Artificial Intelligence and the Labour Market

Kevin Hollinrake Excerpts

Wednesday 26th April 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I am grateful to be called, Dame Maria, and it is a pleasure to speak in the debate. I congratulate the hon. Member for Birkenhead (Mick Whitley) on bringing this timely subject forward. I thought it would be appropriate to type his question into ChatGPT. I put in, “What is the potential impact of AI on the labour market?” It said, “AI has the potential to transform many aspects of the economy and society for the better. It also raises concerns about job displacement and the future of work.” That is it in a nutshell. It did not say that it was time for a Labour Government.

[Justin Madders]

Did the AI tell the Minister that the Conservative Government have got everything right?

[Kevin Hollinrake]

I have not actually posed that question, but perhaps I could later.

This is an important debate, and it is important that we look at the issue strategically. The Government and the Labour party probably have different approaches: the Labour party’s natural position on this kind of stuff is to regulate everything as much as possible, whereas we believe that free markets have had a tremendous effect on people’s lives right across the planet. Whether we look at education, tackling poverty or child mortality, many of the benefits in our society over the last 100 years have been delivered through the free market.

Our natural inclination is to support innovation but to be careful about its introduction and to look to mitigate any of its damaging effects, and that is what is set out in the national AI strategy. As we have seen, it has AI potential to become one of the most significant innovations in history—a technology like the steam engine, electricity or the internet. Indeed, my hon. Friend the Member for Folkestone and Hythe (Damian Collins) said exactly that: this is like a new industrial revolution, and I think it is a very exciting opportunity for the future. However, we also have key concerns, which have been highlighted by hon. Members today. Although the Government believe in the growth potential of these technologies, we also want to be clear that growth cannot come at the expense of the rights and protections of working people.

Only now, as the technology rapidly improves, are most of us beginning to understand the transformative potential of AI. However, the technology is already delivering fantastic social and economic benefits for real people. The UK’s tech sector is home to a third of Europe’s AI companies, and the UK AI sector is worth more than £15.6 billion. The UK is third in the world for AI investment, behind the US and China, and attracts twice as much venture capital investment as France and Germany combined. As impressive as they are, those statistics should be put into the context of the sector’s growth potential. Recent research predicts that the use of AI by UK businesses will more than double in the next 20 years, with more than 1.3 million UK businesses using AI by 2040.

The Government have been supporting the ethical adoption of AI technologies, with more than £2.5 billion of investment since 2015. We recently announced £100 million for the Foundation Models Taskforce to help build and adopt the next generation of safe AI, £110 million for our AI tech missions fund and £900 million to establish new supercomputer capabilities. These exascale computers were mentioned in the Budget by my right hon. Friend the Chancellor. These developments have incredible potential to bring forward new forms of clean energy, and indeed new materials that can deliver that clean energy, and to accelerate things such as medical treatment. There are exciting opportunities ahead.

If we want to become an AI superpower, it is crucial that we do all we can to create the right environment to harness the benefits of AI and remain at the forefront of technological developments. Our approach, laid out in the AI White Paper, is designed to be flexible. We are ensuring that we have a proportionate, pro-innovation regulatory regime for AI in the UK, which will build on the existing expertise of our world-leading sectoral regulators.

Our regulatory regime will function by articulating five key principles, which are absolutely key to this debate and tackle many of the points that have been made by hon. Members across the Chamber. Regulators should follow these five principles when regulating AI in their sectors: safety, security and robustness; transparency and explainability; fairness; accountability and governance; and contestability and redress. That feeds into the important points made by my hon. Friend the Member for Watford (Dean Russell), who held this ministerial position immediately prior to myself, about deception, scams and fraud. We can all see the potential for that, of course.

Clearly, right across the piece, we have regulators with responsibility in those five areas. Those regulators are there to regulate bona fide companies, which should do the right thing, although we have to make sure that they do. For instance, if somebody held a database with inappropriate data on it, the Information Commissioner’s Office could easily look at that, and it has significant financial penalties at its disposal, such as 4% of global turnover or a £17 million fine. My hon. Friend the Member for Watford made a plea for a Turing clause, which I am, of course, very happy to look at. I think he was referring to organisations that might not be bona fide, and might actually be looking to undertake nefarious activities in this area. I do not think we can regulate those people very effectively, because they are not going to comply with anybody’s regulations. The only way to deal with those people is to find them, catch them, prosecute them and lock them up.

[Damian Collins]

The Minister talks about safety, but does he agree that that has to be safety by design, and not just having response mechanisms built into the system so that a victim can appeal? I know he has looked at fraud a lot in the past, and there is a presumption that all will be done to combat fraud at its known source, rather than just providing redress to victims.

[Kevin Hollinrake]

That is absolutely right. We will not deal with everything in the world of AI in this respect, but there needs to be overarching responsibility for preventing fraud. That is something we have committed to bringing forward in another legislative vehicle—the Economic Crime and Corporate Transparency Bill, which is passing through Parliament now—but I agree with my hon. Friend that there should be a responsibility on organisations to prevent fraud and not simply deal with the after-effects.

Our proposed framework is aligned with and supplemented by a variety of tools for trustworthy AI, such as assurance techniques, voluntary guidance and technical standards. The Centre for Data Ethics and Innovation published its AI assurance road map in December 2021, and the AI Standards Hub—a world-leading collaboration led by the Alan Turing Institute with the National Physical Laboratory and the British Standards Institution—launched last October. The hub is intended to provide a co-ordinated contribution to standards development on issues such as transparency, security and uncertainty, with a view to helping organisations to demonstrate that AI is used safely and responsibly.

We are taking action to ensure that households, public services and businesses can trust this technology. Unless we build public trust, we will miss out on many of the benefits on offer. The reality is that AI, as with other general-purpose technologies, has the potential to be a net creator of jobs. I fully understand the points raised by the hon. Member for Birkenhead—of course, we do not want to see swathes of people put out of work because of this technology. I hasten to add that that has never been the case with other technologies. There have been many concerns over the ages about how new technologies will affect jobs, but they tend to create other jobs in different sectors. The World Economic Forum estimates that robotics, automation and artificial intelligence will displace 85 million jobs globally by 2025, but create 97 million new jobs in different sectors, which I will discuss in a second. I think the hon. Member for Birkenhead asked in his speech whether I would be willing to meet him to discuss these points; I am always very happy to do that, if we can convene at another time.

The hon. Member also raised the point about how AI in the workplace has the potential to liberate the workforce from monotonous tasks such as inputting data or scanning through documents for a single piece of information. I will address the bigger concerns he has around that, but in the public sector it would leave teachers with more time to teach, clinicians with more time to spend with patients and police officers with more time on the beat, rather than being behind a desk.

As was raised in a salient point by my hon. Friend the Member for Folkestone and Hythe, AI also has tremendous potential in defence and national security. That is absolutely critical. It was interesting that leading people in the world of technology, led by Elon Musk, recently wrote a letter asking for a six-month pause while we look at how we can properly moderate the impacts of AI. I am not sure that that is a good idea, because I am not sure China and Russia would play that game. It is important that we stay ahead of the curve, for exactly the reasons pointed out by my hon. Friend.

[Damian Collins]

The Minister is exactly right. That initiative also suggests that AI is not yet here but, actually, the issues we have discussed today exist already. We can look at them already; we do not need a six-month pause to do that.

[Kevin Hollinrake]

That is absolutely right. There is an opportunity but also a potential threat. It is important that we continue to invest, and it is great that the UK is ahead of the game in its investment, behind only the US and China, which are obviously much bigger economies.

The key thing is that we take action on skills, skilling up our workforce in the UK to take advantage of the potential of AI. Clearly, a good computing education is at the heart of that. We have overhauled the outdated information and communications technology curriculum and replaced it with computing, and invested £84 million in the National Centre for Computing Education to inspire the next generation of computer scientists. Our national skills fund offers to do just that, with free level 3 qualifications for adults and skills bootcamps in digital courses, including coding, AI and cyber-security, available across England.

On that point, as well as the opportunities in AI, we need to look at the new opportunities in the new economy. Some jobs will be displaced, so we need to ensure that we are skilling up our workforce for other opportunities in our new economy, be it data science or green jobs with the green jobs taskforce. Recently, in Hull, there were 3,000 new jobs in the wind turbine sector with a starting salary of £32,000, which illustrates the potential for green jobs in our economy. So although jobs might be displaced, others, hopefully better-paid jobs will replace them. We want a higher-wage, higher-skilled economy.

The Government are also supporting 16 centres for doctoral training, backed by an initial £100 million, delivering 1,000 PhDs. We expanded that programme with a further £117 million at the recent launch of the Government’s science and technology framework. Last year, we invested an additional £17 million in AI and data science postgraduate conversion courses and scholarships to increase the diversity of the tech workforce, on top of the £13 million that has been invested in the programme since 2019-20. We also invested £46 million to support the Turing AI fellowships to attract the best and brightest AI talent to work in the UK.

The point about protections for workers’ rights was raised by many Members in the debate, not least the hon. Members for Gordon (Richard Thomson) and for Birkenhead; the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders); and my hon. Friends the Members for Folkestone and Hythe and for Watford. It is important to see the Government’s position on workers’ rights here. We are bolstering workers’ rights, raising the national living wage, with the highest increase on record—a near 10% increase—and six private Members’ Bills that increase workers’ rights, including on flexible working and other issues. There is also the Employment (Allocation of Tips) Bill, which is the favourite Bill of my hon. Friend the Member for Watford, who was its sponsor prior to becoming the Minister.

On the concerns many raised about workplace monitoring, we are committed to protecting workers. A number of laws are already in place that apply to the use of AI and data-driven technology in the workplace, including in decision making, which was raised by the hon. Member for Ellesmere Port and Neston. The Equality Act 2010 already requires employers and service providers not to discriminate against employees, job applicants and customers. That includes discrimination through actions taken as a result of an algorithm or a similar artificial intelligence mechanism. Tackling discrimination in AI is a major strand of the Equality and Human Rights Commission’s three-year strategy. Existing data protection legislation protects workers where personal data is involved, and that is one aspect of existing regulation on the development of AI systems and other technologies.

Reforms as part of the Data Protection and Digital Information Bill will cast article 22 of the UK GDPR as a right to specific safeguards, rather than as a general prohibition on solely automated decision making. These rights ensure that data subjects are informed about, and can seek human review of, significant decisions that are taken about them solely through automated means, which was a point raised by the shadow Minister. Employment law also offers protections. The Employment Rights Act 1996 provides that employees with two years of continuous service are protected from unfair dismissal, which would encompass circumstances where employees’ article 8 and UK GDPR rights have been breached in the algorithm decision-making process that led to the dismissal.

Of course, all good employers—by their very nature—should use human judgment. The best way we can help employers in any workplace is to have a strong jobs market where employers have to compete for employees. That is the kind of market we have delivered in this economy, despite some of the difficulties that surround it.

I once again thank the hon. Member for Birkenhead for tabling this timely and important debate. To be clear again, we have a strong ambition for the UK to become a science and technology superpower, and AI is a key part of that. However, the Government recognise the concerns around these technologies and appreciate that, as with all new technologies, trust has to be built. We will continue to build our understanding of how the employment rights framework operates in an era of increasing AI use. AI has the potential to make an incredibly positive contribution to creating a high-wage, high-skill and high-productivity economy. I very much look forward to seeing the further benefits as matters progress.

Post Office Horizon Compensation

Kevin Hollinrake Excerpts

Wednesday 26th April 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

On 23 March my Department launched its compensation scheme which aims to ensure that postmasters affected by the Post Office Horizon scandal who were part of the “GLO” High Court case get compensation on a similar basis to other postmasters.

