two employee directors to the board; having met the individuals concerned, I am very hopeful that they will make a strong contribution to the success of the company.

I now turn explicitly to the tax system and must say how much I look forward to today’s contributions on the specifics. I have already criticised tax complexity—which is possibly top of my list, because it is a slow killer that people do not notice—but I would like to highlight some specific areas where the structure of tax, especially for business, needs to be looked at.

As a former retailer, as everybody knows, I know that retail, the heart of thousands of towns and villages across the country, is disproportionately affected by business rates. According to the British Retail Consortium, the industry constitutes 5% of the economy but pays 10% of business taxes and 25% of business rates. Moreover, the Treasury requires a fixed amount in business rates every year. This is no longer a sensible or viable policy; the take needs to be reduced. Also, the present system of transitional relief is unfair. Month after month, we see the bigger shops failing and taking with them many small shops. This week’s figures bring the problem home: in the three months to June, non-food instore sales fell by 4.1%, like for like, while online retail sales, excluding food, grew by 3.3%

I support the digital services tax in principle, but it should be higher and the proceeds should be used to offset business rates and help the desperate situation on the high street. Rates should be frozen with no upward adjustment until the vibrancy of our towns and cities is restored or the business taxation system reformed.

It is clear that the property market is slowing and that the recent increases in stamp duty have discouraged people from moving whenever it can be avoided—especially at the top end, where the level reaches 12%. This has had a deleterious effect on the movement of labour, which is vital to our growth. Stamp duty must be reformed, especially with a view to encouraging mobility and empty nesters trading down to release family homes. It is not just a matter of concern at the lower end, which leadership candidates have highlighted.

The Government should be congratulated on what they have done for small businesses on rates and their proposals to give the Small Business Commissioner more teeth. They have also established the British Business Bank, which is now five years old and the subject of an inquiry in the other place. My own view is that this bank needs to increase in scale and remit and that it can help smaller businesses enormously, not only in London but especially outside it.

However, the tax environment remains a struggle for millions of small businesses and, as your Lordships’ Economics Affairs Committee report Making Tax Digital for VAT: Treating Small Businesses Fairly highlighted, the change to digital returns has created great difficulties for some small businesses. The work I have done with business across the country also suggests that the complexity of the tax, national insurance and auto-enrolment pension systems—which I support—taken together are made much worse by the inadequacy of free advice from HMRC and others.

If we are to flourish in a world that is growing faster than us, we need to have more regard to international competitiveness. Some of this Government’s reforms to corporation and other taxes have been good and have reduced the incentive for offshoring. The reduction in corporation tax from 28% to 19% was George Osborne’s best move and has even increased revenues thanks to the magic of the Laffer curve. It will fall to 17% in 2020, which is a further boost to responsible, tax-paying businesses. Likewise, there is a good case for increasing thresholds for the higher marginal income tax rates, because it will encourage enterprise.

I am also a fan of a taxation and accounting system which supports our huge service sector, our invisible exports and intellectual property; these are all areas in which Britain is strong. I know how much BEIS has done to increase R&D funding in this country, but the tax system has also been supportive. UK-registered firms have claimed R&D tax credits worth £3.5 billion and 1,025 companies have saved £943 million in corporation tax from the patent box.

With such a myriad of taxes and so much complexity, I have barely scraped the surface of this important subject. However, I hope I have helped to make the case for a more informed and supportive attitude to business. While I know it is not my noble friend’s direct responsibility, I hope he agrees that the structure of business taxes needs to be looked at by the new leadership and that there is a case for change.

The Chancellor has already announced a welcome digital services tax on the larger digital players to help redress the unfairness of the current system, but it needs to increase quickly and be used to ease the burden of rates on the high street. It cannot be right that Amazon paid £4.6 million in UK tax in 2017 and the beloved Marks & Spencer paid £98.3 million.

Finally, we must support a culture of enterprise. If we do this, we are not only taking the right moral stance but we are bound to boost the economy further. The choice is not between lower taxes for business and more wealth for the public. Lower taxes, carefully crafted, will encourage growth to the benefit of all.

