Thomas Cook Customers
Bill Esterson Excerpts(4 years, 5 months ago)
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Bill Esterson (Sefton Central) (Lab)
As your next-door-but-one constituency neighbour, Mr Speaker, may I congratulate you on your election?
I thank the Secretary of State for her statement. She is right to raise these matters today, because they raise serious questions that will need far more attention in the new Parliament, whichever Minister is at the Dispatch Box. I also have some questions today to take this forward.
In her statement, the Secretary of State mentioned a “high aggregate amount”. Can she tell us more about what that is? On the question about audit, to which I will return shortly, will she tell us why no regulation was in place to ensure that this serious weakness did not materialise? I should also like to put on record my thanks to all those involved in bringing 140,000 holiday- makers home.
We welcome the fact that the online services have now been bought, and that shops in the constituencies of Members across the House are being reopened by Hays Travel, but why oh why did Thomas Cook have to close first, and why were the opportunities that were given to the shops and online services not given to the airline? Intervention to ensure the retention of those viable parts of the business would have been a major step towards addressing the serious weaknesses that the Secretary of State identified in her statement. The Government were told at the time that parts of the business were successful, and Hays Travel clearly agreed because it bought the shops. There is also value in the brand, which is why the online business has been recovered. Could the airline have been saved, as the ones in Germany and Scandinavia were, if the liquidation had been delayed?
Why did the Government not listen to those calling for intervention? Why did they not take a stake in the company, so that the shops and digital business could have been transferred while still trading and so that other parts of the business could have been saved? Let us remember that the Turkish and Spanish Governments wanted to step in. They saw the potential value, but our Government did not. Had our Government intervened, the hardship to which the Secretary of State rightly referred could have been identified and possibly avoided. Does she regret her failure to speak to the company and to intervene to protect the jobs and rights of workers? Had the company continued trading, with the Government holding a stake, the rights of workers would have been protected. It is good news that staff will now have jobs with Hays Travel, but will they be paid for the time since Thomas Cook closed? Will their rights from their years of service be protected? Are staff being TUPE-ed over, or not?
What can the Secretary of State tell us about her response to the warnings about auditor conflicts of interest? She mentioned audit responsibility and potential failure in her statement. Auditing conflicts of interest have been repeatedly identified at Carillion, at BHS, in the banks and now at Thomas Cook. Has she read the excellent report from the Business, Energy and Industrial Strategy Committee, and what is her response to its recommendations, including its calls for a new regulator and for the audit profession to be proactive rather than reactive? Why is the Secretary of State so resistant to change? The Competition and Markets Authority wants action; why does not she?
What action is the Secretary of State taking to address the scandalous payment of bonuses to executives who have profited at the expense of workers and customers and who presumably have direct responsibility for the appalling hardship to which she has referred? Analysis by Unite and Syndex shows that £188 million in bridging loans would have prevented the liquidation. That would have allowed profitable parts of the business to be sold while still trading, and for workers’ rights to be protected. This would have supported the wider economy and communities, too.
The Government should be a partner of business, not stand apart from it. That means intervening and providing support where intervention stands a chance of succeeding. The more evidence emerges about the Thomas Cook collapse, the more it appears that the case for intervention was there to be made. If they would not intervene at Thomas Cook, exactly when would the Government intervene?
If the Secretary of State wants to avoid hardship for those covered by insurance, she needs to change her approach and her attitude to intervention. When she referred to a drop in the ocean in responding to a question from the shadow Business Secretary, she demonstrated that she did not agree with her predecessor, who said that reforms were needed to ensure a strong level of consumer protection and value for money for the taxpayer. He was right, was he not?
The Secretary of State said that the Thomas Cook approach was unacceptable and that support must be given to those severely impacted by its closure through no fault of their own. I agree, but the Government have failed Thomas Cook. They sat back and let it fold. Only proper reforms will make sure that catastrophic failures of this type do not happen again.
Andrea Leadsom
I am glad that the hon. Gentleman recognises the Government’s efforts, particularly on the repatriation of customers stranded overseas and, of course, in the work, which I know through chairing the Government taskforce, to try to ensure that we get the best possible arrangements for Thomas Cook staff. He asks why the Government did not bail out Thomas Cook. He will be aware that, according to court reports, there was about £1.9 billion of debt on Thomas Cook’s balance sheet. It did approach Government looking for a loan facility of up to £250 million, but it is clear that, had the Government put that significant sum of taxpayers’ money into Thomas Cook, we would have ended up in the same position as we are in today. We would have had to repatriate those customers. We would have to have done exactly as we have done, but the taxpayer would have been £250 million worse off, so it was not an appropriate use of taxpayers’ money. It is very sad that Thomas Cook went bust, but it is not right that Government should just bail out every business. Businesses need to stand on their own two feet.
The hon. Gentleman made some very important points about regulation. I can tell him that I wrote to the Financial Reporting Council asking it to prioritise as a matter of urgency consideration of an investigation into the audit of Thomas Cook’s 2018 accounts, as well as the conduct of its directors. He asked why the Government did not foresee this.
It was never envisaged that a UK tour operator would fail to insure itself fully to cover claims for personal accident or fail to ensure that it had ring fenced the funds to meet those liabilities so that they were safe if the company got into difficulty. The company has a legal obligation to cover personal injury claims arising from package holidays abroad, and that is why I have asked the official receiver to investigate, in particular, this aspect of the conduct of Thomas Cook’s directors.
Draft Insolvency (Amendment) (EU Exit) (No. 2) Regulations 2019
Bill Esterson Excerpts(4 years, 6 months ago)
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Bill Esterson (Sefton Central) (Lab)
It is a pleasure, Mr Pritchard, to see you in the Chair this afternoon.
We are being asked to approve the regulations, or our amendments to the regulations, which were already agreed in January; the Minister has gone through them in some detail and I have no objection to what she said. The Committee is here to apply section 8 of the European Union (Withdrawal) Act 2018, in so far as it relates to the failure of retained EU law to operate efficiently. We will not oppose the measure. For the record, that is in stark contrast with the Committee that the hon. Member for Glasgow Central and I attended yesterday, where that was anything but the case. I will just put on the record that the Committee’s proceedings are an appropriate use of the powers in the Act, and I am glad that the Government have returned to that appropriate use and to the promise they made—namely, that they would not make major policy changes and they would not affect rights.
Mostly these regulations are minor technical changes, as the Minister said, to what was passed in January; I do not intend to revisit what I said then. Those changes include Scotland-only regulations, as insolvency is a devolved matter, and my understanding is that they have the support of the Scottish Government. The regulations passed in January had industry support, but can the Minister say what discussions took place with industry about the changes? The explanatory notes and the Minister in her speech referred to the consultation with the Scottish Government, but can she just catch us up on the consultation with industry on these additional minor changes?
The regulations relate to no-deal preparations. At the moment in the Chamber, my right hon. Friend the Leader of the Opposition is responding to the Second Reading debate on the European Union (Withdrawal Agreement) Bill. However, even if the Bill is passed, there is still the very real threat that no deal could happen, because—this is one of the great weaknesses of the Bill—the default position at the end of December 2020, in the event that a free trade agreement has not been negotiated by the Government, is for us to leave without a withdrawal agreement being in place; the Minister referred to that. We would leave with no deal at the end of December 2020, according to the legislation that is currently being debated in the Chamber. One of the reasons that is a real concern is because it takes many years to negotiate free trade agreements. That threat must be taken seriously.
