Businesses: Late Payments
Kelly Tolhurst Excerpts(6 years, 7 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
With permission, I wish to make a statement about the Government response to the “Creating a responsible payment culture” call for evidence, which I have published today.
The Government are committed to supporting small and medium-sized enterprises to start well and grow, including through a network of 38 growth hubs throughout England that provide advice, guidance and support. As part of our industrial strategy, we have an action plan to unlock more than £20 billion of investment in innovative and high-potential businesses. Where we see practices that unfairly constrain SMEs’ finance choices, we are prepared to act. For example, we recently removed a barrier that was preventing some SMEs from using invoice finance because of prohibitive contract terms imposed by their customers. The new measure is expected to provide a long-term boost to the UK economy worth almost £1 billion.
Last year, we launched a call for evidence asking for views on how to create a responsible payment culture for small business. Although a number of measures are already in place to tackle late payment—from the prompt payment code to the ability to charge interest on late payments and the increased transparency through the payment practices reporting duty—the call for evidence told us that there is more to do to improve the payment landscape. That is why I am announcing today that I will now take further and firmer action to tackle the scourge of late payments while maintaining a holistic approach to cultural change by using all the avenues available to us in this space.
I will shortly launch a consultation to seek views on strengthening the small business commissioner’s ability to assist and advocate for small business in the area of late payments through the provision of powers to compel the disclosure of information. I will also seek views on the merit of the commissioner’s potentially being able to issue penalties for poor payment practices. In respect of large businesses that have poor or unfair payment practices, we want to seek views on whether the commissioner should be able to apply sanctions, such as binding payment plans or financial penalties.
I am also announcing today that responsibility for the voluntary prompt payment code is to move to the small business commissioner and be reformed. This will unify prompt payment measures with the commissioner’s other responsibilities and address weaknesses in the operation of the current code. We have seen the impact of the strengthening of the code since our announcement in October: earlier in the year, we saw the removal from the code of five businesses and the suspension of 12 others. The next compliance round is currently under way.
I will take a tough compliance approach to large companies that do not comply with the payment practices reporting duty. The legislation allows for the prosecution of those who do not comply. I will use this enforcement power against those who do not comply, where necessary. We are already writing to the businesses that we have assessed as being within scope to remind them of their duty.
The Government will launch a business basics fund competition, with funding of up to £1 million, which will encourage small and medium-sized enterprises to utilise payment technology. We have recognised that tech adoption has had a positive impact on the productivity of small businesses. This competition is coupled with the small business commissioner’s strategy to deliver advice, signpost and provide a clear pathway for small businesses when they feel that they need support.
I also intend to establish a ministerial-led group to bring together key Government Departments to act on improving prompt payment across both the public and private sectors. We are working with UK Financial Investments and the financial sector to review the role that supply chain finance plays in fair and prompt payments, including the potential for an industry-led standard for good practice in supply chain finance. This review will report back to the Business Secretary by the end of the year.
We also want to bring greater transparency to how supply-chain finance is reported in company accounts and assessed in audits. Working with the Financial Reporting Council, we want to develop guidance and build that into its sampling of companies’ accounts. Supply-chain finance can provide an affordable finance option for SMEs, but they need to be assured that the terms are fair.
Our modern industrial strategy aims to make Britain the best place in which to start and grow a business, and removing barriers to growth is key to that aim. The response to the call for evidence and the package of measures that I am announcing today will ensure that we will continue to tackle the issue of late payments. I offer great thanks to the Federation of Small Businesses and its Fair Pay campaign, which has campaigned so hard for movement from the Government. I also thank the hundreds of businesses that have taken part and engaged comprehensively with the Department in assessing the call for evidence.
Finally, I thank the Business, Energy and Industrial Strategy Committee for its significant work on this issue and the work that it will continue to do. I am sure that it will hold us to account on the improvements that we are announcing today. I will place a copy of the Government’s response in the Libraries of both Houses today. I commend the statement to this House.
Bill Esterson (Sefton Central) (Lab)
Unfortunately, I have only just received a copy of the Minister’s statement. I do not know why there was a delay, but it was not particularly helpful in preparing my response. [Interruption.] The Minister has just graciously apologised.
Late payment is believed to be the cause of 50,000 business failures each year, at a cost to the economy of £2.5 billion, along with thousands of jobs. Those are figures from the Federation of Small Businesses. The Minister is right to pay tribute to that organisation for the brilliant work that it does in advocating for small businesses on this issue and on so many others.
In her press statement, the Minister reported a fall in the scale of the problems facing small businesses, but let me caution her on that. She cited the excellent work of the Business, Energy and Industrial Strategy Committee, but it has suggested that it has evidence that payment terms are growing longer to mask some of these problems. Perhaps she can address that through some of the proposals that she has outlined.
We welcome the steps announced today as an important start in tackling the scourge of late payment. I tabled amendments to the Enterprise Bill that would have given the small business commissioner powers to insist on binding arbitration and fines for persistent late payment. The Government rejected those amendments, so we put the proposals in our 2017 manifesto, along with requirements for anyone bidding for a Government contract to pay their suppliers within 30 days. It is good to see the Government catching up with us today in their proposals.
The small business commissioner does great work with the £1.35 million in his revenue budget and, as I understand it, 12 members of staff at his disposal, but there are limits to what he can do. Although the £3.8 million recovered by the commissioner is important to the businesses affected, it is a fraction of the money withheld by late payers, which is in the tens of billions of pounds on any of the estimates available to us. What extra budget will the commissioner be given to discharge the additional responsibilities that the Minister is proposing, and what is the timescale for the consultation?
Accountability of company boards is a step in the right direction, but it will be important to compare the experience of the supplier with the reported practice in company accounts. How will the Minister ensure that what is reported is the time from the date of supply of goods and services rather than the date of recording the invoice, which any accountant knows can be significantly different and is often subject to delay when invoices are mysteriously lost or queried by accounts departments? How will this add to the existing duty to report? When will the consultation on giving the powers on the duty to report to the small business commissioner take place?
As the Minister told us, a number of companies that are members of the prompt payment code have been found not to comply with the code. The scandal of Carillion is an example of abuse of that code; we saw payment times of 120 to 180 days becoming the norm. Giving the policing of that code to the small business commissioner is a sensible idea, so will the Minister say what additional resources for these powers will be given to him?
The use of project bank accounts would have prevented the £2 billion loss to 38,000 suppliers in the Carillion fiasco. What consideration are the Government giving to extending the use of project bank accounts? I also note that the Government are pledging from 1 September to force bidders for Government contracts of more than £5 million to pay 95% of their invoices within 60 days. That is in line with the prompt payment code, but only with the lower end of its requirements. Why not make it a 30-day requirement?
One complaint of businesses is that the public sector is the source of some of the worst practice. The Minister mentioned the public sector in her statement. Another complaint is that smaller firms are often at fault in delaying payments. When does she expect action to be taken on public sector and other small business delays?
The problems of late payment need significant changes in practice. Today’s statement announces a series of measures which, if properly resourced, could make a significant difference. Businesses deserve a change of culture. The economy and the country need a change in practice. In broadly welcoming these measures, I hope that the Government’s delivery matches the rhetoric.
Kelly Tolhurst
I apologise to the hon. Gentleman for the fact that he did not receive a copy of my statement in sufficient time. That was not my intention at all. I hope that he will understand, following the many debates that he and I have had in the House, that that is not how I tend to work with him. I thank him for recognising that this statement should have an impact on the late-payment problems of many small businesses. One thing that has been made absolutely clear to me since I became a Minister—and actually prior to being elected, when I was a small business owner myself—is that late payment is always raised by companies that deal with large organisations. I am very pleased to be able to move forward on this matter.
The amount of money owed in late payments has halved. I wish to recognise the work that has been done by the small business commissioner since he took up his role one and a half years ago. He has collected more than £3.5 million in late payments. The hon. Gentleman is right to question his role and when the consultation will take place. We want that consultation to happen quite quickly. One of the key things that came out of the call for evidence was that people wanted more powers to be given to the small business commissioner. They saw his role as, in effect, an umbrella role encompassing a number of enforcement abilities for him to act on behalf of small businesses.
The consultation will happen soon, and I would like it to take place with speed. I reiterate that, as we seek views on whether we should allow the small business commissioner to apply sanctions such as binding payment plans and financial penalties, that would be a massive step change and step forward. The small business commissioner has been very vocal in requesting more powers to enable him to represent and help the small businesses that come to him.
We will also be seeking views on whether the small business Minister should have the ability to refer topics to the small business commissioner for investigation. The small business commissioner will currently investigate only once a complaint has come from a small business, so we are looking at other ways in which investigations could be carried out. Obviously, I am giving hon. Members just a sample of what will be included in the consultation.
The hon. Gentleman is quite right on the matter of boards. On the back of the Chancellor’s announcements in the spring, we are pleased to give audit committees the power to review payment practices and for that to be included in the annual report. We are working with the Financial Reporting Council and the frameworks department at BEIS to work out the best way for that to happen. The new strategic reporting requirement was introduced in January. We are asking the FRC how the payment reporting duty is covered by that new duty, if at all. I assure the hon. Gentleman that we will legislate to make that happen if necessary.
The Chartered Institute of Credit Management has worked hard on this issue over recent months, especially on the strengthening of the voluntary prompt payment code in October. We are pleased that cross-examining the data gathered under the payment reporting duty has helped with compliance with the voluntary code. We and the CICM believe that the best place for that duty is with the small business commissioner, so that the commissioner is, in effect, a one-stop shop and an easily identifiable pathway for small businesses.
The hon. Gentleman is right to talk about project bank accounts. Some hon. Members present, including my hon. Friend the Member for Bury St Edmunds (Jo Churchill), have lobbied me in the past on the matter of retentions. We have told the industry that we expect it to come to a consensus on a way forward, and we will take action if it does not.
As the hon. Gentleman knows, we have announced that from 1 September any company bidding for Government contracts over £5 million will be expected to pay 95% of their invoices within 60 days. If they do not achieve that target, they will not necessarily be able to bid for further contracts. In April 2019, we announced our new ambition that 90% of undisputed invoices should be paid to small businesses within five days.
Mark Pawsey (Rugby) (Con)
Like the Minister, I ran a small business, so I recognise the challenge of late payments for small businesses. It is to the credit of this Government that they created the role of small business commissioner. The Minister said that she is holding a consultation on additional powers for the small business commissioner, who has often said that he needs more powers. Will she be a little clearer about when those powers might be available to him, and whether they will include the power to fine businesses that fail to honour their commitments? The Business, Energy and Industrial Strategy Committee has heard about many businesses that signed up to the prompt payment code but failed to adhere to its terms, and the small business commissioner needs a little bit more beef to get his teeth into that issue. Finally, will she consider making it mandatory to add interest to overdue accounts, because that would give businesses that are delaying payments a real incentive to get their payments made on time?
Kelly Tolhurst
Primary legislation would be required to give further powers to the small business commissioner, so we will seek views and consult. We do want to give the small business commissioner further powers—for example, the ability to apply sanctions to businesses that do not comply with requests for information, court orders or financial penalties. Such sanctions could include binding payment plans.
My hon. Friend asked whether we would consider making it mandatory to apply interest to overdue accounts. There is currently low take-up of the application of interest to invoices, so there needs to be an education piece for small businesses, which we very much hope to achieve through the small business commissioner. With all these elements coming under one roof, he can launch an ambitious PR strategy to enable small businesses to understand what powers already exist for them.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I thank the Minister for advance sight of her statement, which in our case arrived in plenty of time for us to look at. We welcome initiatives to curb late payments, but let us be frank: this does not go nearly far enough. For anyone tuning in to last night’s Tory hard Brexit hustings, it will come as no surprise that the UK Government remain opposed to taking the steps required to protect Scottish business. Does the Minister have the good grace to agree that it is now beyond a joke that, in place of serious policy steps, her statement merely proposes some minor technological measures and platitudes on best practice? And she did not fully answer this question, so can she confirm that she has looked at the Scottish Government’s project bank account scheme? Has she learned any lessons about how that is protecting smaller contractors and subcontractors on public procurement projects?
With the Federation of Small Businesses stating,
“If all payments were made on time 50,000 more businesses could be kept open each year”,
it is clear that small business needs legal protection, so does the Minister now regret her Government’s failure to support the Construction Industry (Protection of Cash Retentions) Bill, with which my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) aimed to stop late payments in that sector? Indeed, does she regret her Government’s failure to extend that sort of protection across the economy to all small and medium-sized enterprises?