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[Baroness Kramer (LD)]

My Lords, I begin by picking up the issues raised by the noble Viscount, Lord Chandos, who made it clear that we cannot talk about anything to do with the economy without a real awareness of Brexit. It sets the framework; I know we do not want to focus on it today, but it is worth a comment or two here. Many people are acting as though uncertainty is something that exists until we decide to leave, and at that point uncertainty ends. As the noble Viscount said, we are then locked into five to seven years of future uncertainty. It becomes the fundamental of the British economy, and all we can be sure of in leaving is that British businesses will have less access to EU markets; the complex supply networks that are the foundation of the British economy will gradually erode, because that is the logic of the disengagement and separation; and British businesses will have to build their future from economies of scale in a domestic market of 65 million people, not 500 million. I could go on, but that is the context.

The noble Lord, Lord Popat, the noble Baroness, Lady O’Cathain, and others said that we are looking at a robust and healthy economy. Public services in this country are desperately underfunded. Many, particularly at local government level, are in crisis. This is repeated in almost every sector, including the police, prisons, schools, the health service and social care.

There are more than 14 million people still in poverty, with inequality at its widest since the 1980s. We talk about full employment, but real wages are still 3% below those in 2008. We have now normalised in-work poverty, a serious feature that we have to tackle. For many people, their employment feels precarious as they know that their employers are trying to work out what the future of their business will be.

Growth is geographically unbalanced. In recent years, foreign direct investment in the UK has plummeted. In 2018 it was one-third of what it was in 2016. When people talk about us receiving more foreign investment than any other area, I wonder whether they have looked at the value of the pound. Assets in the UK are at fire-sale value and, even with that, there is a decline in foreign investment.

I share the concerns of the noble Baroness, Lady Neville-Rolfe, about productivity. Our recent growth numbers are, frankly, awful. It is a not a situation in which we can be complacent because we risk being ineffective in driving the economy forward.

The issue raised by the noble Lord, Lord Haskel, goes to the heart of economic growth for the future. Times have changed. Big businesses, good businesses and the smaller entrepreneurial businesses no longer take a traditional view of their role in society. Many recognise that it is now time for a new social contract between business and society; that social justice matters; that their relationship with their customers, workforce and communities must be a positive and different one; and the necessity of tackling climate change. We are entering a different and new world, which has to be redefined and can no longer be classified in terms of profitability. This will lead to a different notion of what is a successful business and how it grows. Fairness becomes a fundamental and underlying principle. I use the word “fairness” because I am shall move on to address some of the issues raised.

Before I do so, however, I must step back and say that businesses also recognise both the opportunities and dangers of the fourth industrial revolution. The noble Lord, Lord St John of Bletso, referred to this. If we are to continue with research and development and science, and if we are to develop the skilled workforce we need, it will mean a revolution in how our businesses operate.

We have in place many of the right things to drive the economy forward, but we have them in miniature. I join others in praising the British Business Bank—it is perfect, but so small when compared with the challenge it is trying to deal with that it cannot make material change. It will take a change in thinking in this country to put into the British Business Bank the scale of resource and finance it will need for the future, especially as it will have to replace both the European Investment Bank and the European Investment Fund if we decide to leave.

Again, the industrial strategy has good policies, but in limited areas and on a limited scale. We are not undertaking the infrastructure challenge; we are not delivering the broadband we need; and we are not making the necessary changes in the rail and transport infrastructures. These are massive projects and will need substantial amounts of money behind them and a real drive to make them effective. It is the same with skills. Surely we all recognise now that life-long learning will be essential but comes with a heavy bill attached.

When I hear people talking about tax cutting as the key mechanism for driving the economy forward, I realise that we have to put a cross through virtually all the measures that we need to sustain and take forward our economy. I can think of nothing worse than tax cutting at this point in time. I ask those who think that cutting taxes will lead to a huge increase in the tax yield to go back and look in detail at the past few years. The rise in the tax yield has come because business has rebounded from a severe financial crash in 2007-08, not because taxes have been cut.

