National Minimum Wage (Amendment) (No. 2) Regulations 2023

Earl of Minto Excerpts

Tuesday 14th November 2023 Grand Committee

Moved by

[The Earl of Minto]

That the Grand Committee do consider the National Minimum Wage (Amendment) (No. 2) Regulations 2023.

Relevant document: 53rd Report from the Secondary Legislation Scrutiny Committee, Session 2022–23

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, these regulations were laid in draft before the House on 13 September 2023. This statutory instrument will help ensure that so-called live-in domestic workers will be paid at least the national minimum wage for the time that they are working. The live-in domestic worker exemption was part of the National Minimum Wage Regulations and provides that work done by a worker residing in the employer’s family home and treated as a member of the family is not work for the purposes of the national minimum wage and therefore does not have to be paid the national minimum wage. The exemption was originally created mainly to cater for au pairs, so that they should gain experience of cultural exchange through living and being a part of a family in the UK, although the legislation covers other types of domestic workers as well.

Currently, the National Minimum Wage Regulations state that workers do not need to be paid the minimum wage if they live with their employer and are genuinely treated as part of the family. Such treatment is particularly expressed in the provision of living accommodation and meals, sharing of tasks and leisure activities. The exemption is not compatible with most jobs, and it is hard to prove whether someone is or is not being treated as a family member. The removal of the exemption will remove the inequality facing these workers, who are more likely to be migrant workers and women.

In 2016, an employment tribunal judgment considered whether the exemption indirectly discriminates against women, as such workers tend to be women. The employment tribunal found the exemption had given rise to unjustified indirect discrimination, and thus the exemption was disapplied in this case. After the employment tribunal judgment on live-in domestic workers was published, the Government asked the Low Pay Commission to research low-paid live-in domestic workers.

In 2021, the Low Pay Commission published research into the live-in domestic worker exemption. During the gathering of this research, the commissioners came to a consensus conclusion that the exemption should be removed. The Low Pay Commission heard evidence of employers using the exemption to exploit domestic workers, often non-British nationals, who were required to work long hours and were not fully treated as members of the family. They found examples of domestic workers suffering abuse, including physical abuse, with little recourse for enforcing their employment rights. The commission found that the exemption is rarely being used for its intended main purpose, as in practice there are now few au pairs in the UK.

The Low Pay Commission’s extensive evidence in 2021 on this issue provided a clear recommendation to government that the exemption should be removed. The Government accepted the Low Pay Commission recommendations and announced that the live-in domestic worker exemption would be removed in March 2022. During this period, the employment tribunal decision was appealed, and the Employment Appeal Tribunal agreed earlier this year that the exemption should be disapplied. These decisions established the removal of the exemption as a matter of case law.

Taking into account the existing case law and other more general legislation, live-in domestic workers have reasonable arguments that they are entitled to be paid the national minimum wage. However, this is not a matter of certainty, and therefore with the National Minimum Wage (Amendment) (No. 2) Regulations we are putting the matter beyond doubt by amending our regulations to remove the exemption from the date that the amendment comes into force. In the meantime, we recommend that live-in domestic workers are paid the national minimum wage in this short interim period.

These amendment regulations remove uncertainty and the risk of accidental national minimum wage non-compliance within this workforce. These regulations need to be put forward to make sure that the workers, and the families that hire these workers, are able to clearly understand the national minimum wage laws for live-in domestic workers. These amendment regulations will ensure that live-in domestic workers are paid at least the relevant minimum wage rate, providing protection from exploitative low pay.

HMRC will enforce the national living and minimum wage for this group, in line with other sectors. HMRC enforces the national minimum wage in line with the law and policy set by DBT. HMRC follows up on every worker complaint it receives, even those which are anonymous. This includes complaints made to the ACAS helpline, via its online complaint form and those received from other sources.

The policy will ensure that all work is treated fairly and will end the misuse of the exemption to exploit workers, particularly migrant women. The overwhelming majority of workers covered by this exemption are employed by families, not by businesses. The impact on businesses will therefore be negligible. However, many vulnerable workers will now enjoy the same protections that almost all other employees receive.

As live-in domestic workers will be entitled to the national living and minimum wage, I would like to remind the House of the achievements of the national living and minimum wage. The Government remain committed to their ambitious target for the national living wage to equal two-thirds of median earnings by 2024, provided that economic conditions allow. We look forward to announcing the 2024 rates in due course. The national living wage, which applies to those aged 23 and over, increased to £10.42 an hour in April 2023. As a result of this increase, a full-time worker on the national living wage has seen their annual pay increase in excess of £1,600 per annum. This increase ensured that our national living wage rate remains one of the highest in the world.

These regulations will provide clarity to live-in domestic workers and the families who employ these workers. With this exemption removed in legislation, there will be no ambiguity between what is in case law and the statute book. Through the national minimum wage and the national living wage the Government protect the lowest paid within our society. It is right that we ensure that the lowest paid are fairly rewarded for their contribution to the economy, and ensuring live-in domestic workers are entitled to the national living wage is vital to achieving this. Protecting workers’ rights, especially those of vulnerable workers, is a priority for this Government and therefore we have taken action to remove this exemption.

This does not remove the right to have a live-in domestic worker, such as an au pair or other domestic staff; it just removes the right to pay them less than the national minimum wage. This is the right thing to do to help protect these vulnerable workers and make it clear that our legislation reflects the case law on this issue.

[Lord Palmer of Childs Hill (LD)]

I thank the noble Earl for his comprehensive introduction to this SI, which deals with regulations as to work in a family household, and rightly seeks to protect such workers by acknowledging their rights as workers and not as some inferior being. On my Benches, we support this new regulation.

The Minister expanded beyond this SI, for which I am grateful, so can I use the opportunity to say to the Minister that this is only one such unfair anomaly? Could I also call attention for the need of the abolition of the separate apprenticeship wage? I had a briefing from the End Child Poverty coalition, which talked about how this is a barrier to young people from less well-off backgrounds going into apprenticeships, because they are not sustainable.

Could I also ask for an assessment on the policy of having different wages for different ages? Is this the right thing to do? The cost of living is the same no matter how old you are, and it is hugely ignorant of the Government to assume that young people will be able to have support from their families.

Finally, unfairness goes right through the system. Could the Minister comment on the policy of paying under 25s less universal credit? This is punitive, particularly for young parents and care leavers. Again, we cannot assume that parents can or will give financial support to their adult children.

I welcomed the Minister’s expansion on this SI, and what the Government are doing, but I have tried to point out that there are still some gaps, which I hope the Government will remove in ensuing legislation and statutory instruments.

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, I thank the Minister for the overview and explanation of the statutory instrument. We on this side very much welcome this instrument. I thank my noble friend Lady Donaghy for her contribution and for bringing us up to speed on what happened 25 years ago.

As many noble Lords know, the national minimum wage was introduced on 1 April 1999 by the last Labour Government. It creates an obligatory threshold pay level. At the time, the party opposite argued that it would cost millions of jobs, but, 25 years later, this has not happened. In fact, the national minimum wage has had negative effects on the overall UK labour market. Today, around 1.6 million workers—roughly about 5% of all UK workers—are paid at or below the minimum wage. When there is such high inflation and a sustained cost of living crisis, this is just not good enough. Employers should be encouraged to recognise that making work pay with a real living wage and strong workers’ rights is good for growth and for the economy.

This statutory instrument removes the option for a person who resides in a domestic family home, but who is not a member of the family, to be asked to do work in a household without remuneration. This means that a potential loophole by which the unscrupulous employer could require someone living with them and treated as a member of the family to unreasonably be expected to perform jobs in the home without being paid at all. From 1 April 2024, such tasks will now have to be paid at the relevant band of the national minimum wage.

Does the Minister have figures for how many employees —nannies, au pairs and other domestic workers—can expect their income to increase as a result of this change in legislation? Can he also indicate which channels or organisations the Government plan to utilise to alert affected workers to their new rights, especially as I imagine some may not be British citizens or have any union representation? Given the sensitivity of employee-employer relationships in a domestic situation, can the Minister inform your Lordships’ House what provisions are in place to support workers who might find themselves in vulnerable situations, or even potentially homeless, if their employer refuses to recognise their right to be fairly paid as a result of these changes, since their access to legal advice may be very limited? Finally, as well as making people aware of their rights and offering support when made aware, will there be any more proactive steps to ensure that as few people as possible slip through the cracks?

[The Earl of Minto (Con)]

My Lords, I thank noble Lords for their valuable contributions during today’s short debate. These regulations will reward low-paid live-in domestic workers right across the country so that they are paid fairly for the work they do. It will give more clarity on wage regulations for the families that employ these workers, making sure they are paid the national minimum wage. It will also ensure that HMRC enforces the national living wage and national minimum wage for live-in domestic workers, in line with other sectors. The legislation will ensure that all work is treated fairly, and it will end the misuse of the exemption to exploit workers, particularly migrant women.

