Draft Employment Rights (Amendment) (EU Exit) Regulations 2019
Draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) Regulations 2019
Draft Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018
Draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) (No. 2) Regulations 2018
Kelly Tolhurst Excerpts(7 years ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Employment Rights (Amendment) (EU Exit) Regulations 2019.
The Chair
With this it will be convenient to consider the draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) Regulations 2019, the draft Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018 and the draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) (No. 2) Regulations 2018.
Kelly Tolhurst
It is a pleasure to serve under your chairmanship, Mr Evans. The draft statutory instruments were laid before the House on 14 January 2019 and on 31 October 2018 respectively. They are part of a package of measures that the Government have promised to introduce to make sure that we are prepared in the event that we leave the EU without a deal. It is important to remember throughout the debate that the changes will not be needed if a deal is secured.
The statutory instruments under consideration amend employment law to reflect the UK’s withdrawal from the EU. New directives agreed in the EU are transposed into UK law. The act of the UK leaving the EU therefore does not remove those rights, which are already in UK law. By passing the European Union (Withdrawal) Act 2018, Parliament gave the Government the ability to ensure that necessary changes can be made to keep the statute book in proper working order.
I can confirm that the SIs before the Committee make only minor changes to language to ensure that existing regulations will reflect the fact that the UK is no longer a member of the EU. Those changes are necessary to ensure that the statute book is accurate and clear. It is important that businesses, employees and citizens have clarity regarding their rights and responsibilities.
During the passage of the 2018 Act, some hon. Members raised concerns about the potential for the Government to use some of the powers granted by that Act to make more fundamental changes. I assure the Committee that the Government are not making any changes to employment rights or employment policy through these regulations. The Prime Minister, the Business Secretary and many other colleagues have been clear that there will be no roll-back on workers’ rights when we leave the EU.
Chris Stephens (Glasgow South West) (SNP)
Does the Minister not concede that, as a result of the regulations, in the event of no deal, employees and workers in the United Kingdom will not be able to set up a European works council?
Kelly Tolhurst
If the hon. Gentleman allows me to make some progress, I will come to that point. We should aim not to sensationalise the issue, but to provide clear answers to the public. It is our responsibility to be the guide during this unprecedented time.
The Committee will be aware of the programme of reforms that the Government are already implementing to strengthen workers’ rights and we are delivering on our commitments through the “Good Work Plan”. We do not need to be in the EU to have strong workers’ rights or to enhance them in the future. Indeed, we will continue to deliver the good work reforms after the UK has left the EU.
Far from being content with EU minimum standards, the UK has gone beyond them in a number of areas. Our maternity entitlements are nearly three times greater than the EU standard. In the UK, we offer 52 weeks of maternity leave, of which 39 weeks are with pay; the EU requires only 14 weeks of paid leave. We give fathers and partners the statutory right to paternity leave and pay—an entitlement that the EU is only now starting to consider. We allow eligible parents to share paid leave and thus caring responsibilities in the first year following birth or adoption; the EU does not provide for that right. We have given all employees with 26 weeks’ qualifying service a statutory right to request flexible working; EU law allows workers to make a request only if they are returning from parental leave. One of the EU’s own agencies, Eurofound, ranks the UK as the second best country in the EU for workplace well- being, behind only Sweden, and the best for workplace performance.
In our future outside the EU, the political declaration on our future relationship states that we will build on the withdrawal agreement commitment not to reduce our shared standards or regress from existing EU legislation. As my right hon. Friend the Prime Minister said in the House yesterday, we are prepared to commit to asking Parliament whether it wishes to follow suit whenever the EU changes its employment standards. I hope that that provides assurance to the Committee that the Government are absolutely committed to protecting and enhancing workers’ rights.
The statutory instruments are an important and necessary part of the work to protect rights in the event that we leave the EU without a deal. Of course I hope that the regulations will not need to come into effect, and that an agreement can be reached with the EU so they can be revoked.
Ms Angela Eagle (Wallasey) (Lab)
Will the Minister explain why the Government initially thought that the regulations should be subject to the negative procedure and not debated at all? We are obviously pleased that the Government changed their mind when the European Statutory Instruments Committee asked for the change.
Kelly Tolhurst
The statutory instruments that were laid subject to the negative procedure, which was changed by that Committee, relate particularly to Northern Ireland. They were upgraded to be debated, so we have the opportunity to debate all four sets of regulations in Committee today.
Although I hope that the regulations will not need to come into effect, because I hope that we can reach an agreement, in the event of no deal it will be vital that they are enacted. Failure to pass these largely technical regulations would result in uncertainty about workers’ rights and employers’ obligations, which could lead to disruption for business and citizens and an increased risk of litigation, which is in no one’s interest.
Against that background, I will explain one set of provisions about which hon. Members may have concerns. The Employment Rights (Amendment) (EU Exit) Regulations 2019 make changes to the rules on European works councils. Businesses and trade unions in the UK value the opportunity for employee engagement and consultation that the councils provide, and the Government recognise and encourage those benefits. However, withdrawing from the EU without a deal will mean that the UK is no longer covered by EU rules on European works councils.
In that scenario, it would be for the EU to give UK workers the right to be represented on the councils. It is an unavoidable and unfortunate truth that there is no way for the UK unilaterally to ensure that workers in this country retain that right without a deal. There is also no way to replicate the European works council system only in the UK, as their purpose is to enable cross-border engagement. That requires the same rules in all countries, which requires a withdrawal agreement.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The assertion that the UK cannot make those provisions is incorrect. In relation to financial services, for instance, the UK is unilaterally making provisions on payment services and hoping that EU member states will do the same. Is the Minister aware that what she is saying is incoherent and inconsistent with what is happening in other policy areas?
Is the Minister not concerned that we are, yet again, in Committee considering statutory instruments without impact assessments, which does not allow adequate scrutiny? I have raised the issue several times. Can she give an assurance that the next time she or her colleagues come before such a Committee, they will provide an impact assessment?
Kelly Tolhurst
All the regulations have had de minimis statements applied. Obviously, they have been cleared through the better regulation framework, because if the impact exceeded the de minimis threshold, full impact assessments would have been made. All regulations or SIs that we bring to the House will be looked at by the Department in a deep way to assess the impact.
The hon. Lady’s first point was on other regulations that may be passing through the House at the moment and that are not directly related to the draft instruments. It is clear that we are retaining EU law. The changes we are considering are mostly technical, apart from the changes to the particular area I am referring to at the moment. Rightly, we want to see co-operation and agreement in the future where it is necessary and achievable. That is why the Government are determined to deliver a deal, so that we can have those reciprocal agreements with other member states.
Chris Stephens
The Minister is being most generous in giving way. She will be aware that the European Parliament and European Commission are currently negotiating regulations for workers in the gig economy and for working parents that are far better and stronger than anything found in the UK Government’s “Good Work Plan”. Is the Minister saying to the Committee that if the European Parliament and European Commission agree those regulations, the UK Government will match them?
Kelly Tolhurst
I remind the hon. Gentleman that we are debating an SI that will be enacted if we are in a no-deal situation on 29 March. As I have already outlined, whether we decide in a future no-deal situation to align our laws with the EU’s is a different matter, but I repeat: we have the “Good Work Plan” and we are going further. We are still a member of the European Union, so we still take part in those conversations happening in Europe.
Justin Madders (Ellesmere Port and Neston) (Lab)
I would like some clarity regarding the Minister’s answer to the hon. Member for Glasgow South West. Is it the Government’s policy to match future EU advancements in worker protection laws?
Kelly Tolhurst
I assure the hon. Gentleman that we have been very clear that we will not roll back workers’ rights. In fact, we have made an express commitment to go further. As I outlined, we already go further than Europe in many ways. We have been feeding into the development of EU thinking on some of these policies, as some of the work we have been doing in the UK is particularly good. We are determined to continue on our path. Our ambition is that the UK continues to be a great place to work, with those protections continuing to be afforded to the people employed in this country.
Our domestic regime for employee engagement and consultation will remain in place, and we will encourage businesses to continue to allow UK workers to be represented on a voluntary basis in European works councils. We are retaining as many of the existing rules as we can to enable that. All existing protections for workers and for their representatives on European works councils—even those there voluntarily—will be maintained. Approving the draft regulations is the only way to ensure that workers involved in European works councils are protected if there is no deal. They deliver on our commitments.
Another area I am aware that Members may be concerned about is the changes being made to the TUPE regulations. In a dynamic economy such as the UK’s, there will inevitably be takeovers and mergers and contracts changing hands, which is good for the prosperity of our country; the best companies outdo the worst. We recognise that that must be combined with strong protection for the workers in those companies, for whom a change of employer may be a stressful and difficult experience. TUPE regulations are central to protecting workers from suffering as a result of being transferred.
The draft regulations are an important part of EU-derived employment law, which we have committed to retain. In the UK, we have gone further than required under EU laws and we have extended these important protections to other groups of workers. Not only will we retain the elements from the EU, but we commit to retaining the gold-plating. Only by making the changes contained in the draft Employment Rights (Amendment) (EU Exit) (No. 2) Regulations can we make sure that workers remain entitled to these protections. The changes are necessary to ensure that the Government retain our current powers to extend the protection provided by TUPE to other groups of workers. These powers have been used to protect workers where there is a change of service provider that is not also a business transfer—a situation that would not be covered by EU rules. That crucial gap can include situations where a business outsources or contracts out a service. The changes are technical, but it is important that I set Members’ minds at ease.
The current powers are defined with reference to the EU directive, which applies to the UK as a member state. When the UK is no longer a member state, if there is no deal the reference will no longer make sense, so the reference must be changed so that it does not rely on EU law. Without that change, the Government could not use the power or use this tool for protecting workers in future.
I have highlighted these areas as the other changes in the SIs are purely technical, made to reflect the fact that the UK will no longer be a member of the EU. I assure the Committee that the amendments made through these SIs deliver on our workers’ rights commitments, thus providing clarity to employers, workers and businesses, and confidence that the Government are prepared for a no-deal scenario.
Kelly Tolhurst
In the event of a deal situation, the SIs that have been laid and passed can be revoked, referred, or brought to a following end-date, so there is a range of options on the table in a deal situation. We have been passing the no-deal SIs, particularly those before the Committee today, to make sure that we are ready if we leave the European Union on 29 March without a deal. It is imperative that we have regulations in place to ensure that we have a functioning statute book and are able to operate in a correct way.
Kelly Tolhurst
I do not know the particular SIs that the hon. Lady is referring to, so I cannot comment on them. All I am commenting on are the ones that I have in front of me today.
Ms Eagle
Some provisions in the regulations that are scheduled to come into force came into force at the beginning of last December. Will the Minister explain why it was felt necessary to bring them into force well ahead of our leaving the European Union and then apply them retrospectively, which is not a good principle of law?
Kelly Tolhurst
That may be, but the measures that she is referring to have not been highlighted. I am not aware of the ones that the hon. Lady is referring to. I am referring to the SI that is in front of me today.
Kelly Tolhurst
I will happily write to the Committee if the hon. Lady outlines to me the SIs that became active on 1 December 2018, so that I can give her and the rest of the Committee further clarification on that.
It would be unacceptable not to provide clarity to businesses and workers, and I encourage the Committee to approve the instruments. I commend them to the Committee.
Kelly Tolhurst
I thank all Members who have contributed to the debate. As the Minister responsible, I am well aware how passionate Members are about the subject, and not just those on the Opposition Benches. Despite what has been said, there is strong support for these regulations on the Government Benches.
I am extremely sad that the Opposition will be voting against this SI. I remind the Committee that it deals with a no-deal scenario and would come into force only if we leave the European Union on 29 March without a deal. It ensures that our statute book is in working order. By passing it today, we are effectively guaranteeing workers’ rights. Voting against it puts workers’ rights in jeopardy in the event of a no-deal scenario.