Can the Minister confirm that the regulations and many others that have been passed in Committees such as this one, including in Committees that the Minister and I have attended, as a result of that serious weakness—one of many—in the European Union (Withdrawal Agreement) Bill, leave open the strong prospect of no deal? Will these no-deal regulations remain potentially necessary for implementation, not just on 1 November 2019 if the Bill is rejected and we leave with no deal on Halloween, but on 1 January 2021 if the Bill passes? Perhaps she can confirm that they will still apply, be relevant and be available, if needed.
Although we will not oppose the regulations, we will continue, for the reasons I have just set out, to do all we can to prevent no deal, not least to ensure that regulations, including these ones, never need to be enacted.
Draft Freedom of Establishment and Free Movement of Services (EU Exit) Regulations 2019
Bill Esterson Excerpts(4 years, 6 months ago)
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Bill Esterson (Sefton Central) (Lab)
It is an even greater pleasure than usual, Mr Hanson, to serve under your chairmanship. I congratulate you on becoming a grandad for the first time and I hope we will not detain you for too long from visiting your new grandchild, which I know you are keen to do—but I apologise that I will detain you for a little while.
Before we consider these regulations, we should consider the comments of the3million, the organisation representing the more than 3 million EU and EEA citizens resident in the United Kingdom. The organisation has described this measure as not being what was promised by the Government and says that it undermines promises made by the Government, which, of course, is something that the Democratic Unionist party has been only too familiar with in recent days.
What is it that we are considering today? We are considering the removal of the rights of EU, EEA, Swiss and Turkish nationals who are self-employed or business owners or operators in the United Kingdom. Who are these people and how will they be affected? They are thousands—potentially hundreds of thousands —of people who are working in professional services, entrepreneurs, people who operate start-up businesses, people who operate in IT and in professional and financial services, architects, or self-employed workers in the gig economy. There are serious potential consequences not just for them but for their staff, their customers and their suppliers—both for businesses and the self-employed—as well as for their families and the local economies in which they operate.
The Minister talked about the impact of the regulations; in fact, at one stage, he said that he was keen to move on to the impact. But there is no impact assessment, so how can we possibly know? This is a perennial discussion—it seems that we have been dealing with the issue long enough for it to be perennial and not just something of a repeated nature. Every time we have a set of these regulations, the impact assessment is lacking. Because this measure affects so many people, it is impossible for the Minister to say that it will not have a significant impact on the economy. He simply has no way of knowing that, because that investigation—that impact assessment—has not been carried out.
Stephen Doughty
My hon. Friend is making strong points, with which I completely concur. He will note that the Minister used very careful words: he said “no further restrictions at the point of exit”. The fact that this matter is being considered in this way, rather than through the immigration Bill, will raise significant concerns about these rights changing in due course. We on the Select Committee on Home Affairs have looked at the subject many times. This issue did not come up, and we have discovered all sorts of problems with the existing EU settlement scheme, let alone with this provision, which many people were unaware of.
Bill Esterson
I am grateful to my hon. Friend for those remarks, which I will address in some detail later.
Matt Rodda (Reading East) (Lab)
Does my hon. Friend agree that there is a disturbing lack of assessment and evidence-based policy making on these important matters? The Government are ignoring the demands of many, including the official Opposition, for a full assessment of their new deal. Surely there should be some proper assessment of these important matters.
Bill Esterson
I absolutely agree. My hon. Friend is right to mention the lack of impact assessment or analysis of the proposed deal, which we are being asked to consider without being able to judge the line-by-line detail of what is in it. Somebody will have to remind me how many pages the new document is.
Bill Esterson
I will accept the hon. Gentleman’s comment from a sedentary position; does anybody want to go higher? The reality is that we do not have the information we need in order to make judgments, whether on the new deal or the consequences of no deal, and on these regulations. In the explanatory memorandum, the Government use the phrase, “It is anticipated”. What they are saying is that they do not know what the impact will be, and I am afraid that is a real problem. These regulations were drawn to the attention of the Secondary Legislation Scrutiny Committee.
Kevin Hollinrake
The hon. Gentleman may be familiar with the document we were given access to, which was held in the Treasury since November 2018. That contained an impact assessment of all kinds of different scenarios, and said that in all of them, the economy is expected to continue to grow. Does that give the hon. Gentleman some confidence that there is life beyond the European Union?
Bill Esterson
That is a slightly different point to the one we are discussing. We need to look at the detail. I am not sure whether that intervention was part of the hon. Gentleman’s pitch to be Chair of the Treasury Committee—others must judge—but I will touch on his point. The Secondary Legislation Scrutiny Committee speaks of the removal of treaty rights, and the fact that this is a policy change. That goes to the heart of the concern about what is being proposed, because when the withdrawal Act was passed, the Government promised that they would not use the Henry VIII powers in section 8 of that Act as a vehicle for policy change. They also said that it “almost goes without saying” that no change should be made to rights through delegated legislation, yet that is exactly what is being proposed.
The disapplication of the rights of EU, EEA, Swiss and Turkish nationals is clearly at odds with what was promised regarding section 8 of the withdrawal Act. That Act was not intended to address how, whether, and how quickly we should meet our obligations under the WTO, which is the reason the Government are giving for putting these regulations through. The purpose of section 8 of the withdrawal Act was to fix deficiencies in retained EU law—an explanation that, to be fair to Ministers, they have used to justify previous regulations in Committees in which I have responded on behalf of the Opposition. Why is that not the case on this occasion? Why is this not being addressed through primary legislation? Why is it not being done through an immigration Bill, as my hon. Friend the Member for Cardiff South and Penarth asked, and why is that Bill stuck in Committee?
If free movement of people is to end via primary legislation, as the Home Secretary said on 5 September, why is the same principle not being applied to the freedom of establishment and free movement of services, and what are the consequences for those individuals who are self-employed, or who own or manage businesses in this country? A large cohort of the people delivering services or running businesses depend for their lawful residence qualification on being regarded as economically active. They have the right to that definition and to qualify. Their rights are derived under the 2016 immigration regulations, which the Minister mentioned, but that is because they are in accordance with article 49 of the treaty on the functioning of the European Union. These regulations disapply article 49, and therefore the 2016 immigration regulations.
It makes no sense to decide immigration rights for those who are self-employed or are running a business separately from determining the immigration rights of other people, but that is what these regulations do, despite the assurances that were given when the withdrawal Act was passed. If there is nothing to worry about, where is the legal analysis? Where were the Minister’s comments about the legal opinion that the Government have obtained? Where is the analysis that these regulations will not adversely affect the immigration rights of EU or EEA nationals? Thousands of self-employed, business-owning or business-managing providers of services need the assurance that they will not be disadvantaged and that their right to stay will not be questioned or removed. Where is the legal protection? It is not referred to in the explanatory notes, and the Minister did not refer to it.
I note from previous regulations passed in these Committees that on other occasions it has suited the Government to apply a principle of reciprocity. For example, I was responding for the Opposition on the matter of intellectual property regulations when the Government chose to allow EU and EEA firms the right to continue to have full access to our intellectual property regulations, and there was no guarantee that our firms would have those rights in return. Reciprocity was not a barrier on that occasion, but it seems that it is here, when the Government want to remove the rights of self-employed or business-owning or managing EU or EEA nationals.
Matt Rodda
This is a particularly worrying point, and I welcome my hon. Friend’s analysis of the situation. The Government seem to have one rule for big business and a very different one for small businesses, which are the lifeblood of our economy. Surely they should be equally fair to both types of business.
