Draft Companies (Disclosure of Address) (Amendment) Regulations 2018

Bill Esterson Excerpts

Thursday 29th March 2018 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I had planned to trace the history of the Companies Act 2006 and, for the benefit of our illustrious company, to go through the reasons why it was so important that residential addresses, later service addresses, were published, but the Minister has given such a thorough, detailed and lengthy explanation—

[Alex Chalk (Cheltenham) (Con)]

Exhaustive.

[Bill Esterson]

Exhausting or exhaustive? I could not quite catch from the Parliamentary Private Secretary which it was. I leave that for the readers of Hansard to determine for themselves.

I have two questions for the Minister. It is clearly right that the authorities still have access to residential addresses, including for former directors, and that a service address is available. As the Minister rightly set out, for reasons of fraud and the risk of violence and intimidation, and the 2003 cut-off, it is right that directors—as well as, I believe, company secretaries, shareholders and persons with significant control—receive adequate protection. My understanding from research from the fraud prevention organisation, CIFAS, is that one in five victims of recorded cases of such fraud is a company director. As the Minister says, there has been an increased incidence of fraud or risk of violence and intimidation reported to his Department.

It is clearly right that if the service address option exists, it is only fair that all directors, current and former, can take up the option. Will the Minister explain how the redactions are possible? What has changed in the technology to allow that? What is the new process that means it is now possible? Will he confirm that my understanding about full access by the authorities is correct and also that the publication of a service address is important to the wider public? With those replies, we will be happy to support the regulations.

Draft Land Registry Trading Fund (Extension and Amendment) Order 2018

Bill Esterson Excerpts

Monday 19th March 2018 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Sir David. In 2014 and in 2016, the Government brought forward proposals to privatise the Land Registry. They seem to do that every two years, and we are another two years on, so forgive us if we sense another opportunity for the Government to privatise—or to put out for consultation to privatise—the Land Registry. My question to the Minister is therefore this: is the draft order part of fattening the calf for slaughter? Is it a chance for the Government to prepare the Land Registry for another go at privatisation? I will explain why that matters before turning to the detail.

The consultations of 2014 and 2016 revealed wholesale opposition and the Government backed down. The reason for the wholesale opposition was, whether for share trading or for buying or selling the family home, the importance of having a trusted, impartial register that is apparent to everyone—to every individual, to everyone in the legal profession, and to everyone in the property profession and across commerce, with the exception, of course, of those who stood to benefit from taking over the highly successful Land Registry itself. There was great interest from the venture capital sector in doing that. Proof of title—proof of ownership—is vital to everyone, as is having trust in that title, which is why it was so important to so many people that privatisation did not go ahead then, and why it is so important that it does not go ahead now.

I mentioned venture capital. The firms that showed an interest on the previous two occasions were venture capital firms in offshore tax havens. That was a cause of great concern, because their interests may well have lain in asset stripping, rather than in ensuring the integrity of our Land Registry system.

Let us look at just what an attractive proposition the Land Registry was. According to his own figures, the then Secretary of State for Communities and Local Government, the right hon. Member for Bromsgrove (Sajid Javid), thought that the sale would generate £1.2 billion, yet at the time the Land Registry was bringing in a surplus of up to £100 million a year. I will not do the calculation in my head, but that is a return of something like 8% or 9%. In comparison, interest payments on the national debt lie somewhere under 3%—in 2016-17 they were 2.4% gross and 1.8% net—so selling the Land Registry really does not look like a good way of paying down the national debt, because it would mean turning down a long-term income stream to pay down something with a much lower cost of interest. The financials did not add up: going through with the sale would have meant taking an incoherent approach to economics. Happily, the Government backed down. The question is whether they intend to have another go, either now or in the future.

The Library briefing for the Infrastructure Bill, as it was in 2015, showed that the predicted cost of centralising the local search system was £48.5 million against a projected income of £134 million. It would therefore be highly profitable, and it would increase the attractiveness of the Land Registry to the venture capital sector for a potential sale, hence my comment about whether it amounts to fattening the calf for slaughter.

Turning to the proposal to centralise activities connected to local land searches, an amendment was tabled to the Infrastructure Bill in Committee in the Lords, calling on the Government to produce an implementation plan for making those activities central rather than local and to demonstrate the impact on local authorities. That amendment was withdrawn, but perhaps the Minister can tell us, with a little help from his friends, what the Government’s assessment is of how this measure will be implemented and what the impact will be on local authorities.