I will address some of the points that have been made. We are lucky that a number of experienced and well-respected Members have taken part in the debate. As a Minister and a relatively new Member, I welcome the experience and comments of Members who have been around far longer than I have. I was elected as a Conservative Member in 2015, but some of the comments I heard this afternoon, about my party’s position on workers and its aspirations for their future in our economy, were contrary to what my party stands for.
The Prime Minister invited Matthew Taylor to undertake his review—it was our Prime Minister who brought that forward—and we will be implementing the majority of its recommendations, as published in our “Good Work Plan”. That plan will be the biggest reform of workers’ rights in a generation—that is the reality—and a Conservative Government will bring it forward. I respect the position of hon. Members who say that they do not feel that they have had clear assurances from the Prime Minister that in a deal situation we will not row back on workers’ rights, but the fact of the matter is that the Prime Minister has been clear. Not only have we announced the “Good Work Plan”, but we have already laid three SIs that further protect workers’ rights.
Chris Stephens
If the Minister wants to enhance and strengthen workers’ rights, the Government are welcome to support my Workers (Definition and Rights) Bill, which I can assure her is a beautifully written piece of legislation that deals with some of the issues. Does she not appreciate the criticism that the EU is currently negotiating regulations that give better and stronger workers’ rights than those set out in the “Good Work Plan”? If the EU pushes those through, can she give us an assurance that the UK Government will adopt the regulations?
Kelly Tolhurst
Let me be clear: the reality is that we are committed to going further on workers’ rights, as has been shown through our publication of the “Good Work Plan” and the laying of SIs. We are going further than any Conservative Government have, and I am very proud of that. I am extremely proud to be part of a Government who have put workers’ rights at the top of their agenda, particularly in my Department.
Justin Madders
Was the Minister proud when the High Court declared employment tribunal fees illegal?
Kelly Tolhurst
I am proud that this Government look at and deal with the issues that arise, and then look for ways of resolving them, which is exactly what we are doing with our “Good Work Plan” and the SIs that have already been laid. I understand the concerns of Opposition Members, but I am pleased to be extremely clear in saying that we are committed to maintaining workers’ rights and to going as far as we can. We talked about European Union committees and the work currently going on. We are still involved in those negotiations, are feeding into those negotiations and are helping the EU to formulate recommendations. The legislation that we are bringing forward will ensure that they are protected and will continue to be protected.
Kelly Tolhurst
I would like to finish my points and then get on to answering some of the questions I have been asked.
I was pleased that my hon. Friend the Member for Basildon and Billericay made his contribution. He was absolutely right, as was my hon. Friend the Member for Beckenham. I thank them for making their points. The accusations that the Opposition have levelled at our party and our Government this afternoon characterise a party that I did not join and I am not part of; they illustrate something that I do not think is the reality. I am the Minister responsible, and it is not what I think, so there we go. [Interruption.]
The Chair
Order. I think that the Minister is being heckled by her own side. Can we please have a bit of calm, so that she can focus on her response?
Kelly Tolhurst
Thank you, Mr Evan; I am so very lucky to have you in the Chair this afternoon.
I thank hon. Members for their contributions. I reiterate that these regulations are for a no-deal situation. The Government are still determined to get a withdrawal deal. I hope that the Opposition will be willing and open-minded, and will want to work with the Prime Minister to ensure that happens, to get to a position where they will support a deal so that the regulations do not have to come into force in a no-deal situation.
I will try to answer the questions I have been asked, but I am more than happy to write to hon. Members if I do not respond to all of them. Hon. Members suggested that we are not retaining workers’ rights in these regulations. The regulations are mainly technical; they introduce technical changes to ensure that current rights are retained and that we operate from a clear statute book. As hon. Members know, there was no provision in the European Union (Withdrawal) Act 2018 for us to make changes in policy. There was an element of the Act that enabled us to bring forward legislation to retain EU law and make modifications so that we would have a clear statute book.
The hon. Members for Wallasey and for Ellesmere Port and Neston raised the question of enacting such legislation. It is true that those elements were intended to correct redundant EU references, which is why they would come into force earlier. They are not a consequence of the UK leaving the EU; they would change out-of-date references in the legislation. I hope that my explanation has answered the hon. Lady’s question on that—the instrument does not actually have any relation to the UK leaving the EU.
Justin Madders
I am grateful to the Minister for explaining why there are different dates, but can she explain why some of them are retrospective?
Kelly Tolhurst
As I have outlined, it is because of out-of-date references to EU regulations in the legislation, which will be changed. On European works councils, it is true that the European Union could allow us to have a reciprocal agreement even in a no-deal situation. That could happen, but obviously we cannot guarantee that the EU will allow it. As it stands, the current laws and protections afforded to representatives on those councils and to employees will be retained. It will affect new works councils, but that might be resolved in a deal situation. In a no-deal situation, it does not stop the fact that there might be cross-border co-operation and reciprocal agreement. I can give hon. Members some comfort that, as I have outlined, anything that would allow us to continue in the same way and ensure that workers’ rights are protected would be a good thing.
Bob Stewart
Can I get this absolutely right? We are talking about taking employment rights from the European Union and putting them into UK law. Effectively, we are changing as little as possible, so that things do not change for workers. That is what the Conservative party would like to happen.
Kelly Tolhurst
I assure my hon. Friend that he is correct; that is exactly what we are doing. Failure to pass this no-deal SI would put workers’ rights in jeopardy. This SI would allow us to protect those rights.
Chris Stephens
I thank the Minister for that explanation, but paragraph 7.6 of the explanatory memorandum states something different, namely that
“the SI amends the TICE Regulations 1999 so that no new requests to set up a European Works Council or information and consultation procedure can be made.”
Therefore, the statutory instrument actually weakens workers’ rights. Deal or no deal, is it the Government’s position that UK workers will have access to a European works council where it applies?
Kelly Tolhurst
As I have already said, because we will no longer be a member of the European Union, it will be up to the European Union to decide whether it gives us reciprocal abilities to continue down that path. There are existing rules governing consultation for businesses and employers. There is already a UK system. I like to think that what I said about opportunities for us to have reciprocal rights was clear, but the SIs relate to a no-deal situation, and I was very clear in my opening speech that in such a situation some things would be a reality and would not necessarily be in our control.
It was suggested that we should not use the wording “TUPE-like”. We decided to use that wording to maintain the current scope of the powers.
The SIs make no change to the working time directive. It will not be scrapped or lost. That is not what the SIs are intended to do. As I tried to make clear, in a no-deal situation, these SIs would not all of a sudden roll back or strip workers’ rights. That is not what they are about; they are about protecting the situation as it stands. That is why I feel very strongly about them. There will not be a vacuum in workers’ rights in a no-deal situation, because the powers effected by the SIs will protect the status quo. In a no-deal situation, those rights will not suddenly disappear. There will not be a race to the bottom. The Government have no intention of that.
We need a statute book that is ready to protect workers and give businesses, workers and employers all the clarity they need if we exit the European Union without a deal on 29 March. I hope the Committee recognises that these important pieces of legislation provide such clarity, and that failing to do so could jeopardise the rights of workers. I do not believe the UK workforce would be happy if it was unclear about what would happen in a no-deal situation.
I absolutely accept the comments made today about the Government’s commitment to securing workers’ rights, and wanting to go further. I am sorry that the Prime Minister’s word has not been taken completely at face value, because I fundamentally believe that what she has said is the case.
As I have already outlined, we have submitted the three SIs dealing with, among other things, the repeal of the Swedish derogation, and fairer holiday pay. Obviously, there is legislation to come. In a deal situation, or even a no-deal situation, we are intent on going further and making sure that workers in this country are protected. That also means working with and reacting to businesses and the marketplace. When things change, a responsible Government will look at the challenges and find ways to resolve some of the issues that may affect the workforce. I firmly believe that the Government are trying with absolute focus to do that.
The Government are complying with our duty to ensure that the UK is prepared for every outcome, whatever happens in the EU negotiations, and not to roll back workers’ rights. I therefore hope the Committee will approve the regulations.
The Chair
May I explain the process to the Committee? I shall put the first question and if the Committee wants a Division, that will happen. Each statutory instrument will then be taken individually. It will be up to the Committee whether to divide, but they will be taken separately. For the three statutory instruments that have not yet been moved, the Clerk will read the title before I request the Minister to move them formally.
Question put.
Oral Answers to Questions
Kelly Tolhurst Excerpts(7 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Martyn Day (Linlithgow and East Falkirk) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Through the good work plan, the Government are strengthening employment rights for all workers. We are introducing measures that will support innovative businesses, while ensuring that workers of all ages have access to fair and decent work. In April, we will introduce inflation-beating increases to the national minimum wage rates, benefiting 350,000 young workers directly.
Martyn Day
Despite the PM promising on her first day in the job to tackle burning injustices, this Government have consistently refused to introduce a real living wage for all, with the under-25s particularly hard hit. If Government will not act, will they devolve these powers to Holyrood?
Kelly Tolhurst
I point out that some of the highest unemployment rates are among that age group so our priority is to make sure that young people are able to gain secure work and experience. In actual fact, nine out of 10 workers between the ages of 18 and 24 are paid above the national minimum wage rate, and we are continuing to work towards increasing that year on year.
Kerry McCarthy (Bristol East) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The retail sector is the UK’s largest private sector employer and recognises that it has a responsibility for this issue, and it is pioneering responsible sourcing practices. The Government welcome campaigns such as the British Retail Consortium’s “Better Retail Better World” and Oxfam’s “Behind the Barcodes”. The Government remain determined to eliminate exploitation, and the landmark Modern Slavery Act 2015 increases specialist support for victims and places requirements on businesses to be transparent about their supply chains.
Kerry McCarthy
I secured a debate last year on this issue, highlighting the shocking extent of modern slavery in our supermarket supply chain. Will the Minister tell me what action has been taken since then?
Kelly Tolhurst
I thank the hon. Lady for raising this question and for giving us an opportunity to talk about this matter. The retail sector regards human rights and supporting sustainable markets as fundamental principles within its psyche. The British Retail Consortium has played a pivotal role, and it was a founder member of the “Stronger Together” scheme. Under the Modern Slavery Act, there is a duty on employers to submit modern slavery statements, and they should be doing so by the end of March.
Michael Fabricant (Lichfield) (Con)
May I invite my hon. Friend to meet Sir Charlie Mayfield, who is the chairman of the John Lewis Partnership, which of course includes Waitrose? She will know that it has an audit trail to ensure that all its goods are produced ethically. When can she meet him?
Kelly Tolhurst
I thank my hon. Friend for his question and say that we meet Sir Charlie Mayfield regularly. This gives us a great opportunity to highlight the fact that there are thousands of businesses really stepping up to the mark on this issue. ASOS and Co-op are leading the way on transparency, and are identifying risks and taking action. M&S, Unilever and Tesco are also signing up to the employers’ pay principles.
Jo Swinson (East Dunbartonshire) (LD)
We all want to be able to buy food in the supermarkets without trampling on the human rights of the people who produced it. Yet less than half of all agricultural companies are complying with their requirements under the Modern Slavery Act 2015, so what changes will the Government make to ensure that companies properly report what they are doing to tackle problems with human rights in their supply chains?
Kelly Tolhurst
I thank the hon. Lady for her question. The Home Office has written to more than 17,000 businesses reminding them of their obligations to submit their modern slavery statements. We are committed to the Guiding Principles for Business and Human Rights, a UN initiative, and we are proud to be the first country to have an action plan in place, but, as with all these things, we will continue to keep them under monitoring.
John Howell (Henley) (Con)
In my role as the Prime Minister’s trade envoy to Nigeria, I am aware that Guinness Nigeria is being sold by Tesco. Is the Minister aware that Diageo and other companies in Nigeria have pledged to eradicate modern slavery from their supply chains?
Kelly Tolhurst
I thank my hon. Friend for his suggestion. He is quite right. That is just another example of where the sector, working with Government, is taking action to stamp out these practices where they identify them and telling us how they are taking action to eradicate them.