I will now take the opportunity to answer some of the specific questions asked by noble Lords. The noble Lord, Lord Palmer of Childs Hill, said that this is only one of the unfair anomalies in operation at the moment. The Government accept that and are working as hard as they can to ensure that this is dealt with. The question about different ages and rates is certainly something that I have always found quite difficult to come to terms with—I always paid everybody the same amount, regardless of their age. I can see the argument for bringing people up to a certain level as they leave education and start building up to a full-time job while living at home. Certainly, the Government have moved to narrow the gaps and, as I said, the full national living wage is a significant salary—that is good news. I will write to the noble Lord about the issue of less universal credit. I do not think that it is our policy to take away universal credit, but I will write to confirm that that is the case.

The noble Baroness asked about au pairs. I am advised that there are still 45,000 au pairs in this country, which is a surprisingly large figure. Although it is a small number in the total scheme of the 1.6 million workers, this is an important step to take—I suspect there are a lot of other people who are not covered by the au pair qualification. Clearly, it is the responsibility of HMRC to police this, and it has been given a substantial increase in the funds it can address towards this area. As I said, it follows up every single report it gets about this. Of course, there is a link to slavery and all sorts of things, which one worries about deeply. On the accommodation off-set, I rather like the idea of the monastery. That does reduce the national living wage but at a reasonable rate—I think it is about £1 per hour at the moment, or something like that.

The point of the noble Lord, Lord Leong, about the 1.6 million was well made. The Government have been absolutely committed to the national minimum wage and the national living wage, and they will continue to drive that through as far as possible. We will certainly encourage employers to ensure that this amendment is widely known; I will write with the detail on that. Equally, we will take seriously support for workers, particularly those who are homeless. I hope that covers the specific points raised.

I conclude by extending my thanks once again to the Low Pay Commission—it is wonderful to have an original member in our company. Thanks to its independent and expert advice on this national minimum wage exemption, we can ensure that the right balance is struck between the needs of workers, affordability for business and the wider impact on the economy and the families involved. Again, we look forward to receiving its recommendations for the 2024 rates, which will be published later this month. I commend these regulations to the Committee.

Motion agreed.

British Steel

Earl of Minto Excerpts

Wednesday 8th November 2023 Lords Chamber

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my honourable friend the Minister for Industry and Economic Security to an Urgent Question in another place on British Steel. The Statement is as follows:

“Steel is vital to the UK economy. I fully recognise the importance of British Steel to local communities, particularly in my honourable friend’s constituency of Scunthorpe, where the company is a major contributor to local economic growth, and where she campaigns incredibly hard for the steel sector.

Global conditions have been tough for steel companies around the world. That is why we have changed the competitive landscape for British Steel and other energy-intensive industries by announcing the British industry supercharger—a decisive package of measures to reduce the long-term electricity price gap that exists between UK energy-intensive industries and competitor countries. This support will mean that strategically significant UK industries, such as steel, are safeguarded against the high industrial electricity prices that they have faced in too many recent years. We have also provided over £730 million in energy costs relief to the steel sector since 2013, in addition to the energy bill relief scheme. Steel producers will continue to receive support until 31 March 2024 through the energy bills discount scheme.

As my honourable friend is aware, the Government made an extremely generous offer of support to British Steel earlier this year to help it invest in a decarbonised and sustainable future. We have continued to work intensively with British Steel since then and will continue to do so. However, she will also understand that the detail of those conversations remains highly commercially confidential and that any public discussion risks undermining talks.

I know that this must be a deeply concerning time for British Steel employees and others in Scunthorpe following the company’s announcement on Monday regarding its plans for future operations. I can very much assure my honourable friend that we will help affected workers, their families and others impacted in the local area, and that we are committed to finding solutions to enable the ongoing sustainable and decarbonised production of steel. Just last month, for example, we announced a £1.25 billion joint investment package with Tata Steel to secure a decarbonised future for steelmaking in Wales. That has the potential to safeguard some 5,000 jobs across the UK. In 2020, the Government provided an emergency loan to Celsa Steel to help it continue trading during the Covid pandemic, saving over 1,500 jobs, with a further 300 jobs created since the loan was made.”

[Lord McNicol of West Kilbride (Lab)]

My Lords, it is a real pleasure to be back on Labour’s Front Bench. I thank the Lord Speaker and his office for their support in my time as one of the Lord Speaker’s deputies; it was a real pleasure.

I turn to today’s Urgent Question. The loss of up to 2,000 jobs at the Scunthorpe plant clearly will have a devastating effect on the local community. However, this transition will also leave the UK more reliant on steel imports, meaning that we will no longer be able to produce virgin steel made from smelting iron ore. What assessment have the Government made of the national security challenges that are posed by the UK no longer having this sovereign capability?

[The Earl of Minto (Con)]

My Lords, obviously the loss of any jobs, particularly in a sector as important as steel, is to be deplored. However, there are commercial necessities that we are all fully aware of. The activity that the Government took in Port Talbot shows very clearly the commitment that we have to supporting the transition from historic steel-making to something more modern. As far as the production of virgin steel is concerned, the noble Lord is absolutely right that it will be affected by the closure of the smelting plants, but we will still be able to import limited amounts of iron ore pellets, which can be put towards the other steel that we have already within this country to produce what is required.

[Lord Fox (LD)]

My Lords, I welcome the Opposition spokesperson back to his Front Bench and thank the Minister for his answer. However, I do not think that he is grasping the point. Steel is vital to the economy, as the Answer said, but it is also vital to our strategic interest. At a time when we are talking about the need for secure supply chains, does the Minister recognise that this weakens the supply chain for our defence, aerospace and automotive industries?

[The Earl of Minto (Con)]

I completely understand the position of the noble Lord. During this transition period there is bound to be some effect. However, once the new systems are in place, there should be no change.

[Earl Attlee (Con)]

My Lords, like the noble Lord I support the UK steel industry. Can my noble friend the Minister say how much ferrous scrap the UK economy generates and how much we export overseas?

[The Earl of Minto (Con)]

I thank my noble friend for that question. We generate just over £11 million-worth of ferrous scrap each year, of which about £8 million-worth is exported.

[Lord Sikka (Lab)]

My Lords, I hope that the Minister can clarify a policy issue here. The Government are handing billions of pounds to steel, railway, broadband, car makers and others. Why do they not take an equity stake in those businesses? That way, the businesses still get the money and the public has some kind of asset. Should the business then make a recovery, there would be a return.

[The Earl of Minto (Con)]

My Lords, that sounds to me rather like the thin end of the wedge. Any return to some form of nationalisation is not appropriate. We operate in a global market now, in all sorts of categories. We must allow the commercial viability of each individual market.

[The Lord Bishop of Oxford]

My Lords, many of us around this House will have experience of what happens in communities when these devastating redundancies happen. I was Bishop of Sheffield in South Yorkshire for many years and saw the effects at first hand. Can the Minister say more about the Government’s plans to invest in the area to help those affected transition through? In particular, what industries and areas of employment does he see as appropriate to the Scunthorpe area, given all the technological and industrial changes that we are seeing?

[The Earl of Minto (Con)]

Since 2018, the Government have provided about £200 million-worth of investment into the north and north-east Lincolnshire, across a range of different categories. As far as this specific transition is concerned, I ask the House to consider the level of support that has been agreed by the Government —new government money managed by both the Welsh and Westminster Governments—which is providing some transition from the historic steel jobs of Port Talbot to the future.

[Lord Boateng (Lab)]

My Lords—

[Lord Forsyth of Drumlean (Con)]

My Lords, it is this side. Does my noble friend recall that the second crossing of the Forth Road Bridge was made of steel, most of which came from China, where they are opening one coal-fired power station a week? Is it not insane to pursue a green agenda which will destroy jobs on this scale and at the same time cost many millions of what my noble friend describes as “government money” but which is taxpayers’ money or borrowed money that taxpayers will have to pay for?

[The Earl of Minto (Con)]

I completely understand the point about it being taxpayers’ money. There is no such thing as free money and it is very important that we do not lose sight of that. The issue of dealing with China has been well rehearsed, and the Chinese ownership of British Steel is widely known. We are supportive of that relationship.

[Lord Boateng (Lab)]

My Lords, it is our turn now, I think. The Minister says that we should leave the fate of these workers and our strategic interests as a nation to the market. Will he reflect on the ownership of the company in question? It is a Chinese company; every Chinese company is controlled by the Chinese Communist Party. Would he apply the same strictures to the Chinese and, if not, why should we subordinate our national interest to the market, when the Chinese—our competitors —do not?

[The Earl of Minto (Con)]

My Lords, I do not think I said that we are throwing employees into a wide market. In fact, I think I said that we would provide support to see them through the transition. We have a fair and open market for Chinese investment in this country. It is a major world trading relationship and, while I understand some of the political issues behind it, just to avoid a country of that weight is slightly isolationist.