Unfortunately, part of the money has come in because business has been holding back on investment, as we have discussed. The work done by the IFS in looking at Jeremy Hunt’s proposal that we should cut corporation tax to 12.5% makes a nonsense of any suggestion that that kind of tax cut repays itself. If we are to repair public services and drive the economy forward, we certainly cannot afford to do any of that.

I have listened to many noble Lords who talk regularly to businesses. I do not find businesses asking for tax cuts. They ask for all kinds of long-term support, but I have never heard a request for tax cuts from any major business.

[Baroness Neville-Rolfe]

What about business rates?

[Baroness Kramer]

The noble Baroness, Lady Neville-Rolfe, is being kind to me in raising the issue of business rates because, as she knows, my party supports a policy of abolishing them—they are part of a Victorian past—and replacing them with a commercial landowner levy. I do not want to try the patience of the House in the time allocated by taking noble Lords through the details, but it is one of the crucial ways forward. It gives businesses every incentive to grow because the tax is on the underlying land value, not on the additional value that they create by future investment. It also helps the regional distribution of businesses. I suspect we have found another supporter for that policy in the noble Baroness, Lady Neville-Rolfe, and I appreciate that.

I agree with the noble Baroness that we have to tackle the issue of digital taxes. I am not sure whether I support the French proposal, announced today, of a 3% tax on digital revenues but it would be interesting to look at that issue because something has to be done, rather than just talking about it. I am concerned that the US is now considering that this would be an opportunity to retaliate against any European country that sought to tax digital companies more seriously. I hope any future Administration here would have the backbone to stand up to the Trumpian “America first”, which would make fair taxes impossible.

I believe in fiscal responsibility and investment. The old notion that you either support business or the ordinary people in the workforce is nonsensical. We are in a modern era where everyone must pull together. That is accentuated further by the fourth industrial revolution, and I hope we will begin to think about that new era rather than lock ourselves into the past.

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[Baroness Neville-Rolfe]

My Lords, this has been an excellent and good-humoured debate, which is frankly long overdue. I thank all noble Lords from across the House for their thoughtful contributions at this critical time. I will send them, elegantly edited by our friends in Hansard, to the two aspirant Prime Ministers, with one of my beautiful blue ribbons. As my noble friend the Minister said, business pays the taxes that pay for the public services we all value—a key insight for the next 100 days.

Motion agreed.

Consumer Rights Act 2015 (Enforcement) (Amendment) Order 2019

Baroness Neville-Rolfe Excerpts

Tuesday 25th June 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, this order aims to strengthen the ability of the Office for Product Safety & Standards to carry out its role in leading the response to national product safety incidents and to ensure consistency across the product safety system.

The order has a threefold purpose. First, it will enable the Secretary of State, and the Office for Product Safety & Standards on his behalf, to investigate potential safety issues related to consumer products regulated by the General Product Safety Regulations 2005, using the investigatory powers listed in Schedule 5 to the Consumer Rights Act 2015. Secondly, it will enable enforcement authorities in the UK, including local authority trading standards, district councils in Northern Ireland and the Secretary of State, to use those same investigatory powers to investigate claims about gas appliances and personal protective equipment. Thirdly, it makes a minor amendment to the Measuring Instruments Regulations 2016, and to the related reference in paragraph 10 of Schedule 5, to correct a typographical error.

The majority of claims about unsafe consumer products that fall under the General Product Safety Regulations 2005 are investigated by local authority trading standards in Great Britain and by district councils in Northern Ireland. So why give these investigatory powers to the Secretary of State? Part of the remit of the Office for Product Safety & Standards, created last year, is to take the lead in a serious product safety incident that needs managing at a national level. The office published Strengthening National Capacity for Product Safety: 2018-2020 Strategy, setting out its approach to managing this sort of incident. This order continues the process of developing the office’s national incident management capability. It allows the office to investigate claims of unsafe products in the context of a national incident, where a local trading standards authority or other relevant enforcement authority lacks the resources or expertise to do so. It does this by giving the office equivalent investigatory powers to those of local authority trading standards.