Liz Twist (Blaydon) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
We are committed to protecting consumers and providing clear information so that they understand their rights. That is why we have launched a public information campaign to reach out to consumers, citizens and businesses. As part of that, we have provided tailored information to consumers about their rights after EU exit. We are working closely with partners such as Citizens Advice on this issue.
Kelly Tolhurst
The hon. Lady raises an important point. Every piece of no-deal legislation that we have brought through the House has had an impact assessment, and we have already submitted five pieces of legislation. We have been very clear that consumer rights will be protected when we leave the European Union, and I am committed to doing that.
Stephen Kerr (Stirling) (Con)
In the Minister’s estimation, what has the Office for Product Safety and Standards achieved in its first year of existence?
Kelly Tolhurst
My hon. Friend is right to highlight that the new Office for Product Safety and Standards has got its strategy plan together. We are working through that, working with data-led intelligence to ensure that we tackle product safety inequalities when they appear.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
As the Government continue to threaten the public with a catastrophic no-deal Brexit, which they admit themselves would be detrimental to consumers, a report by Which? shows that a staggering 82% of people said that the Government had communicated either too little information or no information at all about the impact of such a Brexit. Will the Minister tell the House whether that is a result of sheer incompetence, or is it simply that the Government no longer care about consumers?
Kelly Tolhurst
This Government are committed to retaining the high levels of consumer protection that we have. We have been very clear about that; we set out our intentions in the consumers Green Paper. We have launched advertising campaigns and published guidance on the Government’s website regarding certain elements of consumer rights. We are working closely with the Consumer Protection Partnership, which brings together the enforcement and the information bodies that work with consumers. We are committed to delivering for consumers, and that will not change—in or out of the EU.
Giles Watling (Clacton) (Con)
Maria Caulfield (Lewes) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government recognise the importance of post offices to rural communities across the UK and are committed to the post office network’s future. The Post Office offers targeted financial support in recognition of the unique challenges of running a rural post office. Postmasters who run community branches that are the last shop in the village can receive packages combining fixed and variable remuneration to reflect their special circumstances.
Maria Caulfield
Post offices in my rural villages of Newick, East Dean and Alfriston are still temporarily closed because the Post Office local model, on a transaction-fee basis, is not enticing potential postmasters. Will the Minister look at returning to a community-based Post Office model to help these post offices to reopen?
Kelly Tolhurst
The Government have invested significantly in post offices in recent years. While there is no programme of post office closures, some unexpected closures, for some reasons beyond the control of the Post Office, as in my hon. Friend’s constituency, can occur. Work is currently under way in regard to her constituency, and there is hope that the services will be restored. I will also ask the Post Office to liaise directly with my hon. Friend on those issues.
Gareth Thomas (Harrow West) (Lab/Co-op)
Given that many rural post offices are barely profitable if they are profitable at all, is it not time for Ministers to consider giving business rates relief to all rural post offices—in particular, those housed by the Co-op movement, which continue to provide a service to local communities?
Kelly Tolhurst
The hon. Gentleman will know that the Government have doubled permanent small business relief and increased the threshold at which businesses pay business rates. We are investing in community branches. The Post Office has launched a smaller community branch development scheme, which is guaranteed to benefit another more than 700 post offices. We will keep working with the Post Office to make sure that we maintain our network of 11,500.
Several hon. Members rose—
Kevin Foster (Torbay) (Con)
Kelly Tolhurst
It is true: it has been too long since I have had the opportunity to visit my hon. Friend’s part of the country. I have met some of his colleagues to talk about post office opportunities in the south-west. As I have already reiterated, we are committed to delivering those rural post offices.
Sir Edward Davey (Kingston and Surbiton) (LD)
As the Minister will be aware, in the Postal Services Act 2011 the House has already given its in-principle agreement to mutualise the post office network. Will she indulge a former Post Office Minister and agree to meet me to discuss how the powers in sections 4 and 5 of the Act could be used to take forward this exciting policy innovation?
Kelly Tolhurst
The right hon. Gentleman is quite correct: the Post Office is at the forefront of looking at new ways in which it can modernise and increase the services delivered through our post offices. I will be more than happy to listen to any suggestions that he has—so, yes, of course, at some point I will meet him.
Peter Heaton-Jones (North Devon) (Con)
Kevin Hollinrake (Thirsk and Malton) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
In the past five years we have halved late payments and through our call for evidence we are looking at what more we can do to end the scourge of late payments affecting small businesses. In January, we announced £2 million of funding for our business basics programme, supporting 15 innovative projects. We continue to do that as we try to improve productivity.
Peter Heaton-Jones
Many of the excellent small businesses in North Devon are in the hospitality sector. Will the Minister assure me that the Government will continue to support those excellent small businesses, which give such good service to our visitors and tourists?
Kelly Tolhurst
My hon. Friend is absolutely right. North Devon is a wonderful part of the country. The tourism sector is particularly important for our economy, providing 1.6 million jobs across all regions and contributing £67.7 billion in gross value added. The Government are committed to supporting the sector and to continuing to work with small businesses through our industrial strategy and the sector deal that is under way.
Kevin Hollinrake
Sadly, HBOS managers were found guilty of defrauding their own small business customers, yet the Financial Reporting Council has steadfastly refused to seriously consider whistleblower evidence that KPMG and the bank colluded to cover up bank losses partly attributable to that fraud. What will my hon. Friend do to ensure that this matter is seriously investigated?
Kelly Tolhurst
My hon. Friend raises a really important question. There have been several criticisms of the FRC, which is why the Secretary of State commissioned Sir John Kingman to lead a review of the regulator. We are taking forward Sir John’s recommendations to create a stronger regulator with stronger powers. I assure my hon. Friend that I will continue to meet him on the particular issue he raises, so that we can find a resolution.
Stephanie Peacock (Barnsley East) (Lab)
Does the Minister agree that we should support workers who keep small businesses like cafes and pubs going? In his so-called “Good Work Plan”, the Business Secretary boasted that the Government will ensure that all tips go to workers in full. Where exactly is the Bill that was first promised three years ago?
Kelly Tolhurst
The hon. Lady is quite right. In October last year, we announced that we will bring forward legislation regarding tipping in the next Session. We are committed to doing that. It is this Government who have brought it forward.
Bill Esterson (Sefton Central) (Lab)
The Secretary of State for International Trade seems to be hell-bent on destroying our businesses, judging by his support for zero import tariffs. Can the Business Minister confirm that she understands the damage that unilaterally imposing zero import tariffs would do to businesses and jobs in this country? Will she confirm whether she or the Business Secretary will remain as members of the Government if that policy is adopted?
Kelly Tolhurst
I am glad the hon. Gentleman has raised this issue. We engage with the small business community, the wider business community and all business representation organisations on a weekly basis. It is quite right that we consult a plethora of businesses throughout the UK on any decision that will be taken on customs and tariffs. We will take into consideration their views when we set our policy, which will be announced in the near future.
Rosie Cooper (West Lancashire) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government are committed to supporting working families. We are conducting a short and focused review of the provisions for parents of premature, sick and multiple babies, focusing primarily on barriers to the labour market. I have met colleagues, Bliss and The Smallest Things.
Rosie Cooper
In response to the Minister’s reply, may I ask when that review will commence and when we can expect its conclusions?
Kelly Tolhurst
I thank the hon. Lady for allowing me to talk about this issue. A short internal review has been carried out by my officials and I expect to receive information on that shortly. I have already committed to keeping cross-party colleagues updated and I happily extend that commitment to her.
Mrs Pauline Latham (Mid Derbyshire) (Con)
Will Quince (Colchester) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I thank my hon. Friend for that question. Let me be clear: pregnancy and maternity discrimination is unacceptable and illegal. That is why, last month, the Government announced a consultation on pregnancy and maternity discrimination. The consultation seeks to extend redundancy protection for pregnant women and it seeks views on what the Department is doing to tackle pregnancy and maternity discrimination. I point out that this will go beyond what the EU currently allows.
Jo Platt (Leigh) (Lab/Co-op)
Derek Thomas (St Ives) (Con)
Kelly Tolhurst
I would love to come to Penzance if time permits—it is an area of the country I would love to visit—and I will continue to work with my hon. Friend to deliver post office services in his region. He is a passionate supporter of the Post Office and I welcome his support for me in my role as the Minister in that area.
Louise Haigh (Sheffield, Heeley) (Lab)
Neil Gray (Airdrie and Shotts) (SNP)
Kelly Tolhurst
I recognise the distress felt by constituents in cases of insolvency and where companies cease to trade. The redundancy payment service, operated by the Insolvency Service, has already made statutory redundancy payments to 157 eligible employees. Payments in respect of unpaid wages cannot be made while the company is still not in formal insolvency procedures, but we remain ready to act.
Luke Graham (Ochil and South Perthshire) (Con)
My office has been meeting representatives of the Coal Authority to talk about geothermal opportunities in Clackmannanshire in my constituency. Will my right hon. Friend meet me to discuss these opportunities?
Unpaid Work Trials
Kelly Tolhurst Excerpts(7 years ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Glasgow South (Stewart Malcolm McDonald) on securing this important debate. I am proud to serve as the Minister responsible for the national living wage and workers’ rights, and I am pleased to be responding to the debate. I fully agree with the hon. Gentleman that it is wrong to exploit workers through unpaid work trials at the outset of their employment. Workers have the right to be paid the minimum wage when they are deemed to be working, and this must be upheld.
The Government are committed to building an economy that works for everyone through the national minimum wage and the national living wage. We will continue to ensure that the lowest paid in our society are rewarded fairly for their contribution to the economy. All businesses, irrespective of their size or sector, are responsible for paying the correct minimum wage to their staff. The vast majority of responsible employers ensure that they get it right.
The hon. Gentleman and other hon. Members raised examples of constituents and others who had been disadvantaged. Having heard the details, I can say that it is highly likely that those practices were illegal. An individual’s entitlement to the minimum wage depends on whether they are deemed to be a worker. If they are a worker, their employment must pay at least the relevant national minimum or national living wage. Our legislation is clear on that.
Many individuals participating in work trials would be considered to be workers. Therefore, they are already protected under existing legislation and are eligible to be paid the minimum wage from the start of their employment. An employer may wish to test an individual’s skills using a range of kitchen knives in a restaurant kitchen. That would probably have little or no value in terms of work for the employer, so would not require payment at the relevant minimum wage rate.
Clearly, the circumstances of each particular case would need to be considered to confirm entitlement to the minimum wage. However, the case of the 40-hour unpaid trial is, in the view of my Department, likely to be excessive and, therefore, against the law. Similarly, new recruits who are required by their employers to spend time at the outset of their employment undertaking training are entitled to the minimum wage for that time.
The hon. Member for Glasgow South raised the issue of exploitative unpaid work trials in his private Member’s bill of March last year. The Government recognised that concerns had been expressed in the House and in the media. Therefore, we issued new guidance on unpaid work trials on 3 December last year, to provide further clarity for employers and workers. The guidance aims to ensure that workers, especially young people in the hospitality and retail sectors, are not exploited through unfair and excessive unpaid work trials. The guidance sets out a number of relevant factors that should be taken into account, such as the duration of the trial and whether the employee is deriving economic value from the activity.
The Government have clarified their view that work trials that are reasonable, not excessive and clearly part of a legitimate recruitment exercise do not require payment at the relevant minimum wage rate. For example, an employer may wish to test an individual’s skill in a restaurant kitchen through a short trial before hiring that person. That would probably have little or no economic value for the employer, so would not entitle the applicant, but it may well lead to a job offer for the individual. However, unpaid trials are not permitted if they are part of a genuine recruitment process, if they are excessive in length or if they are simply for the financial benefit of the employer.
Stewart Malcolm McDonald
I have no quarrel or disagreement with anything that the Minister has just outlined. The guidelines that she has produced are, no doubt, admirable. What is her objection to underpinning them in statute?
Kelly Tolhurst
As I have already said, we have an enforcement system for the national minimum wage, which, with the guidance, is focusing on targeting the employers that we need to target. We need to recognise—I was going to come to this point later—that in 2017-18, Her Majesty’s Revenue and Customs investigated and took action against more than 1,000 employers, raising £15.6 million, and affecting over 200,000 workers. That shows that the enforcement work is taking place. HMRC will investigate every worker complaint.