[Lord Hannan of Kingsclere (Con)]

My Lords, will my noble friend the Minister confirm that the industries that use steel employ many more people than the industries that make steel? We have 34,000 steelworkers and 176,000 people making cars. We have the better part of 0.5 million working in agriculture and 2 million working in construction. The way to protect jobs is to bring the price of steel down, not raise it. Will my noble friend confirm that our Trade Remedies Authority found no case whatever for the tariffs that we have inherited from the EU and continue to maintain on imported steel? Will he make clear that the way to make this country competitive is to remove excess costs on energy so that our industry can compete? By the way, we are still our own biggest supplier by far, and no foreign country accounts for more than 14% of our imports.

[The Earl of Minto (Con)]

That was a very detailed question indeed, with which I entirely agree.

[Lord Wigley (PC)]

My Lords, the Minister will be aware of the concern among the workforce, particularly in south Wales, about the way in which this has rolled out. Does he agree that there is a need to ensure that the workforce are in the picture, at every stage? If, at present, we cannot afford to manufacture our own steel, which is so vital for defence and to many other industries, what happens when we cannot afford to import it?

[The Earl of Minto (Con)]

To answer the first part of the noble Lord’s question, we will keep key people fully informed, subject to commercial sensitivities, as I am sure everyone in the House understands. As far as the cost of steel is concerned, we trade in an open market and generate funds within this country, and I am sure that we will never lack availability of steel from somewhere in the world.

United Kingdom Internal Market Act 2020 (Services Exclusions) Regulations 2023

Earl of Minto Excerpts

Wednesday 18th October 2023 Lords Chamber

Moved by

[The Earl of Minto]

That the draft Regulations laid before the House on 20 July be approved.

Relevant document: 49th Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, this statutory instrument will help to ensure that seamless internal trade is maintained for the shared prosperity and welfare of people and businesses across all four nations of the UK. It will enable the effective operation of services regulation in the United Kingdom by adding, amending and removing service sectors excluded from the market access principles in Part 2 of the United Kingdom Internal Market Act 2020—the UKIM Act. I will cover both the purpose and impacts of the instrument in detail, starting with the former.

The UK internal market plays a vital role in maintaining equality of opportunity and certainty for businesses, no matter where they are in the UK, by ensuring that there is an internal market where the free flow of goods and services is protected across the whole of the UK. The UKIM Act was introduced to preserve the United Kingdom’s internal market as powers previously exercised by the EU returned to the UK.

The Act establishes two market access principles: mutual recognition and non-discrimination in relation to goods and services. The principle of mutual recognition means that service providers, such as businesses, that meet authorisation requirements to provide their service in one part of the UK can provide their service in other parts of the UK without having to comply with any additional authorisations or requirements. Non-discrimination prevents service providers being discriminated against, based on where they are from in the UK. For example, if, under a regulatory requirement, a regulator requires a service provider to pay a higher fee because they are from another UK nation, this could be discriminatory.

The Act’s market access principles will apply only to new or substantively amended authorisation or regulatory requirements for providing services introduced after 31 December 2020. For example, a new licensing requirement for accountancy services would be in scope of both the mutual recognition and non-discrimination principles of the UKIM Act, if it were enacted on or after this date.

However, service sectors listed under either or both parts of Schedule 2, on services exclusions relating to mutual recognition or non-discrimination, are not within scope of those market access principles. The market access principles additionally do not apply where the requirement is a response to a public health emergency or there is a legitimate aim for it, as set out in the Act.

In the UKIM Act, there is a power under Section 18(2) to amend Schedule 2. During the passage of the Act through Parliament, this Government gave a commitment to review and further develop the list of services exclusions after the Act received Royal Assent. This commitment was made because the list in Schedule 2 is mainly based on exclusions in the most relevant pre-UKIM Act regulatory framework, the Provision of Services Regulations 2009, which is retained EU law. The exclusions in Schedule 2 were therefore based on the sectors originally excluded with intra-EU trade in mind, rather than intra-UK trade.

In February 2021, the former Department for Business, Energy and Industrial Strategy publicly consulted on whether the existing services exclusions were fit for purpose in a post-EU exit context. The consultation had three main aims: first, to establish whether there were any instances in which regulators previously disapplied the existing mutual recognition requirement to recognise authorisations under the previous retained EU law; secondly, to establish whether any other changes needed to be made to the services excluded in Schedule 2 to better reflect the UK’s circumstances post EU-exit; and finally, to ask for any other ways in which the internal market for services could be further strengthened.

Following my department’s assessment of the consultation responses, including engagement with other government departments and the devolved Governments, this statutory instrument is making the following changes. First, it will add exclusions from the mutual recognition principle for services for the supply of gas, electricity and water, sewerage and waste sector services, construction and operation of heat networks and qualifications-awarding services. This change will mainly reflect how these sectors currently operate. These exclusions will maintain the status quo in areas where mutual recognition was not already in operation, to reflect long-standing existing regulatory arrangements in the UK. Without these exclusions, regulators in the gas and electricity supply sector would not be able to regulate as they have done previously, for example, as they would have to accept authorisations from another part of the UK. Evidence from the consultation responses highlighted that this could have a harmful impact on these sectors, causing consumer protection and public safety issues due to the different standards and systems in the parts of the UK. Not making these modifications to the existing exclusions schedule could also lead to higher regulatory costs, as it would instigate market framework changes that industry is not prepared for.

Secondly, this statutory instrument will also amend the existing exclusion relating to social services. This change will not alter the scope of the exclusion but will make it clear that it applies to children’s social care and childcare services provided by both private and public providers.

Finally, this statutory instrument will remove the existing exclusions for financial services, electronic communications services, statutory audit services, postal services, and services of temporary work agencies. Our view is that exclusions are not needed in areas where the UKIM Act market access principles will have little to no impact on how the service is regulated or provided in the UK. This is because the sectors either are reserved or already currently operate on a UK-wide basis. Removing these exclusions and making the service in question subject to the mutual recognition and non-discrimination principles should therefore have little impact on how this service is provided in the UK. Detail on these changes can be found in the government response to the consultation, published in July 2022.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

My Lords, I thank the noble Baroness, Lady Kramer, for the image of a Rubik’s cube in looking at this legislation. I welcome the detail that has been provided; it has been very helpful and, as a result, I will keep my comments fairly brief. I thank the officials who have been involved in the process and the Minister for his detailed explanation.

The major concern I want to raise is that, despite the detailed consultation—I am very pleased to see the extent to which that was undertaken—it is troubling that consent was only achieved with Welsh Ministers and not Scottish Ministers. Obviously, the Written Ministerial Statement was laid before the Summer Recess, which was a significant time ago now, and I wondered whether there have been any more conversations between those bodies to seek further reassurance about the progress of this.

I have a specific question. The Scottish Government made a request in relation to heat network authorisations. Can I seek clarification that that has been incorporated into this SI?

I too would like to ask if the noble Earl is able to give us a more detailed explanation of why consent was not forthcoming. As we know, the Scottish Government did not consent to the UKIM Act. Could the Minister explain whether this is the reason? Has he had any explanation of the reasons? Is there a reflection of any concern with the content of the SI as a result? We obviously have to note the continued absence of the Northern Ireland Assembly and Executive. We want to explore with the Minister if that is seen as one of the reasons consent was not forthcoming.

This speaks to a broader concern, which we have expressed on many occasions, about the hoarding of power in Westminster. This is still seen as an issue. Perhaps the lack of progress on an agreement on a range of common frameworks with the devolved Administrations, and the failure to bring this forward, undermines the co-operative working with the DAs.

In terms of review, paragraph 14.1 of the Explanatory Memorandum mentions a review of the Act’s amendment powers, which “must take place” between the third and fifth anniversaries of the passing of the legislation. Could the Minister provide an update on this? Would it be reasonable to assume that there will be further review towards the end of the period stated? If this is the case, has work already begun to detail what further amendments might be required?

[The Earl of Minto (Con)]

I thank noble Lords for their valuable contributions to the debate on this instrument. I agree that it is a very technical SI, and I would like to answer some of the detailed questions properly in writing. I have a lot of the detail here, but I know that time is short, and we want to get on with it. A number of very valuable points have been made, and I will endeavour to answer them to the best of my ability.

The provisions of the UKIM Act naturally bring up historic opposition, but I hope that the legislation that we are looking to pass today will be considered on its own merits in relation to protecting the UK internal market. As a reminder, the instrument will enable the effective operation of services regulation in the UK by adding, amending and removing service sectors excluded from the market access principles in Part 2 of the UKIM Act to reflect current regulatory practice in the UK.

This instrument is a direct result of a public consultation and therefore a rare amendment to the exclusions list, following the intention to make the scope of the UKIM Act better support intra-UK trade. It continues to guarantee that services connected with the supply or production of gas and electricity can be regulated separately in the parts of the UK. This will ensure regulation, mainly in environmentally sensitive areas, can continue without the application of the UKIM Act’s market access principles maintaining how the service is provided or regulated in parts of the UK. It will also ensure the services excluded in Schedule 2 better reflect the UK’s circumstances post-EU exit by removing exclusions which are no longer necessary in this new context.