The order provides the full range of powers contained in Schedule 5 to the 2015 Act. This schedule includes powers to require the production and potential seizure of documents and to inspect and purchase products, as well as to test equipment and seize and detain goods. These are essential aspects of undertaking effective checks and actions in relation to unsafe goods. It is vital that our new national regulator has these powers across the broad spectrum of consumer products. These will enable it to provide leadership in incidents of national importance. The Secretary of State, and the Office for Product Safety & Standards on his behalf, can already exercise these powers in relation to the enforcement of sector-specific regulations, such as those for electrical equipment and lifts. The Government want to ensure that the Secretary of State can lead across the wide range of consumer products, not just those that fall under sector-specific regulations. The order therefore allows the Secretary of State to investigate any type of product covered solely by the General Product Safety Regulations 2005, should the need arise. The office will thus have the authority to provide the leadership and action needed to deal with national incidents.

The second purpose of the order is to make sure that the Secretary of State, local authority trading standards in Great Britain and district councils in Northern Ireland can investigate safety issues concerning gas appliances and personal protective equipment. New regulations were introduced last year by the negative procedure and this order provides for the amendment of the Consumer Rights Act by affirmative procedure. It now enables enforcement authorities to use the investigatory powers in Schedule 5 in relation to these products covered by the 2018 regulations.

Finally, the intention underpinning the enforcement of the Measuring Instruments Regulations 2016 has always been that the enforcement authorities should have access to the investigatory powers in Schedule 5. This order corrects that typographical error in the relevant provision in both the regulations and Schedule 5.

In conclusion, the order improves the ability of the Secretary of State to investigate claims about unsafe consumer products, protecting consumers and preventing injury and loss of life. It ensures that the Office for Product Safety & Standards can fulfil its regulatory role in the area of product safety by leading and co-ordinating responses to national product safety incidents across the wide range of consumer products within its remit. It enables the Secretary of State, local trading standards and district councils to investigate the safety of gas appliances and personal protective equipment regulated by the 2018 regulations. It contributes to the Government’s aim of promoting and protecting law-abiding businesses by preventing unfair competition through the placing of unsafe products on to the United Kingdom market. I commend the order to the House and beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I support this measure, which will improve the enforcement framework for unsafe consumer products—always a concern of mine because of my background in retail and at the business department. I want to raise two issues. The first is the adequacy of resourcing for trading standards in their important work on product safety. I welcome the new Office for Product Safety & Standards in Birmingham and hope that, through the Minister’s good offices, some of us might be able to visit it on some future occasion. Local authorities are squeezed. I fear that trading standards, which do such an excellent job across the country, do not have the funding they need to tackle product safety and product counterfeiting, which is often a cause of safety incidents in some local authority areas.

The second issue is Whirlpool. I would like an update on the recall of Whirlpool tumble dryers. I am not entirely clear on what this SI adds in the case of electrical white goods, which, as the Minister said, are already regulated, but Whirlpool is mentioned on page 3 of the Explanatory Memorandum and the 10 days of BEIS consultation on the recall are nearly up. What are the Government’s plans in respect of this matter and, even more importantly, of future enforcement of product safety more broadly? What are the criteria for recalls and speed of response, which in the case of Whirlpool has sadly been very slow—I think nearly four years, although I must commend current Ministers for moving ahead on that. Can the Minister clarify the numbers involved? I understand from Which? that the recall will involve 300,000 to 500,000 dryers, which is a fall of about 500,000 in the department’s estimate of the number of unmodified dryers since last year. Yet only some 50,000 have been modified since then, so I do not see how the numbers add up. Can the Minister also kindly advise—in writing if need be, because I appreciate that these are detailed questions—on the number of modified dryers that have caught fire, and on why the Government are comfortable, as stated in Parliament on 17 June, that they are low risk. I hope for all our sakes that this judgment is correct. We should give the owners of modified dryers further comfort if that is possible.

[Baroness Burt of Solihull (LD)]

My Lords, I thank the Minister for his explanation of how the investigatory powers of consumer law enforcers will be consolidated and simplified through this statutory instrument. It seems that these measures are needed in the face of mounting consumer concerns over the safety of the products that we buy.

It seems eminently sensible for the Secretary of State, or the Office for Product Safety & Standards on his behalf, to be able to investigate claims about unsafe consumer products falling within the ambit of the General Product Safety Regulations.