Kelly Tolhurst
I stand here today and make announcements, but we also need to recognise that this is about culture. We want to use all the tools in the box to legislate and take action where possible, but we also want to work with the industry and businesses to change the culture. It is not right that large firms take advantage of smaller businesses through late payments, so today we bring forward our response to the call for evidence, to stem the scourge of late payments.
The hon. Gentleman mentions project bank accounts. As I briefly outlined in my response to the previous question, project bank accounts and the use of retention is obviously a concern for many people. It is part of the whole late payment arena. That is why, as I have said, we have worked with the industry and heard the views of both sides. A consensus has yet to be found in the industry. The challenge that we have set is that the industry must come to a way forward or we will take action.
To answer the hon. Gentleman’s question, I have indeed looked at some of the work that has gone on in Scotland and at what has happened in Northern Ireland. I highlight what the Federation of Small Businesses said today:
“Small businesses will be delighted with today’s announcement. FSB has worked very hard with government to create a whole-board approach to late payment within the UK’s large companies, and empower Audit Committees to look after the supply chain. Together with measures to strengthen the Small Business Commissioner’s powers and reform the Prompt Payment Code, the measures today could finally see an end to poor payment practice.”
Andrew Griffiths (Burton) (Con)
The words that my hon. Friend just spoke were those of my constituent, Mr Mike Cherry. There can be no greater praise than that from such an advocate for small business. The FSB supports these measures, so I commend her on them.
Does my hon. Friend agree that one of the main challenges is not late but prompt payment? Far too many big businesses continue to extend payment terms—150 days, 180 days or even more. That is simply not acceptable and is unfeasible for many small businesses. Will my hon. Friend add that to her to-do list and really make a difference for small businesses?
Kelly Tolhurst
I thank my hon. Friend for his question and recognise his particular interest as my predecessor in this post. He is absolutely correct: prompt payment is a particular concern for small businesses, and some large companies alter their payment terms. We are seeking views on giving the small business commissioner more powers because he acts for small businesses that have struggled with getting prompt payment. Currently, his powers are not binding; we feel that if his powers were binding, that could be part of his suit of armour in tackling late and non-payments.
Mr Deputy Speaker (Sir Lindsay Hoyle)
I call the Chair of the Business, Energy and Industrial Strategy Committee, Rachel Reeves.
Rachel Reeves (Leeds West) (Lab)
Thank you very much, Mr Deputy Speaker.
When our Select Committee looked into this issue, many small businesses insisted on giving evidence in private, so worried were they about retaliation from the big businesses that they supplied. Larger businesses, including Morrisons, Aldi and WH Smith, are not signatories to the prompt payment code, while Boots pays suppliers at a discount for the privilege of their being paid on time. The power imbalance is so great now between bigger and smaller businesses that. I urge the Government and the Minister to look again, make the prompt payment code mandatory and bring down the period to a benchmark of 30 days.
Kelly Tolhurst
I thank the hon. Lady and highlight again the significant work that her Committee has done on this issue, including with our Department. She is absolutely right to highlight the power imbalance, which is why many small businesses feel that they are unable to speak out. That is why we are seeking views in our consultation on powers for the small business commissioner. We will seek to enable the Small Business Minister to make a referral to the small business commissioner; to give the commissioner investigatory powers similar to those of the Groceries Code Adjudicator; and to empower him to carry out an investigation without the small business involved having had to report the issue. There is a suggestion that the process could be anonymised.
The hon. Lady raises an important point, and I am very much aware of it. It will be very much part of my drafting, with the team, in regard to the consultation.
Sammy Wilson (East Antrim) (DUP)
I welcome this statement from the Minister and I know that she is committed to ensuring that small businesses are dealt with fairly.
The project bank accounts introduced by the Northern Ireland Executive have already been mentioned. That measure now applies to hundreds of millions of pounds of Government contracts and ensures that the money goes not to the main contractor but directly to the subcontractors when they have completed the work. That stops the main contractor holding on to the money or bargaining with the small companies and means that the small companies do not have to take the initiative, which they are sometimes afraid to do. Will the Minister work with Northern Ireland officials to ensure that the lessons learned there can be applied here?
Kelly Tolhurst
I thank the right hon. Gentleman for raising that. I highlight his particular interest in this area and the fact that he was one of the Ministers responsible in Northern Ireland when project bank accounts were introduced there. He is right that there are absolutely some merits in such accounts; as he knows, I have taken a particular interest in the subject and I will continue to work on it. The Government are clear that where project bank accounts can be used with Government contracts, they will be, although they are not always a suitable measure in some large contracts.
Today, I have announced a suite of tools to tackle late payments. Am I going to stand here and say that in future we will not have to do anything more? Of course not. Part of government and what we need to do in a changing economy and business environment is to make sure that we keep looking at ways to make things easier for small businesses.
Chuka Umunna (Streatham) (LD)
I thank the Minister for advance sight of her statement. She talked about the challenges facing small businesses. Brexit, of course, will cause huge disruption to small businesses’ supply chains, given the added bureaucracy and tariffs.
This statement on late payments is welcome, but may I ask the Minister again the specific question put by the Chair of the Business, Energy and Industrial Strategy Committee, the hon. Member for Leeds West (Rachel Reeves)? Why not make the prompt payment code mandatory—compulsory for large businesses? Why is there is further delay with consultations and what have you? She should make it mandatory, as we have been arguing for.
Kelly Tolhurst
I thank the hon. Gentleman for welcoming the statement and the moves that the Government have made today. He is absolutely right about the prompt payment code: it is voluntary. As it stands, there are more than 2,000 signatories to it; they sign up and commit to paying 90% of their invoices within 60 days. As he will know, the Government initiated the new duty on companies to report biannually on payment practices. To date, we have had more than 15,000 reports for over 7,000 companies. That data has enabled the Chartered Institute of Credit Management to scrutinise the voluntary code payment data.
We have seen action. Five businesses have been removed from the code and 12 have been suspended. As I have outlined today, when people are not complying with the legislation, we will take action. We are continuing to move forward to strengthen the prompt payment code and close any holes and weaknesses that there are.
Alan Brown (Kilmarnock and Loudoun) (SNP)
When it comes to cash retentions, the Minister said twice that it was up to industry to find a way forward, but they are actually a Government responsibility. It is about 40 years since it was first recommended that the use of cash retentions in the construction industry be phased out. In my time as an MP, the Government have consulted twice on the issue, voted down amendments to the Enterprise Bill, and refused to back both my private Member’s Bill and that of the hon. Member for Waveney (Peter Aldous). Instead of listening to the large, tier 1 contractors, will the Minister pledge to take action and give a timescale for the phasing out of the use of cash retentions in the construction industry?
Kelly Tolhurst
The hon. Gentleman raises the issue of retentions. He says that this is not for industry, but for the Government. I have spoken to industry representatives and businesses about this issue, and it is clear that the industry has not come to a single way forward to deal with this. We hope that the measures that I have announced today on supply chain finance will make a big difference. With regard to cash retentions, I have been clear that if industry cannot come to a consensus on a way forward, the Government will step in and take action.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I welcome the Minister’s statement, and I thank her for meeting me after I introduced my Public Sector Supply Chains (Project Bank Accounts) Bill earlier this year. However, the measures she has introduced are actually recommendations from the 2013 inquiry that I led into late payments. Six years on, this is a little late, although I recognise her commitment. These measures will be no comfort to Neil Skinner, who owns a business in my constituency and lost £176,000 when Carillion collapsed. That was not a one-off; we know that there are other Carillions out there. Some 380 small businesses closed directly as a result of Carillion’s collapse. I cannot understand why she is so reticent after decades of this issue and why she will not act on project bank accounts.
Kelly Tolhurst
I recognise the hon. Lady’s passion and commitment. As I have said to her in previous meetings, I am happy to continue to work with her on this issue. Project bank accounts have value. I have announced the measures we are taking, following the call for evidence. I understand that she is disappointed in the time it has taken to bring these measures forward, but we are taking action. These bad practices have been happening not only in recent years but for decades, and this Government are finally taking action.
The hon. Lady is right to mention her constituent and the losses that his business suffered through the collapse of Carillion. Carillion’s debt was estimated to be £900 million at the end, which excluded £500 million of supply chain finance. That is why we will work with the Financial Reporting Council to find ways to bring transparency to companies’ accounts and reporting, which we hope will address any larger failures in the future.
Recall of Tumble Dryers
Kelly Tolhurst Excerpts(6 years, 7 months ago)
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Andy Slaughter (Hammersmith) (Lab)
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on his decision to recall 500,000 unsafe tumble dryers manufactured by Whirlpool UK.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government take the safety of electrical products very seriously. For our children, relatives and families, we all want our homes to be places of safety and security. I provided an update to the House at departmental questions last week on the most recent steps taken by the Office for Product Safety and Standards in respect of Whirlpool tumble dryers. This follows the OPSS review of the actions taken by Whirlpool in relation to its corrective action. The findings of the review were published on 4 April. The OPSS review examined in detail the modification programme put in place by Whirlpool as well as technical documents supplied by Whirlpool. The review concluded that the risk posed by modified tumble dryers is low.
The Office for Product Safety and Standards produced a list of required actions for the business to take, and Whirlpool was given 28 days to respond, outlining the actions that it would take. The response received from Whirlpool was considered to be inadequate. As a result, the OPSS has written to Whirlpool to inform the company of its intention to serve a recall notice under the provisions of the General Product Safety Regulations 2005 in respect of the unmodified tumble dryers that remain in homes in the UK. As required by law, Whirlpool was given 10 days’ notice of that intention, which allowed it time to submit its views prior to the service of the recall notice or to seek arbitration in line with the provisions in the GPSR. Officials in the OPSS are reviewing Whirlpool’s response to determine whether it fully meets the requirements laid down in the draft recall notice.
At this time, all enforcement options remain on the table, including serving a formal recall notice. It would be inappropriate for me to comment further while the legal process is ongoing, but I will update the House in due course. It is important to stress that consumers who have had their affected tumble dryers modified can continue to use them and that those with an unmodified affected tumble dryer have been urged to unplug them and to contact Whirlpool. I encourage all consumers to register their appliances to ensure they receive updates on product modification and recalls. The OPSS will continue to monitor the situation closely and will take any steps it deems appropriate to ensure that consumers in the UK continue to enjoy the high levels of protection they have come to expect.
Andy Slaughter
I thank the Minister for her response, although, given the lack of action by Whirlpool, and indeed the Government, over a four-year period, there are many questions to be asked. If they cannot all be answered today, I would be grateful if she could write to me and perhaps meet me and other interested Members, as this is clearly an ongoing matter.
The fire that destroyed 20 flats in a 19-storey block in my constituency in 2016 was one of hundreds of fires caused by over 100 models of tumble dryer manufactured between 2004 and 2015 by companies now all owned by Whirlpool, but when I met Whirlpool a couple of weeks ago, it could not even say how many reports of fires it was receiving each week. This is the most serious consumer safety issue for many years. At one stage, it was estimated that one in six households in the UK had a faulty Whirlpool tumble dryer in use. Why has it taken four years to reach this point, despite repeated requests for recall from the fire brigade and others? What steps will the Government now take to ensure that unmodified dryers are recalled? I heard what the Minister said, but anything less than a recall now would be considered wholly inadequate.
What is the basis for the estimate of 300,000 to 500,000 unmodified machines in service, given that 5.5 million were sold and only 5,000 have been modified since Whirlpool estimated itself that there were 1 million unmodified dryers in December 2017? If it goes ahead, how will the recall process work, as a matter of law and in practice, given that, as the Minister said, it is unprecedented? What progress has the OPSS made on setting up the recall database that we were promised would be live by the end of this year? What further advice is being given to the owners of Whirlpool tumble dryers? Why has Whirlpool still not published on its website the list of model numbers affected, and why is it refusing to give one to Which? and Electrical Safety First? Why did the advice change from the OPSS? It seemed quite happy with the advice in April. Will the Government look again at the modification process and at the evidence compiled by Which? saying that the modified machines are still liable to catch fire?
Finally, does the Minister agree with what her predecessor, the hon. Member for Burton (Andrew Griffiths), said in asking the planted question last week, which is that there remain grave concerns about the “straightness” of Whirlpool? What will the Government do about this company, which has flouted the rules here? Is it not time to get tough?
Kelly Tolhurst
I appreciate the hon. Gentleman’s concern, specifically for his constituency, given the desperately sad incident that occurred there. He is absolutely right to ask these questions and raise these concerns, as would be any consumer who believed they were at risk.