To ensure that postmasters get fair, consistent and rapid compensation, the GLO Compensation Scheme Guidance and Principles document identifies the characteristics of moderate, serious and severe losses in some categories of compensation, including reputational damage and stigma, and gives figures indicating the likely range of awards. In the light of media comments on those figures I asked the Horizon Compensation Advisory Board to consider the matter. The group includes the right hon. Member for North Durham (Kevan Jones) and Lord Arbuthnot as well as two senior academics.

A report of the Board’s discussion is now available on the Department’s website. It recommends that the GLO Compensation Scheme’s guidance and principles should be amended to make it clear that:

The bands are not limits but indicative guidance to claimants, their lawyers and the Independent Panel.

Each case will be decided on its merits.

The GLO Compensation Scheme expects to find some cases where the facts of the case demand awards significantly higher than the upper figure for the top band.

If a claimant’s compensation cannot be agreed through the Alternative Dispute Resolution process, they have the right to have it considered by the Independent Panel including a KC and other experts.

As for other aspects of compensation, where the guidance and principles set out bands, decisions will be taken by DBT and the Independent Panel based on the facts of each case looked at “in the round” and guided by considerations of fairness.

I am happy to accept these recommendations. My Department will publish a revised version of the guidance and principles in due course.

[HCWS742]

Digital Markets, Competition and Consumers Bill

Kevin Hollinrake Excerpts

Tuesday 25th April 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

Today, the Government are introducing the Digital Markets, Competition and Consumers Bill. The Bill will drive growth, innovation and productivity, ensuring that businesses and consumers in the UK reap the benefits of competitive markets. The Bill will:

boost innovation by increasing competition in digital markets, taking action against a small number of the most powerful tech companies that force businesses and consumers to sign up to unfair terms and pay inflated prices;

grow the economy by enhancing our wider competition regime to focus it on the areas of greatest harm, delivering a level playing field for businesses; and

protect consumers by strengthening the enforcement of consumer protection law and introducing new consumer rights, for example tackling subscription traps that currently set consumers back £1.6 billion a year.

Digital technologies have transformed the way we buy products and services, increasing accessibility, flexibility and choice, but we need to act now to address their potential for consumer harm. For instance, companies can make it unreasonably difficult for consumers to cancel a subscription, or inhibit choice by artificially ranking their own products higher in search results.

The Bill will give consumers greater choice and drive innovation, leading to new products that transform lives. It will also establish new, faster tools to address the unique barriers to competition in digital markets, allowing the Competition and Markets Authority to proactively drive more dynamic markets and prevent harmful practices such as making it difficult to switch between operating systems.

We are using the freedoms we have gained by leaving the EU to address these issues in a way that best works for the UK. We can now make our own decisions on how we maintain a proportionate system of regulation that drives innovation and protects consumers. Our new pro-competition regime, focused on the most powerful tech companies, is flexible and principles-based rather than following the EU Digital Markets Act’s blanket set of obligations on all “gatekeepers”, which risks creating unnecessary regulatory burdens for firms. Our more targeted and pro-innovation approach involves investigating specific harms, developing tailored obligations and taking more evidence-based regulatory decisions—informed by significant engagement with the firms themselves. We are also taking a power to ban unfair commercial practices, such as fake reviews, and are strengthening oversight of alternative dispute resolution services that would have been more constrained while in the EU.

The Bill will also support consumers through new and improved rights to deal with bad business practices such as subscription traps. This includes better information up front as well as easier exiting and earlier cancellation rights. These and other new measures will save consumers’ hard-earned cash and protect them from scams and rip-offs. We expect the Bill’s enforcement reforms to increase consumer benefits by tens of millions of pounds above the CMA’s current estimate of £146.5 million a year.

The Bill will grow the economy by boosting competition, better placing UK businesses to succeed in export markets. It will allow the CMA to more effectively deter, prevent and, where necessary, enforce against monopolistic behaviours, to ensure that the free market can operate effectively.

[HCWS737]

Draft Register of Overseas Entities (Definition of Foreign Limited Partner, Protection and Rectification) Regulations 2023

Kevin Hollinrake Excerpts

Monday 24th April 2023 General Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft Register of Overseas Entities (Definition of Foreign Limited Partner, Protection and Rectification) Regulations 2023.

It is a pleasure to speak with you in the Chair, Ms Fovargue.

The regulations were laid before the House on 15 March 2023. They form part of a series of secondary legislation that is needed to implement effectively the register of overseas entities. The register was created under part 1 of the Economic Crime (Transparency and Enforcement) Act 2022, which gained Royal Assent last year.

The register will crack down on dirty Russian money in the UK and other foreign corporate elites abusing our open economy. The register requires overseas entities owning or buying property in the UK to give information about their beneficial owners and/or managing officers to Companies House. The register provides more information for law enforcement to help it to track down those using UK property as a money laundering vehicle.

The register went live on 1 August 2022, and the deadline for registration was set for 31 January this year. There has been a relatively high rate of compliance, with more than 27,500 overseas entities registered so far. Over 700 have provided details to Companies House as they had disposed all their interests in land before the end of the transitional period. That means that over 28,000 entities have complied with the requirements. While that leaves probably a few thousand entities still to register, some of the unregistered entities are believed to have been dissolved or struck off, and others have not kept their address details up to date with the Land Registry. Companies House continues to work to increase compliance even further and is now also assessing cases for compliance action.

The first tranche of regulations was laid last year. Today we are considering the first regulations in the latest tranche that are subject to the affirmative procedure. Other instruments are in preparation, and they will ensure that the register can function even more effectively. The regulations we are considering have three main elements: they prescribe the characteristics of a foreign limited partner for the purposes of the 2022 Act; they allow for information held on the register to be removed on application under certain circumstances; and they amend the protection element of the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022.

The first part of the instrument sets out the characteristics of a foreign limited partner for the purposes of the register. The regulations require that such individuals must participate in a foreign limited partnership, or hold shares or an interest, either directly or indirectly, in a legal entity that participates in a foreign limited partnership. The regulations also define exactly what is meant by a foreign limited partnership and how an individual would qualify as a participant in a limited liability partnership. These provisions will assist overseas entities to decide who are registrable and beneficial owners under the legislation for the register of overseas entities.

Regulation 4 of the instrument sets out the grounds for rectification of the register. There may be occasions when information submitted to the registrar and visible on the register is factually incorrect, forged, or submitted without the consent of the overseas entities. It therefore allows for rectification of the register through the removal of such information.

Regulation 5 establishes the criteria for those entitled to receive notice on an application for rectification. In addition, the regulation specifies the information that must be included in the notice. The regulation also covers particulars of recipients’ rights and obligations under the provision. Accordingly, regulation 6 lays down the grounds for interested parties objecting to such an application. It also confirms how an objection should be made and the time limit for making one. Without these regulations, it would be impossible to know how to make an application to remove inaccurate or false information from the register, which would affect the register’s utility and accuracy.

Regulation 7 sets out the details of an amendment to the existing protection regime, which covers protecting personal information from public inspection. However, as things stand, protection can be granted only on an application subject to strict criteria. Applicants must provide evidence that they or a person they live with are at risk of serious violence or intimidation if their details are publicly disclosed. Such a disclosure must result directly from their link with the overseas entity.

The amending provision will remove the requirement to demonstrate the risk of violence or intimidation arising directly from the individual’s association with the overseas entity. The measure will subsequently allow applications for protection that are necessary because an individual is at serious risk. They would still need to demonstrate the risk before protection is granted, but the risk would no longer need to be linked to the overseas entity.

The amendment will also allow for a relevant individual’s usual residential address to be protected. For example, if the individual provided their usual address as a service address, not realising that it would be displayed on the public register, the person would have to provide an alternative address to protect their usual residential address. Protected information must still be provided to Companies House and will be available to law enforcement. The changes are being made because it has become apparent that the current criteria are not flexible enough. Without these changes, there is a real risk that some people will be in danger of serious violence or intimidation following the public disclosure of their details, given the ease with which that link could potentially be made to their usual address.

I emphasise that the regulations are crucial for the effective operation of the register of overseas entities. I hope that Members will support the measures and their objectives. I commend the draft regulations to the Committee.

--- Later in debate ---

[Kevin Hollinrake]

I thank members of the Committee for their valuable contributions to the debate. As the Committee knows, the Government are committed to ensuring that the register of overseas entities is robust and effective at tackling the illicit use of UK property to launder money. The draft regulations provide the mechanics that ensure the effective operation of the register.

The hon. Member for Caerphilly made a very good point. Clearly, sometimes individuals are under threat from other people for a variety of reasons. For example, a celebrity or public figure may not want their identity to be public because of potential risks posed by individuals to them or their families. That might be the case for a host of reasons—stalkers, for example. Where there is serious risk of violence or intimidation of that nature, which has to be proven to the registrar, the person is allowed not to disclose their address, particularly when it is a residential address, although the information is still held by Companies House and is available to law enforcement agencies. The protection regime is not a way of circumventing the purpose of the legislation; it applies in situations where there is proven potential for harm to the individual.

I think the shadow Minister, the hon. Member for Feltham and Heston, was a little unfair in some of her comments. The Government have certainly never turned a blind eye to some of the corruption that goes on in society. She says the Government have not acted, but as someone who has often spoken out about the need for stronger measures to deal with economic crime, I would say that Governments of all persuasions have not dealt with this issue in the past. She points to the fact that David Cameron stood up in 2015 and talked about the need for these kinds of measures. I agree with both him and her, but this country has failed to introduce appropriate measures for decades, and now we are doing so.

The hon. Lady points to Russia’s invasion of Ukraine bringing this issue into public consciousness. We parliamentarians react to public concern and we have concerns in the House about the invasion, which brought these kinds of issues into stark relief and provided the impetus to deal with them. We should all welcome the fact that we are dealing with them now. This SI is one of a number of measures we are taking forward that will make it much more difficult to use either properties or companies to launder ill-gotten gains through our society.

[Seema Malhotra]

The Minister has a track record in Parliament on this, but I think it is important to say that over the last seven years things have not been moving as quickly as they should have done. It is important to put on the record that various Committees in Parliament have raised this issue. We welcome things moving forward more quickly, but we have to keep our foot on the accelerator. That is extremely important.

[Kevin Hollinrake]

We are in violent agreement on moving things forward more quickly. I absolutely agree that we should have moved more quickly, but we are where we find ourselves. We have the momentum to act now, so let us make the best use of that opportunity.

The hon. Lady asks what Companies House is doing. As far as I am aware, 7,000 entities have not complied with the legislation. Some of them will no longer be entities that we need to worry about—they may well have closed down, and an address may have changed because there is no more purpose to an entity—but we are clearly keen to find out such information. Companies House has written to tens of thousands of organisations to ask them to register and to point out that there are now restrictions on being able to rent or sell land. There are meaningful measures in place to restrict the use of land and property, which is important. Companies House is also preparing cases for enforcement, which is another important message that we send to people who have not complied with the legislation. I am keen to make sure that the measures are taken forward as quickly as possible, and I am prepared to take personal oversight of making sure they are properly implemented.

The hon. Lady asked about how the measures can be avoided, such as by sharing ownership between a family of six. A beneficial owner is a beneficial owner regardless of how the ownership is distributed, and even if there are proxies. We had this discussion on the economic crime legislation, too. I think it is fair to say that if somebody is determined to avoid the rules by giving false evidence, they will do so, but there are significant penalties for doing that, which are a key part of the legislation.