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[Lord Henley]

My Lords, I think the noble Baroness is probably right that Whirlpool has absorbed something in the order of 14 different companies, so that what an individual will think of as an X machine is in fact a Whirlpool one. If it is possible to publish that list, I will certainly make it public; I do not think that there is any secret about it. The important thing is that we try to identify as many of those who still have unmodified machines so that they can be identified. My understanding is that Whirlpool—I do not speak for it—has already achieved considerable success in previous recalls in identifying quite a high percentage of potential owners of machines, certainly compared with other recalls that have happened. However, it will probably be better if I write in greater detail to my noble friend, copying it to the noble Baroness, on the names of the individual companies to deal with that point at greater length.

[Baroness Neville-Rolfe]

A letter from my noble friend would be extremely helpful. Regarding food safety, which I also know a lot about from my background, there was a practice whereby unsafe products would be listed in a newspaper or on a website almost as a routine matter. Even if for some reason it is not possible to do that on this occasion, that is one of the criteria that should be looked at for the future so that when there is publicity about a product safety problem, consumers can check easily whether there is an issue with their machine.

[Lord Henley]

Again, my noble friend is absolutely correct. I can remember seeing campaigns of exactly that sort. It is important for the consumer, or rather the original purchaser of a machine, to be able to identify what it is, which is why on occasion there have been such advertisements, as my noble friend points out. As I said, I would prefer to write in further detail to her on that issue.

I will now deal with the whole question of resourcing, not only of the new OPSS but of local authorities. As we have made clear, some £12 million has been made available to the OPSS, and we believe that that figure is an adequate sum. My noble friend asked whether she could visit its office, and I am sure that such a visit can be arranged through my department. If she would like to get in touch, we can send her up to Birmingham as soon as the Whips allow such visits to take place, and if other noble Lords wish to take part, that is obviously a matter for them. That money is for the OPSS; local authorities are funded through the general local authority grant, and there is no ring-fenced budget. However, we believe that, whatever difficulties local authorities might have, by giving the OPSS equivalency of investigatory powers, it can certainly support trading standards at a local level. The support of the OPSS, which employs some 300 staff, can be of extraordinary use to local authorities, providing training, for example.

I turn next to the question of EU exit, raised by the noble Baroness, Lady Hayter. Again, I make it clear that—although this issue is possibly beyond my pay grade—delivering the negotiated deal remains the priority and we continue to make appropriate arrangements in the event of no deal. We have created a new, UK-specific market surveillance database that will allow market surveillance authorities to record product safety and compliance incidents. That database will give the United Kingdom a rapid alert mechanism for dangerous products which will allow for product recall to protect consumers.

I turn now to the impact on small business. The noble Baroness, Lady Burt, was worried about the lack of an impact assessment. There is no impact assessment because the order gives powers to public bodies and does not place a burden on business itself. A full impact assessment was carried out in 2013, which I can make available to her. It concluded that there was a zero cost to business and a net benefit to business of £5.3 million by consolidating and simplifying the process. There is no reason to assume that those underlying assumptions have changed.

Whirlpool Tumble Dryers: Product Recall

Baroness Neville-Rolfe Excerpts

Monday 17th June 2019 Lords Chamber

[Lord Henley]

My Lords, all I can say is that I await my noble friend’s question in due course. As for the number of fires caused, I quoted the figure, saying that some 724 last year were caused by tumble dryers but that that was a decline. One must remember that any white goods are going to have a risk, and the important thing is that manufacturers ensure that they are as risk-free as possible. That is why on this occasion, as I said, we want to hold Whirlpool to account and ensure that it gets to as many machines as possible to make sure that they are dealt with. However, it is right and proper that we not only deal with tumble dryers where there is a problem but ensure the safety of all other white goods.

On the question of our exit from the EU, I assure the noble Lord that the department will make sure that safety remains an absolute priority in dealing with these matters. Ensuring that we have a robust system of market surveillance to make sure that we can protect our border from unsafe products will be a priority for the department.