We carried out the review at the behest of my predecessor, my hon. Friend the Member for Burton (Andrew Griffiths), who ordered a review of the Whirlpool modification process in 2018. As the hon. Gentleman will know, the review looked at the effectiveness of the technical modification and the adequacy of the outreach programme. It concluded that the risk was low, and was further reduced by the modification. Following the review, we issued a 28-day notice letter to Whirlpool, specifying issues on which we wanted more information and assurances. We were unsatisfied by its response, which is why, on 4 June, we issued a letter of intent of notice of a recall.
Following conversations that I had with the hon. Gentleman last week, he wrote to me at the end of the week asking for a meeting. As I said to him last week, I should be more than happy to meet him to discuss any of his concerns about the ongoing process. My absolute intention is to ensure that we hold companies to account when we do not believe that they are carrying out their legal obligation, which is to place safe products on the market.
The hon. Gentleman is entirely right to be concerned about the future prevention of fires. I can tell him that, according to Home Office data, there were 224 fires caused by tumble dryers in 2017-18, a 10% reduction on the previous year’s figure of 808. We will obviously do all that is required to ensure that consumers are kept free of harm. We are following due process, in line with the regulations, in order to ensure that Whirlpool carries out its obligations.
I am more than happy to answer any further questions from the hon. Gentleman in detail as the process continues, and, as I have said, I am also more than happy to meet any colleague at any time.
John Redwood (Wokingham) (Con)
Can the Minister give us some indication of how many machines the Government think are still out there which could be risky, in the light of the high incidence of fires that she has reported?
Kelly Tolhurst
In response to a query from Which?, Whirlpool said that 1.7 million cases had already been resolved. It estimates that another 500,000 machines are still in people’s homes.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
Thank you for granting the urgent question, Mr Speaker. I congratulate my hon. Friend the Member for Hammersmith (Andy Slaughter) on his relentless campaigning, and for securing this important question.
The Government stated their intention to initiate a recall notice to Whirlpool on 4 June, but that only became apparent in the House during topical questions to the Secretary of State for Business, Energy and Industrial Strategy on Tuesday 11 June. Can the Minister explain why she did not make a statement about the decision, which she has described as “unprecedented”, but which she considered not to be “unprecedented” enough to inform the House about it?
The issue of Whirlpool and its faulty products has been one of the biggest consumer safety issues for many years. The relevant fault affected more than 5 million tumble dryers under brand names that are now owned by Whirlpool UK, which were manufactured between 2004 and 2015. I welcome the recall notice regarding the 500,000 unmodified products, but I am seriously concerned about the millions of modified Whirlpool products that are still in people’s homes, and whose owners have reported fires and faults despite the modifications. Which? spoke to more than 30 owners who have said that their “fixed” tumble dryers have caught fire, or have produced smoke or a smell of burning. There are millions of those modified machines out there in people’s homes. Consumer safety must be our utmost priority, so will the Minister demand a full investigation of those reports, and go further by demanding a recall of the modified products too?
In April, the Office for Product Safety and Standards published findings of its inquiry into Whirlpool’s handling of the risk of the machines. It found that the risk of fire was “low”, and therefore no recall notice action was taken. Which? considered that the “inquiry is fundamentally flawed”, and that
“it appears to favour business interests over people’s safety”.
The investigators failed to speak to any affected Whirlpool customers as part of the review, and further failed to verify the history of the 28 Whirlpool dryers that it tested, which meant that it was unable to draw conclusions about when the machines had been modified and by whom. The inquiry was published in April and the Minister’s subsequent contradictory decision to issue a recall notice obviously raises serious questions about the OPSS. Will the Minister clearly outline why she came to a different decision from the OPPS in April? Does she now believe that the OPSS investigation was fundamentally flawed and will she announce an investigation into that review to look at whether it was properly undertaken and whether there are lessons to learn for the future?
Kelly Tolhurst
I must start by outlining that the protection of consumers, the safety of consumers and the safety of products placed on the market are of utmost importance to me and this Government. I did indeed update the House last week in response to a question about the action that we have taken in regards to Whirlpool; it is part of a legal process, as I have already outlined. All complaints about modified or unmodified tumble dryers that have been duly registered were included in the review. The review was significant: it looked at many areas, took all the data into account, and carried out the assessments, as the hon. Lady has outlined, and I am absolutely satisfied that the review undertaken by OPSS was appropriate and robust.
I have not taken a different decision from OPSS. We were very clear. OPSS wrote to Whirlpool after the review outlining areas where it wanted a guarantee of further work. Whirlpool had 28 days in which to respond. It responded, and the OPSS reviewed that information and was not satisfied, finding that the commitment was inadequate. We therefore decided to issue a notice—an intention to recall. As I have outlined today, we will be reviewing what has been submitted by Whirlpool. There is no intention to put, as has been suggested, big business over the needs and safety of consumers, and we will not do that. Fundamentally, the safety of people in their homes is of utmost importance to me and the Government and I will do everything in my power to make sure that large companies and manufacturers absolutely comply with their legal obligation to place only products that are safe on the market. If they fail to do so, this Government will take appropriate action to hold them to account.
Andrew Griffiths (Burton) (Con)
I congratulate both the OPSS and the Minister on having the cojones to hold Whirlpool to account, because there is no doubt that Whirlpool has been shifty on this and the Minister has called it out, so I say well done. Does she agree that it sends a clear message to business that either they put their house in order and ensure that their products are safe or the Government will act and have a product recall?
Kelly Tolhurst
I thank my hon. Friend for his comments and acknowledge his role in instigating the review of Whirlpool’s modification programme last May. Let me reiterate that the law is clear: manufacturers have a responsibility to ensure that only safe products are placed on the market, and appropriate action must be taken when a safety issue is identified. We will make sure that any organisations placing unsafe products on the market are forced to comply with the law, and we will continue to hold them to account.
Kirsty Blackman (Aberdeen North) (SNP)
This matter does not seem to have been handled well, either by Whirlpool or by the UK Government, from start to finish. Surely our first priority should be, as the Minister said, to protect our constituents and ensure that they are not at risk from fire. If there are still 500,000 unmodified products out there, and if the risk of them going on fire is 1%, we are looking at a potential of 5,000 fires. If the risk is half that, we are still looking at 2,500 fires and the risk to life that comes with them. What assessment has been made of the risk from the modified tumble dryers? Concerns have been raised that modified dryers are also continuing to go on fire.
The other thing I am confused about is why the Government took so long to take action, given that this issue was first recognised by Whirlpool in 2015. If it takes the OPSS and the Government so long to undertake a review and put sanctions in place against a company, there is surely an issue with the system. Will the Government, as a result of the issues raised, look at the product recall system in general and ensure that a review is undertaken, so that we no longer have such incredibly lengthy waits when products are recalled, and so that the Government can take action more quickly than they have done in this case?
Kelly Tolhurst
As I outlined earlier, the review of Whirlpool was a review of the modification programme. It looked at the effectiveness of the technical modifications and the adequacy of the outreach programme. The review concluded that there was a low risk from unmodified machines, and an even lower risk from modified ones. The wider review was concerned with the actions that Whirlpool took to resolve any risk of lint fires in its machines. I believe that its findings were robust and proportionate. The info that was provided to us via Which? and “Watchdog” and the testing carried out by Which? were also featured and taken into account in the review. However, the review very much focused on the technical effectiveness of the modifications.
The reason that this has taken so long, as the hon. Lady suggests, is that we followed due process in carrying out a substantial review, making our assumptions and providing Whirlpool with laid-down notice to come back to us with what it would do to rectify the situation. I would just highlight that part of enforcing consumer and product safety involves ensuring that we carry out a review when we believe that manufacturers are not fulfilling their obligations under the regulations, and that we follow due process in doing so. We will continue to do that where there are concerns about any product that is placed on the market. We will ensure that organisations and large manufacturers comply with the law.
Bill Grant (Ayr, Carrick and Cumnock) (Con)
All too often in my previous life I saw the damage, despair and devastation—not to mention the risk to life—that fire can bring to a family home. Will my hon. Friend confirm that product safety and standards remain a priority for this Government, and that manufacturers of white goods such as Whirlpool must act promptly and responsibly when faced with the evidence of goods not being fit for purpose? This journey of risk has been unacceptably long, but I thank her for the robust action that she has recently taken.
Kelly Tolhurst
I thank my hon. Friend for that, and I note his particular interest in this as a result of his past career. He is absolutely right to suggest that we will ensure that large manufacturers such as Whirlpool comply with the regulations if they find that a technical change needs to be made to their products. We expect them to take appropriate action where a risk has been identified. This is indeed a priority for this Government. It has been a priority since I have been in post, and we will continue to ensure that these organisations comply with the law.
Carolyn Harris (Swansea East) (Lab)
The recall has been far too long coming. As soon as Whirlpool became aware of the problem, it should have acted immediately and recalled every affected machine. As it is, it has sat back and waited years, and consumer safety has been at risk, with the Government finally stepping in last week. The public are rightly terrified of the danger that could be sitting in their homes. People who contact Electrical Safety First, Which? and other consumer bodies are struggling to find assistance because Whirlpool has refused to publish a list of the affected machines. Instead, members of the public have to wade through a series of hidden steps on the Whirlpool website to try to establish whether they have a potential fire hazard in their home. Why has Whirlpool been allowed to get away with that? A list should be readily available, so will the Minister commit to ensuring that Whirlpool publishes one immediately?
Kelly Tolhurst
We are following due process, and we are taking action. This has been an ongoing piece of work. When issues with the modification programme were raised, my predecessor, my hon. Friend the Member for Burton (Andrew Griffiths), instigated the review, and OPSS has been working since then and has been in continual communication with Whirlpool. It is vital that we follow due process and, whether the organisation involved is small or large, that we ensure that any action is proportionate and correct. Any consumer with concerns about the tumble dryer in their home can get in touch with Whirlpool by entering the serial number and model to check whether their product is affected, and we encourage anyone who is worried about the product in their home to contact Whirlpool immediately.
Vicky Ford (Chelmsford) (Con)
I do not talk about this in public a lot, but I lost my father in an electrical accident when I was 10, and there has not been a Father’s Day in 40 years when I have not wished that he was still here. Consumer safety must come first, and I thank the Minister for the action she has taken. We have some of the strongest consumer safety standards in the world, but enforcement is sometimes challenging. Will she therefore take this opportunity to consider ways of strengthening the enforcement, and will she examine whether the penalties for producers are effective and strong enough?
Kelly Tolhurst
I thank my hon. Friend for that question. I am sorry to hear about her father, particularly since this urgent question comes the day after Father’s Day. She is absolutely right. This action serves as a warning to manufacturers that if they put unsafe products on the market, this Government will act to make them comply with the law. The beauty of the OPSS, which this Government set up in January 2018, is not only that it is a national body that takes responsibility for national crises, but that it supports local enforcers on the ground with scientific and research-based knowledge. I assure my hon. Friend that we are taking the matter seriously, and this is a warning to manufacturers that we will enforce the law if we believe that they are not complying.
Ms Karen Buck (Westminster North) (Lab)
I congratulate my hon. Friend the Member for Hammersmith (Andy Slaughter) on his dogged pursuit of this consumer scandal. Is not too much onus being left on consumers to understand the potential risks to their machines? If half a million Whirlpool machines are still unmodified, how exactly are the Government tracking progress? If they proceed to recall, which they should, how will they ensure that Whirlpool is successful in getting the message through to the owners of all those machines?
Kelly Tolhurst
The hon. Lady raises an important point on how we reach consumers, and part of the review covered the adequacy of the outreach programme. Our review found that Whirlpool needs to do more in that space, which is exactly why we issued a notice for Whirlpool to tell us what it will do further on the intention to recall. Whirlpool had time to respond, and we asked for further information on how it will get that information out to consumers. That will be a key part of how we review anything that Whirlpool submits to us, and the process will be ongoing if the recall notice is served or if Whirlpool decides to undertake a recall itself.
Sir Peter Bottomley (Worthing West) (Con)
We ought to recognise that Whirlpool took over Indesit Hotpoint in 2014. It identified the problem in 2015 and has been trying to take action, but not fully adequately.
Will the Minister ask Whirlpool to make sure that the website better identifies the EU product safety site, as with Creda, Proline or Swan? Will she also ask the search engines, especially Google, to feature product recall information on the first search page, preferably even before the advertisements? Finally, will she indicate that safe products have a green dot inside the door? If people want to know the serial number and model, that is also inside the door.