The register of overseas entities provides a novel approach, and it is important to recognise that we are setting a new global standard. By setting up a register and introducing transparency, we are at the front of the pack with the legislation, so although the Opposition constantly put forward a fair challenge by saying that we are not going far enough, we are going further than any other jurisdiction I am aware of.

[Seema Malhotra]

It is not just the Opposition who are raising this issue. The Minister will know that many of the organisations with which he has worked in the past have also raised concerns about the threshold. I want to probe him on the threshold being 25%. It was not clear from his answer whether he was saying that any threshold, even a low one, would have people working around it. It feels fairly high for this purpose.

[Kevin Hollinrake]

We think it is at the appropriate level. We can perhaps have a discussion about it at length on another occasion, but as I say, the idea behind this is that the beneficial owner is disclosed. I will probably write to the hon. Lady to clarify this, but as I understand it, even if somebody put a proxy or nominee in place for the ownership of a property, it would still not get them off the hook in terms of whether they are actually the beneficial owner of the property. Perhaps I can write to her to confirm that.

The register is a crucial part of the Government’s fight against illicit finance. The Economic Crime and Corporate Transparency Bill, which is before Parliament, features substantial changes to UK company and partnership law, and complements the Economic Crime (Transparency and Enforcement) Act 2022. The Bill will introduce amendments to the Act that provide further operational detail to the register of overseas entities. For example, new measures in the Bill will require more information about overseas entities, including the title numbers of the properties held by overseas entities, and put in place minimum age limits for managing officers, to ensure that details of a person over 16 years of age must always be provided. The Bill will also make further provisions for registrable beneficial owners in cases involving trusts, and it includes an anti-avoidance mechanism to ensure that those in scope of the register at the time that the Act was first published as a Bill to Parliament cannot circumvent the requirements. The laying of the draft regulations complements the measures in the Bill to ensure that the register is as effective as possible, and I commend them to the Committee.

Question put and agreed to.

Business and Trade

Kevin Hollinrake Excerpts

Monday 17th April 2023 Ministerial Corrections

The following is an extract from the Westminster Hall debate on Unpaid Work Trials on 29 March 2023.

[Kevin Hollinrake]

In 2021, HMRC returned more than £6.7 million in arrears to over 155,000 workers, and issued fines totalling more than £14 million to businesses that had failed to pay the minimum wage.

[Official Report, 29 March 2023, Vol. 730, c. 361WH.]

Letter of correction from the Under-Secretary of State for Business and Trade, the hon. Member for Thirsk and Malton (Kevin Hollinrake):

An error has been identified in the speech I gave in the debate on Unpaid Work Trials.

The correct statement should have been:

[Kevin Hollinrake]

In 2020-21, HMRC returned more than £16.7 million in arrears to over 155,000 workers, and issued fines totalling more than £14 million to businesses that had failed to pay the minimum wage.

Unpaid Work Trials

Kevin Hollinrake Excerpts

Wednesday 29th March 2023 Westminster Hall

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

I beg to move,

That this House has considered the matter of the use of unpaid work trials.

It is always good to see you in the Chair in Westminster Hall, Mr Hollobone. You will remember, because I think you might have been present, that I introduced in the previous Parliament a Bill to amend the National Minimum Wage Act 1998 in order to outlaw the practice of unpaid work trials. I will come back to the substance of that Bill, which is now a piece of history, but I want to begin with the genesis of this entire issue and why I decided to take it up as a Member of Parliament in the private Members’ Bills selection.

There is a bubble tea company called Mooboo, which had an outlet in Glasgow that was offering unpaid work trials—the practice of inviting applicants to apply for a job and making them work for a trial period for which they are not paid. Although there are many variations on what an unpaid work trial looks like, this was perhaps the most extreme version that I have come across, because the applicants were invited to work for a full 40 hours without payment, at the end of which they were or were not offered a job. That is a particularly egregious and extreme example, but when I decided to take up the case on behalf of a constituent who went through that process, I started to find that this practice was rife and much more common than I had first thought. As I mentioned, it presents itself in many guises.

Although that example is at the extreme end of the practice of unpaid work trials, there are many intricacies and differences in the way it presents itself. When I started to talk about this issue publicly and wrote to Ministers and His Majesty’s Revenue and Customs, I started to gather in my inbox various horror stories about the practice of unpaid work trials across the country. A study in November 2017 by Middlesex University and the Trust for London, called Unpaid Britain, shows that unpaid work trials contribute to about £3 billion in missing wages in the United Kingdom. That figure is six years old, and I do not know what it is today—perhaps the Minister has a better idea—but I would wager that it is probably higher now than it was then. Polling from YouGov shows that 65% of Brits say that such a practice is unfair and only 24% think it is fair.

The way in which unpaid work trials present themselves is often different, as I mentioned, but it is none the less insidious. Quite often an applicant will apply for a job where the trial period may be an hour or two, so that they can come in and show what they are made of—whether that is in a restaurant, a cocktail bar, a hotel, a retail setting or whatever it might be. I discovered that quite often those trials were being offered to applicants for jobs that did not actually exist. Applicants were being exploited to cover staffing shortages and busy periods, such as Christmas trading. Those poor people had often spent hours applying for jobs, sending in CVs and filling out application forms, often going through the soul-destroying process of hearing nothing back. They were being invited to unpaid trials for jobs that did not exist, that were never going to materialise and that they would never be offered.

I suspect the Government position is the same as it has always been—that legislation is not required. I think we can all agree that that it is an egregious thing to ask somebody seeking employment to go through. It is fraud; it is morally fraudulent and must almost certainly be legally fraudulent—except it is not. I have no ambition to relitigate the Government talking out my Bill. The Minister who did so is no longer a Member of Parliament, and I am, so I like to think I won that fight with that Member at the time. When I talked to Ministers and officials about this at the time, we all agreed it was an abhorrent and unacceptable practice, but the Government position was that legislation was not required to fix it.

I would say to the Government today that the fine guidance they produced for employers on unpaid work trials has not had the effect that we all wanted, which was that they would not be used at all and certainly not used in the egregiously fraudulent way that I described. At the time, there was some good will on the Government side, among Labour colleagues and on my own side, which even in today’s Scottish National party environment still exists.

The fact that the practice is still going on and partly contributing to billions of pounds in missing wages that people should rightfully receive—

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I am listening carefully to the hon. Member’s speech, and he is making some very valid points. I agree that such behaviour is egregious. Is the £3 billion he quotes for unpaid work trials or unpaid work? There is an important difference between the two.

[Stewart Malcolm McDonald]

Yes—and no, in terms of the Minister’s final point about there being a difference. The unpaid work trials contribute to the figure of £3 billion. I am not saying that the trials are worth £3 billion, but the study by the university concluded that that was part of the bigger £3 billion picture. I confess I do not think there has been an updated study. I do not know if the Government have anything to share with us this afternoon. I would be amazed if that figure had not grown since that study was done six years ago.

Among all the good will to try to stop this miserable exploitation, the Opposition and the Government arrived at different conclusions. I was of the view, supported by colleagues in the Opposition, that legislation was required —an amendment to the National Minimum Wage Act 1998—to outlaw the practice. The Government took the view that guidance was adequate, but it is not. It was proven not to be as recently as December last year in a court ruling. The ruling in Ms P Karimi and Ms C Patricio v. Fadi Ltd, published by His Majesty’s Courts and Tribunals Service on 2 December 2022, found that the claimant was entitled to the minimum wage for all hours worked during the trial period. Reasoning the judgment, the employment judge, Judge D Wright, stated that the

“legislation does not give explicit guidance”

as to how long these unpaid trial shifts may last.

An exploitation had taken place, whereby someone had worked in an unpaid trial, and the tribunals service determined that they should have been paid for it, but the judge said that the guidance is not sufficient on the regulation of work trials. I am not against work trials. I entirely support an employer’s right to say to someone, “Come in and show us what you are made of. Come in and show us that you actually have the skills and experience that you set out in the interview process.” What I do not support is exploiting people for jobs that do not exist, or for covering staffing shortages and doing so for 40 hours, as in the extreme examples that I mentioned at the start of my remarks.

Forty hours is an extreme and unusual example. What I thought I would find initially was that the norm would be two or three hours—half a shift or a morning. What I found more often than not was that the time was longer, and the physical experience of the unpaid work trial was demeaning. The number of people—mostly young people—who would work their unpaid trial shift and then just be left, not told whether they had a job, confused as to what was supposed to happen next, clearly tells us that better regulation of trial periods needs to be forthcoming from the Government. I do not think that that is too much to ask in this day and age. A fair day’s work for a fair day’s pay; it could even be said that it is a broadly Conservative value. It is something that even my colleague, the hon. Member for Glasgow South West (Chris Stephens) can rally around.

Let us be clear about what my proposed legislation was not; it was not about banning trial periods, and it did not concern itself with things like unpaid internships. Although I find them objectionable, I felt that would require its own piece of separate legislation. The aim of my proposal—the banning of exploiting people through unpaid work trials—remains an entirely just one.

--- Later in debate ---

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair this afternoon, Mr Hollobone. I thank the hon. Member for Glasgow South (Stewart Malcolm McDonald) for securing the debate and for the work he has done over six years to try to deal with this wholly egregious situation.

We can probably start on a note of common concern, because every right-minded person would regard it as wrong that workers should be expected to work for free. In many cases, as we have heard, they actually end up out of pocket after working a trial shift. I firmly believe that we should all adhere to the principle that there should be a fair day’s pay for a fair day’s work, and any action to stop exploitation—whatever form it takes—should be welcome.

As we have heard, there clearly ought to be means by which an employer can test an individual’s suitability for a position, but—call me old-fashioned—I have always thought that that was what a job interview was for. If not that, what about a paid probationary period for someone to be assessed for their suitability? Let us not forget that people have to work somewhere continuously for two years before they get any protection against unfair dismissal, which could be seen as a very long trial period, albeit one that is paid. When we consider the many options available to employers to assess the suitability of potential employees in the round, we inevitably get drawn to the conclusion that, in the main, trial shifts are not necessary—certainly not unpaid ones. When we are confronted with the evidence that we have heard today and on previous occasions, the suspicion continues to grow that they are often used as a quick way to get free labour.

We have to ask what is being done to stop jobseekers being exploited. Although it is welcome that the Government have published guidance on the practice of unpaid trial shifts, it is not worth the paper it is written on without proper enforcement. There is a problem with both the wording of the guidance and the Government’s general attitude to upholding UK employment law. In particular, I have concerns about the fact that, as the guidance notes, there are no definitive rules or tests for whether a trial shift is legal.

As we know, there are six factors in the guidance that a court or tribunal will consider when making a judgment about whether a trial shift should be paid. I ask the Minister to consider how many people have the legal knowledge, patience, time or money to pursue an employer for a handful of hours of lost earnings at the tribunal, particularly if they are in a legally vulnerable position from having no employment protection at that point. Does the Minister agree that the threat of being taken to a tribunal for an unpaid trial shift is self-evidently a hollow threat to employers, and that the Department should be much more proactive in pursuing complaints on behalf of workers? Does he agree that, given that the majority of people in these sectors are young people, because of the nature of the work, and are unlikely to be members of a trade union, they need support in enforcing their rights?

Let me give an example from my own family of what is probably a pretty typical situation. My son has plenty of experience working in bars—quite often in Glasgow, actually. He has applied for various jobs in bars, including one at a bar in Chester. He had an interview. He has all the experience needed to work there, but was offered a trial shift despite the fact that he clearly could do the job. It transpired that the trial shift would run for eight hours and finish in the early hours of the morning, when there is no public transport, so he would have to pay for a taxi out of his own pocket to get home. That looked to me like blatant exploitation. Luckily for him, his father was the shadow employment rights Minister so he could be guided on what to do in that situation, but it begs the question: how many other times have they gotten away with that? How many hours each week are young people being asked to work trial shifts for which they get no payment? The Minister should be tasking his officials with trying to find out exactly how many times this happens each week, because we are probably seeing only the tip of the iceberg.