[Baroness Kramer (LD)]

Could I ask for clarification? If you are one of the relevant engineers, who is excluded, and you move, do you need to get another set of qualifications? I want to clarify that that is the way this has gone.

[The Earl of Minto (Con)]

I do not believe that that is the case, but I will confirm that.

On the issue of the devolved Administrations and consent, there was absolutely no intention to pass this SI without getting everybody’s consent. Our officials have worked continuously throughout this process with Ministers and officials to bring them along. It is extremely gratifying that the Welsh Government accepted everything. The situation in Scotland is slightly different. There was a fairly robust defence of why they did not want the UKIM Act in the first place. I think that has obviously had an impact. However, we have accepted some of the exclusions they wanted put in.

Post Office Compensation

Earl of Minto Excerpts

Tuesday 19th September 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, I too thank the noble Earl for repeating this Statement. I recognise the good faith that the Under-Secretary of State in the Commons and the noble Earl have in trying to move this forward. As the noble Baroness, Lady Blake, said, this scandal is deeply shameful—one of the most deeply shameful incidents in public life, certainly in our lifetimes. It has involved lying, cover-up and deceit on an industrial scale and, to date, only the innocent have been punished.

Nevertheless, as I said, this announcement is a sincere attempt to inject some forward movement. As media reports have indicated, and as the noble Baroness set out, since the announcement, some of the victims will be freed from the need for an extensive claims assessment process through this offer. Others, some of the most egregiously harmed by this scandal, will rightly decline in anticipation of more appropriate compensation via a full assessment and, clearly, the Government have recognised this right, which is the right thing to do.

I sense and understand the Government’s frustration that only 86 out of an estimated 600 people who were damned by Horizon evidence have so far come through the process. Perhaps this new announcement will attract some people out, but I ask the Minister: what is plan B and what else are the Government going to do to try to inject further forward motion in this awful scandal? The process is grindingly slow and presents imposing challenges to people who have already been burned by their contact with the courts and the authorities. These are people who have been psychologically harmed by the system and now have to re-enter it to get recompense. Some element of psychological understanding has to go into coaxing these people to cross that line.

In the Commons, my honourable friend the Member for Tiverton and Honiton asked a very pertinent question regarding subpostmasters who were dismissed but not prosecuted. In his thoughtful answer, Kevin Hollinrake MP highlighted the complexity and difficulty of processing claims. This is the nub of the problem and why things are grindingly slow. It is complex and difficult, and things are taking so long. Already, people have died and more will die before they find justice. I understand that this announcement is driven by a desire to move things forward, but can the Minister please undertake to carry back to his department your Lordships’ frustration and plea for greater urgency and more energy to make this move forward?

I have a question, which perhaps the Minister can explain now or write to us. Do the victims in this process, which is complex, have to prove themselves innocent, or is the assessment the other way around? It seems to me much harder to prove innocence than to refute guilt. Perhaps one way of moving this forward is to change the bar that people have to clear in the assessment process, and make it clear to them that it has been lowered and made easier. Perhaps we are applying too rigorous a standard for people who were so unrigorously prosecuted in the first place.

The elephants in the room in this inquiry are the roles played by the Post Office and Fujitsu, as the noble Baroness, Lady Blake, said. Here, I think the Government have been found wanting. The Government moved on the issue of senior employee bonuses, for which they deserve some praise, but, seemingly unchastened by this overall story, the Post Office is still taking an obfuscatory stance with respect to providing evidence to the inquiry and moving things forward, and it continues to be allowed to do so. Secondly, can the Minister confirm that Fujitsu remains commercially untouched by this and continues to bid and win government contracts—and can he tell us why?

This is a welcome announcement, but it is one step and there is a long way to go, so please can the Minister, who I know is working with us in good faith, work with his colleagues to find new ways to speed it up and find resolution and at least some end to this sorry story?

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, I thank both noble Lords for their speeches, which were both very powerful and raised some extremely salient points on what I think everybody must agree is one of the most atrocious commercial situations that this country has experienced. Both the noble Baroness and the noble Lord are quite right: this is an extremely complicated situation and of course it goes back over a very long time now. Memories are fading and some of the financial data, which is critical to sorting out some of the issues, is not as fresh as it was and, of course, we have the terrible situation of individuals being not only prosecuted but jailed—and unfortunately some have even taken their own life, which is just beyond belief.

This is one of the very worst incidents in commercial history. When it comes to trying to support the victims wherever one possibly can, the Government are increasingly taking steps to not only get an appropriate amount of compensation into their hands but to encourage people to come forward, which seems to be one of the hardest things to do. For one reason or another, people who have been so badly affected by this situation are unwilling to come forward. The noble Lord, Lord Fox, made the extremely interesting point that it could be that proof of innocence is harder than proof of guilt, which of course is completely the wrong way round. I will certainly ask what the Government can do in relation to that, but this is an increasingly difficult situation to get to the bottom of.

Having said that, the offer of £600,000, free of any tax and with legal support if so required, for the individuals involved where their conviction has been overturned is a genuine attempt to make things much simpler and easier for those who find the whole process of going through the established claims procedure too challenging. This is an offer that is not conditional upon anything. My honourable friend Minister Hollinrake said “no ifs, no buts”—it is £600,000 tax free, and of course it is a full and final settlement. The clarity of it is absolutely simple. I hope that will appeal to certain people who may want to bring financial closure where possible. There is no doubt that it will not appeal to everybody. I am sure we have all read in the press this morning a number of stories of people who are talking about numbers which are considerably higher than this. It is right and proper that they should continue to press their case through the compensation channels that they have.

I will address some of the issues raised. I am afraid I cannot give a clear answer to every single one of them; some of them are extremely subjective and probably need a little more thought. I will certainly write where I have not addressed the issue.

The question of personal damages is a tricky one. The Government have already made interim payments of £21 million to 86 postmasters who have had their convictions overturned.

On how the £600,000 figure was reached, I am not absolutely clear. It is a huge step forward from what was available previously, but I will follow that up. From the point of view of the pecuniary amount, it is a significant amount of money. The offer that anybody who has already settled and who got less than £600,000 through the existing channels will be made good up to that figure is an honourable way of going about it. It is extremely important—I quite agree.

As to how many people will take it up, that again is a very difficult question to answer. As I am sure the noble Baroness knows, there are a number of these unfortunate individuals who have already employed lawyers and who are already into the process. I guess they have to be confident that the legal advice they receive will either allow them to pursue what they have started or take this offer. I am not certain that it is the Government’s role to get involved in that; I do not think that is the case. As far as the total amount goes, if everybody were to take it up, obviously that would be £600,000 per claimant, but my suspicion is that it will end up being a bit more than that.

As for the timescale, this offer is to make it simple and fast, for all sorts of reasons. As the noble Baroness said, this has been going on for an unacceptably long time. The attempt to make it transparent and simple is a genuine attempt to bring closure for as many people as possible.

The point about the Post Office, the Government and Fujitsu is very well made, and I will address that later, if I may.

Finally, on the point about it never, ever happening again, I do not think anybody would put their hand on their heart and say that something like this could never happen again, but one of the collateral benefits of a situation such as this is that it raises awareness. One has to go back a long time, but, as noble Lords may know, I was a retailer in my commercial life and the level of faith that one put in electronic point-of-sale equipment and the systems behind those front-facing things was, in the early days, at times ill-founded. One would think now that there are enough checks and balances within any form of automated stock control and management system that anything that does not look right would be flagged up—that is certainly my experience. I do not think that something as specific as what we have had to face through the Horizon scandal is likely nowadays with the advances in technology.

I will refer quickly to the comments of the noble Lord, Lord Fox. I am entirely with the noble Lord; this is a deeply shameful situation. I have stood here before and talked about the way that the Post Office runs itself; I do not think anybody can be in any doubt as to what I think some of its commercial failings have been. We have to look only at the extraordinary situation around the bonus payment, which has now been fully repaid; the chief executive has paid back more than he had to—slightly too little, too late, in my view, but at least it is an acceptance of failure. The Government are acutely aware of those issues.

As for damages through the courts, that is really a question for the courts. As I understand it, the legal advice that you get when you make a claim through the court—I referred to this earlier—is such that it is always an estimate. I imagine that, for some, it is absolutely obvious that they will continue to go through the courts, whereas for others that is not the case. The fact that the Government will make up the difference is certainly an honourable way to address that.

The question of those dismissed but not prosecuted is something that we need to address. I am again surprised, as I imagine are a lot of people, by the amount of people who have not applied and put their names forward. However, on the group litigation order, as of 15 September, 461 registration forms had been received and 32 full claims. Seven offers had been made and accepted. It shows that all these different opportunities are starting to gain some traction. It would be nice if we could get through them as quickly as possible.