Kelly Tolhurst
I thank my hon. Friend. As he requests, I will ask Whirlpool how it can make its website more user-friendly. I cannot give him any guarantees on Google’s actions, but I am sure that is something we can take forward. He has previously raised his final point in the House, and consumers will therefore have heard him. I reiterate that, if consumers are concerned about the products in their home, they can go on the website and call the Whirlpool helpline. If their tumble dryer has been modified, continued use is a low risk. We recommend that unmodified dryers are unplugged and not used and that Whirlpool is contacted.
David Hanson (Delyn) (Lab)
By the Government’s own admission, there are 500,000 unmodified machines in existence, which equates to around 700 per constituency. The Minister has just reaffirmed that the Government’s advice is to unplug these machines. How are those 700 people in Delyn supposed to know that?
Kelly Tolhurst
The right hon. Gentleman outlines that there are 500,000 machines, which is not a Government estimate—we have used data to estimate the number of dryers still in people’s homes. As I said to the hon. Member for Westminster North (Ms Buck), Whirlpool has an outreach programme to communicate with individuals who have not yet contacted Whirlpool and who it believes to have faulty equipment.
We recommend that anyone who buys any kind of electrical appliance should register it so that the manufacturer can easily contact those who have a particular product—this is not just for Whirlpool but for any kind of electrical product that is sold. It is vital that consumers take the time to register their purchase so it is easy for the manufacturer to contact them if any faults or problems are found with the machine.
Stephen Kerr (Stirling) (Con)
I congratulate the Minister on the action she has taken. One of the first cases I received as a newly elected Member of Parliament was on the safety of tumble dryers; the issue came up at my first surgery. As a member of the Select Committee on Business, Energy and Industrial Strategy, I have to say that I have been singularly unimpressed with Whirlpool’s attitude to this problem. Part of the problem lies in trying to find where these machines are, so is the Minister entirely satisfied with our current system for the registration of appliances in this country? It is sometimes very difficult to find serial numbers and model numbers, especially where appliances have been fitted in kitchens or utility rooms, for example. These are real, live issues. Is she satisfied that this system is adequate for purpose?
Kelly Tolhurst
I thank my hon. Friend for that. He is right to raise concerns about whether the system is suitable, and whether all appliances are easily identified and registered. We definitely need to look, on an ongoing basis, at whether some of the products being placed on the market are easily identified. He is right to highlight the issue with built-in appliances, as it is sometimes difficult to remove them to get the serial number. As I have said, I recommend that all consumers register their appliances on the registermyappliance site. We will keep all information under review, but I remain determined to ensure that where manufacturers do not comply with the law we will take enforcement action. That is why I am pleased to be standing here today outlining the steps we are moving through to make sure that we comply with the regulation on the enforcement.
Cat Smith (Lancaster and Fleetwood) (Lab)
With an estimated 700 affected appliances per constituency, it is not surprising that I have been contacted by a number of constituents affected, including Linda Thomas, who was advised to contact Peterborough trading standards, it being the trading standards body responsible for this Whirlpool issue. She tells me that she feels very much that Peterborough trading standards are
“on the side of Whirlpool and ‘not the consumer’”.
What assessment has the Minister made of the impartiality of Peterborough trading standards, in the light of the emails revealed by the BBC as a result of freedom of information requests?
Kelly Tolhurst
Trading standards, in Peterborough or anywhere else nationally, are carrying out, every day, the important work of enforcing safety issues; they are taking lots of enforcement action. I, for one, am very proud of and grateful to trading standards officers, who sometimes work in challenging circumstances but do some fantastic work. One reason the OPSS was set up was in January last year was to look at product safety and standards, and it was the body that carried out the review of the Whirlpool modification programme, working with regional trading standards, including Peterborough’s. Trading standards do have the ability to work with the OPSS on the scientific research and data, using the expertise the OPSS brings to help them carry out their duty locally. Therefore, I very much disagree on this; action taken by any enforcement body is being taken on behalf of the consumer, not in the interests of large manufacturers.
Mr Philip Hollobone (Kettering) (Con)
If any of my constituents correctly identify their tumble dryer as a potentially unsafe model, how quickly would the Minister expect them to be given a replacement by Whirlpool?
Kelly Tolhurst
My hon. Friend asks when his constituents would have a replacement. I would say that the affected tumble dryer should be modified, but any action must be taken swiftly. The particular circumstance, the age of the model and the brand of the model would dictate which action Whirlpool takes.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I thank the Minister for her comments, but I am still extremely concerned that 500,000 machines are at large. As the chair of the all-party group on disability, I am particularly concerned about whether notifications have gone out in accessible formats, because if people have disabilities they might not see a fire so quickly or be able to leave their homes so quickly should one start. Will the Minister speak to Whirlpool and make sure that the notifications are in formats that are accessible for all?
Nigel Huddleston (Mid Worcestershire) (Con)
The UK may well have one of the strongest consumer protection regimes in the world, but does the Minister agree that things need to be under constant review? Can she assure me that the OPSS has sufficient resources, powers and skills to do what we expect of it?
Kelly Tolhurst
I can reassure my hon. Friend that the OPSS has the powers and funds necessary to carry out its work. The beauty of the OPSS is that it is absolutely focused on product safety and standards. Part of its £12 million per annum funding is for building scientific and technical expertise. It works with trading standards locally and nationally and provides the national leadership required on national issues such as this one.
Yvonne Fovargue (Makerfield) (Lab)
The Minister will know that registration rates for white goods are typically less than 30%, which means that more than 70% of people typically do not register their products. That is understandable—they are frightened of being sold to or contacted for lots of other reasons—so surely it is now time to take the onus off the consumer and have a central register, from the point of sale, that can be used only in the event of a recall.
Kelly Tolhurst
I thank the hon. Lady for that suggestion. I will commit today to making that a topic for discussion at the Consumer Protection Partnership, which is the group of organisations that sit together to consider consumer protections. Perhaps we can look into whether that would be more beneficial for consumers. I reiterate that the Government have a recall website that gives the details of all white goods that are subject to recall or fire risk. All consumers should register their appliances. It is down to the manufacturer to make sure that the products are safe, but if consumers take the simple step of registering their goods in the first instance, when they buy them, before any changes are made, that is the best way forward.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Might not many of these tumble dryers have been resold in the second-hand market? If so, what is the Minister doing to assess the dangers of the resale of such machines, bearing in mind that local authority trading standards have been decimated by Tory austerity cuts?
Kelly Tolhurst
As I have outlined, it does not matter whether the product is second hand or has been with its original owners since purchase. If a dryer is affected and is unmodified, consumers should contact Whirlpool. I reiterate that when the OPSS carried out its review of the modification programme, it took all the data into consideration and the risk was deemed to be low and further reduced for modified tumble dryers. I therefore urge any consumer with a tumble dryer in their home to look to see whether it is one of the products affected and make contact with Whirlpool.
Tom Brake (Carshalton and Wallington) (LD)
The Minister has said that modified machines are low risk, yet last year the BBC’s “Watchdog” live consumer programme uncovered cases in which machines had caught fire even after being fixed. Can modified machines be deemed to be low risk, even though they catch fire?
Kelly Tolhurst
The right hon. Gentleman talks about modified machines. When any information or testing that had been carried out at any particular event by “Watchdog” or Which? was submitted to the Department or to the OPSS, it was scrutinised and looked at during the review of the modification process. The outcome was to put the risk level at low. However, anyone who has a concern about any machine should contact Whirlpool. In actual fact, if anyone has any concern about any electrical appliance within their home, they should stop using it and contact the manufacturer.
Alison Thewliss (Glasgow Central) (SNP)
A number of my constituents contacted me with their concerns about Whirlpool. With Electrical Safety First research pointing to the fact that only 10% to 20% of recalled products are ever returned or repaired, we should perhaps consider looking at a statutory basis for online retailers to contact people who bought products online, because they certainly will have a means of contacting their consumers—they will have email addresses and other details for the products that have been dispatched. Perhaps that could be an easier way for some retailers to contact people to get that recall information to them.
Kelly Tolhurst
I thank the hon. Lady for highlighting that point. One of the issues that we considered in last year’s review was the outreach programme. There are many ways in which Whirlpool should be able to contact the people who have bought its products. This is very much the responsibility of the manufacturer, and it is one of the reasons we are taking so much care with this review, and why we are asking so many questions. It is the responsibility of the manufacturer to make sure that it has a programme that is sufficient to reach its customers. We are dissatisfied with what it has done. That is why we issued the intention to issue a recall. She is absolutely correct: Whirlpool should be using everything at its disposal to make sure that it contacts anyone who has purchased its product by any means necessary.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
The Whirlpool situation has highlighted a problem exposed by the Electrical Safety Council about the difficulty of identifying the owners of the defective appliances it recalls. Can the Minister say a little more about what progress has been made on requiring the registration of purchase of electrical goods at point of sale by the retailer, rather than by consumers registering afterwards? Consumer registration patently does not work, and the point raised by my hon. Friend the Member for Makerfield (Yvonne Fovargue) is not a new one; it has been knocking around for years and the retail industry needs to own up to its responsibility.
Kelly Tolhurst
I thank the hon. Gentleman. I know that he has a particular interest in this matter. He will know that, when I last sat in front of him at the meeting of the all-party group on fire safety, I was very clear that if action needed to be taken I was not fearful of taking it. As I tried to outline to the hon. Member for Makerfield (Yvonne Fovargue), it is a valid suggestion, and I do agree that we need to look at it. That is why I have said here today that I am prepared to bring that to the Consumer Protection Partnership to see whether we can progress it further. He is absolutely right: we need to do all we can to ensure that consumers are protected, but fundamentally I am here today to talk about holding Whirlpool to account, and I am proud to be standing here and doing that. This Government want to ensure that, no matter how big manufacturers are, we will still make them comply with the law.
Nick Smith (Blaenau Gwent) (Lab)
Where is the Whirlpool list of model numbers that may be at risk?
Kelly Tolhurst
I thank the hon. Gentleman for his question. As I have outlined, anyone who has one of the brands that are affected—Hotpoint, Indesit, Swan, Proline and Creda, manufactured between April 2004 and September 2015—should go to the Whirlpool website and put in their model and serial numbers to find out whether it is an affected model. If they do not want to go on to the website, they should ring Whirlpool’s helpline.
Points of Order
Kelly Tolhurst Excerpts(6 years, 8 months ago)
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Andy Slaughter (Hammersmith) (Lab)
On a point of order, Mr Speaker. In a brief answer in Business, Energy and Industrial Strategy topical questions yesterday, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Rochester and Strood (Kelly Tolhurst), who, helpfully, is on the Treasury Bench, announced that she intended to order the recall of 500,000 tumble dryers made by Whirlpool UK, an action that she described as “unprecedented”. In fact, over 5 million such machines were manufactured with a fault that makes them liable to burst into flames without warning, and they have caused several hundred fires, including one in a 19-storey block of flats in my constituency that destroyed 20 flats and could have caused serious loss of life.
This is the most serious consumer safety issue for many years, yet we have had no statement from the Government on when and how the recall will take place, and why it has taken four years for them to act. I am wondering whether you, Mr Speaker—perhaps with the assistance of the Minister—can say how these matters will be addressed in this House.
Mr Speaker
It is certainly open to a Minister to seek to respond, and it looks as though one is minded to do so.
Kelly Tolhurst
Further to that point of order, Mr Speaker. I would like to clarify what I announced in the House yesterday. Since the Office for Product Safety and Standards review, we have kept Whirlpool’s actions under review. A letter was issued to Whirlpool, which was given 28 days to respond, and it did just that. We have informed it of our intention to issue a recall. That is part of the regulatory process. That is what I was updating the House on. We had 10 days to inform Whirlpool of that, and I believe that Friday is the deadline for that. I hope that satisfies the hon. Member for Hammersmith (Andy Slaughter).
Smart Data: Consultation
Kelly Tolhurst Excerpts(6 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Today I will be placing a copy of a consultation document entitled: “Smart Data: Putting consumers in control of their data and enabling innovation” in the Libraries of both Houses. This outlines the conclusions of the Smart Data Review that was announced in the Modernising Consumer Markets Green Paper and consults on future action by the Government.
The consultation sets out our vision for an economy where consumers’ data works for them and not against them. Data needs to be smart: easily and instantly accessible to consumers and be able to be safely and securely transferred to third party services who can use this data to provide innovative services for consumers. This is what we mean by smart data.
The consultation focuses on introducing new smart data initiatives to improve consumer outcomes and promote innovation in regulated markets. The key proposals we are consulting on include:
Accelerating the development of innovative data-driven services through the establishment of a new cross-sectoral smart data function to support, manage and govern the delivery of smart data initiatives
Introducing an open communications initiative in the telecoms market to require communications businesses to provide consumers’ data to third party providers at the consumer’s request to increase switching and stimulate innovation
Establishing a vulnerable consumer challenge to encourage data-driven innovation to improve outcomes for vulnerable consumers
Introducing strong data protection requirements and a cross-sectoral approach to regulation of third-party providers using smart data to build trust and minimise burdens on business.