[Kevin Hollinrake]

What guidance did the hon. Member give his son in that situation? I would be interested to know.

[Justin Madders]

I am not sure Hansard can record in a polite way the suggestion that I conveyed to him. Let me put it this way: the employment relationship did not continue.

The six factors contained in the guidance are useful, but a lot of subjectivity is applied to them. For example, how is observation—which is one of the criteria—defined? How long is a reasonable period of observation? Ultimately, how can a jobseeker be expected to know if their employer has acted in line with the guidance, given how ambiguous it is? The ACAS website does not make any reference to trial shifts at all. People need a lot more support to understand when they are being asked to do something that is unlawful.

Ambiguities aside, the guidance needs to be properly enforced. As has been mentioned, we have this figure of £3 billion for unpaid work in various forms—it is probably is an even greater figure now. The continued reliance on an underfunded and overstretched tribunal system is failing our workers. Surely it is time for a single enforcement body to follow through for workers to ensure that their rights are enforced. I know the Government promised that along with an employment Bill, which we unsurprisingly have touched on. Will the Minister give us a timescale for when this single enforcement body will emerge?

The Government’s record on national minimum wage enforcement in recent times has been concerning. A naming and shaming list has not been published since December 2021, and I know the Minister has expressed his support for that as an important pillar of enforcement. As I have mentioned to him on previous occasions, a number of Departments have awarded lucrative contracts running into the hundreds of millions of pounds to companies that have appeared on the list of shame. What kind of message does it send to companies about the importance that the Government place on enforcement of the national minimum wage if they are then rewarded with Government contracts? I hope the Minister can give us an update on when the next list will be released.

In conclusion, the debate is a useful reminder that this is unfinished business. We can see very clearly how current ambiguities are being used to exploit workers. I want to hear from the Minister about what more can be done to ensure that people get paid for the work they do, and to ensure that these ruses, in all their forms, are put to an end, so that we get to a point in this country where a fair day’s work means a fair day’s pay.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

It is a pleasure to speak with you in the Chair, Mr Hollobone. I congratulate the hon. Member for Glasgow South (Stewart Malcolm McDonald) on introducing this important debate, and on his persistence. I think it is his seventh year of talking about this issue. He rightly feels strongly about it. He, like me, the rest of Government and probably every parliamentarian, absolutely believes that people who are at work should get paid the national living wage. I am delighted to be the Minister responsible for national living wage policy and workers’ rights.

Broadly, I agree with the points the hon. Member made. As others have said, if employers are engaging in the behaviour to which he referred—I accept that there is some evidence that some are—that is a scandalous practice. It is absolutely our case that all workers should be fairly rewarded for their work. Most people think that. Who would not agree with the point that a fair day’s work should mean a fair day’s pay? We are all on the same page on that.

We are also all on the same page on a related and very important point. As Minister responsible for national living wage policy, I am pleased to see the largest ever increase to the national living wage: a 9.7% increase to £10.42. That applies from Saturday. It is great to see it go over that £10 mark. Some 2.9 million people across the country will benefit from that measure, including 210,000 in Scotland and 160,000 in Northern Ireland. It is a very welcome move.

We should pay tribute to the vast majority of businesses and employers who—I think we all agree—are decent, do the right thing and do not engage in these scandalous practices. It is really important that we reiterate that, as well as the fact that lots of businesses are already struggling in the cost of living crisis, not least because of high energy bills, for example. They are suffering because of numerous cost pressures, and their paying this increase in the national living wage will not only affect the people on the bottom rung of the pay ladder, but have a knock-on effect on others in their workforce. We are determined to build the high-skill, high-wage economy that most people would like to see.

We have further ambitions. We want the national living wage to reach two thirds of median pay by 2024. That remains our ambition. It is the right thing to do. We are putting in place other measures that reinforce our point that we are absolutely protecting and indeed strengthening workers’ rights. The hon. Member for Glasgow South West (Chris Stephens) made an interesting point about finding parliamentary time; we are effectively finding parliamentary time for a number of pieces of legislation, including six private Members’ Bills for which I am personally responsible. Those Bills include measures to ensure workers get full allocation of tips and service charges; to protect neonatal care for new parents who have difficulties with a newborn, ensuring more leave—up to 12 weeks; to entitle everybody to at least a week’s carers’ leave, which could help many people in the workplace look after dependent relatives; and to ensure redundancy protections pre and post maternity, which, again, is a welcome change.

A further change, and a key measure in the Taylor review, to which the hon. Gentleman referred, is the right to request predictable terms and conditions. It will give people on, for example, zero-hours contracts the right to request predictable hours. We support legislation on that, and on making flexible working something that people have the right to request on day one. Those are all things that we are doing to strengthen workers’ rights and make the workplace more attractive.

[Chris Stephens]

I have been listening to the Minister very carefully, and I welcome what he says about the right to request, but a right to request does not necessarily mean that the right will be given. Will the Minister talk about how he intends to enforce that legislation, and increase enforcement around unpaid work trials?

[Kevin Hollinrake]

I do not want to get too distracted from the issue at hand, but I am happy to address that point in detail afterwards. We think those measures strike a balance. The recommendation from Matthew Taylor was not that there be a right to insist; it was the right to request. The employer could reject that request only on one of eight grounds, and in doing so, has to adhere to a process. We think that strikes a balance and meets the needs of businesses. For example, businesses can refuse a request in order to ensure that they have the right customer service availability and are not put under an undue burden. Those criteria have been set out, and I am happy to have that discussion with the hon. Member after the debate.

On the issue that the hon. Member for Glasgow South raised, there are two things that the Government would question about his policy: is it necessary, and what is the extent of the problem? It is important that we reflect the actual extent of the problem. He said that there is £3 billion of unpaid work; clearly that is a different issue. Following my intervention, he clarified that unpaid work trials are an element of that. The figure of 29% is also about unpaid work; the hon. Member for Glasgow South West said that among the 29% of employers that use unpaid work, work trials were a factor. The extent of the problem is not clear. I would describe people who are abusing the system as rogue employers, rather than something to benchmark.

Anybody who is defined as a worker should receive the national living wage. We updated the guidance in 2018, probably prompted by the work of the hon. Member for Glasgow South. The guidance is clear on the time that someone is allowed to have a work trial for. It says:

“in the Government’s view an individual conducting work in a trial lasting longer than one day is likely to be entitled to the minimum wage in all but very exceptional circumstances”.

Employment tribunals, for example, have a basis on which to make a judgment, and there are other bases.

[Stewart Malcolm McDonald]

I am unclear. Do the Government and the Minister’s Department collect data on the use of unpaid work trials?

[Kevin Hollinrake]

I do not have access to that data. The hon. Member refers to a survey that was done some years ago. It is our belief that unpaid work trials are not widespread, and there are measures to deal with the problem, which I will set out shortly. As the hon. Member for Ellesmere Port and Neston (Justin Madders) said, there are six criteria applied to unpaid work trials.

[Jim Shannon]

Some of the responses have been very positive. The Carer’s Leave Bill, which I have been following, is really welcome. The Minister mentioned the outcome of tribunals, but a person cannot take a case to a tribunal if they have not been in the workplace long enough, which means that a tribunal may not be an option. Can the Minister also give some direction on the uniform issue?

[Kevin Hollinrake]

I thank the hon. Gentleman for all the good work he does in this House. In all the debates he speaks in, he is a champion for doing the right thing. As he said, we have been on the same side of the fence in debates on many occasions, and I am sure that will continue despite my ministerial position. I will come back to both of those points shortly.

Six different criteria apply in deciding whether an unpaid work trial is appropriate. The first is the length of time. The trial should be no longer than a day. Observation is another: is the employer observing, or is somebody just working unobserved? Other criteria relate to the nature of the work, and the value to the employer—is there a value to that work? That would be inappropriate. If the worker is observed, the work would have less value, because somebody has to observe them, and they might as well be doing the work themselves. All those things are taken into account in judging whether that shift should be paid.

There are reasons for having an unpaid work trial; for example, a teacher might be required to do a model lesson. It might be appropriate to ask teachers who are being interviewed to show what they would do in the actual situation. It would not be right to ban the practice altogether.

On having more specific guidance, which the hon. Member for Glasgow South mentioned, the problem is that being too specific in guidance could result in a race to the bottom by some employers—something that he is looking to clamp down on. If we said, “This categorically is the perimeter of work trials,” rogue employers may well take advantage. There needs to be a balance of judgment, rather than exact criteria.

The Government think that work trials can be a legitimate recruitment exercise at times, which is why we are not legislating in this area and do not intend to. I know the hon. Member disagrees, and I respect his opinion, but we do not think it is right to legislate further in this area. What we already have strikes the right balance.

[Chris Stephens]

On the one hand, the Minister says that the Government do not collect data, and on the other, he says that legislation is not necessary. That seems a bit confusing to those of us in the House who study these matters. Before the Government decide whether to legislate, would it not be better to do some investigation into the root of the problem to see how widespread it is?

[Kevin Hollinrake]

Of course, we will always look at information and evidence. As parliamentarians, we get information and evidence from lots of different sources, but we tend to work by seeing where there is obvious detriment and therefore loopholes that we need to close. I do not think it is practical for the Government to look at every single problem and then decide where to legislate; it is usually the other way round. I think we disagree on that, but we will always look at information. If the survey was updated and specified unpaid work trials as an issue, the hon. Gentleman would have a more compelling case.

On uniforms required for a place of work, deduction of the cost of the uniform should not take a person’s earnings below minimum wage. If it did, the employer would be guilty of an offence under the National Minimum Wage Act 1998. It can be appropriate for an employer to say that there is a uniform that an employee must wear, at the employee’s cost, but that must not take that employee below the minimum wage.

[Jim Shannon]

The example I gave was a true one—I bring all my examples with honesty. The person had to buy a black shirt and black trousers to have the trial. If they did not get the job, they were out of pocket. Where is the comeback? It might be better for the employer, who will probably have spares, to make them available.

[Kevin Hollinrake]

I agree with the hon. Member, but that is a different point; I am speaking more to uniforms and how they relate to the minimum wage. It would be entirely inappropriate for an employer to say, “I want you to come on an unpaid work trial, and I want you to buy a new shirt and a new pair of trousers to do that.” I would define them as a rogue employer for taking that approach. As I have said, I was an employer for 30 years, and we would never have even considered that kind of behaviour.

The hon. Member for Strangford talked about awareness. His Majesty’s Revenue and Customs undertakes a programme on best practice for employers. It is an enforcement body, as well as one that tries to help employers meet the relevant employment conditions.

A number of contributors said that an employment tribunal is the only way to deal with the issue. I quite understand that employment tribunals can be expensive and time-consuming. There are other processes; if people feel that they have been wrongly and inappropriately asked to do an unpaid work trial, they can report that to ACAS or His Majesty’s Revenue and Customs, through its online form. All reports are investigated.

We are keen to expand the reach of HMRC’s enforcement capability. We have doubled our investment in national minimum wage enforcement since 2015-16. We spend nearly £28 million every year on ensuring that employers meet their legal responsibilities. Employers who are found to underpay their staff must repay all arrears that they owe to their staff and a penalty of up to 200% of the underpayment, and may be eligible to be publicly named by the Department for Business and Trade.