The same Library briefing suggests that 850 members of staff are engaged in local land charge activities up and down the country. There are often only two or three in each local authority, but what will happen to them? What will happen to the resources that local authorities currently rely on? What will happen to enable the Land Registry to carry out that work? Will 850 staff be transferred, or will the work be carried out by existing staff? Will fees and charges remain the same? Is this measure going to be cost-neutral, or will it generate the surplus suggested by the figures I quoted—£134 million income against £48.5 million costs—which on the face of it is sizeable? Perhaps the Minister can explain some of those points, look at the analysis and see how this is going to work in practice. Also, is it the case that at present the fees cover costs anyway, or will there be a detrimental effect on local authority budgets as a result? All those points were made in the Library briefing on the Infrastructure Bill.

Perhaps the Minister will give us the answers; in order to understand exactly what is going on, an explanation from him of the business case for moving from the local system to a centralised system will help. As he does so, perhaps we will reach our own conclusions, in addition to whatever answer he gives to my initial question, about whether the draft order is part of a longer term plan to move the Land Registry from the public sector to the private sector.

[Mr Gyimah]

I thank the hon. Gentleman for those questions. Having heard him speak in the House a number of times, I know of his usual scepticism about the private sector. My view, however, is that there are great organisations in both the public sector and the private sector; we need both to run our economy.

On the hon. Gentleman’s specific question about whether the draft order is part of a plan for privatisation, the 2016 autumn statement confirmed that:

“Following consultation the government has decided that HM Land Registry should focus on becoming a more digital data-driven registration business, and to do this will remain in the public sector.”

The Law Society welcomed that announcement. Its then chief executive, Catherine Dixon, said:

“This decision responds to the representations we, and other Land Registry users, made as to the risks of privatisation, and puts the public interests in this important institution first. We look forward to working with the Land Registry to assist it in delivering its ambitious modernisation plans.”

There is therefore no plan for privatisation, but it still makes sense to improve and modernise this fantastic organisation, which is why we need the draft order. As I mentioned in my earlier remarks, the Infrastructure Act gave the Land Registry powers to expand its operations, so consequential amendments to the trading fund are needed to take account of the additional revenues.

The hon. Gentleman asked a number of questions about the local land charges services and about implementation. The 1 March 2018 formal response to the consultation on local land charges rules marked a significant milestone and provides an exciting opportunity to modernise the service. In the first phase, the Land Registry is working with 26 local authorities in England to migrate their local land charges records to the national local land charges digital register service. It is also anticipated that the Land Registry will be able to launch a live service later this year for those 26 local authorities. With regard to how that will be implemented, the Land Registry is building the foundations for a national land charges register, which will happen over the coming year. It will be working with more than 30 local authorities in England to migrate local land charges records to a centralised digital register, which will launch in 2018-19, benefiting up to 125,000 home buyers.

The first phase of migration will establish the foundations for the national local land charges service and help the Land Registry better understand how it can make further migration of more local authorities’ land charges and how to do that more simply and faster, using data more effectively. In the meantime, local authorities are still expected to undertake activity to keep the register up to date.

The hon. Gentleman asked whether any powers have been extended to support the future privatisation of the Land Registry. The answer is simply no. I hope that satisfies him.

[Bill Esterson]

rose—

[Mr Gyimah]

Clearly not, so I will take an intervention.

[Bill Esterson]

I asked about the impact on staff numbers. I quoted figures indicating that there are 850 staff across England and Wales. How many staff does the Minister anticipate will be needed in the Land Registry, and what will be the impact on staff in local authorities? Will fees stay the same or change? Does he accept the figures in the Library briefing, which indicates that this measure will cost £48.5 million and generate £134 million of income?

[Mr Gyimah]

Of course, as I said, the trading fund will have to ensure that its income from fees covers its expenditure under normal operating conditions. The hon. Gentleman asks about the number of staff and what exactly will happen to them. As I wait for inspiration on that point, I will expand on some of the other points that he raised. Local authorities will receive a new burdens payment to assist with this migration so that they are not negatively affected financially, and we are working with new businesses to assess how it will be implemented. [Interruption.] The inspiration seems to have arrived just at the right moment. On average, there will be a reduction in the fee for consumers, and we do not expect this to impact on staff increases at all. I hope he is satisfied—

[Bill Esterson]

rose—

[Mr Gyimah]

Clearly not, so I will take another intervention.