These initiatives build on the approach in open banking, which is enabling consumers to ask their bank to share their current account transaction data securely with third parties. We have seen an explosion of new services that seek to make life easier for consumers—for example, through bringing together their current accounts into one platform or finding new ways to help consumers build an accurate credit score.
As announced by the Prime Minister yesterday, we are also signalling our agreement with the recommendation of the digital competition expert panel’s recommendation to establish a new digital markets unit to promote, among other things, data mobility and data openness across all sectors. As we take forward proposals on smart data, we will work closely to co-ordinate and integrate the recommendations as appropriate.
[HCWS1612]
Oral Answers to Questions
Kelly Tolhurst Excerpts(6 years, 8 months ago)
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Alex Cunningham (Stockton North) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
In the autumn the Government will introduce legislation to extend the right to receive the national minimum wage to seafarers operating in UK territorial seas. Any business, British or otherwise, benefiting from consumer subsidies and the growth of UK offshore wind has a clear moral responsibility to abide by the spirit of UK employment law, even where operations take them beyond the UK’s formal jurisdiction.
Alex Cunningham
I think that is the most helpful answer I have had in this place since I got elected nine years ago so I am grateful to the Minister for that, but why do we have to wait until the autumn when she could introduce secondary legislation and close this loophole now?
Kelly Tolhurst
I thank the hon. Gentleman for his supplementary question. This is a complicated process; I have been working with my counterparts in the Department for Transport and we are committed to delivering this legislation in the autumn. As I mentioned at previous questions sessions, we have also doubled our enforcement on the national minimum wage and are determined to make sure we are tackling all areas where people are not upholding the spirit of UK employment law.
Karl Turner (Kingston upon Hull East) (Lab)
It is disgraceful that P&O Ferries is employing Lithuanian cooks sailing from Hull to Zeebrugge on the “Pride of York” at €2.04 an hour. Filipino able-bodied seafarers crewing the “Pride of Hull” are paid $4.45 an hour. Will the Minister meet me to see what we can do together to stop these predatory capitalist companies taking advantage of foreign crews? This amounts to slave labour.
Kelly Tolhurst
I thank the hon. Gentleman for raising this point, and he is absolutely right: this is unacceptable, and I am more than happy to meet him to discuss it. But I just want to reiterate that the law is clear that any individual undertaking work in the UK is entitled to receive the national minimum wage; this includes workers in different sectors, which is why we are taking this action, and we will be laying legislation in the autumn.
Chris Law (Dundee West) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
We engage regularly with the Secretary of State for Scotland on how we can achieve our industrial strategy aim to make the UK the best place to start and grow a business. The British Business Bank has supported 5,219 small and medium-sized enterprises in Scotland with more than £898 million to date. My hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) will be pleased to know that the bank’s start-up loans programme has delivered 61 loans totalling more than £253,000 in his constituency.
Bill Grant
As the House is aware, high streets are under pressure as a result of the changing retail landscape. Sadly, in Ayr, we lost our independent department store, Hourstons, earlier this year. It had been trading for 123 years. Will my hon. Friend outline what support is available to local businesses to ensure that they can remain at the heart of their communities?
Kelly Tolhurst
I thank my hon. Friend for highlighting the loss of a department store in his constituency. Let me assure him that the Minister with responsibility for high streets—the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rossendale and Darwen (Jake Berry)—and I are committed to working together to support the businesses at the heart of our communities across the country and to deliver the £1.6 billion plan for our high streets, including via the Retail Sector Council. The Ayrshire growth deal, with £103 million of UK Government funding, in my hon. Friend’s constituency—of which he has been a keen supporter—will also help the wider business community.
Chris Law
The business growth accelerator suspends rates for new builds or renovated properties for 12 months, and this Scotland-wide policy has encouraged new development across the country. Is it not the case that while Brexit is set to push the economy off the cliff, the Scottish National party is the only party supporting Scotland’s small businesses?
Kelly Tolhurst
It will come as no surprise to the hon. Gentleman that I disagree with him. UK Government investment in city region and growth deals in Scotland is now more than £1.3 billion, and there are 48,000 more enterprises operating in Scotland than there were in 2010. We are committed to delivering economic growth and business support across the country, but as the hon. Gentleman will know, it was his Government’s decision to bring in the highest taxes—
David Linden (Glasgow East) (SNP)
Kelly Tolhurst
I am grateful to the hon. Gentleman for raising this topic. Following the Department’s internal review, we will now consult on the options to provide further support to the parents of premature, sick and multiple babies before the end of the summer. The consultation will be informed by the review’s findings, and I am grateful to Bliss, The Smallest Things and the many Members across the House who have spoken to me and lobbied on the matter.
Layla Moran (Oxford West and Abingdon) (LD)
Derek Thomas (St Ives) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government absolutely recognise the importance of post offices to rural communities across the UK. There are over 11,500 post offices nationwide, and Government subsidy safeguards post offices, which can be the last shop in the village, so that they can continue to serve their communities. The Post Office delivered almost £10 million of investment via the community fund between 2014 and 2018 to facilitate rural community branches to invest in their retail businesses.
Derek Thomas
I thank the Minister for her response but, unfortunately, there is one fewer post office today, as Porthleven post office in west Cornwall closes. Six months ago, the Minister said from the Dispatch Box that, guided by the Post Office, a mobile service will be available in west Cornwall to deal with the nine post offices that have so far closed and are now no longer available. Can she please tell me when we will get that mobile service so that people can once again access post office services?
Kelly Tolhurst
I thank my hon. Friend, who has long been a campaigner for post offices in his region. It is true that west Cornwall communities have been unduly inconvenienced, and he is right that the Post Office is now waiting for Cornwall Council to issue a formal permit to formalise the agreement. I have been assured that, due to the closure of Porthleven post office this morning, there will be a weekly mobile service in place very shortly. I just want to highlight that, with such a diverse network in many different locations and settings, it is true that some post offices will close due to unforeseen circumstances and lots of other reasons. It is important that the Post Office keeps up with that challenge to make sure our communities are well served.
Chris Evans (Islwyn) (Lab/Co-op)
With banks closing their rural branches, post offices are the last places where people can access cash. However, as I know from the experience of Pontllanfraith in my constituency, it is increasingly difficult to replace postmasters who give up their tenancy. What can the Government do to work with the Post Office to encourage more people to take up postmaster and postmistress jobs?
Kelly Tolhurst
I thank the hon. Gentleman for raising that matter. A key part of what the Post Office has done is to renegotiate the banking framework, which has seen remuneration for postmasters increase significantly—it has doubled, and trebled in some cases. On Thursday, I will be hosting a meeting with Post Office Ltd and the National Federation of SubPostmasters, where we are hoping to tackle some of the issues about the economic viability of sub-post offices.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
Kelly Tolhurst
My hon. Friend is right: Government have a responsibility to ensure that we work together across Government to ensure that services can be provided through the post office. We must celebrate the fact that the Post Office, for the first time in a number of years, has become profitable. We have the most stable network in decades. Under the last Labour Government, over 7,000 branches shut. We are making sure that we maintain the number of post offices; in fact, we have opened 400 since 2017.
Tim Farron (Westmorland and Lonsdale) (LD)
One of the silver linings of the decision of the high street banks to abandon our town centres is that post offices are now able to pick up that slack. The Minister said earlier that she was meeting with Post Office Ltd and that the income that postmasters get from banking transactions has trebled. The reality is that they are getting a few pence for every £1,000 of work that they do for the banks, so a trebling is still a pittance. Will she ensure that the banks remunerate our post offices for, basically, doing the work that they have left behind?
Kelly Tolhurst
The hon. Gentleman makes a good point about banks moving away from our high streets and the post offices picking up the slack. That is why I am proud of what Post Office Ltd has done in negotiating this new framework. I disagree with him when he says that what postmasters receive is a pittance. In fact, the remuneration has doubled or trebled; it has increased significantly. The Post Office will also be bringing that forward: it will be remunerating postmasters from October, rather than January, when the framework comes into place.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
The new report by a representative group of sub-postmasters notes that a fifth of sub-postmasters are planning to leave the profession, due to increasing financial pressures—indeed we have heard, from different sources, of postmasters earning well below the minimum wage. The result could be the closure of 2,500 branches, threatening the viability and sustainability of the entire network. What discussions has the Minister had with the Post Office to ensure that sub-postmasters are getting a fair deal? Will she urge the Post Office to look at contingency plans to ensure that such closures do not occur?
Kelly Tolhurst
It is true that Members across the House care deeply about our Post Office, and so do the Government. The number of branches remains at its most stable for a decade. To give the hon. Lady some reassurance, my meetings on Thursday will include one of the formal meetings held quarterly—with ministerial oversight—between Post Office Ltd and the National Federation of SubPostmasters to tackle some of the key issues.
I reiterate at the Dispatch Box that Post Office Ltd will be undertaking a review of pay, which will report back in the autumn. I agree that any sub-postmaster who wants to take on a post office franchise must be able to do so in the knowledge that it is financially viable. We are supporting them, and the Post Office is supporting them, to serve their communities.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Andrew Griffiths (Burton) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I recognise the key role that my hon. Friend played in instigating the review when he was in post. Consumer safety is a Government priority and I assure him that we have kept Whirlpool’s action under review. I can tell the House that we have informed Whirlpool of our intention to serve a recall notice as the next step of the regulatory process. This is unprecedented action.
Mr Jim Cunningham (Coventry South) (Lab)
Peter Aldous (Waveney) (Con)
Kelly Tolhurst
My officials are in regular contact with the Treasury and MHCLG to represent the views of business. Last week, we welcomed the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rossendale and Darwen (Jake Berry), to BEIS so he now holds ministerial roles in this Department and in MHCLG, as Minister for the northern powerhouse and local growth. This further strengthens our relationship. We look forward to continuing to work together to support these businesses and make proper representations to the Treasury.
Stephen Kinnock (Aberavon) (Lab)
Ruth George (High Peak) (Lab)
What has the Department done to monitor the growth of short-hours contracts in supermarkets, which have led 76% of USDAW members on low pay to rely on unsecured loans to pay everyday bills, with 63% believing that financial worries are affecting their mental health? Will the Secretary of State meet USDAW to discuss its recent survey in detail?
Kelly Tolhurst
I am happy to meet the hon. Lady to discuss this, but I would like to reaffirm the Government’s commitment to upgrade workers’ rights, protecting the most vulnerable workers. Our legal framework already ensures that employers should always treat their employees fairly, and our good work plan will introduce the biggest upgrade in workers’ rights in a generation. In the retail sector specifically, the industry-led Retail Sector Council has identified that employment is a key priority for the workstream and we will be discussing that on 20 June.
Kevin Hollinrake (Thirsk and Malton) (Con)
At the last BEIS questions, my right hon. Friend the Business Secretary gave a positive response to my suggestion of a wide-scale roll-out of solar on every public sector building—every school, hospital and prison. Is he interested in taking that proposal forward?
Jim Shannon (Strangford) (DUP)
Will the Minister outline what steps her Department has taken to ensure that free ATM services are retained in rural areas?
Kelly Tolhurst
Absolutely. Access to free cashpoints is an important part of our high streets and I personally, as a constituency MP, have made representations on that to the banking sector. However, through the post office network, we already have a great deal for offering cashpoints in post offices with the Bank of Ireland. I hope to make sure that Post Office Ltd extends that service. We continue to campaign and talk to the Treasury to make sure that we still offer those cashpoint services.
Bim Afolami (Hitchin and Harpenden) (Con)
The Secretary of State knows that Rothamsted Research in Harpenden does amazing work in agricultural science. Many people at Rothamsted have expressed to me their concern about the nature and the amount of science funding after we leave the European Union. Will the Secretary of State give me an update as to where we have got to on that as a Government?
Jenny Chapman (Darlington) (Lab)
Yesterday, I spoke to the chief executive of Arcadia Group about the Top Shop, Top Man and Dorothy Perkins stores in Darlington. Tomorrow, there is a CVA—company voluntary arrangement —meeting where we could see the loss of 18,000 jobs nationwide. I know that the Government cannot intervene in the process, but what are they going to do to protect communities who could be affected by this decision?