In 2021, HMRC returned more than £6.7 million in arrears to over 155,000 workers, and issued fines totalling more than £14 million to businesses that had failed to pay the minimum wage. Since 2015, the Government have ordered employers to repay over £100 million to more than 1 million workers, which demonstrates that it is never acceptable to short-change hard-working employees. The shadow Minister rightly asked when we will do the next naming and shaming. It has been too long. The last one was in December 2021. I have absolutely met my officials and said, “We need that list out very shortly.” It will happen very shortly.

I conclude by again thanking the hon. Member for Glasgow South. We absolutely agree that it is vital that the right of workers to be paid the minimum wage continues to be upheld. That is why the Government listened to concerns relating to work trials, and issued new guidance in 2018—prompted by his work, I would say, though I was not in this role at the time. That revised guidance, combined with strong enforcement of existing legislation, will continue to ensure that workers are not exploited through unpaid work trials.

P&O Ferries Redundancies

Kevin Hollinrake Excerpts

Tuesday 28th March 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

It is a pleasure to speak with you in the Chair, Sir Gary. I thank the hon. Member for Wansbeck (Ian Lavery) for bringing forward this important debate.

G. K. Chesterton said:

“Too much capitalism does not mean too many capitalists but too few capitalists”.

I absolutely agree with that. I think there is agreement across the House that the vast majority of employers are decent people who treat their employees properly. However, some of the egregious behaviour we have seen in this case, and in others as well, happens when there is too much power in the hands of a few very large operators that dominate certain sectors. The title of this debate is absolutely right, in that there are lessons we can learn from the case of P&O.

The hon. Member for Wansbeck made lots of points. He said to me before that he did not expect me to respond to them all today, and I probably cannot, but I will write to him about the ones I do not pick up on. Some are dealt with by other Departments such as DFT, but I am keen to facilitate responses on all his points where I can. We are in total agreement here: the behaviour of P&O and its chief executive was disgraceful and gratuitous, running roughshod over UK legislation, as I saw in the testimony referred to by the hon. Member for Middlesbrough (Andy McDonald). That is absolutely appalling, and we must deal with it. Yes, we need to learn the lessons, and we have learned some already. We are determined to look at this issue carefully and to go further where we need to. I think the hon. Member for Wansbeck knows that we have taken some action already, but I fully understand that he might want us to go further.

So much attention has been drawn to this appalling behaviour because it is very unusual. I was an employer for 30 years, and most employers would never have considered not carrying out the requirements around consulting the workforce. That is because it was the right thing to do and because we wanted to have a good reputation as an employer with our existing staff and any staff who would join us in future. There is something fundamentally wrong when an employer can set aside the clear requirements to consult the workforce in these instances.

It is fair to say that the Government were very clear in their condemnation early on. The Secretary of State wrote to P&O to ask it to reverse its decision and asked the Insolvency Service to investigate whether the law was complied with. That investigation has not yet concluded. The criminal side of the investigation has reported back. A senior prosecution barrister looked at the matter and decided there were not sufficient grounds to take forward a criminal prosecution. The civil investigation is still live, and it is important we give it the opportunity to run its course.

We all believe in the principle of due process in these cases. Certainly, there is still a chance, as the hon. Member for Middlesbrough noted, of an up to 15-year ban of a director if there are sufficient grounds, so we should let the Insolvency Service conduct its work. Like others, I urge the service to do that work as quickly as possible so that it can come to a resolution and more lessons will hopefully be learned. Indeed, if lessons are learned, I am keen to take further action where necessary to clamp down on such behaviour.

[Andy McDonald]

Does the Minister accept that we were told that action would be taken urgently and it was not? In that vacuum, there is no reason why DFDS, Stena and other ferry services could not do the exact same thing and more seafarers could lose their jobs.

[Kevin Hollinrake]

The hon. Gentleman raises an important point. I do not accept that no action has been taken, and we are consulting on some things now to try and beef up the requirements in terms of consultation. We have already done some things.

The hon. Member for Wansbeck referred to the Seafarers’ Wages Act and the requirement to pay a minimum wage in UK waters. He is right to say that the seafarers’ charter is a voluntary code for now, and we want to see how that operates. I fully respect his perspective that this should be mandatory across the piece, but when there is a proportionate approach—we do not feel at this point that it is. Nevertheless, we have legislated in that area. That legislation has received Royal Assent and is now law, but the hon. Member for Wansbeck is right that some secondary legislation is required for it to be fully and effectively implemented.

On the Thames freeport, let me clear: we have not given any money to DP World, but we have given money to Thurrock Council. However, some of the land needed to operate a Thames freeport includes land owned by DP World. It would be cutting off noses to spite faces if we said, “You can’t use that land, because of its ownership,” and we do not believe in compulsory purchase, except in certain circumstances. I think that would be the wrong—

[Andy McDonald]

You’ve just done that on Teesside!

[Kevin Hollinrake]

Well, that is a slightly different case.

It was interesting that none of the contributions suggested that we would ban fire and refire. Interestingly, the deputy leader of the Labour party, the right hon. Member for Ashton-under-Lyne (Angela Rayner), said Ministers would not ban the behaviour, judging that it is “acceptable in some circumstances”. So I think we are probably all on the same page in terms of making sure the bar is high on the requirements for anybody using these kinds of tactics and making sure that people cannot just run roughshod over them.

New guidelines from ACAS in 2021 were clear that this kind of action should be taken only as a last resort. In terms of a statutory code of practice, there is a 12-week consultation from January 2023. The principle behind that is that there is a 25% compensation uplift in employment tribunals if consultation requirements are not adhered to. We think that sets a sensible balance between the two. Having said that, I am keen to go further, where we can, and to look at the different provisions we can put in place to make sure that the requirements on employers work in practice. It is clear that has not been the case in this case, which is why we have gone further.

To conclude, I thank the hon. Member for Wansbeck again. He knows I am as incensed as he is by the actions of this employer because they bring into disrepute the good name of many other employers, which cannot be right.

[Andy McDonald]

Just briefly, on fire and rehire, we have to be clear about what we are talking about here. This was not firing and rehiring the same workers; this was firing workers and replacing them with cheaper workers. That is the point that concerns us. If companies get into financial difficulties, there has to be a proper mechanism for protecting people if they have to have lower terms and conditions. That is the point we are making.

[Kevin Hollinrake]

We are totally on the same page. The fire element is the worry here. Setting aside the consultation requirements, hon. Members will remember the case of British Airways, which threatened fire and rehire during the pandemic. It did not go ahead with that tactic, as P&O did, but consulted the workforce and found a way through. That shows why the consultation period is so important. Making sure that the provisions we have work in practice is key.

As I say, we already have the Seafarers’ Wages Act. We will keep the issue under review. We are keen to see the outcome of the Insolvency Service investigation and, as far as I am concerned, where action can be taken, it will be taken. We should bear it in mind that we want to act in a proportionate way. Most employers do the right thing. I have never heard of a case like this one before. Most employers do adhere to consultation requirements. We should celebrate the good employers we have in this country, as well as clamping down on the bad ones, and I am determined that we do so.

Question put and agreed to.

Workers (Predictable Terms and Conditions) Bill

Kevin Hollinrake Excerpts

3rd reading
Friday 24th March 2023 Commons Chamber

[Imran Hussain]

The hon. Gentleman’s constituency is known for the things he has said. He will appreciate there is a huge difference between shift working and zero-hours contracts. Those are two very different concepts, and I do not think anybody is arguing against shift working. Equally, nobody is saying there should be no flexibility. I accept that in a minority of situations—perhaps, for example, in the case of students, as was mentioned earlier—there may need to be that flexibility.

To answer the question from the hon. Member for Crewe and Nantwich (Dr Mullan)—I will cover this later as well—the reality is that over the past decade we have gone from around 150,000 people on zero-hours contracts to more than 1 million, as the Minister will know. To suggest that the majority of those people somehow benefit from some flexibility in zero-hours contracts—or some of the points that the Minister may outline later—is just not true.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The hon. Gentleman suggests that it is not true that a majority of people like that relationship, but surveys show that some 64% of people do not want more hours. He would ban zero-hours contracts, even though 64% of people want them. Where is the sense in that?

[Imran Hussain]

I will refer the Minister to another survey. By far the most over-represented groups of people on zero-hours contracts are women and those from ethnic minority backgrounds. The Minister quotes statistics, but in the current market people who have a choice between zero-hours contracts or no work at all are a different case altogether.

--- Later in debate ---

[Kevin Hollinrake]

I start by thanking my hon. Friend the Member for Blackpool South (Scott Benton) for all his work. He has been a delight to work with all the way through and I have been delighted to support his Bill through its various stages. I reiterate the Government’s support for the Bill.

It has been encouraging to observe the support for the Bill from across the House. I was pleased to hear that reflected once again in this debate, including by the shadow Minister, the hon. Member for Bradford East (Imran Hussain), who represents part of the fine city of Bradford, in my county of Yorkshire.

As my hon. Friend the Member for Blackpool South pointed out, zero-hours contracts are an important part of the UK’s flexible labour market, for both employers and individuals who may need to balance work around other commitments. We believe they play an important role, and 64% of people surveyed said they do not want more hours and that they are happy with the basis of their current contracts. As my hon. Friend the Member for Crewe and Nantwich (Dr Mullan) pointed out, Labour is determined to take that option away from people, which once again illustrates that the Government believe in freedom of choice while the Opposition believe in state diktat.

Around 3% of workers in the UK workforce are on zero-hours contracts and such contracts may offer many of those individuals the kind of flexibility they want, but, of course, we are determined to tackle unfair working practices used by a small minority of employers. I endorse the comments made by my hon. Friend the Member for Newbury (Laura Farris), who speaks in this House with such authority on employment matters, given her background. Many of those employers take advantage of what she describes, quite rightly, as “a grey zone”. Workers may be left waiting on standby for work that never materialises, unsure whether they will receive the hours they need to pay their bills.

We have already made significant progress in bringing forward measures that support individuals on zero-hours contracts and in low-paid work. In 2015, we banned exclusivity clauses in zero-hours contracts; in December 2022, we extended the ban to workers who have a guaranteed weekly income equivalent to or below the lower earnings limit of £123 per week; and on 1 April, we will increase the national living wage by 9.7%, to £10.42 per hour.

[Mr French]

In reference to the comments made by the shadow Minister, does the Minister agree with me that the Labour party’s words on sticking up for workers are rather hollow, particularly when they support the Labour Mayor of London’s ultra low emission zone expansion and tax rise, which will impact over 850,000 drivers in London and have been described as “anti-worker” by Unite the union?

[Kevin Hollinrake]

My hon. Friend is a fine champion on that issue; I would describe the measure as anti-worker and also anti-business, particularly at a time when we are all seeing cost of living challenges. It is simply the wrong measure to take and I applaud him for his constant campaigning on it.

The Bill in the name of my hon. Friend the Member for Blackpool South represents a further step towards addressing one-sided flexibility, as he says. In 2018, the Government consulted on the right to request predictable working and in 2019 we committed to introducing a right to request a more predictable contract in our manifesto. That militates against the hon. Member for Bradford East’s argument that we have suddenly discovered this concern. We have always committed ourselves to legislating in this area.

The new right to request a more predictable working pattern will apply to all eligible workers, not only those on zero-hours contracts, meaning that a wide range of workers who have unpredictable working conditions will benefit, including temporary workers, agency workers and workers with non-guaranteed hours. Crucially, that is a right to request more predictable hours, not a right to insist on them, because we also need to look after the interests of businesses in this conversation.

My hon. Friend’s Bill includes a list of eight specific grounds on which any employer may decline a request, similar to those established for the existing right to request flexible working—for example, if the costs of providing a worker with a more predictable pattern would be too burdensome, or if accepting a request would have a detrimental impact on the ability to meet customer demand.