[Bill Esterson]

I think I heard the Minister say that there will be an impact on local authority budgets because there will be an interim period during which there will be support. Is he saying that local authorities will have their budgets cut as a result of this move? Also, there are on average two to three affected staff in each local authority. Will they lose their jobs, or will they transfer to the Land Registry? It would be really helpful to know whether the Land Registry will take on additional staff or use existing staff, because 850 people’s livelihoods are at stake.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 13th March 2018 Commons Chamber

[Andrew Griffiths]

As the retail Minister, I recognise the real challenges faced by our high streets and, in particular, by independent businesses. In his spring Budget statement, the Chancellor announced a package of measures for business rate relief, including a £1,000 discount for pubs with rateable values below £100,000, £300 million for local authorities to fund discretionary rate relief, and a cap on rate increases, which means that businesses that lose their small business rate relief will not see their bills increase.

[Bill Esterson (Sefton Central) (Lab)]

The Minister should stop being quite so complacent. Carillion was a signatory to the prompt payment code; Interserve still is. Carillion suppliers were paid on terms of 120 days, while Interserve subcontractors say that they are being absolutely hammered by late payment. Yesterday the Federation of Small Businesses again highlighted the damage done to growth by late payment. When will Ministers support smaller firms in the public sector supply chain, and enforce the prompt payment code?

[Andrew Griffiths]

We are certainly not complacent, which was why we set up the trade body group to assess the impact of Carillion. The hon. Gentleman will be delighted to know that yesterday I spoke to Phil King, who runs the prompt payment code, and I will be meeting him later this week to discuss how we can tighten up the code and give it real teeth. We are determined to help small businesses.

Pubs Code 2016

Bill Esterson Excerpts

Wednesday 24th January 2018 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Robertson, and I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey) on—yet again—securing a debate on this topic. I did not attend the debate on pubs last year, but I did attend the one before that. I am no longer the shadow pubs Minister; that is now my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss), but sadly she has the flu and has sent her apologies for today’s debate.

[Richard Harrington]

I hope she gets better quickly.

[Bill Esterson]

I will pass on that message from the Minister.

Given that I follow the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), I will point out that my constituency includes the oldest pub in Lancashire, the Scotch Piper Inn—there is a link there of some sort. We have three microbreweries and two micropubs, the Beer Station and the Corner Post. The hon. Member for Strangford (Jim Shannon) made a good point about the importance of pubs as community hubs, and I agree with his other comments about the need for accountability in the implementation of the code.

My hon. Friend the Member for West Bromwich West set out the key issues with his usual forensic accuracy, and he mentioned the concerns about the appointment and continuation in post of Mr Newby. I raised concerns about conflicts of interest in the debate two years ago, and such concerns have continued. Sadly, the predictions about Mr Newby’s difficulty in obtaining the trust of pub tenants have been all too well demonstrated. The cases against him by the Chartered Institute of Arbitrators—that he has continued to arbitrate and has not accepted the decision, and that he is in breach of the code of conduct for a body of which he is a member—have not helped, and they continue to give the impression that all is not well with the implementation of the pubs code.

My hon. Friend the Member for Chesterfield (Toby Perkins) was modest in not mentioning his role in securing cross-party agreement on amendments to the Small Business, Enterprise and Employment Bill in 2015. The cross-party agreement had a lot to do with his work, as well as that of Greg Mulholland and other Members across the House. We had the insertion of the market rent only option, but the delivery of that is missing, as is any assurance on the intention that tied tenants should not be worse off than they would be if they were free of tie. My hon. Friend made those points extremely well. As he said, it is vital that we make this work. That is why it is so important that we are having this debate.

I will go through three points for the Minister, who I welcome to his new role. His brief is interesting and exciting, and it is important for many people across the country. I hope he is able to get to grips with the real challenges and concerns that remain. Three questions have been brought to my attention in preparing for this debate. They have been covered, but I will attempt to summarise them. First, the Government may make the point that the code is complicated and will take time to bed in. That is true, but it is overly complicated and completely unnecessarily so. As other Members have said, that complexity has allowed pub companies to use their resources and their power in the relationship—my hon. Friend the Member for Chesterfield made this point—to make it difficult for pub tenants to challenge them and achieve the fair market approach that they should be entitled to. Because of the size of the legal bills, it is simply not possible for pub tenants who attempt to use the code to come up with the necessary resources.