Stewart Malcolm McDonald
I am glad that HMRC investigates, but how many of the cases that the Minister has mentioned, in which money has been clawed back by workers who have been deprived of money to which they were entitled, took place in a period that would be considered a work trial, as opposed to when the worker had formally signed a contract and started a new job?
Kelly Tolhurst
As part of HMRC’s involvement and enforcement of the national minimum wage, it investigates a number of breaches, including unpaid trials. I can tell the hon. Gentleman that HMRC is currently actively investigating companies in which there is a suggestion of unpaid work trials. Obviously, those investigations are currently ongoing, on the back of the legislation and the guidance that we offered.
Several hon. Members rose—
Kelly Tolhurst
I will make some progress. I encourage any worker who has concerns about unpaid work trials to call ACAS for free confidential advice, or to contact HMRC via its online complaints form. ACAS advisors will explain the general position in terms of entitlement to the national minimum wage and advise an individual based on the circumstances of their case. If the caller then feels that they may have been entitled to the minimum wage, the ACAS advisor will explain their options for taking the matter forward, which include contacting HMRC about formal national minimum wage enforcement.
Several hon. Members rose—
Kelly Tolhurst
I will carry on, because I want to give the hon. Member for Glasgow South time to wind up at the end.
HMRC investigators consider work trials on a case-by-case basis. They explore the precise detail of the arrangements, including what the worker is being asked to do and for how long. Where they come to the view that the arrangements constitute work under national minimum wage regulations, they will require the employer to repay any arrears and will impose a fine. HMRC has taken enforcement action where workers were expected to complete an unpaid work trial.
The Government are actively taking steps to tackle non-compliance with the national minimum wage, and to respond robustly to employers who fail to pay their workers correctly. We have doubled our investment in enforcement since 2015-16 and we now spend more than £26 million every year to ensure that employers meet their legal responsibilities. Employers who are found to be underpaying their staff must repay arrears and pay a fine of up to 200% of the underpayment, and may be eligible to be publicly named by the Department.
The hon. Member for Glasgow East (David Linden) mentioned that there had been only 14 prosecutions. As I have already outlined, the figure is actually more than 1,000 businesses in one year. The stat is not 14 but 1,000 in one year.
David Linden
On the issue of enforcement, does the Minister believe that the team in HMRC is adequately resourced?
Kelly Tolhurst
From the feedback I get from business, and from some of the work that I know is going on, I would say absolutely yes. We are enforcing and doubling investment, and we are making sure that HMRC investigates the case of every worker who complains. As the Minister with responsibility for the national minimum wage, that is exactly what I would like to carry on seeing.
I want to answer some of the questions that have been put to me during the debate. I also want to reassure hon. Members that workers’ rights are a big priority for the Government and particularly for me. In the advent of the Taylor review and the good work plan, we have seen a step change in a generation in terms of workers’ rights. We have announced that we will ban tipping, which will come further down the line, and we have laid legislation to firm up workers’ rights.
I thank the hon. Member for Glasgow South for securing the debate. It is essential that workers are paid the minimum wage. The Government have listened to concerns relating to work trials and issued new guidance, which, combined with robust enforcement, will help to ensure that workers are not exploited through unpaid work trials.
Draft Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019
Kelly Tolhurst Excerpts(7 years ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Fiona Bruce (Congleton) (Con)
May I draw attention to an interest recorded in the Register of Members’ Financial Interests? My law firm, of which I remain a partner, is a limited liability partnership.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Ms Buck. The draft regulations, which were laid before the House on 10 January, will address deficiencies in retained EU law in relation to the Companies Act 2006 and supporting secondary legislation. They will ensure that UK law in the area continues to function after exit day. Hon. Members will notice that their provisions cover many different areas; I shall briefly summarise them.
The changes to the 2006 Act and the supporting secondary legislation will ensure that the system of regulation underpinning how companies report to and register with the UK companies registrar, Companies House, makes sense after we have left the EU and the European economic area. They will also remove the UK from ongoing participation in two EU-based processes in the field of company law: the cross-border mergers regime and the business registers interconnection system.
The draft regulations also cover other matters. They include a small number of amendments to address how businesses with membership, access and listing on EEA-regulated markets are dealt with; they will remove preferential treatment in such instances and in relation to EEA entities where there is a potential breach of the World Trade Organisation’s most favoured nation rule. Where there is no such breach, and where it is appropriate to do so, we have maintained the status quo to offer certainty and consistency for business, including EEA businesses.
The main practical changes for business that stem from the draft regulations will be filing changes with an impact on some UK and EEA businesses after exit day, including a requirement for UK companies with an EEA-based corporate secretary or director to file two additional details with Companies House. Additionally, after exit day, EEA companies on the overseas companies register will be treated in exactly the same way as non-EEA companies, meaning that EEA companies that register with Companies House will be required to provide some additional details, while EEA companies that are already registered will have three months to provide the additional information required by the draft regulations. Linked to these filing changes is a requirement for EEA-based companies on the overseas companies register to provide additional minor details in their public-facing material, such as their website and letterhead; again, the draft regulations provide three months from exit day for the affected companies to do so.
In line with those changes, the draft regulations will also revoke legislation on two EU-based processes or systems currently administered by Companies House. The first is the cross-border mergers regime. Hon. Friends and noble Lords in Committees of both Houses have drawn attention to the removal of the current process for UK companies. I understand their concern, because I know that certain companies welcome the fact that it allows companies to merge across EEA jurisdictions. However, that is possible only under the EU cross-border mergers regime, which requires legal entities based in two EEA states. As the UK will no longer be an EEA member after exit, it will not be possible to continue to allow cross-border mergers, but companies will be able to transfer assets and liabilities using contractual arrangements.
The other system of which the UK will no longer be part after exit is the business registers interconnection system—a very new system, introduced only in 2017, that is used mainly to identify companies undertaking a cross-border merger or foreign branches of companies. All the information currently provided publicly on the Companies House register will still be available; the only thing that will cease is Companies House’s access to the register to register connections across the EU.
I will now explain the changes made as a consequence of the insertion of a new definition of “regulated markets” into another statutory instrument, in line with regulations that Her Majesty’s Treasury has laid before the House, and its effect in certain sections of the Companies Act 2006. In most places where it occurs, the change will have no material effect. There are only two occurrences where we have made the decision to apply the same requirements to EEA companies as we do to third-country companies. We judged that without such a change, there would be a risk of breaching the World Trade Organisation’s most favoured nation rule.
The practical effect of each change is that certain intermediaries who deal in securities will no longer be able to hold shares in their parent company where they are a UK-based holding company. This benefit will, after exit, be extended only to intermediaries with access to UK-regulated markets. We are providing a one-year transition for that change. Certain investment companies will no longer be able to benefit from some relaxations on controls on their distribution of profits unless they have access to a UK-regulated market. In addition, we will treat EEA-based credit reference agencies in the same way as third-country credit reference agencies after exit. Companies House will no longer be able to send the protected information that it holds on directors to EEA credit reference agencies and processors.
My officials have worked extensively with Companies House throughout the development of these regulations, and I thank them for their expertise. It is also relevant to point out to hon. Members that this has been done alongside ensuring that the UK’s company registry fully reflects the UK’s departure from the EU on exit day. That includes updating all relevant forms that companies use to file information, as well as updating guidance. That should be emphasised, because it means that companies will have certainty and clarity on what they need to do when the UK leaves the EU. We completed a de minimis impact assessment of the regulations, which shows that the overall costs to business are expected to be small.
As the Committee has heard, the regulations provide numerous technical changes to the operation of UK company law, and they respond to the reality of the UK’s leaving the EU. They are not overly burdensome for business and they will ensure that the UK has coherence in its approach to overseas companies. I therefore commend the regulations to the Committee.
Kelly Tolhurst
I thank the hon. Gentleman for his comments. I said that the measures give clarity and confidence to business. This statutory instrument is intended to do exactly that for company law, and to provide companies with clarity about how retained EU law and the register will operate if we leave the European Union in a no-deal situation. Although the hon. Gentleman thought I was joking, I actually meant what I said.
Let me pick up a couple of the points that the hon. Gentleman has made. He mentioned EEA companies, and I assume that he was talking about EEA corporate appointments. A UK company that makes a corporate appointment of a director or a secretary will have to file two extra pieces of information, which we have identified as being of low cost to business. Some 1,900 of those businesses have already been identified by Companies House, and they will all be written to. We have already updated the advice and guidance from Companies House on that. The regulations also refer to EEA companies that will register on the UK overseas companies register, and we estimate that to be 3,200 companies. Again, Companies House will write to the companies affected, and the guidance has been updated. As he will have seen from the regulations, those companies have to provide more basic information to Companies House, which is an administrative task. As I mentioned in my opening comments, the front-facing aspects—the websites and letterheads—will also need to show additional information. The guidance will be updated.
BRIS is a publicly accessible database, and the hon. Gentleman is correct to say that we will no longer be part of it if we leave the EU in a no-deal situation. Currently, people outside the EEA can access that information via the website, as we do in the UK through Companies House, so access is not restricted.
I could not find the paragraph in the explanatory memorandum that the hon. Gentleman mentioned that referred to a small number of companies. I think he was referring to the number of companies affected by the changes in the regulated markets.
Bill Esterson
I am happy to help. Paragraph 7.8 says:
“This measure applies to very few companies, but transitional provisions have nevertheless been provided that will allow sufficient time for impacted companies to consider the impact of the change on their operations and take appropriate action”.
My question was about how many companies she means by the phrase “very few companies”, which refers to:
“Investment companies that only have shares admitted to an EEA market”.
Kelly Tolhurst
I thank the hon. Gentleman for that clarification; that was the area I was thinking of. As far as intermediaries are concerned, five companies would be affected, but our records show that no investment companies have been identified as being affected.
On consultation, as I outlined, we have consulted, worked with and used the expertise of Companies House to ensure that we are making the best provisions to enable UK companies to implement the regulations that we require for them to be legal if we leave the European Union without a deal. By working with those experts, we believe that we have devised the simplest and best way forward.
As I set out, the changes in the regulations cover a variety of amendments to the UK company law framework, so that, on exit day, the UK statute book is workable and coherent. It should be emphasised that certainty is crucial for business confidence. In some cases, the changes are not material and will have no impact on business; they are simply provisions to tidy up the Companies Act 2006 and related secondary legislation. The communication of pre-emption offers to shareholders is one example. The changes are no less important for that reason, however, and they will mean that UK statute is on a stable footing on exit day.
As I have set out, other areas will have an impact. They include the level-down approach for EEA companies in relation to certain filing requirements for the register, as well as the changes for some entities in relation to benefits that are currently based on access to EEA-regulated markets. The removal of the cross-border mergers regime is another example of where businesses will notice a change to processes that existed as a result of our membership of the EU.
The regulations cover many different changes, but, taken individually, their impact on business will be small. My officials are working with Companies House and others to ensure that the register will be operational for exit day, and that will significantly reduce the impact felt by companies that are affected by the changes. Overall, the regulations will ensure that the UK’s company law framework remains coherent, operable and under- standable for business, and I commend them to the Committee.
Question put and agreed to.
Draft Insolvency (Amendment) (EU Exit) Regulations 2018
Kelly Tolhurst Excerpts(7 years ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Insolvency (Amendment) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Gray. The regulations, which were laid before the House on 19 November 2018, address issues in UK insolvency law that will arise in the event that we leave the European Union without a deal. Cross-border insolvency is an area in which, as legal and insolvency professionals in the private sector have rightly and firmly pointed out, the EU system is greatly beneficial. If we are to ensure the best outcomes for all parties involved, it is important that insolvencies are dealt with as expediently as possible. The sooner a business in distress is dealt with, the more likely it is that it can be saved. When that is not possible, the simpler and clearer the insolvency process is, the more likely it is that the assets will be realised efficiently and money returned to creditors.