Bill Esterson
That is right. As my hon. Friend points out, these regulations relate to the self-employed or those running small firms, who do not have legal protections. That relates to the point about where the legal assurance is. He is right that large firms are able to ensure protection, give assurance and make applications to enable individuals to live and work in this country.
On the question of whether the regulations are about delivering WTO most favoured nation compliance, the Government do not have to act so quickly: as with IP rights, they could wait and see whether the EU and EEA grant reciprocal arrangements. After all, Government Members who support no deal—I cannot remember whether anybody in the Committee is in that category—have often argued that, in the event of no deal, the EU would continue with the existing arrangements and reciprocate because it would be in its interest to do so. I wonder whether the Minister goes along with those Members, who almost certainly all belong to the European Research Group. Whether he does or not, why are not the Government waiting to see the response of the EU and the EEA on the matter of reciprocal rights?
I come back to the central point: that EU, EEA, Turkish and Swiss nationals were promised under section 8 of the European Union (Withdrawal) Act 2018 that it would not be used for policy changes—especially those affecting rights. I remind the Minister that section 8 was designed to rectify deficiencies from minor changes—what we are concerned with is not minor, but is a policy change—and where there would be a failure of retained EU law to operate effectively. Compliance or otherwise with WTO provisions is not a matter of retained EU law and should not be addressed in that way. It was never intended that it would be done in that way.
Let us remind ourselves of the impact. More than 3 million EU nationals live in the UK and so do tens of thousands of Turkish and Swiss citizens. Among their number countless thousands will be affected by the regulations. That will affect their confidence about doing business, and it could affect the confidence of those who trade with them. That may mean contractors having to stop working in the UK, which will affect customers and suppliers. There could be legal proceedings against contractors for breach of contract, or sudden retendering because of the loss of non-UK contract holders’ rights. It did not seem to me from the Minister’s remarks as if the Government had considered those potential economic and business consequences.
There are questions about legal remedy and compensation through bilateral investment treaties. Before a number of east European countries came into the EU, we were party to bilateral investment treaties with them. Once we leave the EU those treaties will come back into force, and once those agreements are back in force they will enable companies in those countries to take legal action against the UK Government. Have the Government considered that potential challenge to the legislation? What steps are being taken to ensure that it is not a problem or threat for the UK?
I turn back to the question of the economic benefits of having in this country the relevant businesses and their owners, and self-employed workers. In the event of no deal and the regulations being enacted, what steps will the Government take to protect the investment that those companies bring and make sure they are not undermined by the regulations? At the moment, the response to the regulations of the3million and the businesses that my hon. Friends have referred to is concern about whether it is desirable for businesses and self-employed people from the EU or EEA to stay in this country. If that protection is not in place and that assurance is not guaranteed, those people will be hit, and there will be a knock-on effect on UK jobs and our economy—to return to the earlier comments of the candidate for the Chair of the Treasury Committee, the hon. Member for Thirsk and Malton.
The Secondary Legislation Scrutiny Committee raised concerns and the3million says that the provisions are not what was promised, and undermine promises made by the Government:
“We were repeatedly promised that we would be treated no less favourably and nothing would change to our rights. These regulations do the opposite and remove our right to bring nationality discrimination claims. The proper place to consider the issues of immigration is in the immigration Bill. Not here.”
Nadhim Zahawi
I have a lot to cover, but I will happily take the hon. Lady’s intervention later. The Government’s plan on citizens’ rights confirms that EEA and Swiss citizens resident in the UK by exit day would be able to apply to the EU settlement scheme until at least 31 December 2020 to secure their status in a no-deal scenario. The EU settlement scheme is live and performing well. More than 2 million applications have now been received, and the scheme will continue to run in a deal or no-deal scenario. EU citizens resident in the UK by exit day will continue to be able to access benefits and services on exactly the same basis after the UK exits the EU as they do now. I sincerely hope that colleagues will refrain from scaremongering. It is deeply irresponsible for hon. and right hon. Members to do so.
The hon. Member for Sefton Central asked important questions, which I will attempt to address. He asked about the impact assessment for the regulations. An impact assessment has not been prepared because the impact has been approved de minimis in line with the better regulation framework.
Nadhim Zahawi
Let me make some headway.
The only area in which the directly effective rights of establishment or free movement of services have been identified to have a direct impact on UK businesses is in the case of satellite decoders, where we expect the impact to be minimal. The directly effective rights of establishment and free movement of services impact the immigration regime applied to Swiss and Turkish nationals. Changes to the regimes will be delivered by primary immigration legislation, so let us not conflate those two things.
The hon. Gentleman also asked how we know that the EU will not reciprocate. Why are we doing this now? These rights are no longer reciprocated once we leave the EU. They are directly effective rights that are applicable only to member states. However, this does not preclude us from agreeing an ambitious free trade agreement with the EU.
The hon. Member for Cardiff South and Penarth said that the regulations are necessary to protect the Government’s freedom to regulate in a no-deal scenario and asked what regulations the Government are planning that would contravene or depart from those rights. We anticipate that the immediate practical impact of the regulations on the ability of EU, EEA, EFTA, Swiss or Turkish nationals to establish or carry on business or provide services in the UK will be limited, because UK law is currently expected to be compliant with these rights. Were there to be any legislative changes that depart from these rights—which I think is his point— after we have left the EU, they would be subject to the scrutiny of Parliament in the normal way and so would be considered at the appropriate time.
I want to return to the hon. Member for Sefton Central, who asked how the Government can be sure that there are no other direct impacts. The Government have prepared as thoroughly as possible. I hope he would agree that we have consulted as thoroughly as we can, and that the only exception is the satellite decoders.
Several hon. Members spoke about the submission from the Public Law Project. Allow me to address it. It is important that we get this on the record, because emotions are running high and the atmosphere is febrile in this place. I think I have addressed the issue of the impact assessment. The hon. Member for Sefton Central said that these go beyond the powers conferred on Ministers by the Henry VIII powers in section 8 of the withdrawal Act, a point that pretty much comes from the Public Law Project notes that were circulated today. I will share with the hon. Gentleman the correct position. The powers delegated to Ministers by Parliament via the EU withdrawal Act specifically allow changes to be made to existing Acts of Parliament by secondary legislation, through so-called Henry VIII powers. In its report on Henry VIII and delegated powers, the House of Lords Constitution Committee noted that
“the distinction between Henry VIII and other delegated powers is not in this exceptional context a reliable guide to the constitutional significance of such powers, and should not be taken by Parliament to be such.”
Section 8 powers to prevent, remedy or mitigate deficiencies in the EU law retained under the Act that arise from the UK’s withdrawal from the EU are used here to address deficiencies in retained EU law relating to certain provisions on freedom of establishment and free movement of services in the event that the UK leaves the EU without a deal. Section 8 is used to address any inoperability of such rights and to ensure that UK law continues to function effectively and with legal clarity.
Bill Esterson
I made the point that section 8 of the withdrawal Act is designed to address deficiencies in retained EU law—that is not in question. The problem is that it is not being used for that; it is being used for changes in policy and to affect people’s rights. That goes way beyond the scope, as does addressing WTO deficiencies. That is not what was ever envisaged or stated by the Government when they passed the withdrawal Act.