I think that is probably it, apart from the elephants in the room—Fujitsu and the Post Office. The Government are keen to get this out the way and settled, before we see where we stand with Fujitsu. It is a core participant in the inquiry. It must now know what went wrong; well, it certainly did before we knew. Once the independent inquiry is complete, I am sure there will be a robust conversation with Fujitsu and, no doubt, its insurers.

I might finish on that. This has been a horrifying experience for a large number of people—well over 2,500—and the Government continue to do what we can.

[Baroness Falkner of Margravine (CB)]

My Lords, I start by acknowledging that the House owes a tribute to the noble Lord, Lord Arbuthnot, who has pursued this indefatigably over years. I am very sorry to see that he is not in his place today, but I am sure he is well apprised of this settlement. A lot of credit goes to him for continuing to raise this scandalous saga.

The Minister says that he is slightly surprised by how few people have come forward. It is well recognised that, if not the majority, large numbers of these people were from ethnic minorities, many of whom were first generation. They had to navigate the system to find a defence and to defend themselves—to deal first with the legal process and their convictions and then, if they were not convicted, to continue to seek compensation or a settlement for their wrongful convictions; it is not surprising that those people did not have the financial and social capital to do that. They were and are a very special category.

I agree with the Government that this is a generous settlement, but I have two brief questions to ask the Minister. I could not see in the letter he wrote whether the dependants of those who died will be offered any compensation. Perhaps I missed that somewhere but it is profoundly important. There were those who, unfortunately, took their own lives and others who died because of the passage of time.

Secondly, what efforts are the Government making to ensure that these minority communities are aware of this and provided with sufficient information to pursue their claims?

[The Earl of Minto (Con)]

I thank the noble Baroness for her questions. Yes, the estates of deceased postmasters are able to bring a claim on their behalf. Not only that, but they will get the tax-free status on offer.

The noble Baroness’s point about minorities was extremely well made and it certainly came out in some of the interviews that I listened to yesterday. Unless this piece of paper will tell me, I am not aware of the absolute number; no, I do not have that data here. A Citizens Advice helpline has been established and the Government have written to 600 people in an attempt to get them to come forward. The noble Baroness’s point about ethnic minorities, some of whom are first generation, and their reticence in coming forward is well made and I will certainly take it up.

[Baroness Randerson (LD)]

I thank the Minister for his very full replies. Of the 600 convictions, only 86 have been overturned so far, so progress is slow. The Statement refers to a number of postmasters having not even sought to appeal their convictions yet. Among the reasons for this are issues such as increasing age and infirmity, because this has been going on for so long. Indeed, some of those affected may well have died without the Government being aware.

My question therefore is about exactly what work the Government are doing with the families of those affected, as well as those directly involved, to ensure that every possible avenue is taken, not only to trace and contact them but to take every possible step to encourage them to claim what is rightfully theirs.

[The Earl of Minto (Con)]

I am entirely in tune with what the noble Baroness said. It is incumbent on the Government to use every channel that we can to reach out to these people. It has not been easy and we continue to try as hard as we can. I will write to tell the noble Baroness exactly what the Government are doing directly and through the Post Office.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, this is the most appalling scandal. I agree with the noble Baroness, Lady Falkner, that the noble Lord, Lord Arbuthnot, should be congratulated on the work that he has done, pursuing this point for years. I wish he were in the House today. It is important that, when the inquiry concludes, people are held to account for what they did and did not do or know. The appalling suggestion is that people knew that something was wrong and allowed people to be prosecuted and convicted. Can you imagine being accused of theft, taken to court, convicted and sent to prison, when you were totally innocent? That is what has gone on here. The noble Lord, Lord Fox, also made a point about people who were just fired.

We talked about why people have not come forward. It may be that they are older or from minorities. They also might be very scared. Will they be believed? They have gone through this nightmare, this trauma, and they have moved on and are worried about bringing it all back. We have to understand the difficulty that people may find themselves in here and do something about it. It is absolutely appalling, and I do not know how people can live with themselves if they knew something but then allowed people to have their lives destroyed. People have died.

I am sure the Government are very sincere about what they are doing when they say that they are going to do this, try that and make this happen, but they have the power to sort this out. They can sort this out; nobody else can. They can find these people and assure them that they will make a difference. They have the power —they should use it and use it now.

[The Earl of Minto (Con)]

I entirely agree. It is only the Government who can do this. The Post Office prosecuted nearly 700 people; other agencies prosecuted another 200. We have had 86 convictions overturned, which is not a lot, and we have contacted more than 600 postmasters who were prosecuted. There is an absolute will and intention to get this sorted out. What is very difficult is to define exactly how one reaches the parts that we have so far failed to achieve. All I can really say is rest assured; it is an extremely high priority. More and more funds and resources are being allocated and we will continue to push until we get to the bottom of this.

--- Later in debate ---

[Lord Fox (LD)]

Before the Minister answers that, it is important to bring home and build on the point made by the noble Baroness, Lady Falkner. A strategy to communicate with certain communities is different from a strategy to communicate with the mainstream community. It involves community leaders, different media and different things. Do the Government have a proper media communication strategy of the sort that was just mentioned that involves using community leaders as intermediaries for those people to give them the confidence to step forward?

I talked about the Post Office being obfuscatory. Among the things it was obfuscatory about were appalling racial slurs that were used to characterise those people. At the heart of this is a racial element, and we should not forget that. Many of the people who were punished may well have been singled out because of their classification within that process. I think the Government owe it to them to double down on this communication.

[The Earl of Minto (Con)]

I entirely agree. The Government really do owe it to them to double down on it and I will find out exactly what the situation is. I know that telephone calls, letters, victim meetings and all sorts of things are going on, and it is extremely important that we get to the bottom of it. I will write to noble Lords with the details and let them know exactly how we are proceeding.

[Baroness Falkner of Margravine (CB)]

I do not wish to detain the House, but can the Minister give the House—perhaps in writing if he does not have the figures now—an assessment of how many other government contracts Fujitsu currently holds?

[The Earl of Minto (Con)]

I do not have that detail now, but I will certainly write and let the House know.

[Baroness Blake of Leeds (Lab)]

I think the mood of the House is very much to put pressure on to get some answers about when the three main stakeholders are going to be in front of the inquiry. We cannot wait any longer. Some of those people will be retiring; some of the people involved will not be with us anymore. The clock has been ticking for so long. If the noble Minister cannot answer now, will he come back and give us a very clear picture as to when those people will be held to account and what we can expect from the process to make sure that everything that needs to be is brought to light and exposed for what it is?

--- Later in debate ---

[The Earl of Minto (Con)]

I certainly commit to doing that. I hope the House would agree that the step taken by the Government, and announced yesterday, is a genuine attempt to push things forward. It is a very significant amount of money and I hope it may encourage some of the people who have been reticent to come forward and help us get to the bottom of this. The inquiry is of course independent, the chairman sets the timeline, but it is certainly something that I will address.

Small and Medium-sized Enterprises: Interest Rates

Earl of Minto Excerpts

Wednesday 13th September 2023 Lords Chamber

[Lord Leigh of Hurley (Con)]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I draw your Lordships’ attention to my register of interest, in particular as senior partner of Cavendish Corporate Finance.

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

We work closely with the British Business Bank to support SMEs through targeted market interventions. That includes improving the terms on offer to SME borrowers through the recovery loan scheme, providing businesses with up to £2 million of guaranteed government finance. We are also boosting availability of non-debt finance by extending British Patient Capital to 2033 and funding the Regional Angels Programme with an additional £150 million over the spending review period.

[Lord Leigh of Hurley (Con)]

Given the economic growth that we now know has now happened since Covid, growing SMEs need equity finance to expand their businesses. Now that the Windsor Framework has been signed and the EU state subsidy restrictions withdrawn from our own state aid, will the EIS and SEIS be amended to take away restrictions such as gross assets and seven-year trading? In particular, will the sunset clause be removed?

[The Earl of Minto (Con)]

I entirely agree with my noble friend about the very good news about the economy. The EIS and SEIS schemes, along with VCT, have been enormously popular and successful, with over £40 billion being invested since their inception in 1994. We are assured by the Chancellor that the Government are committed to their renewal. We absolutely recognise the need for investors and companies, so that investment continues without interruption going forward. My noble friend will understand that I cannot give exact timings today, but the details will be provided by His Majesty’s Treasury ahead of the renewal date. On the European clauses, I ask your Lordships to understand that the Chancellor will have in mind that any renewal is for UK business only and no longer for the wider European audience.

[Lord Fox (LD)]

My Lords, on 17 July the Financial Times reported that the Prime Minister was convening a new business advisory council, bringing together senior bosses to shape government policy. The paper lists

“AstraZeneca, NatWest, BAE Systems, SSE, Google DeepMind, J Sainsbury, Vodafone, GSK, Aviva, Shell, Sage, Taylor Wimpey, Diageo and Barclays”.