The second point that the Government may make is that the Pubs Code Adjudicator, through the Government, was not prepared for the huge take-up. Few staff were in place at the start, and there was a delay in putting in place a deputy adjudicator, despite the overwhelming evidence of abuse. There were 15 years of inquiries by Select Committees, as my hon. Friend the Member for West Bromwich West set out in his opening speech. The system was not set up in the right way, and it should have been.

The third point that the Government may make is about whether there has been an improvement in the financial balance between the pub-owning companies and pub tenants. Ballpark figures suggested to me are that a pub company would typically earn £90,000 from an average pub, which possibly breaks down to £20,000 in rent and £70,000 from tied products. The tenant earns just £10,000. Because of the process, the delays and the inaction from the adjudicator, it is difficult to do anything about that; but for those who try, there has been something of a change, as my hon. Friend the Member for Chesterfield alluded to. There may be a slight improvement, with a £5,000 or £10,000 reduction in the rent and an increase in the tenant’s income to £15,000 or £20,000, but that is still not a realistic living wage for someone running a pub, and the pubco is still earning £80,000 or £85,000.

The point is that legislation was supposed to leave the tenant no worse off than they would be if they were free of tie, not marginally better off than poverty levels. That is the point being made by the campaigners. I pay tribute to all the campaigners who have lobbied so hard over the years—including for this debate—advocating for pub tenants. I include in that Liverpool CAMRA, which has been in contact with me a number of times over the years.

On their own, the three areas that I have set out are grounds for the Minister in his new role to make an early commitment, today or after he has considered the debate, to carry out a proper review of the application and implementation of the pubs code and how the adjudicator is operating. If he can address that and the other points made by my hon. Friends, we will make some real progress.

I am tempted to say—so I will—that the right hon. Member for Chipping Barnet (Theresa Villiers) demonstrated a certain failure by a Government of which she was a member for some years to support a pub in her constituency. I can assure her that the next Labour Government will stand up for pub tenants in a way that so far has not happened under this Government, and that will not happen unless they make the changes touched on in this debate. I was grateful to the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for pointing out that in Scotland, Labour is at the forefront of introducing a pubs code north of the border.

[Drew Hendry]

It is a cross-party position.

[Bill Esterson]

Well, there is a Scottish Government of one minority party. Perhaps they will learn from what has happened here and get the implementation right.

We want to hear from the Minister, so I will make only a few further remarks. Tenants’ experience has revealed the process to be drawn out and complicated. Many have to turn to professional legal support, which is expensive and time-consuming. Most worryingly, there have been suggestions that the pubcos are knowingly gaming the code to make it more difficult for tenants to achieve market rent only. That essential plank of the pubs code sought to redress the balance between pubcos and pub tenants.

The adjudicator’s own independent report on the allegations suggested that pub-owning businesses may be operating the code in a way that makes it hard for tied pub tenants to access their MRO rights. It revealed the shocking lengths to which some pubcos go to wear down tenants, including intimidation, bullying and antagonistic, delaying and frustrating behaviour. Tenants are often given terms that make MRO appear as unattractive as possible, such as being arbitrarily forced to provide six months of MRO rent up front. Some pubcos have refused to allow the deed of variation of lease, thus forcing tenants who want MRO to agree a new lease under unfavourable terms. That is pretty damning. I give credit to the adjudicator for carrying out that review, but it is what he does with it and how quickly he acts that matters.

There is identified failure in the full implementation of the code, and Parliament’s intentions have so far not been followed. I look forward to hearing what the Minister has to say, and I thank Members for their comments. I hope he can give us a proper assurance that there will be the action that is needed, and not just words.

Business, Energy and Industrial Strategy

Bill Esterson Excerpts

Monday 8th January 2018 Ministerial Corrections

The following is an extract from Questions to the Secretary of State for Business, Energy and Industrial Strategy on 12 December 2017.

[Bill Esterson (Sefton Central) (Lab)]

Despite having the fifth biggest economy in the world—soon to be the sixth—the UK is ranked only 48th in the global enterprise league; 48th out of five really takes some doing. But this is not just about the lack of support for start-ups. Among small and medium-sized enterprises business confidence is falling and costs are rising, and, as the Bank of England’s figures show, access to finance is still at its lowest level since 2010. Do the Government have any excuse for their woeful failure to support our smallest businesses?

Draft Designs (International Registration of Industrial Designs) Order 2017

Bill Esterson Excerpts

Wednesday 20th December 2017 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I have a six-page version of my speech, for the benefit of the hon. Member for Lichfield, but I shall leave it on my desk.