Nadhim Zahawi
The deficiencies in retained directly effective rights concerning freedom of establishment and the free movement of services, including a lack of reciprocity, which there cannot be in this case, arise as a result of the withdrawal of the UK from the EU. That is the whole point. The provisions in the regulations are being made as a direct consequence of the UK’s exit from the EU.
Finally, the hon. Member for Sefton Central mentioned the3million’s campaign on our doing this here through secondary legislation, rather than primary legislation. The regulations do not represent a significant policy change, as he suggests. They simply do not. If colleagues prefer to scaremonger, that is their prerogative, but I do not agree with them. I think it is a mistake to do that. It is a time to behave responsibly. The regulations do not impose any new restrictions on EU, EEA, EFTA, Swiss or Turkish nationals or on EU, EEA, EFTA, Swiss or Turkish-based businesses at the point at which we exit the EU, and we do not expect disapplying these rights to have a direct impact on the ability of EU, EEA, EFTA, Swiss or Turkish nationals to establish or provide services. The hon. Gentleman will know better than I do that successive Governments have implemented EU obligations via both secondary and primary legislation, so I hope he will reconsider his position.
I will end, Mr Hanson, because I want to get you over the road to the hospital to see your granddaughter. I thank Members for their valuable contributions to this debate. I compel them to think twice before they scaremonger. The hon. Member for Glasgow Central should talk to her colleagues in the Scottish Parliament on this.
Government Plan for Net Zero Emissions
Bill Esterson Excerpts(4 years, 6 months ago)
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Sarah Newton
I am going to make a bit of progress because so many Members want to speak and I want them to be able to do so.
Businesses have an important role to play, and it has been great to see businesses come forward with their own net zero targets. The water industry, for example, has committed to carbon neutrality by 2030. To give hope to the citizens who are so worried about climate change, that information should be captured so that people can see what all sectors of our society are doing. To level up the expectation on all businesses to take action, the Government should require goods for sale to include climate impact on their labelling. That requirement could cover food, electronic goods, and so on. It would help consumers to make smarter choices when shopping and ensure that companies measure the carbon footprint of individual products. It will add a cost to business, but that is why we must create a level playing field by insisting on the provision of that information. We do not want businesses who do the right thing to be undercut by those who do not. Information is power and it will enable every workplace and home to make smarter choices.
To co-ordinate that activity I want the Chancellor of the Duchy of Lancaster to be given overall responsibility for net zero in the Cabinet Office. We should raise the status of the Environment and Clean Growth Inter-ministerial Group to a Cabinet Sub-Committee. The Treasury could introduce a new net zero test for every Budget and spending review, to ensure that all new Government spending and investment is aligned with the target, or at least is not harming decarbonisation efforts. The Government could ask the Office for Budget Responsibility to scrutinise whether the targets are being met.
Bill Esterson (Sefton Central) (Lab)
In the Liverpool city region, the combined authority and the Mayor, Steve Rotherham, are doing exactly what is needed to take people with us to hit that net zero carbon target. That includes plans for an ambitious tidal barrage on the Mersey, hydrogen trains—hopefully built by Alstom in Widnes—and an offshore wind array. They also oppose fracking. Is that not the way to hit the net zero carbon targets?
Draft Statutory Auditors, Third Country Auditors and International Accounting Standards (Amendment) (EU Exit) Regulations 2019
Bill Esterson Excerpts(4 years, 7 months ago)
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Bill Esterson (Sefton Central) (Lab)
It is a pleasure to serve under your chairmanship, Mr Sharma, and to make the most of this limited opportunity to sit in Parliament. Before I go into the SI, I could not help noticing that the Government still have a majority on this Committee. The Government have nine Members, and the Opposition only eight. I wonder why that is, because the Government have lost their majority in the House of Commons over the past few weeks. Will you confer with the Clerks, Mr Sharma, as to whether the Government should still have a majority on the Committee?
The Chair
I am advised that it is not up to this Committee; it is up to the Selection Committee. I am sure the message will go back to it for future consideration if the situation is the same.
Bill Esterson
Thank you for taking that point on board, Mr Sharma. I realise it was not a decision you could adjudicate on, but it is an important point because this is yet another example of how the Government operate and ignore the democracy of the House of Commons at every available turn. They should have arranged not to have a majority in this Committee. [Interruption.] The hon. Member for South East Cornwall can intervene and challenge me on that point if she does not agree, or if she thinks that a party that is 43 or 45 seats short of a majority—
Bill Esterson
Thank you, Mr Sharma.
Now, to the matter at hand. We are faced with regulations and, as ever, the Minister did her best to make them appear to be a matter of minor change, but the House of Lords Secondary Legislation Scrutiny Committee said the
“range and magnitude of the changes are significant: the Regulations make changes to 15 items of legislation and include a sub-delegation of powers to UK regulators and extend a ministerial power of direction.”
The Minister did mention that.
Bill Esterson
Well, the Minister mentioned the ministerial power of direction; I am not sure that she spoke about just how far reaching the changes are. The Lords Committee expressed its
“concern about the scale of the challenge facing financial services firms in adjusting to these changes.”
Yet when we turn to paragraph 10 of the explanatory memorandum, we find that no consultation was carried out with the financial services sector on these far-reaching changes, which will affect financial services firms. Sadly, that problem has bedevilled such statutory instruments, more than a few of which the Minister and I have considered, including the one she mentioned.
There is also a link to the 2013 report from the Parliamentary Commission on Banking Standards, which was chaired by members of the Minister’s own party. It was jointly chaired by a Member of the House of Commons—the then chair of the Treasury Committee, Andrew Tyrie—and a Member of the House of Lords. They found great concerns about the robustness of our audit regulations and called for wide-ranging changes. Those changes have not happened. The relevance of those points centres on the scandals surrounding companies the collapse of which related to a lack of audit, such as British Home Stores, Patisserie Valerie and Carillion.
The link to the regulations is important, because the Government are proposing to adopt the IFRS system, which is run by a private entity in Delaware in the United States and overseen by the European Commission. I wonder how the Government propose to accept arrangements whereby, once we have left the European Union, the European Commission will have oversight of our financial reporting standards. The Government are making a major change to those standards, tacked on to the regulations. Such a significant change clearly should be fully scrutinised, should have been the subject of consultation, and is very difficult for us to support.
I did some consultation of my own. I asked the Institute of Chartered Accountants in England and Wales for its assessment of the regulations. It confirmed the concerns I have just outlined regarding the Government’s proposed elimination of the exemption for EU companies with a UK-based subsidiary. It wants the Government to say what the timescales will be, because it is not clear from the regulations.
Beyond those concerns from the ICAEW, the proposed amendment is not just minor or technical. The controversies that I mentioned regarding audit mean that if such changes are to be made, they should be subject to much wider consideration. The consideration recommended by the 2013 report from the Parliamentary Commission on Banking Standards gives us a good place to start.
There are some significant concerns about the proposed changes, which are significant changes. It is simply not the case, as far as I can see from the commentary that I have received, that there will be no significant impact on the private, voluntary or public sectors. The lack of an impact assessment yet again is concerning. The Minister will no doubt say that the Government are preparing responsibly for Brexit, with or without a deal, but I am afraid that the lack of an impact assessment, the lack of consultation and the way in which standards have been tacked on to a set of regulations that are actually of a very different nature show that today’s statutory instrument should not have been introduced in its present form. For those reasons, we will oppose the regulations.