That does not leave much room for the SMEs to get their message across, but it does typify the big business approach taken by this Government. Will the Minister confirm who is on this council, whether it has met yet, and how he expects small and medium-sized businesses to be able to catch the Prime Minister’s ear in such company?

[The Earl of Minto (Con)]

The noble Lord makes a very good point. Those are some of the largest international companies in the world, and I am sure that they will provide the Prime Minister with some extremely helpful advice. Having said that, as we all know, in this country the vast majority of businesses are small and medium-sized enterprises. In my role, I communicate with them almost constantly, both individuals and representative bodies. The value they have to add to these sorts of fora should not be underestimated. They are an extremely valuable and successful part of our economy.

[Lord Sikka (Lab)]

My Lords, there is evidence to show that the closure of bank branches leads to lower financial support for local businesses, especially as it also leads to the loss of local economic intelligence networks. What have the Government done to estimate the negative effects of bank branch closures on financial support available for SMEs?

[The Earl of Minto (Con)]

My Lords, it is an extremely good point. If one goes back to before the financial crisis in 2008, when the big five really dominated, there has been nothing short of a revolution in business lending since then. In fact, last year some 55% of all SME borrowing came from challenger banks—at-base banks and specialist SME banks such as OakNorth and Hampshire Trust Bank. The whole structure has changed in the last few years, and my guess is that some of the more traditional banks are feeling the pain in this area.

[Earl Attlee (Con)]

My Lords, is the Minister aware that the UK hovercraft industry is experiencing serious difficulties in obtaining performance bonds to cover stage payments in the construction of a hovercraft? If the answer is not in my noble friend’s brief, can he write to me?

[The Earl of Minto (Con)]

I was not aware that there was this trouble in the hovercraft industry. My guess is that it is something to do with the balance sheet, but I will certainly write to him and we will follow that one up.

[Lord Woodley (Lab)]

My Lords, the Government hold approximately 39% of share capital in NatWest and therefore are in a very powerful position to influence the bank’s policy and to provide small and medium companies with low-interest financial support. They could even turn NatWest into a specialist support hub. Have the Government presented any specific proposals to NatWest in this regard?

--- Later in debate ---

[The Earl of Minto (Con)]

I am not aware that we have made any specific proposal with NatWest but, through the British Business Bank, with a base rate of 5.25%, SMEs can borrow at 6%. They will find it very hard to match that anywhere in the market.

[Baroness Kramer (LD)]

My Lords, community development financial institutions lent over £80 million last year to in excess of 3,000 small businesses, 90% of which had been turned down by a conventional lender. Will the Government finally grasp the nettle and incentivise the major commercial lenders to invest in CDFIs in order to provide lending to those small businesses that do not fit the portfolio of commercial banks, as they do in the United States?

[The Earl of Minto (Con)]

The noble Baroness makes a very good point. CDFIs have been extremely successful and, if one looks at the plethora of lending opportunities right now, it continues to broaden because of the new entrants into the market. We will certainly take it up with the major banks and see where we get.

[Lord Leong (Lab)]

My Lords, SMEs are now looking to move from survival to growth as they recover from the impact of the pandemic. However, many SMEs that relied on government-back pandemic loans are finding the cost of borrowing far higher now. What can the Minister offer the millions of SME owners and employees whose prospects are hampered by the 15-year peak in interest rates?

[The Earl of Minto (Con)]

The interest rate is a Bank of England matter. The reason why it has gone up, as we all know, is to battle inflation, which is incredibly important. Having said that, in business, financial rigour and accountability are paramount in managing a business, particularly through a growth phase. We saw insolvencies fall to quite a low level during the pandemic because of the Government’s support, and the noble Lord is right that we are starting to see the number creep up again. The Government will do all we can in providing both advice and teams to help businesses in trouble but, when it comes down to it, it depends very much on the financial viability of the business going forward.

[Lord Flight (Con)]

My Lords—

[The Earl of Effingham (Con)]

My Lords, I speak frequently with small and medium-sized businesses, and I refer to my interests in the register. Can my noble friend say what the Government are doing to publicise the availability of help for the SME community?

[The Earl of Minto (Con)]

I thank my noble friend for his question. The Government want the UK to be the best place to start and grow a business and to support new entrepreneurs, regardless of their background. That is definitive. In the DBT, we have officials throughout the country who run workshops and who help and advise wherever they can. The British Business Bank reaches out wherever it possibly can to help and support SMEs. Indeed, in the other place, we have an SME Minister who, with his team, is extremely active in engaging the sector.

Digital Economy Agreements

Earl of Minto Excerpts

Monday 24th July 2023 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and declare my technology interests as set out in the register.

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, under the UK’s G7 presidency we brokered the G7’s digital trade principles. Further digital agreements sit at the heart of our agreements with Japan, Australia, New Zealand, EEA/EFTA and CPTPP. Our digital agreements with Singapore and Ukraine are the most innovative trade deals signed. We continue to push our digital objectives at the WTO e-commerce joint initiative and via the digital trade commitments in our suite of upcoming free trade agreements.

[Lord Holmes of Richmond (Con)]

My Lords, does my noble friend agree that digital economy agreements represent the very future of trade? We must ensure particularly that small and medium-sized enterprises are fully aware of this opportunity. Does he further agree that when we put DEAs together with the recently passed Electronic Trade Documents Act, we can really believe that we are on the brink of a new golden age for international trade?

[The Earl of Minto (Con)]

I entirely agree with my noble friend. Our vision is for the UK to be a global leader in digital trade, with an entire network of international agreements that drive economic growth, create jobs and improve productivity throughout the UK.

[Lord Clement-Jones (LD)]

My Lords, how do the Government intend to ensure that while conforming to the terms of digital trade agreements such as the UK/Singapore agreement, or the digital terms of the CPTPP, they still retain data adequacy for EU purposes? Is the Government’s market-driven championing of the international flow of data and the terms of these agreements not in conflict with that?

[The Earl of Minto (Con)]

No, my Lords, I am not sure that they are in conflict. Technological advances in free trade agreements will ensure that this country, among others, will be able to trade freely with a very wide range of companies and countries.

[Lord Leong (Lab)]

My Lords, digital transformation could grow the UK economy by more than £413 billion by 2030, equivalent to around 19% of the entire UK economy. That is more than twice the annual output of the UK’s manufacturing sector. Surely we should be turbocharging DEAs with as many countries as possible. Why are we so slow, and what assessment have the Government made of the size and experience of negotiating teams as part of the recent machinery of government changes?

[The Earl of Minto (Con)]

The noble Lord makes a very good point: anything that improves the speed of these free trade agreements can only be for the benefit of the country. The ones we are looking at at the moment are with India, Switzerland, Israel, Canada, Mexico and the GCC, and digital economy agreements will be in every one. There are digital trade provisions in a further 30 to 40 free trade agreements: I am very happy to give him a list but I do not think it is appropriate to read it out now. The very heart of this is making trade easier, faster, more secure and of course cheaper.

[Lord Clement-Jones (LD)]

My Lords, I shall have another go. The Minister really did not answer my question on data, so perhaps I should put it another way. Can the UK ensure regulatory interoperability among free trade agreement partners with different data protection regimes given the discrepancy in their regulatory frameworks? What I am trying to find out is the care with which these agreements have been negotiated with regard to data adequacy.

[The Earl of Minto (Con)]

My Lords, I absolutely understand the point and I am assured that the security of data is second to none throughout these free trade arrangements, but I will be very happy to write with the full details.

[Lord Wolfson of Tredegar (Con)]

My Lords, in addition to the work on the international stage that my noble friend mentioned, does he also recognise the opportunity here for English law to become the system of law underpinning these new ways of doing international trade? Our Victorian forebears made English law the international law of commerce, with negotiable bills of lading and bills of exchange. The work done by the Law Commission on the Electronic Trade Documents Act and the speeches given by the Master of the Rolls show how English law can now be the law underpinning cyber-transactions and blockchain. Will my noble friend ensure that equal weight is given by the department to that part of this very important work?

[The Earl of Minto (Con)]

My Lords, I shall certainly do all that I can. I believe that in the agreement we reached with Singapore, which was fundamental in the success that we have just achieved at CPTPP, and the agreement with Ukraine, the basis of the law used has been widely praised. It is expected that it will be used as a form for going forward.

Employment Relations (Flexible Working) Bill

Earl of Minto Excerpts

3rd reading
Friday 14th July 2023 Lords Chamber

[Baroness Taylor of Bolton (Lab)]

My Lords, I thank all those who have been involved in the progress of this Bill and in getting us to this stage. Most of all, I thank my honourable friend the Member for Bolton South East, Yasmin Qureshi. At Second Reading, one Member of this House described the Bill as being put forward by the “Bolton mafia”. We not only plead guilty but are very flattered by that description—we will wear it well. I also thank Ministers in the department, who have been extremely helpful on the progress of this Bill in both Houses, and the civil servants behind them, who have prepared assiduously detailed briefings. We are all very grateful for the help that we have had.