The Bill forms part of a wider package of six private Member’s Bills on employment rights that the Government are supporting. I pay tribute to the businesses and business representative groups that have supported them, despite the obvious impact on businesses—if hon. Members have read the impact assessment, they will know the additional impact on business is £16.9 million, at a difficult time for them, so we should pay tribute to businesses that are willing to take on these extra duties.

The hon. Member for Bradford East talked about a ban on zero-hours contracts. I gently ask whether he is doing that in the full and certain knowledge of the costs on business, because I have not seen a figure from Labour to say what would be the cost to business of doing that. That is a reasonable concern that businesses may have about the extra costs of doing business under a potential Labour Government.

Taken as a package, these Bills will deliver on our 2019 manifesto commitments to enhance workers’ rights and support people to stay in work. They will help new parents, unpaid carers and hospitality workers.

Before I close, I want to thank the officials who have worked on this Bill: Sasha Ward, Bex Lowe, Lizzy Blakeman, Mel Thomas, Sarah Boulton-Jones, Louis Ariss, Laura Robinson, Richard Kelly, Adrienn SzNagy, Rose Jefferies and Dan Spillman and, from my private office, Cora Sweet. I commend the Bill to the House.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Thursday 23rd March 2023 Commons Chamber

[Dan Carden (Liverpool, Walton) (Lab)]

2. What recent assessment her Department has made of the effectiveness of businesses’ actions on corporate responsibility.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The Government are rightly proud of the record of UK companies when it comes to corporate responsibility. The UK is home to 10 of the world’s top 100 companies, ranked by social responsibility. These standards are reflected in the UK being considered by business leaders to be the world’s third most important country for investment.

[Dan Carden]

The Government have recently taken action on deforestation in supply chains through the Environment Act 2021, and they have made progress on regulating British companies overseas through the Bribery Act 2010 and the Modern Slavery Act 2015, but I want them to go further. The Cerrejón coalmine in La Guajira, Colombia, has been responsible for widespread, persistent, harmful pollution, and for the diverting and polluting of many rivers, causing the displacement of more than 20 indigenous communities. The companies involved have ignored local court rulings. What more can be done to ensure that businesses registered in the UK uphold human rights and do not commit environmental damage? Will the Minister look again at this case?

[Kevin Hollinrake]

The hon. Gentleman raises an important case. The UK is a signatory to the OECD’s declaration on international investment and multinational enterprises, a voluntary set of standards intended to promote responsible business conduct worldwide. My Department is the UK’s national contact point on these guidelines, allowing anyone who thinks there are problems to make a complaint, which will then be investigated. I am very happy to work with him on that basis.

[Andrew Bridgen (North West Leicestershire) (Ind)]

Will my hon. Friend update the House on any recent discussions that he or his Department have had with the Home Office on the Economic Crime and Corporate Transparency Bill?

[Kevin Hollinrake]

I regularly meet Home Office colleagues, including this week to make sure this legislation is fit for purpose and will do what it says on the tin: tackle economic crime.

[Mrs Sheryll Murray (South East Cornwall) (Con)]

3. What steps her Department is taking to help protect critical minerals supply chains.

--- Later in debate ---

[Patrick Grady (Glasgow North) (SNP)]

16. What steps she is taking to support the post office network.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I thank the hon. Member for Motherwell and Wishaw (Marion Fellows) for the fantastic job she does as chair of the all-party parliamentary group on post offices. I met the Post Office leadership this week to reiterate our commitment to ensuring the long-term sustainability of the post office network. We have funded the network to the tune of £2.5 billion over the last 10 years, and have set access criteria to ensure that vital services remain within local reach of our citizens.

[Marion Fellows]

I thank the Minister for his kind words. Last month, London Economics issued a report showing that the Post Office has a greater economic impact on the UK than Heathrow airport, with three in 10 small and medium-sized enterprises using it at least once a week. The Minister has said that he will invest lots of money in the post office network, but could he also look at “drop and collect” locations? They have a Post Office lozenge, but they are not the properly functioning post offices that most Members in this House would expect.

[Kevin Hollinrake]

The hon. Lady raises an important point. Drop and collect locations offer important services for our citizens, and can be counted towards the commitment to having 11,500 branches. Having said that, the access criteria overlaid on that commitment ensure that branches offering core services, including the sale of mail products, access to cash, and banking and bill payment facilities, remain within 3 miles of 99% of our population.

[Patrick Grady]

The report to which my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) referred found that the social value delivered by the Post Office is 16.5 times greater than the financial input it receives from the Government, so will the Minister carry out an analysis of how additional investment in the post office network will allow it to continue to grow, so that it can help our communities and small businesses to grow and develop?

[Kevin Hollinrake]

That is a very good point. We are working all the time with the Post Office—as I said, there was a meeting earlier this week. Around half of its 11,500 branches are in rural areas. They are hugely important to our local communities, as the hon. Gentleman says. The Government’s funding for the network helps to ensure the viability of rural branches. Of course, this will always be work in progress. We are keen to make sure that the facilities are there for our communities.

[Mr Speaker]

I call the SNP spokesperson.

[Peter Grant (Glenrothes) (SNP)]

Thank you, Mr Speaker, and may I wish Ramadan Mubarak to all those who today mark the beginning of the holiest period in the Islamic year?

The Minister will be aware that the model of sub-post offices is based on the expectation that most of them will be run by small, semi-independent or independent retail businesses. Those businesses are under desperate strain for a number of reasons, some of them within the Government’s control and some not. The people who run these businesses tell me that they are put off the possibility of taking on the responsibility for a sub-post office because it is now more a drag on the business than a benefit. What steps is he taking to review the business model on which sub-post offices operate? It is quite clearly not fit for purpose, and we are getting to crisis point. If it is not changed soon, we will lose even more post offices.

[Kevin Hollinrake]

The hon. Gentleman makes a fair point. The model of a post office is evolving to a more diversified approach, but it is important that remuneration is fair and makes post offices sustainable. I was pleased to see that in August 2022 some improvements were made to remuneration. I appreciate that they may not have gone as far as some might wish, but nevertheless we want to see a sustainable network and make sure that our sub-postmasters are fairly remunerated.

[Peter Grant]

In an hour or two we will hear the latest update on the Horizon compensation scheme. Has the Minister made an assessment of how much damage that scandal has done and is continuing to do to the willingness of businesspeople to take on responsibility for running a sub-post office, given how severely badly treated, and indeed betrayed, so many of their potential colleagues have been in the past?

[Kevin Hollinrake]

Again, that is a very fair point. It was a horrendous scandal, and the first thing we need to do is properly compensate the victims. Alongside that there is an inquiry going on, headed by Sir Wyn Williams. It is important that we find out exactly what went wrong and who was responsible, and where possible hold those people to account. I think that will restore some measure of confidence to those who have been subject to such disgraceful mistreatment.

--- Later in debate ---

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

8. What steps her Department is taking to support the growth of micro- businesses in rural and isolated communities.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

As somebody from a business background who also represents a rural area, I fully understand the importance of provision of a range of support to help small and microbusinesses to grow, including those in rural areas. Such businesses can find support through the free business support helpline, the 38 growth hubs across England, and the newly launched “Help to Grow” website, as well as through start-up loans. I note that 240 businesses on the Isle of Wight have benefited from start-up loans.

[Bob Seely]

I am delighted that that is the case. I want to tie this question into previous comments about post offices. Some microbusinesses and small businesses are incredibly reliant on post offices and sub-post offices. My sub-postmasters—Andy Smith in Ventnor was the last I spoke to, a couple of weeks ago—are increasingly concerned about the payments regime for sub-post officers. They have asked me to look into several specific instances, and I have written to the Minister about that. One area in which I think we could make improvements is banking payments. Banks are increasingly shutting down. Why? To save money. They pass the responsibilities for cash takes on to sub-postmasters, who do not get the remuneration—or anything like enough—to make it economically worthwhile. Will the Government look at the payments system, specifically in relation to banks?

[Kevin Hollinrake]

That is an interesting point. That relationship between banks and post offices is important for post offices and the banks, so we urge for fair terms to be struck. We also have concerns about the banking deposit limits that were introduced recently to cover money laundering issues. I am looking into that in great detail and at great pace to ensure that those issues are resolved, because they are limiting remuneration for postmasters, too. I am very happy to take that forward.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

The Minister will know that my constituency has large rural areas and lots of farmers. Like many microbusinesses, they have difficulty in getting a bank account at all. Could he do something or talk to other colleagues about it? Social and trade enterprises cannot get a bank account. Could we get some action on that?

[Kevin Hollinrake]

If the hon. Gentleman writes to me about specific instances, I will be very happy to look at them. There has been a significant increase in the number of new banks entering the marketplace, such as Starling Bank and Tide, so it is getting easier to open a bank account. I know that it is difficult with some of the larger banks. I am very happy to look into the specific instances that he refers to and see if we can help.

[Christine Jardine (Edinburgh West) (LD)]

10. What recent assessment she has made of trends in the level of business insolvencies.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

In total, 22,109 companies entered insolvency in England and Wales in 2022, which was 57% higher than in 2021. There were lower rates of insolvency in 2020-21 because of the measures that we put in place to prevent the foreclosure of certain businesses. The trend over the last three years is pretty consistent with previous trends, but it is something that we are looking at very closely.

[Christine Jardine]

Notwithstanding that the trend may be consistent, in the last quarter of 2022, 313 companies in Scotland were insolvent. In my Edinburgh West constituency, companies are struggling, particularly those in the hospitality sector, in which there is high energy use. The Federation of Small Businesses has criticised the Budget by saying that there is nothing for businesses once the energy prices support ends at the end of next month—there is nothing for cashflow; there is nothing for tackling late payments. For the sake of small businesses, will the Government review their decision to take away support for businesses at the end of the month?

[Kevin Hollinrake]

The Government have not taken away support; they have replaced one scheme with another. The scheme we have now reflects the fact that wholesale prices have come down significantly since the peak between July and December last year. Of course, we are concerned about businesses that are suffering, particularly those that entered into contracts between July and December on fixed rates that last up to a year. We are working with Ofgem and suppliers to see what can be done to ensure that those businesses are not unfairly treated.

[Anna Firth (Southend West) (Con)]

Does my hon. Friend agree that the tax cut for business worth £25 billion in the Chancellor’s Budget will benefit national and international businesses in the new powerhouse city of Southend such as Olympus KeyMed and ESSLAB, incentivising investment, boosting growth and delivering more jobs not just in Southend but across the UK?

[Kevin Hollinrake]

What an excellent question—I absolutely agree with my hon. Friend. In previous Budgets, the Chancellor has set the annual investment allowance effectively for SMEs at £1 million; that is permanent policymaking. He has now introduced full expensing across the piece, which, as she says, costs around £9 billion a year. We are the only country in the developed world, to my knowledge, that has done full expensing across the board in that way, and it will be a massive boost to business investment, not least in Southend.

[Mr Speaker]

I call the shadow Minister.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Our great British businesses are being let down by 13 years of Tory failure, with little to help but sticking-plaster policies. The Minister may not be aware, but insolvency numbers are at their highest level in four years, which is perhaps no surprise when we look at this Government’s record on small businesses, with Help to Grow: Digital ditched, energy bill support slashed and business investment the lowest in the G7. It is no wonder that the Federation of Small Businesses says that the Budget has left many businesses feeling “short-changed”. It is clear that for this Tory Government, small businesses are an afterthought, so will the Minister follow where Labour leads—reform business rates, boost skills, make Brexit work and make Britain the best place to start and grow a business?