Kelly Tolhurst
I will happily provide my hon. Friend with any advice that we have available. I point out to hon. Members that these regulations constitute an amendment to, and an extension of, the statutory instrument that was laid before and passed by this House at the beginning of the year. They particularly focus, as I outlined in my opening speech, on aspects to do with subsidiaries. They also correct an omission of three words, which it was important to do to ensure that the regulations expressed the true intention behind the original statutory instrument.
I emphasise that as part of the Department’s role in preparing for EU exit and making sure that we are in the best possible place to leave the European Union, with or without a deal, we have engaged continuously with stakeholders. Quite rightly, as Ministers, we have challenged our officials within the Department and our stakeholders, when we have had the opportunity to do so.
Bill Esterson
That is interesting, because I have a briefing note from the ICAEW here. It raises concerns, which I went through earlier, about regulation 4, on the loss of EEA subsidiary exemption, and regulation 6, on EEA qualification for auditors; I did not spend as long on that earlier. I mentioned some other concerns that had been raised with me by professional bodies. It does not seem, from anything that the Minister has said, as though she has had those discussions with the ICAEW. It does not seem to me as though she has had that note from the ICAEW, or those concerns have been raised with her. Perhaps she could clarify the situation for me. Did she receive those concerns from the ICAEW before this meeting?
Kelly Tolhurst
I can confirm that officials in the Department have been speaking to the ICAEW. As I outlined in my response to my hon. Friend the Member for Ochil and South Perthshire, we have made something explicit in these regulations on the back of our conversations with the ICAEW. Those conversations are ongoing and will continue, as I laid out in my opening speech, because we are to bring forward the assessment framework in a further statutory instrument.
The hon. Member for Sefton Central asked how we would cope with the fact that the European Commission was no longer making these opinions or decisions. The statutory instruments that we have made give these powers to the Secretary of State, thereby enabling parliamentary scrutiny of decisions and the ability to delegate responsibilities.
The hon. Gentleman is quite right that we have had many conversations about impact assessments in our debates on statutory instruments as part of the EU exit programme. He will notice that a de minimis assessment took place, because the level of impact was below £5 million. As I outlined in my opening remarks, the overall benefit from the statutory instruments will be a reduction of £2 million per year.
The hon. Member for Glenrothes asked why we are bringing this forward now, and why we did not do it in the original statutory instrument earlier in the year. The regulations before us were not needed for exit day, but because we have had the opportunity to extend our leaving date to 31 October, we have been able to consider them prior to exit day.
As the UK exits the EU, we are committed to maintaining the integrity of the UK system for regulatory oversight of audit. The regulations contribute to that by clarifying and building on the approach to oversight of the audit profession following our withdrawal from the EU that we began to set out in the original regulations at the start of the year. Like those regulations, this statutory instrument does not introduce a change in policy, as I have explained. The fundamental elements of the current statutory audit legislation will remain the same after exit. These regulations make only a small number of further amendments that are necessary to ensure that audit legislation remains operable in the UK following our withdrawal from the EU.
The regulations will mean that the UK system for regulatory oversight remains coherent and understandable, and they will enable us to do more on this over the coming months, irrespective of the outcome of the EU exit negotiations. I regret that the Opposition have decided that they are not prepared to support the regulations, which would give business and stakeholders consistency and clarity about how the market will work as we leave the European Union. I commend the regulations to the Committee.
Question put.
Oral Answers to Questions
Bill Esterson Excerpts(4 years, 9 months ago)
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Greg Clark
I am fearful that I shall find myself in an invidious position, given the competing claims of west country Members. All I will say is that, on this day of the 50th anniversary of the moon mission, my hon. Friend will know that Newquay’s unique claim to be in pole position for a UK spaceport adds to the already considerable attractions of his constituency.
Bill Esterson (Sefton Central) (Lab)
During last week’s Westminster Hall debate, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Rochester and Strood (Kelly Tolhurst), was enthusiastic when she told us that Amazon was leading the retail task group. I dread to think who the Secretary of State might have in mind for tourism—Airbnb, perhaps?
It is Labour that is standing up for the crucial sectors in our economy, not the likes of Amazon, with its exploitation of workers and undercutting of other businesses, not to mention its sweetheart tax agreements. When will the Government stop the gimmicks, and deliver not only hospitality deals but the retail deals that are so badly needed by those vital sectors of the economy?
Greg Clark
That is a strange point for the hon. Gentleman to make, given that our tourism sector deal—the subject of this question—has been hailed by the industry as a pivotal moment for it. Of course it is right to engage with all retailers of all sizes, but colleagues who represent rural communities will know that the outlets, national and international, that web-based platforms such as Amazon give to small rural businesses are very important to retailing. It is vital for that perspective to be part of the deal.
Retail Strategy
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Bill Esterson (Sefton Central) (Lab)
It is always a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Blaydon (Liz Twist) on securing this debate and on an excellent speech. I also congratulate my right hon. Friend the Member for Delyn (David Hanson) and my hon. Friends the Members for Batley and Spen (Tracy Brabin) and for Ellesmere and Neston (Justin Madders), who all advocated for their constituencies and spoke strongly on this issue. They touched on the importance of a retail sector agreement and referred to the USDAW proposals for an industrial strategy for retail; as a member of USDAW, I declare an interest in that matter.
My wife and I decided to buy a dishwasher, and searched online for a local retailer. We found that Smiths TV, in Formby in my constituency, sold dishwashers. Its website was well designed, and when we went to the store, the layout was attractive and the staff were friendly and helpful, so we bought from them. It is a local independent retailer that is clearly doing well, with four stores in Sefton and west Lancashire. Meanwhile, Aintree retail park and Aintree Racecourse retail park, which are next to each other, are both thriving, packed shopping centres where footfall is strong.
In my constituency and across the country, there are success stories in retail, including independent retailers that combine a strong online presence with excellent in-store customer service, and shopping centres where the management and stores combine to present an attractive offer that ensures that customers come and visit. To return to a point made by my right hon. Friend the Member for Delyn, what can high streets learn from successful out-of-town shopping centres? I have mentioned the success stories in my constituency, and it is important that we all do so, because there are plenty more.
However, as is the case with everyone else who has spoken in the debate, the trend across my constituency is far from positive. There have been high-profile closures such as Maplin, Comet and the other names that have been mentioned. In the high streets of my constituency—in Formby, Maghull and Crosby—we have the tattoo parlours, betting shops and tanning salons that others have mentioned, where once we had household names or good local retailers. Many retailers in my constituency, like everywhere else, find trading tough. That is why it is disappointing that the Business, Energy and Industrial Strategy Committee had to report that
“the Industrial Strategy promised to work with low productivity sectors, such as retail and hospitality, with the potential for even small productivity gains across people-heavy sectors having a significant beneficial impact on the UK’s overall productivity. Yet we found that so far neither the retail nor hospitality sector has been able to make significant progress on securing a sector deal of their own”.
The retail industry is a key part of our economy; it employs 3 million people and, according to USDAW, contributes 11% of UK economic output. Many people have their first experience of work in retail. In smaller towns and villages, shops are often the heart of the community, and retail is a fundamental part of how we all go about our day-to-day life. However, 74,000 jobs were lost in 2018 alone, with many more job losses predicted. There is a long-term decline in retail, which is a cause of great concern in many high streets and has a profound impact on communities, workers and the whole country.
However, as I have shown through the local examples I have given, there is much in the industry and high streets and town centres that tells us that this crisis can be addressed. Businesses can still thrive, and good, higher skilled, better paid jobs can be available if we improve skills and use technology to drive productivity, with a strong strategy and the proper partnership between national and local government, businesses and the wider community.