[Baroness Neville-Rolfe (Con)]

I was very glad to hear of the recall, albeit it is rather late in the process. It is, I think, three and a half years since these fires were first identified, and I hope we will learn from the process.

I have two questions for my noble friend. As the department knows, because they were very helpful, I have two Whirlpool tumble dryers. In fact, they are Hotpoint; as noble Lords will know, Hotpoint was taken over by Whirlpool, a US company. The second was modified only after my meeting with the Minister. In the Statement my noble friend suggested that the risk from modified tumble dryers was low. There have been examples of fires in modified dryers, though, so how can the Government be sure that they are safe? Modifying the dryers is quite a long process, as I observed it for two hours on my lawn.

My second question, which I think is the more important one, is: is the system for the recall of white goods good enough, given the danger to the British consumer if there are fires? What changes have the Government made, or are they planning, to ensure that we can sleep safely in our beds?

[Lord Henley]

My Lords, on my noble friend’s first point, I can confirm, as I said in the Statement, that the risk from modified tumble dryers is low. I cannot quantify it, but I can repeat that assurance. It is certainly an improvement on what was there before. As I said in response to the noble Lord, Lord Razzall, one can never remove all risks with white goods; obviously, any electrical product inherently has some danger. However, we must do what we can—or rather, manufacturers must do what they can—to ensure that all products are as safe as possible. It is then the Government’s job to hold those manufacturers to account.

My noble friend also asked whether the system was good enough. We will always keep the system under review. We introduced the Office for Product Safety and Standards a little over a year ago and we will monitor how it is going. If one looks at the figures for domestic fires, including those caused by electrical products, and sees their steady decline, one can say that we are heading in the right direction. This has been happening for some time.

Competition and Markets Authority: Legislative and Institutional Reforms

Baroness Neville-Rolfe Excerpts

Wednesday 8th May 2019 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, this debate is on an important subject—namely, how to improve the UK’s regulatory regime on competition and consumer law. The Secretary of State asked the new chairman of the CMA to outline ways in which this might be improved, and today we are discussing the latter’s ideas. I should register my interest, notably as a company director outside the FTSE 100 in tech services and banking.

I am grateful to the noble Baroness, Lady Hayter, for proposing this debate. She and I worked together on the Consumer Rights Act 2015, which ushered in some important consumer safeguards, not least in the digital content area and on secondary ticketing, which she mentioned and which was a long story. I am not sure that the new rules have had time to settle in, as new laws always take time, and I disagree with a number of things that she said.

Responding to consumer needs has underpinned my whole career. I worked on the Citizen’s Charter, which was about making government measure and act on feedback about its services. Then I was at Tesco for over 15 years, where objective data from consumers—we called them customers—were always the harbinger of success or failure. If you looked after the consumer, you were successful.

I am not convinced that more legislation now is the best way ahead, not least because the costs get passed on to the consumer. We have already seen some adverse impacts from the energy price cap, which was imposed against the advice of the CMA, and we do not know whether we will be in or out of the European Union and its laws in the months and years ahead.

I am very glad that we will hear from the noble Lord, Lord Tyrie. On one point—the final recommendation in his letter—I agree unequivocally. The package as a whole, and indeed any fundamental reform of the regime, should be submitted to open and rigorous external scrutiny.

I also believe that before embarking on new laws—there is a great washing line of new proposals in the CMA document, from new duties and director responsibilities to enhanced penalties—we should always look carefully at what already exists, whether it is managed well and how improvements can be made.

Let us take local government. I am unfashionable in valuing the work done by local authorities, which are close to citizens and know local businesses and local rogues. Trading standards have been persistently unappreciated and starved of funding, but they represent good value for money. I know from the work I have done with them—for example, on online and offline counterfeiting when I was the IP Minister—that there are multiple benefits compared with the relatively small sums spent on that in local government.

I have attended many tutorials and seminars on competition and am convinced that Adam Smith—another reference—was right. Competition is required if a capitalist society is to operate as well as it can for the benefit of all. Recognition of the advantages of competition is what distinguishes a capitalist society from a socialist one, with the latter’s preference for nationalisation and, hence, monopoly. The results are manifest in the much greater economic success of capitalist societies. Oddly, the best recent examples are China and India, which ditched most aspects of socialist economics and consequently made extraordinary progress.