This is a very modest Bill—most Private Members’ Bills that succeed must have a certain degree of modesty—but that does not mean it is insignificant. It will make significant changes that will be of real benefit to quite a few people. We spoke at Second Reading of the changes that have taken place in work patterns. This Bill allows all employees to have more rights in respect of their need for flexible working. Flexible working has increased a lot in recent years, but just yesterday the British Chambers of Commerce pointed out in its press release that there are significant disparities in who can get it and which sectors have been responsive so far. The BCC and trade unions have welcomed this Bill, and many pressure groups that have followed the progress of this issue have made positive contributions.

The Bill will help make flexible working more available to more people and allow people in a broader range of circumstances to be able to contribute fully to our economy; it must benefit everyone. It is a small but significant measure, and I am very pleased and grateful for all the support the House has given to its passage.

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

My Lords, I thank the noble Baroness, Lady Taylor, for bringing the Employment Relations (Flexible Working) Bill through the House. The Government have been pleased to support the Bill throughout all its stages, in line with our 2019 manifesto, which committed to promote flexible working. I am pleased to continue that support today at Third Reading and am very grateful for the cross-party support that the Bill has received.

The successful passage of this Bill will introduce changes to the existing right to request flexible working, which will be made alongside the Government’s commitment to make the right to request flexible working available from the first day of employment. The changes represent a timely, sensible and proportionate update to the right to request flexible working and reflect what many employers already do. They will particularly support those who need to balance their work and personal lives and may as a result find it harder to participate in the labour market. From older workers to new parents and those with disabilities or long-term health conditions, this Bill will be an important step in supporting their ability to remain and progress in work.

I am very pleased to support the Employment Relations (Flexible Working) Bill. It is a meaningful step in the right direction to help employers and employees agree work arrangements that fit with life. I thank the noble Baroness, Lady Taylor, for her sponsorship of the Bill as it has moved through this House, and the honourable Member Yasmin Qureshi and my honourable friend Kevin Hollinrake for their sponsorship in the other place and hard work in putting this Bill forward.

[Baroness Blake of Leeds (Lab)]

My Lords, I briefly add my thanks for the smooth passage of this Bill. I pay tribute to the Bolton mafia and, in particular, my noble friend Lady Taylor of Bolton. I also thank the Minister for his support going forward.

We were all struck by the moving testimonies at Second Reading; I think it was the noble Lord, Lord Holmes, who said, “Flexible working—why wouldn’t you?” That absolutely summed it up. A cultural shift is happening. As we know, many companies are already on board and getting great benefit from a more flexible approach to their workforce.

I cannot let this moment pass without referencing our culture; I note that at Second Reading there were 10 noble Baronesses on the Front Bench.

I say an enormous thank you to everyone who has assisted with this in both Houses and look forward to the next steps that will follow once the Bill is enacted.

Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023

Earl of Minto Excerpts

Tuesday 20th June 2023 Lords Chamber

Moved by

[The Earl of Minto]

That the draft Regulations laid before the House on 26 April be approved. Considered in Grand Committee on 13 June.

Motion agreed.

Industrial Strategy

Earl of Minto Excerpts

Tuesday 20th June 2023 Lords Chamber

[Lord Haskel (Lab)]

In the name of my noble friend Lord Allen, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

The Government have set out an ambitious plan for growth and prosperity. Delivering economic growth in key sectors is a priority and the Chancellor has identified five growth sectors for the UK: digital technology; green industries; life sciences; advanced manufacturing; and creative industries. The Government have announced a £500 million per annum package of support for 20,000 research and development-intensive businesses and £650 million to support the UK’s life sciences sector.

[Lord Haskel (Lab)]

I thank the Minister, but we are still little the wiser about a strategy. The Prime Minister removed the words “industrial strategy” from the business department. As Chancellor, he scrapped the Government’s industrial strategy and the independent Industrial Strategy Council. Instead, we now get announcements, as now—soundbites instead of sound economics. Can the Minister say precisely when the Government will produce a much-needed comprehensive and co-ordinated industrial strategy? That will help business, industry and investors plan for the long term and, we hope, get some growth and progress back into the economy.

[The Earl of Minto (Con)]

My Lords, I think noble Lords will agree that this is a time for specialisation rather than a single, overarching, broad strategy. By targeting specifics, such as the five key growth sectors, we can be more effective and, in this age, more agile to respond to change.

[Lord Howell of Guildford (Con)]

My Lords, does my noble friend agree that a key component of a successful industrial strategy and growth is massive investment, both from foreign sources, on the scale we used to attract and are not attracting now, and of course from pension funds, which are managing trillions and are ready to invest? Does he agree that in the energy sector the attraction is going to be more to quick-build small modular reactors than to any large, rather out-of-date, massive giants which take years to build and are full of risks? Will he advise his friends, as a priority, to put all their efforts behind developing small nuclear reactors as part of our sensible energy strategy and our move to a decarbonised electric sector?

--- Later in debate ---

[The Earl of Minto (Con)]

I thank my noble friend for his comments and his question: indeed, I will. On the specific question of investment, the Government, along with Rolls-Royce, have invested over £300 million in small modular reactors. On inward investment—again, I agree that a massive amount of inward investment is always required—we have arrangements with the UAE, bringing in £5.9 billion, and Qatar, for £10 billion. We know about the Nissan/Envision billion-pound investment up in the north and Ford has put in nearly £400 million recently as well.

[Lord Fox (LD)]

My Lords, Make UK, the manufacturing organisation—it represents most of the countries’ manufacturers—issued an authoritative report on industrial strategy. Some 99% of respondents said that they believed that the UK should have an industrial strategy—which indicates that they do not think that the UK has one now. Will the Minister acknowledge that the very people who are going to deliver what he talks about have not heard what he thinks he has told them?

[The Earl of Minto (Con)]

My Lords, I understand exactly the point that is being made. Communication is critical to any successful enterprise, and there is no doubt that the change from a unified industrial strategy to one that is more targeted and focused is, at times, not the easiest message to get across. However, I believe that the five growth sectors for which the specific strategies have been written will be very effective.

[Lord Aberdare (CB)]

My Lords, an essential part of any industrial strategy is a strategy for addressing the skills needs on which it depends. When the Minister reads the Make UK report that the noble Lord, Lord Fox, has just referred to, he will find that it sets out a long-term vision for UK manufacturing and highlights the failure of current apprenticeships policy to support manufacturers in developing the talent pipeline they need. When will the Government respond to the barrage of demand from employers for a more flexible apprenticeship levy, with greater incentives to offer apprenticeships addressing skills and labour shortages?

[The Earl of Minto (Con)]

My Lords, I think the whole House agrees with that point, and I can assure the House that the whole question of the apprenticeship levy and the flexibility thereof is being looked at closely right now.

[Lord Woodley (Lab)]

My Lords, I have raised my serious concerns about the lack of industrial strategy for the automotive sectors, important as they are for our country. But I also pay tribute to the Government for supporting the Jaguar Land Rover battery plant that could easily have gone to Spain—well done. But does the Minister agree that this is small compared with the billions and trillions being set aside by the EU and the USA to encourage investment, particularly in battery gigaplants? What is our industrial strategy for this important sector, which, clearly, as I said last time, is genuinely at a tipping point?

[The Earl of Minto (Con)]

My Lords, I quite agree with the noble Lord about the success of the announcement from JLR. It is extremely important that we continue to invest in all sorts of technologies and advances. We are continuing to see investment into that sector. As for where the tipping point comes, I am not quite clear. But I will go back and write to the noble Lord with specifics.

[Lord Bellingham (Con)]

My Lords, is the Minister aware that only 15% of SMEs actually export? If that figure could be increased substantially, maybe to 20% or 25%, it would not only create a lot of jobs but help our balance of trade and be a crucial part of our industrial strategy.

[The Earl of Minto (Con)]

I entirely agree with my noble friend. I assure him and the whole House that the Department for Business and Trade is specifically making it easier for small and medium-sized enterprises to consider and go through the process that they fear is difficult—and in fact is not so difficult—to start exporting, to the benefit of all.

[Lord Anderson of Swansea (Lab)]

Do the Government agree that a continuation of steel production in the UK is vital to our industrial future? Therefore, does an industrial strategy include the investment at Port Talbot steelworks which Tata Steel is now wishing to make, without which there will be an enormous hole in employment in south Wales?

[The Earl of Minto (Con)]

The Government fully recognise the role that steel plays within the UK economy, and they are working with the industry on its decarbonisation options. It is a foundation industry, it is high-wage, and it is extremely important to this country for all sorts of reasons. On the specific issues with Port Talbot and Tata, there are ongoing negotiations, which I am sure the House will realise I cannot divulge. But we are closely involved with Tata, British Steel and Liberty.