The Minister has set out the importance to businesses of protecting our designs internationally. The intervention from the hon. Member for Lichfield was extremely helpful in reminding us how important design is in this country. We are world leaders and should do everything we can to protect intellectual property rights. The impact assessment and the explanatory notes set out well how the order will make matters better for smaller businesses in particular, by simplifying and reducing costs. It is right that we do so.

I cannot help but notice, in the way we are able to take this step now, the contrast with a previous statutory instrument that the Minister introduced. I asked him a written question about the challenges of securing our membership of the Unified Patent Court, which is another important matter. We do not know with any certainty whether we will be able to take the same approach to joining that court as to ratifying the Geneva Act of the Hague agreement.

The draft order has the support of the majority of business, and it is right and proper that we support it. The Opposition are keen to stand up for businesses in this country, especially smaller businesses. I wish all hon. Members a merry Christmas.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 12th December 2017 Commons Chamber

[Margot James]

The hon. Gentleman raises a crucial point of concern to communities across the country. Although there is limited action the Government can take on how banks run their businesses, we have worked with the Post Office to enable it, through its 11,600 branches nationwide, to run a full complement of services

[Bill Esterson (Sefton Central) (Lab)]

Despite having the fifth biggest economy in the world—soon to be the sixth—the UK is ranked only 48th in the global enterprise league; 48th out of five really takes some doing. But this is not just about the lack of support for start-ups. Among small and medium-sized enterprises business confidence is falling and costs are rising, and, as the Bank of England’s figures show, access to finance is still at its lowest level since 2010. Do the Government have any excuse for their woeful failure to support our smallest businesses?

[Margot James]

The hon. Gentleman really should stop talking small businesses down, and he is absolutely wrong in his estimate. The UK is No. 4 in the world for being the best place to start a business, and the OECD figures show that we score highly on enterprise. He does raise a valid point about growth, and we need to improve our record in supporting small businesses to grow, which is precisely why the Chancellor has made available a vast amount of money in this year’s Budget to support the growth of small businesses.[Official Report, 8 January 2018, Vol. 634, c. 2MC.]

Draft Small Business Commissioner (Scope and Scheme) regulations 2017

Bill Esterson Excerpts

Tuesday 21st November 2017 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I, too, welcome the appointment of the commissioner. I know Paul Uppal from his time in the House. He has a strong business background. Having been a member of the governing party may have helped him, of course, in securing the post—I could not possibly comment on whether there is any truth in that scurrilous accusation.

The Minister pointed out that there are £26.3 billion-worth of late payments in the private sector according to the latest figures from Bacs, but she did not mention that the time businesses wait is 72 days on average. Members on both sides of the Committee have mentioned the sadly all-too-common game playing by larger companies in dealing with their smaller suppliers. It is fair to say that a reduction in that kind of game playing is one of the many things that I would like to see Mr Uppal and his team address. If he is to repay the faith that has been shown in him, perhaps that is something he can take on board and investigate, to see what recommendations he can come back with on how to address some of those endemic problems.

The relationship damage done when a small supplier challenges a larger customer is a serious block in challenging late payments. It is one of the reasons why, in the Enterprise Bill Committee, we pushed the Government extremely hard on alternatives to the very mild voluntary system that has been set up, which the Small Business Commissioner has before him and his team. The Australian system of binding arbitration, with proper fines behind it, appears from the evidence we discussed in Committee to have been a significant success in bringing down the number of days that small companies waited to be paid. I again urge the Minister not to rule out moving to such a system over a period of time, and urge the commissioner to consider whether that is the sort of system we should consider in this country as well at some stage.

I have previously raised concerns that the system is restricted to the private sector, and I raise them again. The public sector is a source of significant late payment concerns for smaller businesses. The Minister mentioned the prompt payment code; signatories to the code tend to be in the public sector, with some larger private sector firms, but they do not cover the entire public sector and it is too early to say how effective they have been in reducing the time that small companies must wait to be paid.

There are examples of Governments in other parts of the world—the United States is one that springs to mind—using the procurement system to ensure prompt payment. The rules in the United States are that if a company trades with the federal Government, it has to pay its suppliers promptly. I wonder whether that is something the Minister would take on board. Again, that is something we said in the Bill Committee during the passage of the Enterprise Act 2016 that created the post. All too often in this country, companies that procure from Government are paid within 30 days, often as quickly as five days, and then delay their own payments. That is an opportunity within the commissioner’s terms of reference and something else for him to investigate, because those are private sector companies potentially using their position to improve their own cash flow at the expense of their smaller suppliers, and using Government money to do so. That is a particular area where the Government should be interested and could act. As I say, if it is part of the agreement in America, why not in this country?