[Kevin Hollinrake]

I wish I could say I was surprised that the hon. Lady is once again talking Britain down. The reality is that UK growth since 2010 has been the third fastest in the G7. The private sector is now bigger than it was pre-pandemic. Private sector growth has been on trend in terms of other countries, with businesses growing. The FSB says that three out of five businesses are more resilient than they were pre-pandemic. Of course, we would all like to reform business rates, and it has been looked at on a number of occasions, but simply saying that we will scrap something that would cost £22 billion a year without putting in place a replacement for that funding is irresponsible. What will she do to replace business rates—[Interruption.] She made the point. She wants to scrap business rates, but what will replace it with, given that it would cost £22 billion a year?

[Scott Benton (Blackpool South) (Con)]

11. What steps she is taking with Cabinet colleagues to help support energy-intensive industries.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

Through finance, we are making sure that the Government are supporting UK SMEs through our recovery loan scheme and through the start-up loans scheme, which has provided 101,000 loans and nearly £1 billion. On business support, a network of 38 growth hubs across England provides access to information and advice, and we are removing barriers by supporting SMEs seeking to export through the Export Academy, UK Export Finance, cutting red tape and incentivising investment.

[Jo Gideon]

Businesses and traders in Stoke-on-Trent city centre are supported by the fantastic team at our Hanley business improvement district. This week, with investment from the safer streets fund, they are giving a much-needed facelift to shop fronts in Hope Street, making the gateway route to our city centre more attractive. Does my hon. Friend agree that such initiatives, which make our shopping areas more attractive, are a good investment that encourages business growth locally? Will he join me in congratulating my city centre BID?

[Kevin Hollinrake]

It is a great pleasure to do so. I congratulate my hon. Friend on her work. The money that has been invested in Hope Street will contribute to its being a safer, more welcoming place to visit and shop, which in turn will support the local economy. Regenerating streets such as Hope Street is essential to making our high streets and town centres successful, and I congratulate her on the work she does in this regard.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

The financial viability of the high street continues to decline as businesses struggle to compete with online shopping, the impact of which will be felt most keenly in local and small to medium-sized businesses. What discussions has the Minister had with the Chancellor about the urgent need for a long-term, local-scale economic plan to support high streets?

[Kevin Hollinrake]

The hon. Lady is right to raise this issue. We have put in place £13.6 billion of business rates support to help businesses over the next few years, but we are also improving access to finance, improving business support through our growth hubs and cutting red tape, making it easier for businesses to start up and scale up in the UK. That work will continue.

[Sir John Whittingdale (Maldon) (Con)]

18. What steps her Department is taking to help businesses increase their level of trade in the Indo-Pacific region.

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[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

T5. The crypto and digital assets all-party group has been informed, shockingly, that many businesses are struggling to even open a UK bank account. What support can be given to address that issue, and ensure that the UK remains an international hub for fintech innovation?

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

My hon. Friend raises an interesting point, which is similar to the one raised earlier. I am happy to look at any particular instance where businesses cannot open a bank account. My hon. Friend the Economic Secretary to the Treasury is also interested in this issue, so if my hon. Friend writes to me about any instances I will look into them.

--- Later in debate ---

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

T7. Every time I speak to those running sub-post offices in my constituency, I hear the same message: the various packages that are available and the business models are simply not sufficient for them to run a viable business. What will the Government do about that, or are we just going to wait until it becomes a crisis?

[Kevin Hollinrake]

There is no waiting at all and the issue is constantly on our agenda. This week I met the Post Office leadership to look at the sustainability of post offices. We are keen to ensure that the post office network is sustainable, and that sub-postmasters are remunerated fairly. We provide financing to the post office network to ensure it is sustainable, with £2.5 billion over the past 10 years, and that will continue. We are determined to ensure that that network is sustainable and provides those services for our citizens.

[Bob Blackman (Harrow East) (Con)]

T6. This month we are due to have the seventh round of trade talks with our partners in India, working towards a free trade agreement. My right hon. Friend’s predecessor but one promised a free trade deal by Diwali. What assessment has she made about achieving a free trade deal by Diwali this year?

[Chris Stephens (Glasgow South West) (SNP)]

T8. In all the discussions about the Post Office, the Minister did not mention meeting the trade unions. Is he aware of current research by the Communication Workers Union on the opportunities to develop the role of the Post Office and postal workers within the communities of Scotland? Will the Minister engage with the trade unions to discuss the work of protecting post office services across these islands?

[Kevin Hollinrake]

I have met CWU representatives. I am always keen to listen to new ideas on how we make the post office network more sustainable, so yes, I am absolutely willing to do that. Perhaps the hon. Gentleman will put them in touch with me.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

May I ask about the CPTPP? Unlike the European Union, this organisation is growing all the time as a percentage of global population and global GDP. When will we finally enter this very exciting trade agreement? When will we have a campaign across the United Kingdom to inform businesses of the tremendous opportunities of us joining the CPTPP? When I talk to my constituents about how excited I am about the CPTPP, they ask me, “What is the CPTPP?”

--- Later in debate ---

[Liz Twist (Blaydon) (Lab)]

The retail sector is a hugely important part of our economy and a huge employer in my constituency. What are the Government doing to support it in difficult times?

[Kevin Hollinrake]

The retail sector is benefiting from the £13.6 billion of business rates support and the 75% discount up to £110,000 per premises. These are difficult times for many businesses, not least retail, but we are keen to ensure that we end up on a fair and level playing field. Also, businesses will benefit from the economic turnaround that we expect later this year.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is the Secretary of State aware of just how much wonderful research is going on in our universities in medical technology, environmental technology and all the rest? Will she do something to make our universities more entrepreneurial? Some are lagging in their expertise. What can we do to make universities partner with business to make them more entrepreneurial?

Post Office: Horizon Compensation

Kevin Hollinrake Excerpts

Thursday 23rd March 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

With your permission, Madam Deputy Speaker, I would like to make a statement on the Post Office and compensation for the Horizon scandal.

The Horizon scandal was a truly appalling episode in this country’s history. Our postmasters—those hard-working, thoroughly decent people, who give so much to our communities right across the country—were made to suffer horrifically and for many years. We want the postmasters who fought to expose that injustice through the High Court to receive compensation on a similar basis to their peers. I put on record our thanks to Alan Bates and the Justice for Subpostmasters Alliance, and to many others, journalists and parliamentarians, who were key to the campaign.

On 7 December we announced the outline of the group litigation order compensation scheme. I am delighted to tell the House that from today, the scheme is open to receive claims. Details of how to claim can be found on the gov.uk website. I am writing to GLO members today with further information and placing copies of that information, the scheme application form, scheme guidance and principles, and questions and answers for the scheme in the Library of the House.

Our legal powers to pay compensation expire in August 2024. We certainly intend and expect to make payments much faster than that. We said in December that we would follow an alternative dispute resolution model. We have appointed Dentons as claims facilitators to promote the fair and prompt resolution of each case. We have also appointed Addleshaw Goddard as our external legal adviser on the scheme. They have been instructed to recommend fair offers.

In December we also announced an independent advisory board to oversee the scheme. Reports of its meetings are available on gov.uk. I put on record my thanks to board members Professor Chris Hodges and Professor Richard Moorhead, as well as to the right hon. Member for North Durham (Mr Jones) and Lord Arbuthnot—who is in the Public Gallery—both of whom have long been tireless campaigners for the wronged postmasters. I am pleased to announce that the remit of the advisory board will be expanded to cover the historical shortfall scheme, postmasters’ suspension pay, and compensation for postmasters with overturned convictions.

I am pleased to report that good progress is also being made by the Post Office on compensating other groups of postmasters. As of 20 March, the Post Office has paid out more than £17.6m in compensation to postmasters with overturned historical convictions, 79 postmasters have received interim compensation payments, and 49 non-pecuniary claims have been paid. The Post Office has reached full and final settlement in four cases.

On the historic shortfall scheme, 98% of eligible claimants had been issued offers of compensation, totalling £90.2 million, as of 21 March. I recognise that in recent weeks concerns have been raised about the tax position of claimants in that scheme. It has always been the intention of the scheme to return postmasters to the position that they should have been in had they not been affected by the Horizon scandal. The Government want to see fair compensation for all victims, and my Department is working urgently to address that issue with the Post Office, the Treasury and His Majesty’s Revenue and Customs.

As we talk about financial compensation schemes, we must never lose sight of the human cost of this dreadful injustice. That is why, as the House will know, Sir Wyn Williams is chairing a statutory inquiry to establish what went wrong, and to identify those responsible for what has happened so that, where possible, we can hold them to account. I commend this statement to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Secretary of State.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the Minister for his statement and for advance sight of it.

I too begin by paying tribute to Alan Bates and the Justice for Subpostmasters Alliance, which has campaigned for decades for compensation, justice and the truth. In addition, I recognise the campaigning efforts of Members from across this House on behalf of their constituents, and join the Minister in paying tribute to my right hon. Friend the Member for North Durham (Mr Jones) in particular. There can be no doubt that he has played an instrumental role in helping to chart a route to justice for thousands of people. We all wholeheartedly thank him for that.

The House is in unanimous agreement that the Horizon scandal has been a shocking injustice. Indeed, I think it is no exaggeration to say that it is one of the greatest scandals of modern times. As we continue to hear in the public inquiry the accounts of lives torn apart by the scandal, we can never lose sight of how devastating its impact has been on those victims. Today’s announcement of the group litigation order compensation scheme is very welcome. I was pleased to hear about the appointment of claims facilitators and external legal advisers—in the interests of full transparency, I declare that I am a former employee of Addleshaw Goddard.

I thank the Minister and his predecessor, the hon. Member for Sutton and Cheam (Paul Scully), for their work on this matter. I am sure that the Minister will appreciate that I feel duty-bound to put on record the level of frustration that many people have felt about how protracted their fight for justice has been, particularly the 555 litigants excluded from the original historic shortfall scheme. Indeed, one of the first speeches that I made from this Dispatch Box as shadow Business Secretary was in support of calls for compensation to be expanded to them—a campaign that was established long before that exchange nearly 18 months ago. The most important step now is for that compensation to reach victims as quickly as possible, so may I press the Minister on the steps that we will all take to ensure that the process is completed as swiftly as possible?

I am also grateful for the update on the historic short- fall scheme. The Government’s ambition was for that scheme to be completed at the end of last year, but in December, the then Secretary of State said that 93% of eligible claimants had been issued offers of compensation. The Minister has given the figure of 98% today, so can he confirm that the scheme’s completion is imminent? I also was pleased that he raised the tax issue. Will he commit to coming back to the House when he can to provide more information on the work that he said he is doing?

Today’s announcement is certainly welcome, but as we all await the conclusion of the public inquiry, and its recommendations, surely this is one of many steps that we need to take to make amends for what has been the most insidious of injustices.

[Kevin Hollinrake]

I thank the hon. Gentleman for his words, and for welcoming the statement and the opening of the scheme. I absolutely concur that we should all be grateful for the work of my predecessors—not least, as he said, my hon. Friend the Member for Sutton and Cheam (Paul Scully).

The hon. Gentleman is right to say that we want to do this as quickly as possible. I am very pleased with the work of the advisory board, which is helping with the scheme. The scheme is based on a set of principles that should mean that compensation is delivered more rapidly and that there is a clear route to claims being settled quickly. We very much hope that that is the case—we want to get those payments out of the door at the earliest possible opportunity.

Again, we are working at pace on the tax issue. Clearly that is a matter of law as well as of tax policy, so getting that right is key. We have to work with the Treasury and HMRC to ensure that we get it right, but that is a determination and a commitment that I am very happy to make. We hope to make a further announcement on that work shortly.