A successful retail strategy should put in place support for businesses to harness the power of the internet and to benefit from a combination of online and offline shopping. Smiths TV in Formby shows how that can work, but such good practice needs far greater promotion and support. Labour’s plans for business support will maximise the benefits of technology to help business, deliver the well-paid jobs of the future and help communities as well. As was said earlier, high pay means there is more for businesses too, as well-paid workers are able to buy more goods and services from them. The good use of technology, allied to equipping staff with the technical and interpersonal skills that I experienced at Smiths, offers a vision of a successful retail future.
The challenges in retail, especially in our high streets, have been analysed by a number of organisations. The Government must listen to the British Retail Consortium, to Bill Grimsey and Mary Portas, to USDAW, and to others who have written excellent reports. All have produced reviews with evidence-informed recommendations to address the high costs of business rates; the lack of footfall and public transport; bank and post office closures; the need in town centres for work space and housing, as well as for good-quality leisure facilities such as bars, cafes and restaurants; and the opportunity to re-establish public services with lots of staff near where shopkeepers can benefit from their spending power—services such as doctors and dentists, whose patients are also potential retail customers.
Retail is an industry of national importance. We are a nation of shopkeepers, but we are in danger of becoming a nation of shuttered shops. That is why Labour’s plan—a bold and comprehensive offer that would bring customers and workers to town centres, reform the crippling system of business rates and preserve the essential heart of communities—is so necessary. In it, we have addressed the need to have decent bus services—services that are free for under-25s and that have free wi-fi; to keep banks open; to address the digital exclusion of the too many who cannot go online to bank, those who need to use cash to buy and those businesses that rely on cash; to retain cash machines for the same reason, for consumers and businesses alike; to have a register of landlords to address the challenge of empty shops; and to overhaul business rates and consider the alternatives, such as an online sales tax. All those ideas are designed to help address requests made by businesses and shoppers. How about electric vehicle charging points to attract shoppers, while at the same time nudging behaviour on climate action?
A retail council that meets three times a year and whose recommendations go nowhere is a talking shop, and is no substitute for a retail industry strategy; £150,000 for a study of a limited number of high streets is no strategy either. When the majority of high streets have been excluded from the high street fund, it starts to look like window dressing, rather than the basis of a strategy that could transform the prospects of retail and communities. A lack of a detailed plan simply will not save retail jobs, or reinvigorate high streets or communities. There are deep-seated problems in areas of deprivation, which will take much greater intervention than in more prosperous areas.
We must recognise the realities of shopping habits, including online shopping, and not give up on our shops and their staff. Working in a warehouse fulfilling orders cannot be the limit of our aspiration for millions of workers, an nor will online shopping be the answer in all cases. Creating an attractive experience that balances online and physical shopping will provide an opportunity for businesses, consumers and workers, as long as we have the right strategy. Human interaction is important in life; that is as true in retail as anywhere else, and online cannot replicate that experience.
Smiths TV in Formby shows what is possible. If it can succeed as an independent retailer, so can many more. However, retailers cannot do it alone, which is why it is now time for the Government to take action. We must have a proper retail strategy, working with the industry to preserve jobs and reinvigorate communities.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
It is a pleasure to serve under your chairmanship, Sir David, and I congratulate the hon. Member for Blaydon (Liz Twist) on securing today’s important debate. Like her, I have a family history in retail and shopkeeping: my great-grandmother ran a corner grocery store, my great-grandfather was a bootmaker and my father used to run a DIY shop.It is interesting that we are having this debate, because he closed that DIY shop after the retail sector changed. The likes of B&Q finished off some of our small, independent DIY shops. I hope I have been able to bring some direct understanding to my role as a Minister in this area.
As the hon. Lady and other Members have pointed out, the retail sector employs more than 3 million people and contributed £94 billion of gross value added to the UK economy in 2018. The retail sector is at the heart of our communities and our country. I reassure Members that I am extremely passionate and determined about the retail sector and that I care vehemently about it, much as everyone who sits in the House of Commons—not just those in the Government—cares very much about it and values it, the jobs it creates and the value it delivers to our communities.
Retail has always evolved to meet changing consumer demands, and it will continue to do so. Indeed, it is already thriving in many areas. For example, we have the most developed e-commerce market in Europe, with 48% of the estimated total of €198 billion in 2018. We recognise the high-profile pressures in the sector, but there are also businesses that are expanding and developing, as outlined by the hon. Member for Sefton Central (Bill Esterson) with his great plug for his local retailer Smiths TV. Amazon, Lidl, Aldi, Ocado and JD Sports are all companies investing in UK retail, which is a good sign for the future. Primark, which recently opened the world’s largest fashion retail store in Birmingham, is proving that a high street business can still be successful without a significant online presence. We have seen sales increase by 4% and increased profits. Organisations such as Pets at Home are taking on the challenge of changing consumer demand. In its stores, it is bringing in veterinary services and grooming services and investing in the workforce and apprenticeships. Many retailers are grasping the challenge of a changing retail sector and ensuring they are able to deliver services on the ground that consumers want.
We have heard examples from Members about local growth. It has been great to hear examples of local authorities working proactively with their high street forums and the opportunities available to them to try to grow and really focus on meeting the needs of the local community through the local retail offer. However, to continue to evolve, we need to innovate. I was therefore excited to see the UK Digital Retail Innovation Centre open in Gloucester in May this year, following a funding award of £400,000 from Gloucestershire’s local enterprise partnership. It will be a national centre for testing and developing disruptive digital innovations and will help shape and inform the future of cities with a special focus on retail.
Alongside those successes, we have seen some high-profile names struggle, including Woolworths, Toys R Us and, more recently, Debenhams and House of Fraser. We have been used to seeing those iconic names on our high streets, but in some cases they are no longer there. I do not underestimate the impact of those changes, which can be hugely difficult for the individuals and families involved and for communities. Indeed, I know the hon. Member for Blaydon met Toys R Us staff from the metro retail park when the store closed down. Some of them had been working there for 20 years, and I commend her for the support she showed to her constituents.
There is no doubt the sector is facing significant pressures, whether from uncertainty in the business environment or from changes in consumer expectations and preferences towards online shopping. Those challenges are reflected in retail across the world, not just in the UK. Our retail sector is still one of the best in the world, and we are well placed to deal with the challenges. Retail has a long history of responding successfully to change, of turning challenges into opportunities and of turning pressure into innovation. The Government are, and I personally am, absolutely committed to supporting the sector as it responds to change and strives to continue to serve the public so well, as it has in the past, and as it will in the future.
I am pleased, as part of my portfolio, to serve as the co-chair of the industry-led Retail Sector Council, alongside Richard Pennycook, the chairman of the British Retail Consortium. There has been confusion over the idea that the council does not meet very often and is just focused on the troubles of the past, rather than looking to the future, but I assure Members that we not only have Retail Sector Council meetings, but a number of sub-groups heading up the workstreams and meeting regularly. A lot of work goes on outside those meetings to reach targets. The workstreams are focused on future challenges and how we can drive the retail sector forward. It is not just a talking shop; if it were, I can assure Members I would want no part in it. I spent many a year before becoming an MP in talking shops, and I do not particularly want to do that as an elected Member of Parliament and especially not as a Minister.
