Employment Rights Regulations

Kevin Hollinrake Excerpts

Wednesday 8th November 2023 Written Statements

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

I am pleased to update the House that the Government laid the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 on 7 November.

Under this Government we have seen employment reach near record highs. The number of payroll employees for September 2023 was 30.1 million, 370,000 higher than this time last year and 1.1 million higher than before the pandemic. The UK’s flexible labour market is at the heart of this success. It enables businesses to start up, grow and create jobs and opportunity for people across this country.

To build further on this success the Government have been conducting a comprehensive review of all retained EU law, to ensure that our regulations are tailored to the needs of the UK economy—seizing the benefits of Brexit.

During the passage of the Retained EU Law (Revocation and Reform) Bill, Ministers made it clear that the Government have no intention of abandoning our strong record on workers’ rights, having raised domestic standards over recent years to make them some of the highest in the world. And of course, this SI keeps to that pledge.

We identified and consulted on several areas of retained EU employment law where we saw opportunities for improvements following our exit from the EU. The Government’s response to the REUL employment law consultation, published on 7 November, sets out three areas we believe will benefit from reform to ensure that they are fit for purpose for employers and employees alike:

Record keeping requirements under the Working Time Regulations;

Simplifying annual leave and holiday pay calculations in the Working Time Regulations;

Consultation requirements under the Transfer of Undertakings (Protection of Employment)—or TUPE—Regulations.

These reforms will support businesses as the economy continues its recovery from the impact of the covid-19 pandemic and the impacts of war in Ukraine. For example, reducing time-consuming and disproportionate reporting requirements for businesses on specific elements of the Working Time Regulations could save employers around £1 billion a year.

These changes are made under powers provided by the Retained EU law (Revocation and Reform) 2023 Act—the REUL Act—and are designed to minimise unnecessary bureaucracy for businesses without reducing levels of worker protections.

A core objective of the REUL Act is to remove interpretive effects and thus allow our courts to interpret retained EU law the same way as other domestic law. The Act also provides “restatement” powers to maintain any existing policy effects which we want to keep. The SI therefore restates the following principles to retain existing rights, including:

The right to carry over annual leave where an employee has been unable to take it due to being on maternity or other family related leave or sick leave;

The right to carry over annual leave where the employer has failed to inform the worker of their right to paid annual leave or enable them to take it; and

The rate of pay for annual leave accrued under regulation 13 of the Working Time Regulations.

The SI revokes the European Cooperative Society (Involvement of Employees) Regulations 2006 and the Working Time (Coronavirus) (Amendment) Regulations 2020 as these regulations are no longer necessary.

The scope of the SI is limited to Great Britain, other than the revocation of the European Cooperative Society (Involvement of Employees) Regulations 2006, which extends to Northern Ireland. Employment law in Northern Ireland is a transferred matter. My officials will continue to engage with the territorial offices and the devolved Administrations on the implementation of these reforms.

By ensuring that employment regulations are fit for purpose, entrepreneurial businesses will have more opportunity to innovate, experiment, and capitalise on the UK’s global leadership in areas like clean energy technologies, life sciences and digital services, and important workers’ rights will be protected. This will cement our position as a world-class place both to work and to start and grow a business.

[HCWS2]

Economic Crime and Corporate Transparency Bill

Kevin Hollinrake Excerpts

Consideration of Lords message
Wednesday 25th October 2023 Commons Chamber

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

I beg to move,

That this House insists on its amendment 151A and disagrees with the Lords in their amendments 151E and 151F.

[Mr Speaker]

With this it will be convenient to discuss amendment (a), and the following motion:

That this House insists on its Amendment 161A in lieu and disagrees with the Lords in their Amendment 161D in lieu.

[Kevin Hollinrake]

I am pleased to bring this important Bill back to the House this afternoon, for what I sincerely hope is the last time, given that this will be the third time we have debated and voted on similar issues. I urge Opposition Front-Bench Members and those in the other place not to risk the safe passage of this hugely significant, near-400 page Bill by continuing to press these amendments.

The Government have appreciated the input of right hon. and hon. Members from both sides of the House—including the right hon. Members for Barking (Dame Margaret Hodge) and for Birmingham, Hodge Hill (Liam Byrne), my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) and my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill)—to help change the Bill for the better. We are discussing failure to prevent, together with the identification of doctoring. The Government are taking world-leading measures—I think this is the first time that a major economy such as ours has implemented them—which we should be proud we are implementing through the Bill. Of course, if the elected Chamber expresses its strong will on these remaining issues for the third time, I very much hope that the other place will agree that now is the time for it to accept that position. I think we would all rather have what we have done than see all this good work being in vain by letting the legislation fall.