Kelly Tolhurst
The hon. Lady raises an important point about the viability of some of the retail outlets that are operating on our high streets. She is absolutely right that it is concerning when we are looking at any closures of retail names on our high streets. We stand ready to do what we can, along with my colleagues in MHCLG, if closures occur. As I have already outlined, we are working with the Retail Sector Council. We are committed to making sure that we work with the retail sector and high streets to make sure that we can truly grow our high streets and protect retail for the future.
Mr Edward Vaizey (Wantage) (Con)
A small amount of funding would unlock the growth of Harwell campus in my constituency via the Nuclear Decommissioning Authority. Will the Secretary of State, who knows Harwell campus well, meet me and the NDA there to discuss how we can get on and build Greg Clark Park and Theresa May Way, and drive this successful science campus to help growth post Brexit?
Alison Thewliss (Glasgow Central) (SNP)
The Scottish Government’s consultation on fireworks closed last month, having received 16,000 responses. Can the Minister update us on the UK Government’s action on fireworks, and can she guarantee that my constituents in Pollokshields will not have to suffer as they did last November?
Kelly Tolhurst
I would be grateful to discuss the consultation outcomes with the hon. Lady. As she will know, the Office for Product Safety and Standards is undertaking a review, and I will happily update her when we have the results.
Stella Creasy (Walthamstow) (Lab/Co-op)
I have been inundated with complaints from local residents about a second-hand car sales company in my community that variously goes by the names BD Trade Sales, Leabridge Motors, Diamond Motors and many more. Members may be aware of its work from programmes such as “Rogue Traders”, “Don’t Get Done, Get Dom”, “Watchdog” and “The Sheriffs Are Coming”. Despite the evidence about how it is ripping off consumers, the council, trading standards and the police have not been able to stop it. Will the Minister meet me to talk about what we can do to hold these phoenix companies to account, so that we get dodgy cars off the roads and get consumers a better deal?
Kelly Tolhurst
I am grateful for the hon. Lady’s offer to meet me to discuss this issue, which I am keen to do. I hope that when we are in a position to make announcements in the consumer White Paper, we will be able to do exactly that—tackle some of the consumer detriment that we see across the country. I look forward to meeting her to discuss that.
Anna Soubry (Broxtowe) (Change UK)
The Secretary of State has quite properly described a no-deal Brexit as “a disaster” for British business. Will he commit to continuing to do everything he can to prevent a no-deal Brexit, whoever the Conservative party choose as our next Prime Minister?
Consumer Protection
Kelly Tolhurst Excerpts(6 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the draft Consumer Rights Act 2015 (Enforcement) (Amendment) Order 2019, which was laid before this House on 13 May, be approved.
Ensuring the safety of UK consumers is a key priority for the Government. It is vital that consumers can trust that the products they buy are safe. Responsible and law-abiding businesses also need to be confident that businesses which ignore their responsibilities will be held to account for breaches of product safety.
The UK enjoys a robust legal framework to protect consumers, and the Government are committed to maintaining and building on that. Indeed, we have taken decisive action to enhance the effective functioning of the product safety system. We launched the Office for Product Safety and Standards last year to enhance the UK’s product safety system and to provide strategic leadership and co-ordination of the system, taking a lead in response to national product safety incidents. The OPSS works closely with local trading standards teams to support them in tackling local issues.
Yvonne Fovargue (Makerfield) (Lab)
Does not the Minister agree that the cuts to local trading standards departments, which have seen them lose about 56% of their staff, have severely hampered their work in keeping the public safe?
Kelly Tolhurst
The hon. Lady is right about the role of trading standards and the pressures under which departments operate. The local priorities of local trading standards will always differ across the country. The beauty of the OPSS is that it takes a strategic role, which enables it to support local and national trading standards in dealing with nationwide issues. It also provides expertise and financial support for testing functions, when required.
We launched the OPSS last year to enhance the system. We work closely with local trading standards departments to support them in their work and in tackling local issues. The aim of this order is to strengthen the ability of the OPSS to carry out its role in leading the response to national product safety incidents and cases and in ensuring the cohesion of the product safety system.
The order does three things. First, it will enable the Secretary of State, and the OPSS on his behalf, to investigate potential safety issues related to consumer products regulated by the provisions of the General Product Safety Regulations 2005, using the investigatory powers listed in schedule 5 to the Consumer Rights Act 2015. Secondly, the order will enable enforcement authorities in the UK, including local trading standards, district councils in Northern Ireland and the Secretary of State, to use those same investigatory powers to investigate claims about gas appliances and personal protective equipment. Finally, the order makes a minor amendment to the Measuring Instruments Regulations 2016 and to the related reference in paragraph 10 of schedule 5 to the 2015 Act to correct a typographical error.
Potential safety issues relating to consumer products covered solely by the General Product Safety Regulations can already be investigated by enforcement authorities using the powers under schedule 5 to the 2015 Act. Such issues are generally investigated by local trading standards in the UK and by district councils in Northern Ireland in the local area where the incident has occurred. The order will enable the Office for Product Safety and Standards, on behalf of the Secretary of State, to investigate claims of unsafe products in the context of national incidents or cases, providing equivalent investigatory powers to those available to local trading standards and other relevant enforcement authorities. This means that the OPSS can provide the leadership and action needed to deal with national incidents and cases.
The order will provide the full range of powers contained in schedule 5 to the 2015 Act, which includes powers to require the production and potential seizure of documents, the inspection and purchase of products, the testing of equipment and the seizure and retention of goods. These are essential aspects of undertaking effective checks and actions in relation to unsafe goods. It is vital that our new national regulator has these powers across the broad spectrum of consumer products, which will enable it to provide leadership on cases and incidents of national importance.
The Secretary of State, and the Office for Product Safety and Standards on his behalf, may already exercise these powers in relation to the enforcement of sector-specific regulations such as on electrical equipment, lifts and so on. The Government want to ensure that the Secretary of State can lead across the wide range of consumer products, not just those that fall under sector-specific regulations. The order therefore allows the Secretary of State to investigate any type of product covered solely by the General Product Safety Regulations, should the need arise.
The order’s second purpose is to make sure that the Secretary of State, local trading standards in Great Britain and district councils in Northern Ireland can investigate safety issues concerning gas appliances and personal protective equipment. New regulations were introduced last year under the negative procedure, and this order now provides for the amendment of the 2015 Act by the affirmative procedure. It also enables enforcement authorities to use the investigatory powers in schedule 5 to the 2015 Act in relation to products covered by the 2018 regulations.
Finally, the intention underpinning the enforcement of the Measuring Instruments Regulations has always been that the enforcement authorities should have access to the investigatory powers in schedule 5 to the 2015 Act. This order corrects a typographical error in the relevant provision in both the regulations and schedule 5.
The order will provide the ability for the OPSS to lead and co-ordinate responses to national product safety cases and incidents, enhancing protection for UK consumers. It improves the Secretary of State’s ability to investigate claims of unsafe consumer products, and it helps to prevent injury and loss of life.
Dr David Drew (Stroud) (Lab/Co-op)
The Minister probably knows what I am going to say about school notice boards. She and her colleagues have been very helpful. Could she confirm that the order will make it quicker and easier to look at such products, which at least need investigation?
Kelly Tolhurst
I thank the hon. Gentleman for his intervention. I note his passion for the safety of notice boards in schools. He is correct. The essence of the order is that the Office for Product Safety and Standards will be able to act quickly and effectively in investigating and in using the full range of powers open to us to make sure we take the necessary action to protect consumers.
Enhancing protection for UK consumers is at the heart of my Department’s priorities, and the order improves the Secretary of State’s ability to investigate claims about unsafe consumer products and helps to prevent injury and loss of life. The order gives greater protection to law-abiding businesses, as it helps to stop unfair competition by preventing the placing of unsafe products on the UK market, and it makes sure that, where there is a national product safety incident, the Secretary of State can provide the necessary support and leadership to investigate.
The order enables the Secretary of State, local trading standards and district councils to investigate the safety of gas appliances and personal protective equipment regulated by the 2018 regulations. It is a further step in making sure that the Office for Product Safety and Standards can fulfil its regulatory role in the area of product safety, and it is a further step in the Government’s commitment to protecting consumers and maintaining fair markets for law-abiding businesses.
Kelly Tolhurst
I welcome the contributions from all Members, because we all care about consumer safety and it definitely lies at the heart of what I have been doing in my time at the Department. I wish to comment on some of the points made and answer some of the questions that were posed.
First, I respect the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss) and her thoughts on Whirlpool, but I did inform the House in oral questions this morning—I do not know whether she heard—that the Government have notified Whirlpool of their intention to issue a recall notice, which is part of the regulatory process. Although I have much respect for the hon. Lady, I totally disagree with her characterisation of the Government’s view on taking forward the concerns relating to Whirlpool and of the Office for Product Safety and Standards’s role in that process.
Yvonne Fovargue
There are still millions of people who have not contacted Whirlpool and about whom Whirlpool knows nothing, so does the Minister not agree that the recall process would have been so much easier had there been at the time of sale a central register that could be used only in the event of a recall of dangerous white goods?
Kelly Tolhurst
The hon lady raises an important point. The process we have followed has meant that the Office for Product Safety and Standards carried out a review. We obviously want to move on to the next stage, and this is a great example of what the Office for Product Safety and Standards is able to do. The statutory instrument describes a specific element of that, mainly relating to the investigatory powers. We are doing further work on consumer protection as we bring together—we hope, in the near future—a consumer White Paper on strengthening enforcement and a host of other things, on the back of the Green Paper that was announced last year.
On the Secretary of State’s powers to investigate, local trading standards in Great Britain and district councils investigate claims about potentially unsafe products in their local areas. National incidents are designated under the Office for Product Safety and Standards’s national incident management plan triage process. We want the OPSS to lead on national incidents and to have the same investigatory powers as local trading standards. The Secretary of State already has equivalent investigatory powers to investigate any products regulated under specific legislation, such as cosmetics and electrical equipment, but not cots and DIY tools. This order aligns the Secretary of State’s powers with those that are already available to trading standards and ensures the consistency of the powers that could be used by the OPSS. The circumstances under which the Secretary of State would exercise those powers is where the OPSS’s national incident management plan triage process concludes that the nature of the product warrants such action.
With regard to the OPSS and its communication with our trading standards, I have to tell the House that the relationship between national trading standards, local trading standards and the OPSS is one of continuous communication and working together. We would not be able to influence and to have such a great enforcement system without those organisations working together. Yesterday, I met trading standards professionals across the enforcement landscape. A key part of my role has been making sure that I keep in touch with representatives of national and local trading standards. I wish to put it on record that trading standards officers do invaluable and exceptional work throughout the country. They work incredibly hard and are very much the unsung heroes.
Mrs Hodgson
I agree with the Minister on that point, but I want to highlight the points that I was making about the funding of national trading standards. [Interruption.] She has just assured me that she is coming on to that point.
Kelly Tolhurst
The Government took a great step when they formed the OPSS in January 2018. The OPSS was given additional funding of £12 million a year to build national capacity for product safety. The expertise—the scientific-based research— that it will be able to undertake will aid and assist local trading standards in carrying out their own functions. This is very much a working-together situation. We have committed £190,000 to behavioural insights to date and invested £498,000 on social science research. Over the next three years, £4 million will be spent on upgrading the scientific facilities in Teddington, and £750,000 of support has been provided in 2018-19 for testing and training trading standards, and there is another £500,000 funding for trading standards to carry out product safety testing, and that will increase next year. We have also trained more than 250 trading standards authorities, which included training 800 people. Such training enables local trading standards to have free access to the technical British standards, which really equips them and supports them in identifying compliance issues.
Let me move on now to the issues raised by the hon. Member for North Ayrshire and Arran (Patricia Gibson). She was very concerned about funding, and as I have tried to outline, the OPSS will take a strategic role in supporting local trading standards. The statutory instrument ensures that we have a clear enforcement strategy, which gives the OPSS and the Secretary of State the powers that they need.
Patricia Gibson
Forgive me if the Minister has said this already and I have missed it, but given that the powers of the OPSS are to be strengthened, will there be an increase in personnel to support trading standards, and will the OPSS itself receive additional money—apart from the £12 million that it received when it was set up?
Kelly Tolhurst
The OPSS is ready. It is taking on not extra work, but an extra power, which it is quite ready to take on. I have already outlined what it has done in the case of Whirlpool.
I understand the concerns of the hon. Member for Washington and Sunderland West (Mrs Hodgson), and she is a great campaigner in this area. She will know that work is ongoing with regard to secondary ticketing. That matter is not related to this SI, but I am more than happy to speak with her directly outside the Chamber to give her some more assurances if that is what she wants.