[Baroness Hoey (Non-Afl)]

My Lords, an industrial strategy must be for the whole of the United Kingdom. How does the Minister think it will work in Northern Ireland, since so much in Northern Ireland is still under European Union rules and not British law?

[The Earl of Minto (Con)]

My Lords, there is a conference later this year on investment into Northern Ireland, which I am sure will prove a successful enterprise. Investment into Northern Ireland is critical; the difficulty we have had with extricating that part of the United Kingdom is well known.

[Baroness Chapman of Darlington (Lab)]

My Lords, Make UK says that the UK is

“the only leading nation in the world without a comprehensive, long-term industrial plan”.

The Government might be on slightly firmer ground on the UK storming ahead of other economies but a range of initiatives, as the Minister has referred to, is not a strategy. The Government are sitting on their hands and we are losing out to the US and the EU too often when they should be acting. They will have to grip this at some point. When will they?

--- Later in debate ---

[The Earl of Minto (Con)]

My Lords, the Atlantic declaration shows how closely we are working with our American colleagues. The value of trade with that nation is well known and there is no question that we will be able to grow that and continue working with it. The green deal industrial plan is being followed in the EU; I hope that we will get some breakthroughs in that area too.

Workers (Predictable Terms and Conditions) Bill

Earl of Minto Excerpts

2nd reading
Friday 16th June 2023 Lords Chamber

[The Minister of State, Department for Business and Trade (The Earl of Minto) (Con)]

I thank the noble Baroness, Lady Anderson, for bringing this important Bill forward for debate today—it is a notable day. It is an honour to be here to confirm the Government’s ongoing support for it, and I thank all who spoke on this important matter. I also thank Scott Benton MP for initiating the process that has led to us debating this topic today. The Government are pleased to support this Private Member’s Bill, which will introduce a vital new right to request a predictable working pattern.

I watched the Bill’s progress through the other place with great interest, and I am pleased that it has arrived here for our consideration so swiftly. Its progress demonstrates just how much we can achieve through cross-party co-operation and the dedicated work of Bill sponsors across the political spectrum—in this case, Scott Benton MP and the noble Baroness, Lady Anderson. There is always an element of fragility in the parliamentary process for a Private Member’s Bill, but I am pleased that, so far, the Bill has met with consensus, and I hope that the same will be the case today.

Zero-hours contracts and other forms of atypical work are an important part of the UK’s flexible labour market, for both employers where there is not a constant demand for staff, and for individuals who need to balance work with other commitments such as childcare or study. However, as outlined by the noble Baroness, Lady Anderson, many workers experience the issue of one-sided flexibility, whereby workers have to be available to their employer with no guarantee of work. We recognise that receiving unpredictable and varying levels of income each month can make it difficult for some workers to pay their bills, especially during a time of cost of living challenges.

The Workers (Predictable Terms and Conditions) Bill will allow workers to request more predictable working arrangements, addressing this issue of one-sided flexibility, while also ensuring that workers are able to continue working on a zero-hours contract or another form of non-guaranteed hours or temporary contract if that is the type of contract which suits them. The Bill will allow individuals and businesses to strike the right balance between flexibility and predictability.

The Government fully appreciate that businesses are facing challenges, not least those associated with the rising cost of living, and it is vital that this new right does not place further burdens on our hard-working business owners. As the noble Baroness, Lady Anderson, explained, this new right will function in a similar way to the existing right to request flexible working. An employer will be able to refuse a request for a more predictable working pattern based on one of six specific statutory grounds, which are similar to those established for the right to request flexible working. These grounds build in vital flexibility for businesses, ensuring that they are not unfairly burdened by accepting requests which would, for example, generate burdensome additional costs or affect their ability to meet customer demand.

As the noble Baroness set out, the right will be available to workers who have been with their employer for a set period before they make their application. We will set this out in regulations and expect it to be 26 weeks. Given that this Bill targets workers with unpredictable working patterns, they will not have to have worked for their employer continuously during that period. This eligibility criterion ensures that as many workers with unpredictable working patterns as possible will be able to benefit from this new right.

Workers will be empowered and encouraged to start conversations with their employers about their working patterns, with the confidence that starting these conversations should not result in detriment to them. Businesses will benefit too from improved worker satisfaction, and therefore productivity. Accepting predictable working requests will allow businesses to retain valuable skilled staff. Facilitating high productivity, both through this measure and through the other five Private Members’ Bills we are supporting, will help to drive higher employment, better wages and economic growth—and hence, prosperity.

This House frequently adds much value and challenge through asking the right questions about the need for delegated powers in a Bill and their intended use. I am pleased to reiterate the assertion made by the noble Baroness, Lady Anderson, that the powers in this Bill are, as far as possible, in line with the delegated powers in existing legislation on the right to request flexible working. The powers contained in the Bill are also drawn as narrowly as possible.

The new right to request a more predictable working pattern is the latest in a series of measures that the Government have taken to support workers on zero-hours contracts and those on low pay. In 2015, the Government banned exclusivity clauses in zero-hours contracts, as the noble Lord mentioned, helping zero-hours contract workers to secure additional employment and boost their income. As of December 2022, this ban has been extended to exclusivity clauses in the contracts of workers with a guaranteed weekly income equivalent to or below the lower earnings limit of £123 per week. In April 2023, the Government increased the national living wage for workers aged 23 years and over by 9.7% to £10.42, the largest ever cash increase.

Further to these measures, the Government consulted on the right to request a more predictable contract in 2018, and the vast majority of respondents agreed with the creation of a right to request a more predictable working pattern. In response to this consultation, we committed to introduce a right to request a more predictable working pattern for all workers, including those on zero-hours contracts, agency workers and those on temporary contracts. This was followed by a commitment in the 2019 Conservative manifesto to introduce a new right to request a predictable working pattern. I am therefore delighted that the Bill reflects the Government’s previous commitments on this important issue.

The Bill forms part of a wider package of six government-supported Private Members’ Bills, which are delivering on our 2019 manifesto commitments on employment rights. Taken as a package, the Bills will enhance workers’ rights and support people to stay in work. They will help new parents, unpaid carers and hospitality workers. They will give all employees easier access to flexible working. I am delighted that four of the Bills have now gained Royal Assent and become law, and I look forward to seeing the predictable working Bill and flexible working Bill complete their parliamentary passages shortly.

I will address some points made by Members during this debate. While this is a Private Member’s Bill, I am pleased to explain the Government’s policy position on these points. On the question about employment law raised by the noble Lord, Lord Davies, the Queen’s Speech set out an ambitious legislative programme that includes a competitive set of Bills that enable us to deliver on priorities such as growing the economy, which will, in turn, help to address rising living costs and get people into good jobs. There is no employment Bill, but we are making good progress in bringing forward alternative legislation to deliver on our manifesto commitments on employment. I do not have the detail on the specific effects on pensions, so I will write to the noble Lord with the detail he requests.

On the issue raised by the noble Lord, Lord Palmer of Childs Hill, I believe that I have explained the length of time that needs to be applied, for both agency workers and other workers. On the question of flexible working and cancelled shifts, my understanding is that a consultation has been held and they are now waiting to respond in due course.

I mentioned the national living wage. While I take the point about zero-hours contracts, I believe that they now affect only 3% of the workforce—a very valuable part of the workforce, who are extremely useful for a lot of businesses with unpredictable work requirements. Some 75% of people on zero-hours contracts report that they work part-time, compared to only 24% of other people in employment, and 26% of people on zero-hours contracts are in full-time education, compared to only 3% of people in other employment, so they fulfil a valuable role.

On the point made by the noble Lord, Lord Leong, we entirely agree with the concept of an engaged and stable workforce. This involves a balance between workers’ rights and the need for employment; it always has, and, I imagine, always will. I completely understand the worry about the increasing pace of technology and the advance of AI, and what effect that may have on the employment numbers. The Government are looking at that most carefully.

Supporting the Bill is in line with the Government’s ongoing commitment to build a strong and flexible labour market that supports participation and economic growth. It has been encouraging to see that there is support from across the political spectrum in the House for this important measure, as is clear from today’s debate. I look forward to continuing to work with the noble Baroness, Lady Anderson, as the Bill progresses through this House.

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, I thank all noble Lords for their contributions today, especially my noble friend Lord Davies of Brixton, who highlighted how far we still have to go. I also thank the noble Lord, Lord Palmer, for his support, my noble friend Lord Leong for making it clear that this legislation is supported by my Front Bench and the Minister for signalling the Government’s ongoing and continued support for this and the other legislation that follows as part of Private Members’ Bills. This is a stepping stone in the long journey of securing comprehensive employment rights for all who work in the UK, but it is a vital one for those who find themselves in insecure employment. It might not be perfect but it is an important step forward and I therefore invite noble Lords to support the Second Reading of the Bill.

Bill read a second time and committed to a Committee of the Whole House.