Bill Esterson
I am glad the Minister has mentioned the Retail Sector Council. I am curious as to what it has achieved. Perhaps she can tell us, because if it is not a talking shop, it will have made a difference, and there will be some outcomes, deliverables and differences made.
Kelly Tolhurst
The hon. Gentleman is quite right. As he will know, when the Retail Sector Council was set up last year, we set its priorities. The six workstreams and the priority workstreams have been agreed. We are working for outcomes. The beauty of the Retail Sector Council is that it is the retail sector coming together with Government to find solutions to the future challenges. It includes not only the bricks-and-mortar retailers, but the online retailers and the small independent retailers. In the council, the sector is working with Government to move forward and bring forward plans and proposals that will benefit and aid the sector.
Businesses: Late Payments
Bill Esterson Excerpts(4 years, 10 months ago)
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Bill Esterson (Sefton Central) (Lab)
Unfortunately, I have only just received a copy of the Minister’s statement. I do not know why there was a delay, but it was not particularly helpful in preparing my response. [Interruption.] The Minister has just graciously apologised.
Late payment is believed to be the cause of 50,000 business failures each year, at a cost to the economy of £2.5 billion, along with thousands of jobs. Those are figures from the Federation of Small Businesses. The Minister is right to pay tribute to that organisation for the brilliant work that it does in advocating for small businesses on this issue and on so many others.
In her press statement, the Minister reported a fall in the scale of the problems facing small businesses, but let me caution her on that. She cited the excellent work of the Business, Energy and Industrial Strategy Committee, but it has suggested that it has evidence that payment terms are growing longer to mask some of these problems. Perhaps she can address that through some of the proposals that she has outlined.
We welcome the steps announced today as an important start in tackling the scourge of late payment. I tabled amendments to the Enterprise Bill that would have given the small business commissioner powers to insist on binding arbitration and fines for persistent late payment. The Government rejected those amendments, so we put the proposals in our 2017 manifesto, along with requirements for anyone bidding for a Government contract to pay their suppliers within 30 days. It is good to see the Government catching up with us today in their proposals.
The small business commissioner does great work with the £1.35 million in his revenue budget and, as I understand it, 12 members of staff at his disposal, but there are limits to what he can do. Although the £3.8 million recovered by the commissioner is important to the businesses affected, it is a fraction of the money withheld by late payers, which is in the tens of billions of pounds on any of the estimates available to us. What extra budget will the commissioner be given to discharge the additional responsibilities that the Minister is proposing, and what is the timescale for the consultation?
Accountability of company boards is a step in the right direction, but it will be important to compare the experience of the supplier with the reported practice in company accounts. How will the Minister ensure that what is reported is the time from the date of supply of goods and services rather than the date of recording the invoice, which any accountant knows can be significantly different and is often subject to delay when invoices are mysteriously lost or queried by accounts departments? How will this add to the existing duty to report? When will the consultation on giving the powers on the duty to report to the small business commissioner take place?
As the Minister told us, a number of companies that are members of the prompt payment code have been found not to comply with the code. The scandal of Carillion is an example of abuse of that code; we saw payment times of 120 to 180 days becoming the norm. Giving the policing of that code to the small business commissioner is a sensible idea, so will the Minister say what additional resources for these powers will be given to him?
The use of project bank accounts would have prevented the £2 billion loss to 38,000 suppliers in the Carillion fiasco. What consideration are the Government giving to extending the use of project bank accounts? I also note that the Government are pledging from 1 September to force bidders for Government contracts of more than £5 million to pay 95% of their invoices within 60 days. That is in line with the prompt payment code, but only with the lower end of its requirements. Why not make it a 30-day requirement?
One complaint of businesses is that the public sector is the source of some of the worst practice. The Minister mentioned the public sector in her statement. Another complaint is that smaller firms are often at fault in delaying payments. When does she expect action to be taken on public sector and other small business delays?
The problems of late payment need significant changes in practice. Today’s statement announces a series of measures which, if properly resourced, could make a significant difference. Businesses deserve a change of culture. The economy and the country need a change in practice. In broadly welcoming these measures, I hope that the Government’s delivery matches the rhetoric.
Kelly Tolhurst
I apologise to the hon. Gentleman for the fact that he did not receive a copy of my statement in sufficient time. That was not my intention at all. I hope that he will understand, following the many debates that he and I have had in the House, that that is not how I tend to work with him. I thank him for recognising that this statement should have an impact on the late-payment problems of many small businesses. One thing that has been made absolutely clear to me since I became a Minister—and actually prior to being elected, when I was a small business owner myself—is that late payment is always raised by companies that deal with large organisations. I am very pleased to be able to move forward on this matter.
The amount of money owed in late payments has halved. I wish to recognise the work that has been done by the small business commissioner since he took up his role one and a half years ago. He has collected more than £3.5 million in late payments. The hon. Gentleman is right to question his role and when the consultation will take place. We want that consultation to happen quite quickly. One of the key things that came out of the call for evidence was that people wanted more powers to be given to the small business commissioner. They saw his role as, in effect, an umbrella role encompassing a number of enforcement abilities for him to act on behalf of small businesses.
The consultation will happen soon, and I would like it to take place with speed. I reiterate that, as we seek views on whether we should allow the small business commissioner to apply sanctions such as binding payment plans and financial penalties, that would be a massive step change and step forward. The small business commissioner has been very vocal in requesting more powers to enable him to represent and help the small businesses that come to him.
We will also be seeking views on whether the small business Minister should have the ability to refer topics to the small business commissioner for investigation. The small business commissioner will currently investigate only once a complaint has come from a small business, so we are looking at other ways in which investigations could be carried out. Obviously, I am giving hon. Members just a sample of what will be included in the consultation.
The hon. Gentleman is quite right on the matter of boards. On the back of the Chancellor’s announcements in the spring, we are pleased to give audit committees the power to review payment practices and for that to be included in the annual report. We are working with the Financial Reporting Council and the frameworks department at BEIS to work out the best way for that to happen. The new strategic reporting requirement was introduced in January. We are asking the FRC how the payment reporting duty is covered by that new duty, if at all. I assure the hon. Gentleman that we will legislate to make that happen if necessary.
The Chartered Institute of Credit Management has worked hard on this issue over recent months, especially on the strengthening of the voluntary prompt payment code in October. We are pleased that cross-examining the data gathered under the payment reporting duty has helped with compliance with the voluntary code. We and the CICM believe that the best place for that duty is with the small business commissioner, so that the commissioner is, in effect, a one-stop shop and an easily identifiable pathway for small businesses.
The hon. Gentleman is right to talk about project bank accounts. Some hon. Members present, including my hon. Friend the Member for Bury St Edmunds (Jo Churchill), have lobbied me in the past on the matter of retentions. We have told the industry that we expect it to come to a consensus on a way forward, and we will take action if it does not.
As the hon. Gentleman knows, we have announced that from 1 September any company bidding for Government contracts over £5 million will be expected to pay 95% of their invoices within 60 days. If they do not achieve that target, they will not necessarily be able to bid for further contracts. In April 2019, we announced our new ambition that 90% of undisputed invoices should be paid to small businesses within five days.
Oral Answers to Questions
Bill Esterson Excerpts(4 years, 10 months ago)
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Andrew Stephenson
I know that the hon. Lady has discussed the issue with my ministerial colleague. I am not dealing with it personally, but I should be more than happy to have a conversation with my hon. Friend about it and come back to the hon. Lady.