[Mr Prisk]

I am grateful to the hon. Gentleman for raising an important point. My understanding is that most transactions in America are for payment on receipt of goods or services, so there are no 30-day or 60-day terms in most common business practice. Is that something he recognises? It would change the nature of his question.

[Bill Esterson]

The hon. Gentleman is more familiar with what goes on in America than I am in that case. Certainly, the evidence that we were presented with when we discussed the matter in the Bill Committee suggested that that was not true of every contractual relationship in America. Perhaps we could discuss that outside and look further at the evidence. Payment on delivery is one way of addressing the point we have just been discussing.

Some questions emerge from the regulations before us. My understanding is that the commissioner, as constituted, has the power to name and shame. I wonder whether the Minister can shed some light on what the intention is for the use of those powers, and how quickly she feels the commissioner should look to set up some kind of naming and shaming system.

How many complaints does the Minister envisage the commissioner will be investigating every year? How many complaints does she expect him to receive every year? How many complaints could his office deal with every year? That relates to how many staff he has and what his budget is, which the Minister could perhaps address.

From some of the representations I have received, it appears there is a question mark over whether the construction sector will be included in the Small Business Commissioner’s work. Given that a significant number of the problems of late payment lie in the construction sector, can the Minister clarify whether that is true? The concerns around retentions of 5% or even 10% over a number of years are a very important part of why construction should be included.

[Faisal Rashid (Warrington South) (Lab)]

My hon. Friend mentions the construction industry. Does he agree that small businesses in the construction industry are more vulnerable to late payments because they do not qualify for some of the services available to alleviate them, such as invoice finance and invoice discounting?

[Bill Esterson]

Yes, there are opportunities, as there are in other sectors, to use other forms of invoice finance. One of the big concerns is retention, and I should have thought the commissioner would want to look at concerns about the very lengthy delays that often happen with retentions.

One of the questions we raised in the Bill Committee is how to raise awareness of the commissioner’s existence and the services his office can provide. One way is through a website, but not every small business uses a website; actually, quite a lot of them do not use the internet. What proposals does the Minister have to ensure that all small businesses know that this facility exists? One route is through advisers, including accountants, but that is not an answer for everybody. We will have to wait to see how effective the commissioner is after a period, but can the Minister tell us the process for review of the commissioner’s effectiveness and how that will be carried out?

The regulations talk about a limit of businesses with a headcount of fewer than 50. How many businesses does the Minister’s Department estimate will be covered by the regulations, and how many businesses will not be covered? While I recognise that 50 is a figure for a small business, a business with 51 members of staff is still not particularly big, and when it trades with a larger customer, there is still a power imbalance. Will she give some thought to support for the next grade of businesses above those covered by the regulations? One of the reasons these regulations come in is the cost of going to court. For a business with 51 or even 101 members of staff, it is still an exceedingly big expense to take somebody to court.

I want the Small Business Commissioner to be effective in tackling the scourge of late payments. The success of small businesses is crucial for the overall economy. We do not have enough small businesses that are able to grow and become larger businesses—it is one of the structural weaknesses of our economy—and the delay in payment is one of the reasons that businesses find it difficult to do so. In fact, talking to the accountancy and insolvency professions, the main reason for business failure is cash flow, and late payment in particular, so anything that can be done to improve that situation must help individual businesses, those who own them, those who work in them and the wider economy.

However, the commissioner has to be effective if those goals are to be achieved. The title of commissioner suggests a responsibility and a scope that goes beyond the single goal of tackling late payment in the private sector. At the moment, a small business late payments signposting service is being created. I hope that it becomes a commissioner in time and can achieve far more as a support for small business. I look forward to the Minister’s answers and assurances that, in a very short time, that support, advice and guidance, as well as the single role of tackling the scourge of late payments, is where the Small Business Commissioner can and will end up.

[Margot James]

I thank the shadow Minister for his thoughtful comments and I am grateful for his encouraging words about the choice of Paul Uppal to take up the post. I will do my best to answers the questions he posed about some of the details.