In some areas of life, strong competition comes about naturally, but that is not the case everywhere. It is more or less universally acknowledged that there is a need for a public body to investigate cases where competition has or might become weakened to the detriment of others—notably consumers. The mechanism by which these needs are met in the UK is the CMA. I think we are all agreed that it has an important job and, that being so, it is sensible to examine whether that job could be done more effectively. Whether it was ideal to ask the body in question to conduct such a review is another matter. Most bodies consider that the world would be better if they had more powers and, to nobody’s surprise, that is what the CMA chairman’s letter proposes. It might have been better to ask an outsider to make recommendations.

One component of the CMA’s powers has always concerned me—the fact that in some matters it acts as both the investigating body and the judge issuing fines and so on. One understands why the CMA came to be established in that way, since it largely mirrors the equivalent powers enjoyed by the European Commission under the EU treaties. It has also taken steps to mitigate the dangers of this dual role. However, when all is said and done, in some cases the CMA acts as both prosecutor and judge. I will share with the House some of my own experiences when I was a Tesco executive.

In 2002-03, the British dairy industry was going bust. There were many comments in the press and indeed by Ministers of the Crown to the effect that something must be done and that the supermarkets were to blame. The farmers came to see the top people at Tesco and they—a very hard-nosed bunch—were convinced from the figures that the industry was unsustainable. They regarded it as their moral duty to do something about it. They agreed quite independently to implement price increases, from which all or most of the benefit would go to dairy farmers. Other super- markets followed suit.

In due course, the OFT claimed that what had happened, with everyone raising their prices together, constituted a cartel and it sought to fine Tesco and others vast sums—in Tesco’s case approaching £100 million. I suggest that even if the law was, strictly, broken, this ought to have been regarded as a technical breach, since it had little relation to people meeting in secret to set prices. Everything happened in the full glare of publicity and for motives which many had accepted were worthy.

The OFT showed no signs of appreciating, still less accepting, the point. Instead, it proceeded with unnecessary vigour, not recognisable from the points that the noble Baroness, Lady Hayter, made. Our legal advisers recommended going quietly and paying up. They usually do. The other main supermarkets no doubt received the same advice and acted on it, since they pleaded guilty. That is an indictment of the system. We did not do so, for one reason. The CEO and, indeed, all of us were so incensed by the idea that we had taken illegal steps to cheat our customers that he ordered us to fight every inch of the way. Slowly the case unravelled. The charges against us were dropped one by one. Eventually, we reluctantly accepted one low-level charge and a fine well below £10 million on a dairy product.

The CMA has long since taken over from the OFT, but I think that that episode should have taught it that juggling the role of judge and jury is hard. It shows how difficult it is for investigators to stand back and appreciate that their initial enthusiasm might have been unbalanced.

It is salutary to look at the letter that we are discussing in the light of that example. Its most prominent proposal is that an extra provision should be added to the statute making it clear that the overriding duty of the CMA should be to consumers. Reflecting on that suggestion, I suspect that, had it been in place when our milk case was live, it would have undermined Tesco’s position. Justice, I suggest, can need many factors to be weighed, and the balance between them can vary in ways that cannot be foreseen. Seeking to give one factor overriding importance risks skewing investigations and imposing an intolerable burden on businesses—or, of course, driving them overseas if they are mobile.

An existing safeguard for those investigated by the CMA is the right of appeal to the Competition Appeal Tribunal; here the letter suggests what amounts to a clipping of the tribunal’s wings. I think we should reflect long and hard before accepting a proposal from one body that a second one, the function of which is to review decisions taken by the first, should have its powers trimmed.

Effective competition is essential if the economy is to operate to everyone’s advantage. Abuses need to be challenged and stopped, and the body charged with defending competition needs powers adequate to its remit. But all bodies—indeed all people—have a bias in their own favour. That is why the courts have rightly developed doctrines to eliminate bias from their proceedings. These safeguards are as important in matters of competition as anywhere else.