Bill Esterson (Sefton Central) (Lab)
The British Retail Consortium has reported that the high-street footfall is at a six-year low. Town centre businesses across the country are closing. Labour has a five-point plan to reinvigorate our high streets, in stark contrast to the Government’s worn-out platitudes and failure to act. Precisely when is the Minister going to produce a plan—or will the Government just keep walking by on the other side of the high street?
Draft Companies (Directors’ Remuneration Policy and Directors' Remuneration Report) Regulations 2019
Bill Esterson Excerpts(4 years, 11 months ago)
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Bill Esterson (Sefton Central) (Lab)
It is a real pleasure to serve with you in the Chair, Ms McDonagh, and it gives me the opportunity to congratulate you on the fine work you have done over the years in fighting for workers’ rights on a number of occasions. [Hon. Members: “Hear, hear.”] I am glad to have had the opportunity to say that.
The draft regulations remind us of how promises to curb executive pay used to have a prominent place in this Government’s agenda, along with issues such as having workers on boards. It was encouraging to see Julian Richer give employee ownership a vote of confidence yesterday, with his announcement about the future of Richer Sounds. I might also add that that was a welcome endorsement of Labour policy. It is in the context of long-running debates between both parties represented here this afternoon about worker and shareholder democracy that we are considering the draft regulations.
We do not oppose the draft statutory instrument, but we do not think it goes far enough in tackling the gap between the high pay of a handful of senior executives and the pay of everyone else.
The Institute for Public Policy Research North report that was published yesterday was a timely reminder of the income inequality that sees one in four workers in the north of England being paid less than the living wage, with many worse off than 10 years ago. Similar challenges and income inequalities exist right across the country.
The draft regulations state that the directors’ remuneration report must be made available, free of charge, on the company website for 10 years, showing any split or fixed and variable payment to directors. Crucially, reports must compare the annual change in directors’ pay with the yearly change in the pay of company employees, including over a five-year rolling period.
That sounds broadly fine but, as noted by the Secondary Legislation Scrutiny Committee and the House of Lords, the directive and draft regulations introduce other responsibilities that cut across a wide range of bodies, both departmental and non-departmental. The Minister referred in her opening remarks to those measures relating to the Treasury, the Financial Conduct Authority and the Department for Work and Pensions. When she responds, will she update us on whether other Departments will need to introduce regulations and, if so, when we can expect to see them? I ask that because the deadline to incorporate the EU directive into UK law is 10 June, so if additional regulations are required the Government will have to get a move on. That also gives rise to the question as to why it has taken until today to bring these draft regulations to Committee. Were the Government anticipating a no-deal Brexit, which would have resulted in the draft regulations not being transposed?
The essay crisis Prime Minister left office after the 2016 referendum. In his absence, I wonder if he has been replaced by an essay crisis Government. Looking at the former Minister, the hon. Member for Watford, who is sitting opposite me, perhaps I am on to something.
The High Pay Centre report shows that the Government urgently need to do more. It shows that between 2014 and 2018, the first full five years of the “say on pay” regime introduced by the coalition Government, every single FTSE 100 company pay policy put to annual general meetings was approved by shareholders. Across more than 700 pay-related resolutions voted on at AGMs over the same period, the average level of shareholder dissent was just 8.8%, and only 11% of pay-related resolutions attracted significant dissent levels of over 20%.
The intervention by my hon. Friend the Member for Slough about the challenge posed by the disengagement of owners and shareholders of large corporations is particularly pertinent. He asked how the draft regulations address the gap between top executive pay and everybody else’s, as well as the gender pay gap. The Minister has indicated, as do the draft regulations, that information is provided. What is not provided is a way not just to change the culture of shareholder disengagement, but to create a regulatory environment or teeth to address the challenge and difficulties presented by both the pay gap and the gender pay gap.
George Freeman
Does the hon. Gentleman agree that it is important to look not only at the gap between the highest and lowest paid in a company, but at the extent to which remuneration is linked to company performance overall, and the extent to which those who are being rewarded are being rewarded for taking risks and delivering above-trend growth? Does he also agree that we should look at the broader issue of wider share ownership in a company? Inequality in itself is not necessarily a problem, provided that the people who are lower paid are benefiting from the success of the company. Does the hon. Gentleman agree that that is as important a metric?
Bill Esterson
That is a very good challenge. Julian Richer is a responsible employer who has treated his employees very well over many years. He is giving a £1,000 bonus to each staff member and delivering an employee-owned future for the business.
One of the historical problems with the regime of rewarding performance is that it has rewarded apparent immediate success without taking the longer term into account. There have been scandals over many years, with some senior executives raking in enormous bonuses only for us to discover later that the apparent success of the organisations they ran was built on sand and that the true underlying performance was not reflected in the short-term results. We can all think of some very high-profile examples; Enron is one, but there have also been many in this country, which I deliberately will not mention at this stage. The hon. Gentleman’s challenge is an important one, but we have to make sure that any executive remuneration is truly fair over a longer period.
To be fair to the hon. Gentleman, I think he accepts the wider point that fair pay must reflect the contributions of people throughout the organisation. There is a degree of consensus that it is extremely important for the relationship between the pay of senior executives and that of others in the organisation to be fair and balanced, difficult though attempts to achieve that may be. I welcome this debate and the fact that the draft regulations address the matter, but the question is how much further we need to go and what steps we must take to maximise the potential benefits.
When the current Prime Minister took over, she made an initial commitment to put workers on boards, but it was very quickly downgraded and appears not to have advanced. Perhaps the Minister could tell us when those sorts of measures might be introduced.
Following on from the intervention from the hon. Member for Mid Norfolk, what is the most effective way to bring up the pay of working people and combat rising inequality? The answer is to join a trade union. The Government have failed to move beyond the union-busting mindset—that is obvious from their Trade Union Act 2016—and to look to a future that involves unions and employers working together responsibly. The Institute for Public Policy Research has shown that there is a strong correlation between high shares of income going to the top 1% of earners and low trade union membership.
Richard Harrington (Watford) (Con)
I dealt with a lot of trade unions and companies in my time as a Minister. I was extremely impressed by the good relations between them in areas of the country where there has been a lot of strife in the past, for example in car manufacturing and other manufacturing industries. Does the hon. Gentleman agree?
Bill Esterson
When the hon. Gentleman was a Minister, I always enjoyed our exchanges and felt that he was sympathetic on this agenda—I mentioned that consensus. Unfortunately, Government action has not kept up with the good intentions that he highlights. He is quite right: where there are good trade union relationships with management—the car industry is a prime example—we have seen increases in productivity and worker pay, and success for businesses and workers alike.
According to the International Monetary Fund, the economies characterised by free collective bargaining, with strong trade unions and good partnership-working models, are the wealthiest, most productive and most successful. Sadly, in organisations without trade unions, where workers have less power, the richest get richer and the workers do not. The figures from IPPR North tell a story about a decline in incomes and a rise in pay inequality, particularly in the north of England, which is the part of the country that I represent.
We will not oppose the draft regulations, but this is an opportune moment to remind the Minister of Government promises and of the need to go much further. If the Government are serious about curbing excessive power, worker representation on boards and—as the Prime Minister told us a few hours ago during Prime Minister’s questions—the importance of trade unions, and if the Prime Minister meant what she said on the steps of Downing Street about putting the Conservative party at the disposal of working people, they must prove it. They must go much further and invest in all of the people of our country, not just the very wealthy—invest in the future, not the past.