He mentions that the average late payment is 72 days, which was also part of the figures that I gave from Bacs’ data. That is quite unacceptable; it is effectively two and a half months, and if it is the average, we have a lot of work to do. On a more positive note, and as testimony to some of the voluntary work that has already been established through the prompt payment code, there has been a substantial improvement in Bacs’ data. The latest figures show an average of what is owed to small businesses at any one time of around the £14.2 billion mark, as opposed to £26.3 billion the year before. I have chaired roundtables of small businesses around the country and found some enthusiasm for the prompt payment code, and some companies reporting that they have been able to deploy accounts staff in more productive functions than simply chasing up late payment all the time as a result of the improvement that they have seen. As I say, there is clearly still a long way to go, but I think the prompt payment code and other measures the Government have introduced have started a change in culture.

The hon. Gentleman mentioned the Australian model and a more punitive function, and asked me to comment on whether that might be an end point for what we are setting up here today. I do not see it is a logical extension. The business support landscape in Australia is very different from that of the United Kingdom and I think that we can achieve more by trying to bring about a cultural change, rather than introducing hard-hitting measures and fines and going down that route straight away. I would not rule out such an approach if that does not work, but I am quite optimistic that, given the progress we have already made—as well as the progress of interventions in other sectors, such as the Groceries Code Adjudicator—we can achieve more with an approach that tries to take business with us. However, as I say, I would not rule out in the long run something of the sort that the hon. Gentleman described if it became clear that it was needed.

The hon. Gentleman asked about the public sector. There is perhaps a difference between what is required and what is seen as standard, by way of the letter of the law, and what is actually carried out in practice. Under the letter of the law, all public sector contractors are mandated to pay within 30 days and ensure that the 30-day policy applies all the way through the supply chain. I am sceptical about whether that always happens in reality, but that is the goal. The public sector is therefore not incorporated in the regulations.

[Bill Esterson]

The Minister says that payment within 30 days is mandated all the way through the supply chain, but that she is sceptical about whether that is really happening. What are she and her colleagues doing to enforce it?

[Margot James]

I became aware of the issue only a few months ago, and I have not decided yet whether we need to do more than we are doing already. We fund a mystery shopper service that checks how public sector contracts are complied with, particularly in respect of late payment, and I will look closely at its findings. It is encouraging that payment within 30 days throughout the supply chain is the standard, but I will need to satisfy myself that it is being complied with and adhered to. The mystery shopper service may inform that process.

[Bill Esterson]

If the Minister finds that there is still a widespread problem with payment not being passed down the supply chain, is she prepared to take enforcement action? The mystery shopper service may identify the problem, but I am not convinced that it will stop it.

[Margot James]

I shall have to return to that question once I have investigated what the service has identified. I cannot prejudge what we will do based on what we find out, so I hope the hon. Gentleman with bear with me to that extent. In answer to his question about the number of complaints on which the system is predicated and the resources at its disposal, the establishment cost of the Small Business Commissioner’s office is £1.1 million and the anticipated running costs are £1.4 million a year, based on an estimate of 70,000 companies referring just under 400,000 disputes, of which 500 result in full-blown complaints.

The hon. Gentleman also asked about construction. Construction is certainly included in the commissioner’s remit, but I would like to go further, because I recognise that there are special problems with late payment in the sector. Two weeks ago, we announced a consultation on the culture of late payment and payment retention in the construction sector. I urge individuals and companies to respond to that consultation, because there is widespread anecdotal evidence of a big problem of unfair treatment of small businesses in the construction sector.

I think I have answered the hon. Gentleman’s questions, so I thank hon. Members for their time and commend the regulations to the Committee.

[Bill Esterson]

rose—

[Margot James]

In a spirit of generosity, and since Mr Sharma has not called time, I give way.

[Bill Esterson]

It was only that I asked the Minister how she would raise awareness of the service.

[Margot James]

The hon. Gentleman did ask that, and I failed to answer. We will promote the service’s launch heavily through all media, including traditional media—as he mentioned, a lot of businesses are not online. We will also use the routine communications of other Government agencies with businesses to alert them to the importance of this new development.

Question put and agreed to.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 7th November 2017 Commons Chamber

[Margot James]

I suggest that the right hon. Gentleman hold fire until the Financial Conduct Authority has decided on what action it may still take. It is empowered to take action, and I totally agree with the sentiments behind his question.

[Bill Esterson (Sefton Central) (Lab)]

What happened at RBS’s Global Restructuring Group is a scandal of the highest order. Businesses were ruined; families were torn apart; and people took their own lives. The Minister must know that the FCA cannot deliver justice for the GRG’s victims on its own, because most business banking is unregulated. I have asked Ministers this question six times already, and I will ask it a seventh time: will the Government set up a judge-led inquiry into RBS GRG, or do they have something to hide?