[Mr David Davis (Haltemprice and Howden) (Con)]

At last. I remind the House that 27 people have died in the wait for justice. That said, I commend the Minister and his processor for their fabulous compassion, energy and drive in delivering what we are seeing today. However, there are people I represent among the 555 who have still not received any compensation for a variety of reasons, so can the Minister tell the House whether the scheme, under its brilliant advisory board—some of whom are in the Chamber—will cover all 555 claimants?

[Kevin Hollinrake]

I thank my right hon. Friend for his words. He is absolutely right that it has taken too long and people have died waiting for compensation. That is totally unacceptable, and the worst part of that delay was the obfuscation and denials of the Post Office when clear evidence that something was sadly amiss was brought to light by parliamentarians. Yes, it is absolutely the case that we want every single person of the 555 who merit compensation to get it so that it is fair across the board—so that, between them, the three schemes deliver fair outcomes and there is parity across them. I am determined to make sure that that happens, as is the advisory board. We will report back to Parliament regularly to ensure that Members are aware that that is the case.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

I thank the Minister for his statement. Of course, I welcome what he outlined, and, as chair of the all-party parliamentary group on post offices, I am very grateful to him for keeping me updated.

We now have three streams for former postmasters and sub-postmasters who were affected by Horizon to claim compensation—that is really important. The Minister has talked about achieving parity, and I think he will agree that that must be done. I would be keen to for him come back to the House to tell us that it is happening and that the latest compensation scheme will not run out of time.

I think it worth mentioning again the hard work done by the JFSA, by journalists such as Nick Wallis, by Members of this House and by former Members who are now in the other place. They have all been of great help to the APPG. I came into the House not knowing anything about Horizon—I wish I did not know what I know now. I congratulate the Minister and his predecessor, the hon. Member for Sutton and Cheam (Paul Scully), on grabbing hold of this matter and making things happen. So many people will be grateful.

[Kevin Hollinrake]

I thank the hon. Lady for her kind words and for all the work she does as chair of the all-party parliamentary group on post offices. She is right to say that there are three separate schemes, and there was probably a good reason for that at the time. It is not ideal to have three schemes, and Sir Wyn Williams referred to that in his comments, but we are all keen to see consistency across the three schemes. That is why I welcome the work of the advisory board, which will cover all three schemes to make sure there is consistency across them. I am determined to make sure that happens, and I will keep her fully informed on progress.

[Sir Edward Leigh (Gainsborough) (Con)]

This is a terrible scandal, and Post Office Ltd is not fit for purpose. Thirty years ago, when I was a Post Office Minister, I tried to privatise this body, and it is still in a mess. Only last week, I had a meeting with sub-postmasters led by David Ward, one of my excellent local sub-postmasters, and they are calling for something good to come out of this scandal—namely, that we pass control directly to sub-postmasters, for instance through mutualisation.

We have the chief executive of Post Office Ltd paying himself a salary five times more than the Prime Minister, with a bonus of £400,000 a year on top of that. We have banking remuneration to Post Office Ltd coming to £205 million, of which only 27% went to sub-postmasters. We have 11,000 sub-postmasters in a state of managed decline, earning virtually the minimum wage. I wrote to the Minister on 14 March, so he will have received the letter by now. I do not expect him to reply immediately to my question, but will he at least have an open mind about trying to take us forward and preserve the wonderful world of our sub-postmasters, particularly in rural England?

[Kevin Hollinrake]

I thank my right hon. Friend for his points, and I also hope that some good comes out of this terrible scandal. I am a big fan of mutual organisations. I am happy to have a conversation with him. I will respond in writing, and perhaps we can meet following that.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Business, Energy and Industrial Strategy Committee.

[Darren Jones (Bristol North West) (Lab)]

I thank the Minister for his statement and advance notice of it, and the members of the advisory board for their important work.

I want to focus on one particular sentence of the Minister’s statement, which is very important. He said that the intention of the compensation scheme is

“to return postmasters to the position that they should have been in had they not been affected by the Horizon scandal”.

He will know that that has an important meaning in law for the calculation of compensation. Some victims of this scandal feel that they have not been fully put back into the position they would have been in had they not been a victim of this scandal. Can he confirm for those victims what process they should follow to ensure that the compensation scheme delivers on its intention as stated on the Floor of the House today?

[Kevin Hollinrake]

I am grateful to the hon. Gentleman for his work as Chair of the Select Committee. There is a clear process in the GLO scheme for a claim being submitted and then settled. There is claims facilitation if a case cannot be settled, and an independent panel following that. Through those processes, there should be a mechanism to get fair compensation. If he has evidence of people who feel they are in the situation that he refers to, I would be keen to meet him to discuss those cases.

[Andrew Bridgen (North West Leicestershire) (Ind)]

I thank my hon. Friend for his statement. I started campaigning on this issue only weeks after being elected to the House in 2010 when I was approached by two of the victims of this scandal, my constituents Mr and Mrs Rudkin. Thanks to the diligent work of Ron Warmington and his team of forensic accounts at Second Sight, by 2015, I and other Members of this House with an interest, the Post Office and, importantly, the Government were well aware of the overwhelming evidence produced that showed these convictions were at least unsafe and that there had been a huge miscarriage of justice. That was in 2015. Will the Minister tell the House why it has taken a further eight years to get to a position where convictions have been overturned and compensation is now beginning to be paid out to the victims? How will we hold to account those who are responsible for this prolonged injustice against the sub-postmasters?

[Kevin Hollinrake]

I thank my hon. Friend for his work; he is a long-standing campaigner on this issue. He is right to point to the work of Second Sight, which was pretty critical to our getting to this point. The work of Members across the House in drawing attention to these issues shows Parliament at its best and what it is capable of doing, and I pay tribute to all Members of this place and of the Lords who have done that.

As I said, it took too long initially for the Post Office to hold its hands up and say that things were wrong. It had to be held to account in a court, which resulted in the settlement in December 2019. I agree that we need this as quickly as possible. It is also important that we get these schemes right. We want to make sure we get the compensation right the first time, and that is why it has taken a little bit of time, but we are in a much better place now. We are keen to get these payments out by August 2024, and ideally a lot quicker than that.

[Mr Kevan Jones (North Durham) (Lab)]

I declare an interest, as a member of the GLO advisory board. Today would not have happened without Alan Bates and the Justice for Subpostmasters Alliance’s tireless campaign over many years. I pay tribute to the hon. Member for Sutton and Cheam (Paul Scully) and the Minister for the way in which they have approached this scheme. Now the test is to get money to these claimants as quickly as possible.

I thank the Minister for agreeing to the advisory board’s request to extend our remit to cover both the historical shortfall and the overturned conviction schemes, but he knows what I am going to say now. There must be equalisation of the schemes, to ensure that individuals under the historical shortfall scheme are not taxed or liable to bankruptcy clawback. He will not be surprised to know that that will be one of our first requests at the first meeting.

I thank the Minister for his work. This is a historic step forward, but there is still a lot of distrust, and the postmasters and victims will not be happy until those who were responsible for this scandal are held to account in a court of law. That obviously will come after the public inquiry, but their day of reckoning needs to come.

[Kevin Hollinrake]

I am grateful to the right hon. Gentleman for his work, including on the advisory board, which is much appreciated. He is right to reference Alan Bates, as I did. I spoke to Alan this morning, and he is pleased with the steps we have taken, as I think the right hon. Gentleman is, but the proof of the pudding is in the tasting. We need to make sure these schemes work properly. When he and Lord Arbuthnot asked to expand the board’s remit to the other two schemes, I was pleased to support that wish. He is right to point to tax and bankruptcy. We need to make sure these people are treated fairly across all three schemes. We will leave no stone unturned—and I know he will not either—in making sure that happens.

[Duncan Baker (North Norfolk) (Con)]

I thank the Minister, who has followed in his predecessor’s footsteps in following this up. It is right that wrongly convicted postmasters get the justice and the compensation they deserve. I echo the wise words of my right hon. Friend the Member for Gainsborough (Sir Edward Leigh). As a former postmaster, I ask the Minister to turn his attention to a decent investment in the branch network and a decent remuneration and commission package for postmasters, who, operating a stand-alone post office, cannot make it work at the moment because the package is not good enough. Slightly cheekily, may I also ask the Minister to wish my constituents Jigen and Nisha Patel all the best for tomorrow, when I will formally open the new post office in Sheringham on the north Norfolk coast?

[Kevin Hollinrake]

My hon. Friend speaks as one of the few experienced sub-postmasters who have taken a seat in this place, and I appreciate his work in this area. We are looking at the future sustainability of the Post Office, and that will require investment. It is important that we get to a position where there is a bright future for the network and for the sub-postmasters who work in it and they have sustainable businesses. I am keen to liaise with him as we move towards that position. Of course, I congratulate the Patels on their new post office and hope the launch goes well.

[Jeff Smith (Manchester, Withington) (Lab)]

Two of my constituents who were innocent victims of this scandal recently contacted me to raise their concerns about the appropriateness of Herbert Smith Freehills as what they describe as aggressive litigators of compensation claims on behalf of the Post Office, as well as concerns about the level of Government and independent oversight of the process operated by the Post Office with public money. Could the Government look into this situation again and report back to the House?

[Kevin Hollinrake]

If the hon. Gentleman writes to me, I will be happy to look into the situation. The solicitors involved in this are Dentons and Addleshaw Goddard. We believe they are the right people to help us make sure these claims are fair and to facilitate negotiations between the two parties, but I am keen to talk to him about any issue he wants to raise with me.

[Clive Efford (Eltham) (Lab)]

My constituent served a prison sentence as a result of a prosecution by the Post Office. His conviction was subsequently overturned on the recommendation of the Criminal Cases Review Commission, but because he pleaded guilty on the advice of the National Federation of SubPostmasters, the Post Office is saying that his case is not a malicious prosecution, and therefore he is not included in the scheme and is not to be compensated. It is only offering him what it would cost the Post Office to defend his case if he were to take it to court. Can the Minister say whether my constituent will be included in the schemes he has outlined today?

[Kevin Hollinrake]

I am very sorry to hear what has happened to the hon. Gentleman’s constituent; that must have been a devastating situation for him. I do not think it would be appropriate for me to talk about individual cases on the Floor of the House today—I do not think that Madam Deputy Speaker would want me to do so—but I am very happy to liaise with the hon. Gentleman. If he writes to me, we can take that up on his behalf.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

I thank the Minister for his statement and for the work of his predecessor, the hon. Member for Sutton and Cheam (Paul Scully). The emotional toll that this tragedy has had on the Horizon victims and their families is devastating, particularly those who passed away before they were exonerated, one of whom was a constituent of mine. New evidence has revealed that the Post Office-Horizon help desk was a toxic and resentful environment where racism was reportedly a daily occurrence. What investigation have Ministers made of that workplace culture and how it may have hindered the system error from coming to light sooner?

[Kevin Hollinrake]

The hon. Lady is absolutely right to point out the emotional distress that many people felt, and the fact that some people have passed away while this process has been ongoing, a point also made by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). To be clear, any compensation can, of course, be paid to family members in that situation—a situation that, clearly, is entirely unacceptable. The Sir Wyn Williams inquiry will look at all the different factors at play in terms of why this happened, what could have been done, what should have been done, and who is responsible. I am absolutely determined to make sure that we learn the lessons from it, but not just that: if people can be held to account for what they have done, they should be, and I will do everything I can to make sure that they are.

[Madam Deputy Speaker]

I thank the Minister for his statement.

Royal Assent