EU law achieves that goal by providing a framework for mutual cross-border co-operation on insolvency matters through the EU insolvency regulation. That is based on main proceedings in a single member state, eliminating the need to start proceedings in other member states where there may be assets to deal with. It is in the interests of both the UK and the EU to retain that system, and the Government have been clear, with the support of the UK insolvency sector, that we wish to continue it. However, it would be irresponsible of us to not plan for all possible outcomes, including leaving the EU without a deal. We have laid this instrument before the House to ensure that the UK’s insolvency regime continues to function effectively after exit day even if we leave the EU without a deal.
As I have already suggested, the EU insolvency regulation ensures that member states automatically recognise an insolvency order made in an EU country. That helps the insolvency practitioner dealing with the case to recover assets as quickly as possible and return as much money as possible to creditors. However, EU law also contains a provision to ensure co-operation between all the different parties in an insolvency, including insolvency practitioners and courts in different member states where necessary. It ensures that individual member states’ own laws are respected. For those protections to operate, they must apply to everyone. Unfortunately, once we leave the EU, that will not be the case in the UK.
As we leave the EU, the European Union (Withdrawal) Act 2018 will retain a version of the EU regulation in UK law, but the safeguards that the regulation provides will no longer operate correctly: as the UK will no longer be a member state, the remaining member states will no longer be bound to recognise our insolvency proceedings or co-operate with us. While office holders in insolvency cases originating from EU member states could make use of the UK’s retained EU insolvency regulation to lay claim to assets here, they would not necessarily be bound by the EU regulation rules when dealing with those assets in EU states, nor would they be bound by EU rules to recognise the claims of UK creditors.
Senior members of the insolvency professional sector have argued that reciprocity is an essential part of continuing with this legislation. Without a deal, it is vital that we do not continue indefinitely to apply EU rules that could override our own laws and prevent us from dealing effectively with insolvencies in the UK. To reflect that, the instrument repeals the majority of the EU insolvency regulation, keeping only the small part necessary to make sure we do not lose any existing rights to open insolvency proceedings in the UK. We are retaining the categories of proceedings under the EU insolvency regulation to assist the acceptance of UK insolvencies in EU countries in future, continuing with concepts and language that the courts in the EU will recognise.
The instrument continues to apply the current EU laws to existing cases in which main insolvency proceedings are already open on exit day, but as a safeguard for those existing cases, since we cannot assume that the EU member states will continue to apply the same rules where the UK is concerned, the courts may disapply the EU rules where they lead to a different outcome than would have been the case before we left, and where that prejudices creditors or others with an interest in an insolvency. In such cases, the court will be allowed instead to apply the powers in the UK’s Cross-Border Insolvency Regulations 2006 or to make some other appropriate order to resolve the situation.
That brings me to the concerns raised by the Joint Committee on Statutory Instruments. It has suggested that these saving provisions lack clarity, are defectively drafted and make unexpected use of the powers in the European Union (Withdrawal) Act 2018. Officials have worked closely with the JCSI to explain why it is necessary that the courts have a broad power, rather than something narrower. Detailed examples were provided to the JCSI to demonstrate some of the many different situations in which the power might be needed. In its report, the JCSI commented that those examples were helpful, and it expressed its gratitude.
These situations can be complex. For example, suppose that the main insolvency proceedings are opened against a company before exit day in another EU member state. They will be governed by the EU insolvency regulation. One of the requirements of that regulation is that an insolvency practitioner who is dealing with the case must inform EU creditors as soon as the insolvency proceedings are commenced. The regulation also says that the notice should provide the creditors with details of how to make a claim. That is important as there can be time limits on making claims in insolvency. However, after exit day the requirement to provide notice of the insolvency will no longer apply to UK creditors, because the requirement is limited to those creditors in member states and the UK will no longer be an EU member state after exit day. In consequence, UK creditors may not find out about the existence of an insolvency proceeding in time to make valid claims, and if nothing is done their claims may be rejected. At the same time, the insolvency practitioner would be permitted—under the retained version of the EU insolvency regulation that the withdrawal Act will include in our UK law—to seize any of the company’s assets here in the UK to repay creditors who have made valid claims. That is clearly unacceptable.
Under the proposed amendment in these regulations, the court can consider that the interests of UK creditors are being materially prejudiced, and make an appropriate order as it sees fit. For example, it could freeze the company’s UK bank account until the office-holder accepts the UK creditors’ claims. I think we can all agree that that would be a fair and just outcome.
Further examples were included within the JCSI’s published report. The provisions provide the court with the necessary discretion to deal with scenarios such as that, and other unexpected outcomes from the interaction of UK insolvency law following exit with the domestic law of the remaining EU member states. As the UK cannot exercise any control over those other states’ laws, a broader power for the courts to step in is both necessary and appropriate. This does not create a new power that the courts would be unfamiliar with. Insolvency law already contains similar provisions and powers for the courts in other cases where broad discretion is necessary. The power safeguards individuals and businesses who have an interest in an insolvency. It is the best way to ensure that, where they could be treated less favourably after EU exit than before we left, the courts will be able to step in.
The instrument also amends the Employment Rights Act 1996 and the Pension Schemes Act 1993, which set out protections for employees following the insolvency of their employer. The protections remain unchanged and the effect of the instrument in this area is to ensure that the current financial support given to UK-based employees when their employer in the EU becomes insolvent will continue after exit day.
In the absence of a Northern Ireland Executive, the instrument updates and makes similar changes to the law on insolvency and employment rights in Northern Ireland, on behalf of the Northern Ireland Government. That includes updating Northern Ireland employment legislation in this area, where there had been no opportunity to mirror a previous amendment made to British law in 2017. I commend the regulations to the Committee.
Kelly Tolhurst
I thank the hon. Member for Sefton Central for his comments and contribution to the debate. We remain optimistic about reaching a deal of mutual benefit to the UK and the EU, but it is important to maintain our regulatory and legislative framework for dealing with insolvency should we leave without a deal. That is why we introduced this instrument.
The Department has consulted with the profession and spoken to some of the groups to try to ensure that that the statutory instrument will work as well as possible. Obviously, we have consulted R3, which the hon. Gentleman mentioned. As I outlined, we are very much focused on delivering a deal.
The hon. Gentleman is quite right that the statutory instrument relates entirely to things happening in the UK, but does not enable us to have any influence on or dictate to EU member states how they treat UK orders in the event of no deal.
Kelly Tolhurst
I see the hon. Gentleman understands that point.
As the hon. Gentleman will know, in what we have laid out as our future economic relationship in a deal, our focus is on ensuring that we are able to deal with mutual recognition and reciprocal status going forward if a deal is to be had. We recognise, with the profession, that if we can come to an agreement in this area in a deal situation, that would be in everyone’s best interest. With a deal, we would continue our civil judicial co-operation, including on cross-border insolvency. That is in the best interests of both the UK and the EU, as he outlined. However, it is not possible for us to unilaterally continue with the co-operation on cross-border insolvencies; we can achieve the benefits that both sides currently enjoy only through a mutual recognition agreement with the EU. The declaration on the future relationship was clear that it would include wide-ranging agreements on trade, including trade in professional and business services and the framework necessary to support that.
We will continue in those endeavours, but this SI is intended to ensure that, in a no-deal situation, UK law provides clarity for the profession and that we are able to operate on day one. After that date, it would be down to us to bring any further changes to our insolvency regulations that are not in the scope of the draft regulation to the House, as we see fit. After leaving, there may be things that come up that we might need to change, but that would be done in the course of standard business.
Regarding the hon. Gentleman’s concerns about the Pension Protection Fund, I assure the Committee that the Prime Minister and the Government have been clear that we will not row back on workers’ rights through the withdrawal Act. Employees living and working in the UK for a company registered here or in the EU will continue to receive redundancy-related payments from the national insurance fund where their insolvent employer cannot make them, as they do now. The draft regulations ensure that the law in this area is clear and can operate correctly when we are no longer an EU member state. One of the limitations is that within this SI we cannot guarantee for workers in EU states, how EU member states will deal with the employees working in those states. What we can do, as laid out in this SI, is to ensure that people working in the UK, be it for EU companies operating in the UK or UK companies, will still have those protections as they are now for UK workers.
On the hon. Gentleman’s questions about the impact assessment, we have been in this situation many times over recent months and I know it is a particular concern for him. However, for this particular SI we have assessed the direct cost of to business in terms of the costs of insolvency and have estimated that the direct cost would be £2.7 million, due to the extra costs that may arise when practitioners need to open cases in EU member states, which they do not currently have to do under EU regulations.
Nick Smith
I do not know whether this is the case, but if there is a no-deal Brexit, will EU-based employers pay the levy into the Pension Protection Fund?
Kelly Tolhurst
EU member states will be operating under the current EU regulations as they stand, according to how they have implemented those rules in their own states. We currently submit to the levy here, so workers in the UK, whatever their nationality, will still be entitled to all of the same protections and benefits that exist today. With regard to how individual member states implement the EU regulation, we cannot guarantee how they will interpret a UK no-deal situation. We hope EU member states will treat all UK workers in the same way as we will treat people working in the UK, but that is something we cannot dictate. Does that give some clarity?
Nick Smith
No, the Minister did not absolutely clear up the matter for me. Will she check whether EU-based employers will continue to pay the levy into the pension protection fund on behalf of UK employees should we leave without agreement?
Kelly Tolhurst
I apologise if I was not clear. Perhaps I was trying to explain the matter in a more complicated way. Yes, they will all pay the PPF levy. I was simply trying to highlight that we here can expressly say we are making sure that all people working in the UK, no matter what their nationality, will be afforded all protections. What we do not have any control over is future changes that might occur in other member states and in EU regulations in a no-deal situation. At that point we will be regarded as a third country, but under the current regulations they will still pay into the fund.
The changes proposed in the draft regulation go some way to protecting the UK insolvency market in the event of a no deal. They ensure that citizens, businesses and the insolvency profession will not be disadvantaged by unilaterally retaining EU rules when reciprocal and necessary safeguards would not be guaranteed by the EU. The proposed changes provide certainty and clarity regarding cross-border insolvency cases with the EU following exit.
The regulations also ensure that protections for UK employees of insolvent employers are maintained after the UK exits the EU: something we all agree is vital. The instrument is essential to repeal the majority of EU insolvency regulations from UK law and to retain the status quo for employment rights in the UK. I hope I have been able to answer all the questions and I commend the regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Insolvency (Amendment) (EU Exit) Regulations 2018.
Supporting New Parents in Work
Kelly Tolhurst Excerpts(7 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Through the industrial strategy the Government are working to transform our economy to ensure that everyone, no matter what their background, can enter into the labour market and progress at work.
In the “Good Work Plan” we set out an ambition that all work should be fair and decent. Pregnancy and maternity discrimination has absolutely no place in that ambition. It is unlawful.
In our response to the Women and Equalities Committee inquiry into pregnancy and maternity discrimination, we made a commitment to review the position in relation to redundancy following the suggestion that we could further strengthen existing protections. We have completed that review.
Tomorrow, we are publishing a consultation document proposing legislative changes to strengthen the existing protection against redundancy by extending it into a period of return to work after maternity leave or other types of parental leave. It currently applies to women on maternity leave. By doing so we will further help to tackle discrimination and support new parents in work.
The consultation also covers other steps we are taking to change the culture which can exist around pregnant women and new mothers in the workplace.
Copies of the consultation will be placed in the Libraries of both Houses.
[HCWS1277]
Draft Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2018
Kelly Tolhurst Excerpts(7 years ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Sir David. This instrument, laid before the House on 4 December 2018, is part of our EU exit contingency planning; it will not be needed should the UK conclude the withdrawal agreement with the EU. Several laws allow for collective redress when infringements of consumer protection laws take place. The first is the consumer protection co-operation regulation, known as the CPC regulation. The reciprocal arrangements set out in that EU law require enforcers to act on requests from their counterparts in other EU member states. They are required to investigate and, if necessary, take action to end infringements of EU consumer law when the collective interests of consumers in other member states are harmed.