I almost forgot the contribution of my hon. Friend the Member for Worthing West (Sir Peter Bottomley). I am grateful to him for raising those issues. We are looking at strengthening consumer protection, full stop. Perhaps we could meet. I have not spoken to him about this issue, but I am more than happy to meet him, so that we can investigate the matter further with the OPSS if necessary.
Without this order, we will not be maximising the potential of the new regulator. The British public would ultimately have less protection from unsafe and non-compliant products. Law-abiding businesses would have less protection in maintaining and growing their businesses and the UK economy, and that is not what this Government want. We are committed to making the UK product safety systems the best in the world, and ensuring that our regulators have the right tools to protect our people is a further step to achieving that goal Therefore, I commend this statutory instrument to the House.
Question put and agreed to.
National Minimum Wage Naming Scheme
Kelly Tolhurst Excerpts(6 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Stephanie Peacock (Barnsley East) (Lab)
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the suspension of the national minimum wage naming scheme.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Enforcement of the national minimum wage and the national living wage is a priority for the Government, and we take tough action against the minority of employers who underpay. Last year, employers were ordered to repay over 220,000 UK workers a record £24.4 million of arrears. We have more than doubled the budget for minimum wage compliance and enforcement since 2015, and it is now at a record high of £27.4 million.
As part of our enforcement approach, we name employers who have breached the legislation, which raises awareness of national minimum wage enforcement and deters others who may be tempted to break the law. To date, the Government have named almost 2,000 employers who have underpaid the national minimum wage. The Government are reviewing the naming scheme to ensure that it continues effectively to support minimum wage compliance. This is in response to a recommendation made by the director of labour market enforcement, Professor Sir David Metcalf, last year.
In December 2018 we accepted both of the director’s recommendations relating to the naming scheme, specifically to review the scheme’s effectiveness and to consider how to provide further information under the scheme in future. The Government have sought to learn from other naming schemes and other regulatory approaches. We have also discussed the evidence with the director of labour market enforcement and have conducted further analysis to understand the impact that any changes to the scheme would have on the number of employers named.
Naming and shaming remains an important part of our enforcement toolkit, and the review will be concluded in the coming weeks. Any changes to the scheme will be communicated through the national minimum wage enforcement policy documents.
Stephanie Peacock
Thank you, Mr Speaker, for granting this urgent question, which finally forces a Minister to admit to the House that the Government have quietly dropped one of the few policies they had to protect vulnerable workers. The naming scheme had exposed nearly 2,000 employers who illegally underpaid nearly 100,000 workers by millions of pounds, including household names from TGI Fridays to Marriott hotels, but the last such list was almost a year ago.
As we now know, the Government have privately decided to suspend the scheme, despite the Department’s official guidelines maintaining that the scheme still operates. The Minister claims this was based on a recommendation of the director of labour market enforcement, made over a year ago, yet the director made no such recommendation to suspend the scheme; he simply called for an evaluation and specific improvements. The Government accepted those recommendations, so why have they not simply implemented them and continued with the scheme in the meantime? Can the Minister confirm that as this review has “no set completion date”, this policy has been effectively halted? Can she tell us what progress the review has made in the last year? What evidence has it taken, what research has been commissioned, what work has her Department done, and what proposals will come to the House and when? Or is the so-called review in reality just an excuse to let bad employers off the hook?
This is the latest in a long list of policies that would help working people, from fair tips to equality for agency workers, that have been delayed or dropped by the Government. Time and again, they crack down on the vulnerable and back down before the powerful. When will this capitulation to rogue employers over working people finally end?
Kelly Tolhurst
I have to say that the hon. Lady is incorrect: the scheme has not been dropped. Given the impact that being named can have on a business, it is right that we properly consider the effectiveness of the naming scheme. We want to make sure that our enforcement approach balances the need to crack down on the most terrible employers, who purposely and persistently break the law, with the need to be fair to and educate employers who try to do the right thing.
We are in no way going soft on employers. Last year, we issued record financial penalties to more than 1,000 non-compliant employers to the value of £17 million. That was part of our commitment to support workers’ rights. Our good work plan sets out a vision for the future of the UK labour market and includes an ambitious programme of work to implement 51 of the 53 recommendations Matthew Taylor made in his review of modern working practice.
I must point out, however, that it was this Government who gave the lowest paid workers the biggest increase in the national living wage in 20 years.
Vicky Ford (Chelmsford) (Con)
I was reading the report from the Resolution Foundation, an independent organisation, and it says that the proportion of low-paid workers in Britain has dropped to its lowest level since the 1980s, thanks to the national living wage. Why on earth would we not name and shame employers if they were not complying with such an important part of the Government’s policy?
Kelly Tolhurst
I thank my hon. Friend for outlining that piece of work. It is right that naming and shaming rogue employers is a key part of our enforcement. We have doubled the budget since 2015 for enforcement of the national minimum wage, and one of the key things that I am particularly interested in is making sure that we go after those individual employers or big organisations that are deliberately trying not to pay workers the minimum wage.
Rebecca Long Bailey (Salford and Eccles) (Lab)
I thank my hon. Friend the Member for Barnsley East (Stephanie Peacock) for securing this important urgent question. One of the proudest achievements of the last Labour Government was the introduction of the national minimum wage, safeguarding workers from exploitative pay practices. Sadly, from the Trade Union Act 2016 to their failure to address exploitation through zero-hours contracts or bogus self-employment, this Conservative Government cannot be proud of their record on workers’ rights. The admission today that the naming and shaming scheme has been effectively shelved only adds to that woeful record.
The national minimum wage is effective only if it is adequately enforced. The Government have stated that the naming and shaming element of minimum wage enforcement is vital, alongside other measures such as fines. Has the Minister made any assessment of the impact of the scheme’s suspension on minimum wage avoidance in the last year? Has the Department continued to identify those employers underpaying during that period, and what action has been taken?
The Minister will also be aware that the director of labour market enforcement also criticised the Government not so long ago in respect of their utilisation of the enforcement mechanisms available to them. The director also asked about additional resource, so it would be helpful if the Minister could identify what funding has been made available to enhance enforcement capacity at Her Majesty’s Revenue and Customs.
Not only is enforcement of the minimum wage important, but the level at which it is set is crucial. I know the Chancellor of the Exchequer thinks that poverty is a figment of our imagination, but the fact is that in 2017 more than 1.5 million people had less than £10 a day to live on, according to the Joseph Rowntree Foundation. Labour is committed to ending the scourge of low pay. We will introduce a real living wage of £10 an hour and end the unfairness of lower rates for those under 18. Will the Minister take this opportunity to improve her Government’s record on poverty and workers’ rights and commit to doing the same?
Kelly Tolhurst
The hon. Lady says that the Government have nothing to be proud of, but I am absolutely proud to serve in a Government who have put so much focus on enforcing the national minimum wage. As I have already mentioned, this year we increased the national minimum wage by the biggest amount in 20 years, up 4.9%.
It is simply not true to say that we have shelved the naming and shaming scheme. It is absolutely right for me, as the Minister responsible, to evaluate the scheme and make sure that any naming and shaming scheme is meaningful, adds value, acts as a tool to aid employers to make sure that they are able to comply with the national minimum wage legislation, and enables us effectively to communicate exactly what the breaches are and why, and the detriment to the individual worker. We remain absolutely determined to stamp out low pay.
We currently have larger numbers of people in work than ever before, and it is absolutely right that those individuals should get the hourly rates to which they are entitled. As I said in my opening remarks, we doubled the enforcement budget to £27.4 million in 2019-20. That was up from £13.2 million in 2015-16. We are committed to continuing that enforcement. I will not make excuses for reviewing the naming and shaming scheme, because we want to add value and make it more effective, and we want to make sure that we aid employers, help workers to understand their rights and offer routes to recourse.
Rachel Maclean (Redditch) (Con)
I entirely agree with the Minister: I, too, am proud of the record that has meant £2,750 more has been put into the pockets of my Redditch constituents since the introduction of the living wage. Will the Minister update us on the progress towards having a single organisation that looks after workers’ rights, which will be valuable in the seeking of redress?
Kelly Tolhurst
I thank my hon. Friend for raising that point. She is absolutely correct that in our good work plan we announced our intention to consult on a single labour market enforcement body. Our good work plan was a major step forward for the Government. I should point out to Opposition Members that the good work plan is the biggest reformation of workers’ rights for 20 years. It is this Government who are doing it and I am proud to be part of it.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The Government’s wage policy simply is not delivering for those who need it. Under the Tories, FTSE 100 chief executive pay has gone up by two thirds; when will the Minister finally deliver for those who are not rich and match the Scottish living wage? Incidentally, the Scottish living wage is now paid by 1,300 employers in Scotland—more than a quarter of all the living wage employers in the UK. Outside London, that means a wage of £9.55 an hour paid to all workers, including those aged under 25 whom the Tories have left behind. If the Minister cannot commit to that, she should devolve powers so that the SNP Scottish Government can. Given that nearly 370,000 workers on national minimum wage contracts are being underpaid, will she commit to implementing in full the recommendations in the Low Pay Commission’s report on non-compliance and enforcement, including on naming rounds for those who do not comply?
Kelly Tolhurst
First, let me point out to the hon. Gentleman that we are not dropping the naming and shaming scheme. He was right to mention corporate governance and the issues around executive pay, which this Government take seriously and we are taking steps to address. He will know that the Low Pay Commission recommends national minimum wage levels to the Government. He mentioned the under-25s, but let me point out to him that almost nine in every 10 18 to 24-year-olds are paid above their wage bracket.
Huw Merriman (Bexhill and Battle) (Con)
My constituency is one of the top 10 constituencies with the highest proportion of workers on the national living wage, so I welcome the fact that we have increased that wage by another £600 thanks to our excellent Chancellor and his Budget. I know that the Minister has come here to help the lowest paid make something of themselves, but may I say to her that it is essential that we make sure that employers do not get away with non-compliance, because it is unfair to other employers and to the employees who will not be protected. She is right to review the scheme, and she is taking great steps, but I urge her to keep the name and shame policy because there is no better way of shaming people into compliance.
Kelly Tolhurst
I thank my hon. Friend for his comments. Her Majesty’s Revenue and Customs will investigate any complaint that it receives about underpayment of the national minimum wage. We also have ACAS, which provides a helpline for individuals who feel that they are not being paid the national minimum wage. Naming and shaming is part of our toolkit of enforcement, but, as I have said, it is only one tool. I want to make sure that when we name and shame organisations, we understand what the detriment is and how much the detriment is. We need to make sure that, when we report these companies, we are reporting not just big names to grab a headline, but meaningful information that helps to advise and educate employers and, really importantly, educates workers so that they understand that, where there is a detriment, they can take action.
Paula Sherriff (Dewsbury) (Lab)
With record numbers of people struggling with in-work poverty, this Government should be doing everything they can to reverse this shameful record. Instead, they are removing schemes that expose exploitative employers. Will the Minister think again and not only reinstate the national minimum wage naming scheme, but use the scheme to enforce the law? Will she also provide a date by which she intends to complete the review?
Kelly Tolhurst
The hon. Lady knows that I have a great deal of respect for her, but she has not listened to what I have said. We have not dropped the naming and shaming scheme. I want a scheme that is valuable and meaningful, that aids compliance and enables workers to get their entitlement, and that makes sure that employers follow the law. I want to focus on enforcement, absolutely making sure that we penalise and reprimand any employer that is underpaying workers who are entitled to the minimum wage. Since the start of the scheme, we have seen 12 prosecutions. Last year alone, there were seven labour market enforcement undertakings and orders where the national minimum wage had been breached. I am committed to this scheme; this Government are committed to this scheme. We have a record number of people in work, and, this year, this Government have overseen the largest increase in the national minimum wage.
Mr Philip Hollobone (Kettering) (Con)
Can the Minister confirm that it remains Government policy to increase the national living wage to 60% of median earnings by 2020? If that does remain the case, will that not mean an extra pay rise for millions of workers?
Kelly Tolhurst
My hon. Friend is absolutely correct. We remain on target to reach our ambition of 60% of median earnings by 2020. That is something that this Government are looking forward to achieving. We are not stopping there. We are looking forward to seeing where we can continue to increase the wages for our lowest paid workers past 2020.
Jo Swinson (East Dunbartonshire) (LD)
Naming and shaming employers who fail to pay even the basic minimum is one of the strongest ways that society can send a message that such behaviour is unacceptable. The Minister talks about the impact on employers of being named, but I am more concerned about the impact on workers who are underpaid—some of the most vulnerable people in our society. Whether it is deliberate or otherwise, they feel that impact. I recall the opposition that I had to face from the Minister’s Conservative colleagues when I was in her role and introduced this scheme. Will she give the House an assurance today that the review will include no watering down of the scheme to let employers off the hook, and will she name the date when the next round of naming will happen?