[Margot James]

I can assure the hon. Gentleman that we have nothing to hide. I share the concerns about the practices of the Global Restructuring Group at RBS and the devastating impact on people’s businesses, which represent a lifetime’s work for many people. I am sure that we have not yet heard the last of this inquiry.

European Union (Approvals) Bill

Bill Esterson Excerpts

3rd reading: House of Commons & Committee: 1st sitting: House of Commons & Report stage: House of Commons
Tuesday 10th October 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

This is a short Bill. As I explained on Second Reading, the purpose of the Bill is to approve four draft decisions of the Council of the European Union. All four draft decisions rely on article 352 of the treaty on the functioning of the European Union, and therefore require the approval of Parliament. Section 8 of the European Union Act 2011 provides for exemptions in order to avoid the requirement for an Act of Parliament, but the decisions with which we are dealing do not fall within any of the exempt purposes.

The first two decisions will enable two countries, the Republic of Albania and the Republic of Serbia, to be granted observer status in the European Union’s Fundamental Rights Agency. The third and fourth decisions are necessary to implement a co-operation agreement between the EU and Canada on competition enforcement. Clause 1 provides for approval by Parliament of those four draft EU legislative decisions. Clause 2 concerns the territorial extent of the Bill, its commencement date and short title. Subsection (1) provides that the Bill extends to the whole United Kingdom, subsection (2) provides that the Bill will come into force on the day it receives Royal Assent and subsection (3) provides for the Bill’s short title.

We are content that all four decisions are reasonable and proportionate, and that they will not result in any additional financial burdens on the UK. I urge hon. Members to agree to clauses 1 and 2 standing part of the Bill.

[Bill Esterson (Sefton Central) (Lab)]

The European Union (Approvals) Bill is a two-clause Bill, as the Minister has said. It will approve four draft decisions of the Council of the European Union in relation to the participation of the Republics of Albania and Serbia as observers in the work of the Agency for Fundamental Rights, and the signing and conclusion of a new agreement between the EU and Canada regarding competition law, including the exchange of information between the EU and the Canadian Competition Bureau. Approval of those decisions by means of an Act of Parliament is necessary under the European Union Act 2011 in order for a Minister to vote in favour in the Council.

The Fundamental Rights Agency replaced the European Monitoring Centre on Racism and Xenophobia in 2007. As the Europa website states, the agency advises EU institutions and national Governments on fundamental rights, particularly in the areas of discrimination, access to justice, racism and xenophobia, data protection, victims’ rights and children’s rights. The agency’s areas of work have been determined through a five-year framework, and the main priority areas include the fight against racism, xenophobia and related intolerance. EU candidate countries can participate in the FRA as observers. The Bill approves two draft decisions on the participation of the Republic of Albania and the Republic of Serbia as observers in the FRA’s work. We support the draft decisions concerning the participation of Albania and Serbia in the FRA.

Competition is vital to our economy, the success of our businesses and the prosperity of the people of our country, and the encouragement of healthy competition is vital. National Governments have a vital role in ensuring that a fair market exists, and not just a free market. The way in which Governments work together is also crucial in determining whether markets are free, fair or otherwise. The decision of the Trump regime to impose punitive tariffs on Bombardier will have a disastrous effect on the workers and communities of Northern Ireland, and on the economy. Such tariffs, if they are allowed to stand, exemplify the use by companies such as Boeing of market dominance to destroy competition.

[Mr Bob Seely (Isle of Wight) (Con)]

I am not sure that I like Donald Trump any more than anyone else does, but does the hon. Gentleman understand the difference between a regime and an Administration? He calls the Trump regime a regime, but in fact the Trump Administration is an Administration. It is a democratically elected Administration, not some sort of hard left Venezuelan or Cuban-style regime.

[Bill Esterson]

I do not think there is any danger of confusing Donald Trump’s Administration or regime with anything of the hard left.

That Boeing can act as it has done—initiating trade disputes in a segment in which it does not compete—with the full support of a protectionist US Administration demonstrates the need to ensure that every effort is made to deliver healthy and fair competition. The reliance of some Ministers on the US for trade and for our own economic success has been brought into sharp focus by the actions of the Department of Commerce. Notably, this applies to the International Trade Secretary, who seems to think that our relationship with the US is the answer to all our prayers, but it clearly is not.