The second of those laws is the injunctions directive. The reciprocal arrangements in that EU directive allow enforcers to take action in the courts of other member states to stop the relevant infringements. In the UK, part 8 of the Enterprise Act 2002 implements the injunctions directive, as well as providing the UK’s enforcement mechanism for the CPC regulation. It enables certain UK and EU enforcers to apply for enforcement orders to stop the infringements in question when listed EU consumer laws are being breached—these are known as Community infringements—and the collective interests of consumers are being harmed. Finally, UK enforcers are given the necessary investigatory powers through schedule 5 to the Consumer Rights Act 2015.
In the absence of a deal, after the UK’s exit from the EU, the CPC regulation and the injunctions directive will no longer apply to the UK as we will cease to be an EU member state. In consequence, UK consumer enforcers such as the Competition and Markets Authority will no longer be part of the reciprocal cross-border enforcement arrangements. This instrument therefore revokes the CPC regulation, which would otherwise continue to apply in UK law. Doing so prevents a situation in which UK enforcers would be required to assist their EU counterparts, while EU enforcers would not be under the same obligation. This instrument also amends the Enterprise Act so that EU enforcers cannot apply for enforcement orders in UK courts, preventing a situation whereby EU enforcers would remain able to bring legal proceedings in UK courts under the injunctions directive, while UK enforcers would lose their equivalent right to bring proceedings in the EU.
This instrument does not prevent UK enforcers from co-operating with their EU counterparts: UK public bodies will remain able to share information they hold in their capacity as enforcers under part 8 of the Enterprise Act to assist their counterparts abroad. However, we recognise that cross-border enforcement co-operation to protect consumers would become more limited in a no-deal situation. The instrument also ensures that UK enforcers retain the powers they now have within the UK, and can continue to investigate and address infringements of UK consumer law—including retained EU consumer law—after exit day. Those laws are set out in the new schedule 13 to the Enterprise Act to certify this instrument.
These changes are a necessary use of the powers of the European Union (Withdrawal) Act 2018, and I commend the instrument to the Committee.
Kelly Tolhurst
I thank the hon. Lady for her contribution. As a responsible Government, we continue to prepare proportionately for all scenarios, including the scenario that we leave the EU without a deal. That is what this statutory instrument ensures: it revokes provision in the CPC regulation and the injunctions directive that will not be reciprocated by the EU in a no-deal situation.
I recognise the hon. Lady’s concern about the particular issue that she has raised. It is not in the scope of these regulations, but, as she knows, I am more than happy to communicate with her outside this statutory instrument Committee. Importantly, the instrument ensures that, after EU exit, UK enforcers retain powers to continue protecting UK consumers in the case of infringement of UK consumer law. That includes EU-derived consumer law.
Patricia Gibson
What does the Minister think will be the effect on the UK’s influence in European markets, for example? After Brexit, does she think that the UK’s influence on consumer protection will increase or decrease?
Kelly Tolhurst
The statutory instrument before us talks about UK enforcement, and that, through our UK enforcement agencies, which are already registered under EU law, will be retained under UK law. As always, this Government and our enforcement agencies are committed to the protection of consumers in this country and will do whatever they can, in the event of no deal, to ensure that the relationships with our European neighbours will be maintained as far as possible, but obviously a lot of that will rest with the EU and how it wants to deal with us after EU exit.
Mr Baron
The additional point, in answer to the SNP, is surely that we will have control over our own laws more and therefore can even enhance consumer protection within these shores—rather than following on the tails of the EU—and no doubt there will be many areas in which we do that.
Kelly Tolhurst
I thank my hon. Friend for his comment; he is quite right. There are examples of where UK consumer law is superior to EU law in some elements, and this Government are committed to doing that. We will be able to maintain and, obviously, change our laws. Any EU provider selling into the UK market—whatever the product or services—will still have to comply with UK law and therefore be subject to UK enforcement agencies.
Question put and agreed to.
FTSE 100 Company Pay Ratios
Kelly Tolhurst Excerpts(7 years ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing today’s important debate. She has a strong, long-standing record of campaigning on behalf of low-paid workers in the economy. I highlight the constructive way in which she approaches working across the House on some of these issues; I know that she secured an Adjournment debate on whole-company pay policy last July.
Executive salaries and pay ratios are undeniably high. Currently, the ratio of the pay of the average FTSE 100 chief executive officer to that of the average UK employee is around 160:1, based on the mean. The median average is 145:1, but it is important to set current levels of pay in a longer-term context. The data shows that executive pay more than quadrupled from the late 1990s to the early 2010s. Pay ratios increased over that period from 47:1 in 1998 to 132:1 in 2010. However, that has stabilised in the last five to seven years, albeit with minor fluctuations from year to year.
The High Pay Centre, which campaigns against high levels of executive pay, acknowledged in its most recent report that UK executive median pay peaked at £4.2 million in 2013, and is around £3.9 million for the latest reported year. That puts the UK on a par with Germany and only slightly above other major EU countries on executive pay levels, despite our quoted companies generally being much larger. In the US, CEO pay is much higher. Median CEO pay for Standard & Poor’s 500 companies in 2017 was around £9.3 million, giving the US a pay ratio of 399:1.
That sets the context, but it is certainly not grounds for complacency. Shareholders and people in wider society have increasingly been questioning how such wide differentials can be justified, both in terms of individual performance and in relation to company pay policy as a whole. The Government share those concerns.
We do not believe that it is the job of the Government to set company pay levels or impose arbitrary caps. However, it is our position that there must be transparency and accountability in executive pay, and that shareholders must have the information and the powers to challenge unjustified pay in the boardroom. That is why we legislated in 2013 to require listed companies to secure binding shareholder approval for their executive remuneration policies at least once every three years, and to disclose every year the total single figure that each director is paid.
It is also why we are continuing to take steps to force companies to disclose and explain how executive pay is matched by performance, and how it relates to wider employee pay. In particular, we recently introduced a new requirement for companies to disclose and explain every year the ratio of their CEO pay to the average pay of their employees. I am pleased that the hon. Member for Mitcham and Morden welcomed the legislation, which came into effect at the beginning of this year, meaning that companies will have to report their ratios when they publish annual reports next year.
Pay ratio reporting will, for the first time, show systematically and clearly how pay at the top of quoted companies relates to pay across the rest of the company. Companies will have to report each year the ratio of the CEO’s pay to both the median and the quartile employee pay at the company. The hon. Lady expressed concerns that the pay ratio was being calculated only in relation to the median; in fact, we require pay ratios to be published for the first quartile, the median and the upper quartile. We thought hard about whether to use the median or the mean, and finally decided on the median as a more robust figure. In part, that was a response to the TUC, which argued strongly that we should use the median. In most cases, we use the median because the result is the bigger ratio.
Shareholders, employees and others will get a clear and consistent picture from year to year of how CEO pay relates to pay across the whole company. Companies will need to explain the reasons for any change from previous years, and any pay ratio trend over time. They will also need to explain whether any change is due to a change in the company’s employment model—for example, if the reason was the outsourcing or offshoring of low-paid workers. Critically, the company will have to explain whether, and if so why, it thinks that the ratio is consistent with the pay, reward and progression policies of the company’s UK employees as a whole.
Those pay ratio explanations will be watched closely by investors, who are strongly behind the new pay ratio reporting, as well as by employees and wider society. Any company that puts forward weak or misleading explanations can expect to face significant shareholder and public criticism. As the Financial Times wrote in 2017 when we announced the plans,
“a single-figure ratio will attract attention. And that will help investors curb companies’ attempts to inflate chief executive pay—and the pay gap”.
Pay ratio reporting is part of a wider package of reforms aimed at making a real change to the level of engagement between boardrooms and employees. That package includes an important new provision in the UK corporate governance code for remuneration committees to consider workforce pay alongside executive pay, and to engage with the workforce to explain how executive pay aligns with wider company policy. It is too early to tell what the impact of the new reforms will be. The Government expect companies to respond positively and creatively to the new requirements, recognising that no one size will fit all and that there will be a variety of approaches.
We are already seeing some encouraging progress, on a voluntary basis, this year. For example, Marks & Spencer has agreed that the chair of its business involvement group, which represents the interests of the company’s 81,000 staff, will be invited to attend two boardroom meetings and at least one remuneration committee meeting each year. We must also remember that pay ratios are determined by average pay in the workforce, as well as by pay at the top, so ratios will fall where average pay increases faster than executive pay. In that respect, the Government are taking steps to boost the wages of working people through our industrial strategy to deliver better-paid jobs across the country, our £37 billion productivity investment fund and our increase in R&D investment to 2.4% of GDP by 2027.
We have taken concrete action for low-paid workers by introducing the national living wage, which is on track to hit its target of 60% of median earnings by 2020. Its introduction marked a pay rise for more than a million workers across the UK and has helped to deliver the fastest wage growth for the lowest-paid in 20 years. In April, we will increase it again to £8.21 by an inflation-busting 4.9%—an increase in earnings of more than £690 a year for a full-time worker, and a total pay rise of more than £2,750 a year since we first brought it in. Up to 2.4 million workers are estimated to benefit.
Real progress is being made for hard-working people. As a working-class Conservative MP—as a Tory—when I speak about hard-working families and hard-working people, I find that I am accused of referring to higher earners. As somebody who undertook many of the jobs outlined in this debate before I came to Parliament, I actually find it offensive that when I talk about hard-working people, I am accused of not referring to hard-working people separated across our economy.
Kirsty Blackman
I appreciate the Minister’s honesty. The problem is that when the middle-rate income tax threshold goes up, there are Conservatives who make the case that it will improve life for hard-working families, but very few people in the jobs we are talking about are making £43,000 a year. Maybe the Minister needs to tackle the issue with some of her colleagues.
Kelly Tolhurst
I thank the hon. Lady for clarifying her point, but I have to say that it is this Government who have increased the threshold year on year. As a working-class Conservative MP, I am proud to say that I am standing up for hard-working people—and when I talk about hard-working people, I mean people who go out every day to earn a living, no matter what sector they are in or what job they are doing.
The Government have responded to the challenging world of work with plans for the biggest upgrade of workers’ rights in 20 years. In December we published the good work plan, which sets out how we will implement the recommendations of the Taylor review. The plan commits us to introducing a right to request a more predictable and stable contract for all workers and to bringing forward proposals for a single workers’ rights enforcement body in early 2019.
Laura Pidcock
The right to request a contract is often signalled as some kind of big victory, but have not workers always had that right? This is nothing new.
Kelly Tolhurst
We will be making the options for employees clearer. For example, we have already laid statutory instruments to ensure that on their first day, employees are able to get a written statement of their rights. It is about making sure that workers are able to know what rights they have, and that they know that they can ask for that ability.
The Government have also laid legislation that will repeal the so-called Swedish derogation and guarantee agency workers their right to equal pay. After April 2020, agency workers will no longer be able to opt out of their right to equal pay after 12 weeks in the same assignment. In short, we are shining a light on pay at the top and taking action to improve the pay and employment rights of ordinary workers.
I want to touch on a few points made by the hon. Member for Mitcham and Morden. She rightly raised the issue of diversity on boards and gender balance, which the Government are very concerned about. We have started to see results from work on the gender pay gap: we are now at 17.9%, the lowest figure on record. We are working to improve gender diversity on boards, and we have made great progress. The next target and challenge is black and minority ethnic representation—not just on boards, but in the pipeline and among executives in general. That is one of the policy areas in my portfolio, and I take a lot of interest in it.
The hon. Lady asked whether it is right that those in large companies—I think she was referring to companies that are private, but not necessarily listed—are taking large salaries but have not signed up their employees to the living wage. I quite agree that that is not a satisfactory situation, but what is massively important is the highlighting of the issue by the media and wider public, and the transparency that we have enabled so that those companies are held under a tougher spotlight. Customers and suppliers out there who know that information about those companies will need to decide whether they want to deal with them. Things are moving, and it helps that the issue is on the agenda more widely and that more people are aware of what the big bosses are being paid.