Kelly Tolhurst
Given the hon. Lady’s previous role, I know that she understands well the portfolio, and the naming and shaming system. I reiterate that we have not dropped the naming and shaming scheme. I have tried to be extremely clear that I want the naming and shaming scheme to be meaningful, add value and give us proper information so that we can understand where there is detriment to workers and why. We will still name individuals, but I want employers to comply with the law and workers to get what they are owed. That is not just about naming and shaming; it is also about ensuring that the information that we are publish aids education and helps to stop any detriment to employees. Not all employers are wilfully paying under the national minimum wage, and we have a duty to educate businesses so that they are easily able to comply with the law.
Sir Desmond Swayne (New Forest West) (Con)
Why was it necessary for the Minister to suspend the scheme while she reviewed it to make it more meaningful and useful?
Kelly Tolhurst
I decided to do that because I wanted to ensure that I was naming and shaming with meaningful information. I will not make excuses for making sure that we are delivering and reviewing a policy, or for carrying out what the director of labour market enforcement asked us to do.
Diana Johnson (Kingston upon Hull North) (Lab)
So can the Minister confirm that those sleazebag employers who rip off the lowest paid in our country are actually going to be named and shamed for the last 12 months?
Alex Chalk (Cheltenham) (Con)
Naming and shaming is one tool, but does the Minister agree that one of the most powerful tools to increase incomes is to reduce the amount of tax paid by people on low pay? Like me, does she take pride in the fact that instead of people having to pay tax on earnings of above around £6,000, as was the case in 2010, the figure is now closer to £12,000—adding hundreds of pounds to people’s incomes?
Kelly Tolhurst
Absolutely, and this Government have made great ground in that regard. This is not about grabbing headlines. It is about ensuring that workers get the pay to which they are entitled, which is why we have doubled the enforcement budget and are collecting more arrears than ever before. There were more than 3,000 successful investigations by Her Majesty’s Revenue and Customs in the last year alone. I want that budget to be spent effectively on catching more employers who are underpaying the minimum wage.
Alison Thewliss (Glasgow Central) (SNP)
It is all well and fine for the Minister to say that some under-25s are paid more than they are legally entitled to receive, but that gives no reassurance to those who are not. May I suggest that she adds to her naming and shaming scheme employers who employ young people on short-term, temporary contracts and then dismiss them when they cost more money?
Kelly Tolhurst
The hon. Lady raises an issue regarding the incorrect practice of employers. As I have said, HMRC will investigate every complaint and ACAS is available to receive those complaints. We have asked the Low Pay Commission to undertake a review of the structure of the national minimum wage, and it will report back later in the year. We encourage employers always to pay above the minimum wage brackets if they are able to do so.
Jo Stevens (Cardiff Central) (Lab)
The Minister has said on a number of occasions that the Government are taking tough enforcement action against employers who fail to pay the minimum wage, but between 2010 and 2018 in Wales there has not been a single successful prosecution resulting in a fine against employers for underpaying. This is not tough enforcement; it is impunity.
Kelly Tolhurst
The hon. Lady raises prosecutions as the only way of action or enforcement, but that is not true. I have said that since 1999 over £118 million has been paid back—to over 200,000 workers in 2019, so in just one year. It is true that there have been only 14 prosecutions. However, organisations are required to pay back the arrears, and pay a penalty, wherever a breach is found. I would like to highlight the fact that the Government have recently been consulting on salary sacrifice schemes. There have been examples in the media of workers being found to have a detriment through salary sacrifice schemes. This has been a key area in employers being caught under the national minimum wage legislation.
Catherine West (Hornsey and Wood Green) (Lab)
What assessment has the Minister made of the pay discrepancy among cleaners in Whitehall? The Department for International Development pays the London living wage but the Ministry of Justice, which should be seeking justice, pays the national minimum wage. What does she intend to do about it?
Kelly Tolhurst
I thank the hon. Lady for raising that point about the differences between Departments. I do not personally have the details of that and I have not looked into it, but I will happily do so, and I am more than happy to write to her with a fuller answer.
Stewart Malcolm McDonald (Glasgow South) (SNP)
Last time I spoke to the Minister about the use of unpaid work trials and the minimum wage, there had not been a single tribunal case anywhere in the UK in this regard that had been successful. Since that time, there has, but it was in Jersey, where a Polish woman took on her employer and won back the £30 that the tribunal said she was entitled to for the trial. What impact will that have on UK employment law? In the 20-odd years of the National Minimum Wage Act 1998 we have only just this year had one successful tribunal. Does that not tell her that the law is deficient and needs amending, and that unpaid work trials should be outlawed in their entirety?
Kelly Tolhurst
The hon. Gentleman is a keen campaigner in the area of unpaid work trials. As I have said on many occasions, in most cases, unpaid work trials, if they are not a small trial that is conducive to the work environment, are illegal. On the back of his campaign and work that had been done before, we issued new guidance in December 2018. As I have said, where a worker feels that they have had a detriment, they are to report it to HMRC or ACAS. HMRC will investigate every complaint. We cannot just judge this issue on prosecutions. We need to judge it on where the detriment to the worker is, and then ensure that they get what is owed to them and that the employer is penalised.
Jim Shannon (Strangford) (DUP)
I thank the Minister for the response that she has given. What discussion has taken place with the Chancellor with regard to help for small businesses who struggle to make the payroll, and have a presence on the high street, in order to provide tax relief or other help so that the local economy is helped and that small businesses can survive and pay a correct and fair wage?
Kelly Tolhurst
I thank the hon. Gentleman for raising the issue of small businesses. It is absolutely true that small businesses are the backbone of our economy—99.6% of all UK businesses are small businesses, and is absolutely right that we are able to help them. A key part of that is making sure that, as the small business Minister, I make representations to the Chancellor and across Government on what small businesses need. The work that is being done on the review of naming and shaming is to make sure that when small employers find themselves in breach of the national minimum wage legislation, we are able to give them the right guidance and advice to enable them to meet their obligations. Many small employers want to make sure that they pay the national minimum wage, and above the national minimum wage. It is our duty not only to penalise but to aid and enable small businesses to meet their obligations.
Post Office Network
Kelly Tolhurst Excerpts(6 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I wish to provide an update to hon. Members on the steps that the Government are taking to ensure the long-term sustainability and resilience of the post office network.
The Government set the strategic direction for Post Office Limited, to maintain a national network accessible to all and to do so on a sustainable financial basis and allow the company the commercial freedom to deliver this strategy as an independent business.
We recognise the Post Office’s distinct social purpose and the important role post offices play in communities across the country, which is why our 2017 manifesto committed to safeguard the network, protect existing rural services and work with the Post Office to extend the availability of business and banking services to families and small businesses in rural areas.
Between 1997 and 2010 the post office network reduced in size by 37%, resulting in the loss of over 7,000 post offices. Since 2010 we have invested over £2 billion in the network. This funding sought to increase the viability of the network by making it more accessible, modern and tailored to customers’ needs while reducing the long-term burden on the taxpayer.
The Government have no programme of post office closures. Post Office Limited has opened over 400 branches since April 2017 and the Government are committed to ensuring the long-term sustainability and resilience of the network. We not only place a contractual commitment on Post Office Limited to maintain a network of 11,500 branches, but also stipulate stringent access criteria to ensure that this large network is accessible to citizens across the country. More than 93% of the UK population live within one mile of their nearest branch, with more than 99% within three miles.
There are now over 11,500 branches and the post office network is at its most stable since 2013, having changed in size by under 1% over this period. This overall change accommodates a level of churn in what is an extremely diverse network, as branches close and are replaced, and Post Office Limited is therefore used to working quickly with local stakeholders to provide replacement services.
Government subsidy ensures that branches serving our rural communities that need additional support receive it so that they can stay open. In order to provide value for money for the taxpayer the subsidy to the post office has reduced. This fact reflects the progress that the business has made: returning to profit after 16 years of losses, providing a stable network and reducing its reliance on the taxpayer.
Beyond 2021, Government remain committed to ensuring the long-term sustainability of the network and will work with Post Office Limited to achieve this.
It is crucial that running a post office is attractive and sustainable for postmasters, and they should be fairly remunerated for the services they provide. Post Office Limited’s successful renegotiation of the banking framework with 28 high street banks, announced on 15 April, secured a significant increase in the overall fees they receive from the banks. As a result of this, they will double and, in some case, treble the rate that agents receive for processing deposits from October 2019. For example, in a main post office branch, postmasters will receive £8.16 for processing a £8,000 cash deposit, compared with the £3.12 they currently receive.
98% of the post office network is franchised and postmasters are vital to the delivery of the network. The remuneration for delivering post office services should be combined with a successful retail offer in order for postmasters to thrive in today’s competitive retail environment.
The Government have rightly moved with the times as many of us now prefer to access services online. Whilst this has an impact on the Post Office, we cannot ignore people’s desire to transact with Government digitally from the convenience of their own homes. However, we are also committed to ensuring that its services are accessible to all citizens and the post office network does and will continue to play a key role in this.
We are committed to working with Post Office Limited and our postmasters to develop the business and offer, in order to maintain the delivery of services that our constituents want and need, so that the Post Office remains at the heart of communities across the country.
[HCWS1592]
Register of Beneficial Owners of Overseas Entities
Kelly Tolhurst Excerpts(6 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Our modern industrial strategy seeks to maintain the UK’s global reputation as a good place to do business. People come to Britain confident in our high corporate standards, including market transparency, which foster confidence and trust. Transactions are improved and the market has greater confidence when people know who they are doing business with, while lack of transparency can facilitate criminal behaviour.
The 2017 national risk assessment of money laundering and terrorist financing highlights the fact that property continues to be an attractive vehicle for criminal investment, in particular for high-end money laundering. The risks relating to abuse of property are most acute where property is owned anonymously through corporate structures or trusts.
This Government committed at the 2016 international anti-corruption summit to create a register showing the beneficial owners of overseas entities which own or buy property in the UK. The Government also committed in primary legislation, through section 50 of the Sanctions and Anti-Money Laundering Act 2018, to report to Parliament annually on the progress that has been made towards putting in place such a register.
Over the past year, significant progress has been made towards the introduction of the register.
The Government published a draft Registration of Overseas Entities Bill on 23 July 2018 and invited comment on it from interested parties. Some 29 responses were received from civil society groups, the property sector and others, which has informed the development of the register. The draft Bill and explanatory notes set out how the register will operate.
A Joint Committee was appointed to consider and report on the draft Bill. The Commons members of the Committee were appointed on 19 February 2019. The Lords members were appointed on 25 February 2019. The Committee held a number of evidence sessions, including one on 25 March 2019 at which I gave evidence. They also invited interested individuals and organisations to submit written evidence to their inquiry.
The Committee made recommendations in a report to both Houses, published on 20 May 2019. The Government welcome the Committee’s thorough and helpful scrutiny of the Bill. We are considering their recommendations and will publish a response in due course.
The Government intend to introduce the Bill to Parliament as soon as parliamentary time allows. We will continue to work closely with interested parties, including our delivery partners, in developing secondary legislation and preparing for implementation. Following Royal Assent and the making of secondary legislation, the Government intend that the register will be operational in 2021.
The UK continues to lead the global fight against illicit finance. The Financial Action Task Force completed a landmark review of the UK’s regime for tackling money laundering in December 2018, concluding that we have some of the strongest controls in the world.
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Contingency Fund
Kelly Tolhurst Excerpts(6 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Competition and Markets Authority (CMA) has sought a repayable cash advance from the contingencies fund of £14,700,000 to ensure the CMA’s relocation to Canary Wharf remains on schedule.
The CMA will receive its voted funding for this project at the main estimate, and consequently may only draw the related cash from the consolidated fund after the Supply and Appropriation Act has received Royal Assent in July 2019. This requirement has arisen because the 2019-20 capital expenditure for the construction works at the CMA’s new offices at Cabot Square exceeds the vote on account for capital expenditure prior to Royal Assent. The requirement to include the voted funding in the main estimate was agreed after the vote on account for 2019-20 was approved.
The cash advance will ensure the project stays on track and on budget and ensure that the CMA also meets its operational needs.
Parliamentary approval for additional capital of £14,700,000 will be sought in the main estimate for the CMA. Pending that approval, urgent expenditure estimated at £14,700,000 will be met by repayable cash advance from the contingencies fund.
[HCWS1576]