The hon. Lady also raised long-term incentive schemes. The data show that long-term incentive schemes linked to valuation and share prices have increased over time, which has contributed to the rise in CEO pay. I absolutely accept her point, but one of the reasons for bringing in pay ratios and specifying in our rules that companies must give an illustration of the breakdown of executive pay is to enable shareholders to take a view. It will also provide real information about how that narrative relates to wider pay structures across organisations. We are hoping that the reforms will give shareholders the tools and powers to hold boards to account, and that they will exercise that right further as the legislation and the changes work their way through.
The hon. Member for North West Durham (Laura Pidcock) raised the issue of pay caps and suggested a 20:1 pay ratio. As I have outlined, the Government do not feel that it is our responsibility, or that we are in a position, to limit what companies can pay their employees. Our role is to ensure that shareholders and stakeholders have the tools to make judgments and hold boards and remuneration committees to account. We believe that the reforms that we have made over time are going some way towards achieving that.
Laura Pidcock
For information, my point about the 20:1 ratio was about the public sector.
Kelly Tolhurst
I thank the hon. Lady for that clarification. However, I point out that a pay ratio of 20:1 could extend to foreign companies bidding for Government contracts, which would raise state aid and World Trade Organisation issues. There are issues with some of the policies and the refining that she may want to clarify further.
I thank again the hon. Member for Mitcham and Morden, who has taken the opportunity to bring this debate about company pay ratios to Westminster Hall. They are an important means of shedding light on pay distribution within companies and how that is changing over time. Their publication will spur companies and their remuneration committees to give greater thought and show more sensitivity to how pay in the boardroom aligns with employee pay. Along with other reforms implemented by the Government, they will ensure that the UK remains a world leader in corporate governance and an excellent place in which to work, invest and do business.
I have had many conversations with the hon. Lady, and I thank her for the way in which she approaches these matters. As I said yesterday in the Business, Energy and Industrial Strategy Committee, these issues will always be under review and we will always be looking at what can be done to improve transparency and clarity so that the spotlight can be shone on organisations. I look forward to working with the hon. Lady constructively on the number of issues that I know she is interested in in this area over the coming months.
Siobhain McDonagh
Can I ask for your clarification, Chair? Do I have a minute, or two, because we have not reached the time limit?
Crown Post Offices: Franchising
Kelly Tolhurst Excerpts(7 years, 1 month ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
It is a pleasure to serve under your chairmanship, Sir Graham. I congratulate the hon. Member for Wigan (Lisa Nandy) on securing this important debate. Although I am one of only a few Tories in the room, I thank all hon. Members for their contributions. I recognise their passion as well as the importance that post offices represent to MPs.
As a constituency MP, I understand the valuable role of the post office for me and for my constituents. Post offices play a vital role at the heart of our communities and are an essential part of our villages, towns and cities, so the future direction of the Post Office is important not only to the Government, but to all our constituencies.
The festive season has just passed, when the dedication of Post Office staff across the country was shown. They come out in force to help our constituents and deliver the parcels and letters destined for our loved ones. I thank the Post Office and Royal Mail staff for the efforts they have put in over recent months. It is estimated that more than 60 million customers visited post office branches in the run-up to Christmas, and I want to mention one small rural post office in Herefordshire that opened its doors this year to host Christmas dinner for those who would otherwise have been alone. That highlights the social value of post offices, not only within our high streets, but beyond.
To repeat what I indicated in November’s debate on post office franchising, this Government value and recognise the economic and social importance of post offices to people, communities and businesses across the UK. That is why we made a commitment in our manifesto to safeguard the post office network and support the provision of rural services.
Ian Murray
On the manifesto commitment to protect post offices, is it still Conservative party policy to make the post office the front office of Government?
Kelly Tolhurst
What is definitely Government policy is to make sure that we have a network of post offices that offer a wide range of services to our constituents, and that that is sustainable into the future. Franchising is not a closure programme. It is a way to secure better sustainability for the future of our post offices, and it is a good thing that Post Office is working with high street retailers to recognise that.
The performance of the Post Office over the past decade shows that the network is at its most stable in a generation. Between 2010 and 2018 we provided nearly £2 billion to maintain and invest in the national network of at least 11,500 post offices.
Jim McMahon
I thank the Minister for her comprehensive response so far, but it would be good to get confirmation that this will move on, because we cannot keep having these debates every few months. Does she realise that the outreach service counts each and every stop that a mobile post office makes as a branch? A single vehicle travelling to a village for half a day each week or every two weeks would class each stop as a branch, which is where the figure of 11,500 branches comes from.
Kelly Tolhurst
I recognise some of the concerns about mobile branches that the hon. Gentleman raises. I can assure him that I am moving on to it, and obviously I have had the opportunity to listen to hon. Members this afternoon. I am sure hon. Members will agree that we do not want to go back to the days when we saw over 7,000 post offices shut, as was unfortunately the case under the previous Labour Government.
The post offices meet and exceed all the Government’s accessibility targets at the national level. Government investment in the network enabled the modernisation of more than 7,500 branches, adding more than 200,000 opening hours per week and establishing the Post Office as the largest Sunday trading network.
The Post Office’s agreement with high street banks enables personal and business banking in all branches, providing vital access to cash and banking services to consumers, businesses and local economies as bank branches continue to close. It is right to say that the agreement held with the Post Office and banks benefits our communities, which, as the Minister responsible I have made very clear to Post Office Ltd, to my colleagues in the Treasury and to the financial institutions that I have spoken to. The Post Office is providing a vital service to our constituents, and it should be remunerated for that—in doing so, hopefully that will ensure that our postmasters are also remunerated correctly for the service they provide to our constituents.
Gill Furniss
The Minister talks about banking services, and I would like to bring her back to a point made earlier. When post offices supply ATMs—clearly when banks close down, ATMs often just disappear from the high street or village—the rental is so much that they lose a significant amount of money. Does the Minister want to put that right in order to incentivise keeping ATMs in post offices so that they are available to all our communities?
Kelly Tolhurst
The hon. Lady is absolutely right to say the loss of banks and access to cash has been a concern for our constituents and high streets. To individual MPs who represent a constituency where they feel that their post office is in a position to add an ATM—it is not always possible—as the Government representative I will always feed in specific issues that relate to individual constituencies or branches where we can improve services. I put that offer out there. Give me the details and I will always follow it up.
Gill Furniss
The Minister has been given the details today—they will be in Hansard. Postmasters see that they are subsidising the ATM, which just seems wrong to me. I ask the Minister to go back and review that, and to look at finding some way that she can compensate sub-postmasters for that service.
Kelly Tolhurst
I have heard what the hon. Lady has said today, and I will go away and look it. Every post office operates differently throughout the country. There is not a standard rule for all branches, but I will continue to look at the issues that have been highlighted. I care as much about our post office network as any hon. Member does, and that is not just because I am the Minister in post.
The Post Office’s financial performance has improved significantly, and consequently the Government funding required to sustain the network has drastically decreased and is set to decrease even further in upcoming years. It is the first time in 16 years that the Post Office has made a profit. There was a time back in the early 2000s when the Post Office had a deficit of more than £1 billion. Things have changed, and we are ensuring that we get value for money for the taxpayer while ensuring that we sustain the network.
Marion Fellows
The Minister is talking eloquently about the profits that the Post Office is making, but the people who run smaller post offices—the sub-postmasters —tell me that they cannot live on the new contract. When they have to hand back keys to local post offices, does she think it is right that the Post Office is making profit at the expense of these hard-working individuals?
Kelly Tolhurst
I understand why the hon. Lady has raised concerns about sub-postmasters, and she is absolutely right to do so. Whoever has my role in Government—whichever colour of Government—has a duty to defend the Post Office but also to hold it to account. Since being in post I have challenged the Post Office and will continue to do so. Yes, it is commercially independent and operates within terms. We represent the taxpayer, who is the shareholder and owner of the post offices. It is right that we hold the Post Office to account for decisions and that we exert influence where we can.
Changing consumer behaviour has been a serious challenge for post office and small retailers, including many postmasters, which is why in the autumn Budget we made decisions on business rates to ensure that we helped not only some of our sub-postmasters, but small retail more generally.
There is widespread misunderstanding that franchising is a closure programme that will lead to redundancies and the deterioration of services for consumers, but that is not the case. I appreciate that proposed changes to the delivery of post office services can cause concern in some affected communities, but post office branches are not closing—they are being franchised either on site or by relocating them to other high street locations.
Franchising has been common practice since 1635, when King Charles I issued a proclamation allowing the public to use Royal Mail. The model has endured to this day, and the vast majority—11,300 of our 11,500 post offices—are run successfully as a franchise or on an agency basis with retailers, whether large or small. Delivering post office services as part of a wider retail offer is a proven model that brings benefits to the community.
The hon. Member for Wigan raised concerns about the post office in her constituency, which is included in the 40 that will be taken over by WHSmith. Subject to consultation, WHSmith will take over the running of Wigan’s central post office. Let me be clear that the community in Wigan like other communities across the UK is not losing its post office. It will be relocated to a nearby WHSmith branch, and the services will be more accessible for customers.
Lisa Nandy
I am grateful to the Minister for trying to address some of our concerns, but the community is not being consulted on whether the post office is moved into WHSmith. A consultation is explicitly ruled out in the documents that I have been sent. Although she says that this is technically not a closure, to our community it is. The post office has stood on that site for 134 years. Some of the staff have worked there for decades and offer the sort of service that will not be possible in WHSmith. When she has finished winding up—I appreciate that she needs time to respond to our concerns—will she consider meeting with a group of us to talk this through and consider what we can do to address some of those very strong concerns, which are not being heard at the moment?
Kelly Tolhurst
It is right that Post Office Ltd is holding consultations. I apologise; the hon. Lady said earlier that she had been chucked out of the store and that language of intimidation was used. That is quite an accusation to make, and I would recommend that, if that happens to any Member, they should make Ministers aware so we are able to—
Kelly Tolhurst
Absolutely, but that has not been done prior to today. We will take those things forward. I have met other Members about other issues in their constituencies.
It is right that the Post Office is commercially independent, because that enables us, as the major shareholder, to hold it to account at a ministerial level, and I am always happy to do that. I assure the hon. Lady that the proposed changes would add six hours a week to the Wigan branch’s opening times. She is correct—this goes back to an earlier point—that the ATM will not transfer over to the new site, so I understand her concerns about her constituents relating to that service, which would change in that situation.
Jim McMahon
Post offices are not the same from one street to the next; branches provide very different services. If these are not closures but relocations, is the Minister saying that the services provided by the post offices today will be entirely transferred across to WHSmith, and that there will be no loss of service?
Kelly Tolhurst
The programme of franchising is moving Crown postal services. Our objective is to ensure that, when the post offices are moved, they deliver better services and that constituents have better access to them. Part of the franchising programme is about ensuring we have a post office network for today, which suits the modern retail environment and consumers’ changing habits.
Rachael Maskell
Will the Minister follow up the question of my hon. Friend the Member for Wigan (Lisa Nandy) and meet a group of us? I am seriously concerned about the reduced access—not necessarily to the building but to the high street in front of the post office—and the impact on my high street and the local economy. Will she meet us to discuss those detailed issues?
Kelly Tolhurst
As I have said—I thought I was quite clear—I am always willing to meet Members who have issues relating to post offices in their constituencies. I said that earlier. I reiterate that I will listen, hold Post Office Ltd to account and take those things forward. That does not necessarily mean that I will agree with some hon. Members’ positions, and they will not always be achievable, but I will make Members’ cases on their behalf.
The UK visa and immigration biometric enrolment services for the Home Office were available to a mix of 99 directly managed and WHSmith branches nationwide. However, as was mentioned earlier, the Home Office recently awarded that contract to Sopra Steria, which now runs the service in new locations. On the Post Office being in a position to deliver services for our constituents, I will always ensure that we work together to strengthen the services and add value to the services that the Post Office will deliver for the Government.
WHSmith has been operating post offices since 2006 and has proven to be a reliable and dependable presence on the high street. There are some misplaced concerns about the Post Office’s contingency plan should WHSmith go into administration. The latest financial results show that the company’s high street businesses recorded their third-highest profit in more than 15 years despite the well-documented challenges on the UK high street. The Post Office is not complacent; it regularly meets with all franchisees to ensure they are delivering on the terms of their agreements. That is an ongoing process.
I am concerned that we are running out of time, Sir Graham, and I think the hon. Member for Wigan may want to wind up—or I can carry on. Post Office staff at franchise branches will have the opportunity to transfer to new franchises under TUPE employment protection, which means that they will benefit from the same terms. Alternatively, staff can leave with compensation, and there may be opportunities available elsewhere in the network. WHSmith’s post offices are currently performing well, and I have every confidence that the recent deal will help to secure Post Office services on a sustainable, profitable basis in communities across our country.
I hear the concerns about the consultation process, and I have said that I will take them forward with the Post Office. As the Minister, I will not call on Post Office Ltd to stop the franchising process, but I will work with it to ensure that it delivers its business in the best way possible and benefits our communities.
We need a sustainable network. It is not correct that the Post Office owns all the Crown branches—the buildings are not all freehold and some are leasehold. It is right that the taxpayer holds the Post Office to account and, as the Minister, I will do everything in my power to harness opportunities and to increase services in the post offices. There will be many opportunities and, as the high street changes—I am also the Minister with responsibility for the retail sector—I will continue to work with the Post Office to ensure that we are delivering for our communities and that we increase the services that post offices provide.
Draft Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) regulations 2018
Kelly Tolhurst Excerpts(7 years, 1 month ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Davies. Since the UK’s 2016 referendum decision to leave the EU, the Department for Business, Energy and Industrial Strategy has undertaken a significant amount of work on the withdrawal negotiations in preparation for a range of potential negotiation outcomes. The best outcome is for the UK to leave with a good deal and we have put forward a serious and credible proposal for the future relationship. Although we remain confident of an agreement, in the meantime we must and will continue to work on preparing for a no deal.
The regulations aim to address the failure of retained EU law to operate effectively, as well as other deficiencies in the field of audit arising from the withdrawal of the United Kingdom from the European Union. They do not implement any new policy.
Although the fundamental elements of the current statutory audit legislation will remain the same after exit, the legislation still needs to be amended to ensure that it will work effectively once the UK has left the EU. That is because UK law on the regulatory oversight of the audit profession is compliant with the EU audit directive and the EU audit regulation.
The audit directive sets out the requirements on the statutory audit of most incorporated businesses, as well as a framework of standards for audit work and independence. It also sets out the responsibilities of the competent authorities for statutory audit in member states.
Meanwhile, the audit regulation sets additional requirements on the statutory audit of businesses defined as public-interest entities, which are banks, building societies, insurers and businesses with securities traded on regulated markets. The regulation forms part of retained EU law under the European Union (Withdrawal) Act 2018 and will therefore continue to apply in the UK after the UK exits from the EU. Our aim is to ensure that the framework for regulatory oversight of the audit profession in the UK works effectively following our withdrawal from the EU. The statutory instrument will help to facilitate that.
Under the audit directive, powers are provided to the European Commission to grant equivalence to third countries for their audit regulatory framework and adequacy to third countries’ competent authorities for their framework on audit regulatory co-operation. The instrument transfers those powers to the Secretary of State and provides powers to set out the criteria and procedure for assessment.
In future, equivalence or adequacy status decisions will be granted by regulations. Regulations could also be used in the months immediately following the UK’s departure to set out a framework for future assessment of equivalence and adequacy by the Financial Reporting Council. Following the UK’s exit from the EU, European economic area states would be treated like other third countries and, therefore, would be granted equivalence and adequacy status by the FRC.
The instrument extends the powers granted to the UK competent authority, the Financial Reporting Council. Certain powers that have been granted to the FRC by the Secretary of State will need to apply more broadly to reflect the UK’s exit.
The instrument extends the FRC’s ability to enter into mutual recognition agreements to recognise audit qualifications to allow such agreements to be made with EEA states and Gibraltar. It also extends the FRC’s ability to register third country auditors to include the registration of EEA auditors and Gibraltarian auditors.
The instrument transfers the European Commission’s power for the adoption of international auditing standards to the FRC. As the FRC already sets UK standards in line with international standards, we anticipate no immediate change.
The instrument provides certain transitional arrangements for auditors affected and their client businesses. To ensure companies and investors remain confident in UK markets, these will apply until the end of 2020. During that period we will continue to recognise EEA audit qualifications, EEA firm registrations and approvals, EEA audit regulatory frameworks as equivalent and EEA competent authorities as adequate. These transitional arrangements will mean that there will be no cliff edge for EEA companies that list securities on the UK market. It will also allow the FRC the time to put in place the procedures necessary to determine the full equivalence of EEA states, as well as the adequacy of their competent authorities.
The Government have carried out a de minimis impact assessment of the regulations, as the overall costs to business were expected to be small. This confirmed that the impact on business would be minimal, with only a limited sector being affected by most of the substantial changes. This is because the amount of cross-border business affected by this instrument is small. The most significant effects are for EEA businesses that are listed on UK markets, whose auditors will have to register with the FRC, and for UK businesses that only trade securities in the EEA, as these auditors will be subject to less regulation than before.
Recent statements by the Republic of Ireland Government have suggested that some individual UK auditor practices across the border may be affected by the UK’s exit. However, the numbers are small and officials are already in discussion with officials in the Republic of Ireland about them. These regulations maintain access to the UK for the Republic of Ireland auditors for the transitional period. During this period, we hope to agree a mutual recognition agreement with the Republic of Ireland, which will enable continued long-term access for both sides. The Government have worked closely with business and regulatory bodies, to ensure that the instrument before you now achieves continuity wherever possible, while addressing the deficiencies arising from the UK’s withdrawal from the EU.
In conclusion, these regulations aim to provide continuity for businesses operating in the audit sector wherever possible, while addressing deficiencies arising from the UK’s withdrawal from the EU. In the unlikely event that the UK leaves the EU without an agreement, the measures contained in the regulations will be crucial in ensuring that the audit regulatory framework in the UK works effectively. I therefore commend the draft regulations to the Committee.
Kelly Tolhurst
I will try to answer as many of the questions that have been put by hon. Members as I can. The hon. Member for Sefton Central referred to the people behind me as thinking that I was not speaking the truth. I want to clarify my point: as a member of this Government, I am committed to getting to a position where the UK has a deal with the European Union. However, any responsible Government, as we are, would be preparing for a no-deal scenario. The regulations before us will put us in a position where UK business confidence remains. We have confidence in the UK markets and are acting responsibly to ensure that in the event of no deal, we are in a situation where the law works correctly.
I would like to go back to the point made by my right hon. Friend the Member for Welwyn Hatfield. Should a deal be agreed, we might not see many changes. We are in this particular agreement, which is retained EU law, so EU laws are being introduced in the UK. It sets out how we will deal with certain audit provisions. Whether there is a deal or not, further changes will come through, because we will take decisions on how to work things and lay out further guidance on how we will assess qualifications and how we will assess the competency of authorities in the future. Fundamentally, this applies whether there is a deal or not, but obviously it focuses on a no-deal scenario.
As the hon. Member for Sefton Central will know, the transitional agreement is under this SI. For example, up to 2020, under the SI, there is confidence that we will be accepting the relevant professional qualifications and competent authorities within EEA states for the transitional period, so as not to be at a cliff edge.
The hon. Gentleman asked whether the FRC is confident that it will be able to establish mutual agreements, and whether it is in a position to do so. Currently it carries out—fundamentally speaking—oversight with respect to the regulation as it stands. I am therefore confident that it will be in a position to deal with further work that is necessary in the event of no deal—and in a situation where there is a deal, although we are talking about a no-deal scenario at the moment.
I want to touch on a question from my hon. Friend the Member for Amber Valley about recognition of qualifications, and authorisations. Under the SI—and the FRC is agreed—in the case of businesses whose financial years fall after 29 March there will be a requirement for auditors to register prior to the audit being signed. Effectively, there could be up to an extra year for auditors to do that, after 29 March. That is exactly so that it can be managed. There may be benefits for some auditors, because there is potential for them to say, as a selling point, they have done it ahead of time. Obviously that will not be before 29 March, and they will have until the time when they need to sign the audit to register. I hope that that gives my hon. Friend some confidence.
Nigel Mills
I think I understand what the Minister is trying to say, but just to confirm it, let us say a firm had the year end of 28 February 2019 and had to submit audited financial statements to a listing authority by some such time as the end of April or early May, and we had a no-deal Brexit. The auditors could not register for that before 29 March; but would they have to register before they could submit those accounts—so that they would have to do it very quickly in early April—or would they be grandfathered, in the event of no deal?
Kelly Tolhurst
My hon. Friend has outlined a situation where the company’s end of year would fall before the withdrawal date. As things stand the new registry would be only for instances where the financial year started after 29 March. It depends on where the years fall. In the case he gave, effectively, the auditors would not have to do it.
As to the number of companies affected, there are currently 291 EEA companies registered on the UK markets, and approximately 240 UK companies that have registered securities on EEA markets. The regulations affect a small number of organisations and in some cases a few other European countries. We are talking about a small number of companies. To give the Committee an idea of the scale, there are 1,000 listed companies in the UK. We have 3.8 million companies registered in the UK, 98.5% of which are small businesses, 20,000 large businesses and 35,000 medium-sized businesses, so the direct impact will affect a small number of companies and audit firms that are registered within the EEA.
On the point about the Secretary of State taking those powers regarding approval of adequacy and competence that have lain with the European Commission under the EU regulation, there would be full parliamentary scrutiny, as there is, with the Secretary of State having that power. As the hon. Member for Sefton Central knows, all Secretaries of State face full parliamentary scrutiny, and I would argue that our Secretary of State having those powers represents far more scrutiny than the European Commission under the current position. It is a positive move for the Secretary of State to have those powers, and it is right that they are held at parliamentary level rather than being delegated, at this particular time, to an arm’s-length body such as the FRC.
Regarding what the hon. Gentleman says about my confidence in the FRC and its ability, this particular regulation deals with a no-deal scenario, but as he and the Committee know, Sir John Kingman’s report into the FRC was published at the end of last year. We also have the work that has been done in the audit market regarding competitions. Whether we have a no-deal or a deal scenario, those pieces of work on what we do in this area to ensure that our markets are working effectively and that our public bodies are acting effectively will be ongoing. If there were to be any changes in the future, this SI would be taken into account. That is what Governments do. In a no-deal situation we would be in a position to change whatever we might want to in this area. I do have confidence in the FRC and in how we would manage that, and that the FRC would be in a position to deliver what is required in both a no-deal and a deal situation.
Regarding bilateral agreements, the hon. Gentleman mentioned the position with Ireland and asked whether we had had those discussions with other European states. Currently, 200 of the around 240 companies affected operate in the Irish market, so Ireland is the main EU member state that we will need to work more closely with in the future. Our officials are in discussions with our European neighbours all the time across a number of topics in this area, and more of that will go on as we head toward European Union exit date and after 29 March, whether or not we are in a deal situation and working toward a future relationship. We are committed to ensuring that we are able to deliver those agreements with our neighbours in the future.
It is paramount that, as the UK exits the EU, we maintain the integrity of the UK system for audit regulatory oversight. These regulations will help to facilitate that by ensuring that oversight of the audit profession continues to work effectively following our withdrawal from the EU. The regulations do not introduce a change in policy. As I explained, the fundamental elements of the current statutory audit legislation will remain the same after exit. The regulations before the Committee make only the amendments that are necessary to ensure that audit legislation remains operable in the UK following our withdrawal from the EU. The measures in these regulations will ensure that, and mean that the UK system for regulatory oversight will remain coherent and understandable for the businesses that rely on it. I therefore commend the regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2018.