Let me discuss the two issues in turn. I will keep my remarks brief as the arguments remain the same as on the preceding two times we have discussed them. I will first address Lords amendments 151E and 151F on the “failure to prevent” threshold. I will also address amendment (a), tabled last night by the right hon. Member for Barking, on a Government review of the threshold. While my noble Friend Lord Garnier’s amendment has moved closer yet again to the Government’s position by exempting micro-entities and small organisations from the offence, I am afraid that the Government will not support the lowering of the threshold at this time. Let me repeat the reasons why. It is already an offence to perpetrate fraud. The objective of the new offence is to ensure that there is accountability where fraud occurs in large organisations. There is simply no need to apply any such offence to smaller organisations.

Every time such an offence is introduced, business owners end up distracted from running their businesses by taking time to reassess their compliance risks, which often involves taking professional advice. We assess that the revised threshold proposed by Lord Garnier would cost medium-sized enterprises £300 million in one-off costs and nearly £40 million in annual recurring costs. We should be making it easier for businesses to operate in the UK and only imposing additional regulatory burdens when absolutely necessary. The Government completely reject the notion of using such an offence simply to raise awareness among business owners of the seriousness of the problem of fraud. There would be other, more proportionate ways to do that if necessary.

In response to the amendment tabled by the right hon. Member for Barking, the Government have already future-proofed the Bill by including a delegated power to allow the Government to raise, lower or remove the threshold altogether. Of course, as with all legislation, the Government will keep the threshold under review. I make a personal commitment to do that and to make changes if evidence suggests that they are required. I do not think that a Government review is necessary for that to take place, so I ask the right hon. Member not to move her amendment. We must bear in mind that a review does not guarantee change anyway. What guarantees change is having the right people at the Dispatch Box making changes, whether those are people from her party or my party, and both parties are equally exercised by these concerns. I urge all right hon. and hon. Members to support the Government motion to disagree with the Lords amendments to ensure that we take a proportionate approach and do not impose unnecessary measures on legitimate businesses that would curb our economic growth.

I turn to Lords amendment 161D, tabled by Lord Faulks, on cost protection in civil recovery cases. The Government remain of the view that such an amendment would be a significant departure from a fundamental principle of justice—that the loser pays—and therefore not something that should be rushed into without careful consideration. Furthermore, as I set out when we last debated this issue, we have seen no clear evidence that the amendment would increase the number of cases taken on by law enforcement. However, that is not to say that such an amendment is necessarily a bad idea. That is why we previously added to the Bill a statutory commitment to review the payment of costs in civil recovery cases in England and Wales by enforcement authorities, to publish a report on the findings and to lay that before Parliament within 12 months.

With regard to civil costs reform in England and Wales, the Government would normally look to consult appropriate consultees, including the senior judiciary, the Law Society and the Bar Council. Enacting the reform now without a full review would not allow judges and relevant organisations, or indeed their counterparts in Northern Ireland and Scotland, to comment on how it would be read and applied in practice. We therefore feel it would be irresponsible for us to rush into making such a significant change at the end of a Bill’s passage without full consideration by Government and further scrutiny by Parliament. I very much hope that all right hon. and hon. Members will agree that that is the responsible approach to take and therefore support the Government’s position.

[Jim Shannon (Strangford) (DUP)]

The Minister said clearly that there has been consultation with Scotland and Northern Ireland. Will he indicate who those discussions have taken place with? Was it banks, or the Departments looking after matters in the absence of a functioning Northern Ireland Assembly? I am keen to know who does the work to ensure that there is accountability for everyone.

[Kevin Hollinrake]

That is a good point. There are clearly different legal jurisdictions in Northern Ireland and Scotland, with of course the Court of Session in Scotland. From a legal perspective, the counsel in those jurisdictions are the people who discuss this. In wider issues such as failure to prevent, banks and many other stakeholders have people who will consult during the process. I am happy to keep up the conversation with the hon. Gentleman.

[Jim Shannon]

The reason I asked the question is quite specific, although it might not necessarily relate to the issue directly. The Minister refers to banks. A number of local organisations and community groups back home, which are registered and constituted as community institutions, have had their bank accounts closed. Banks have closed their accounts down because they say they are non-profitable. Is it right that banks should be able to do that? I know the Minister understands the matter—

[Mr Speaker]

Order. Can I just help a little bit? The hon. Gentleman is very good, but his intervention is very long. Why does he not put down to speak? It might be easier. I have to get other people in as well.

[Kevin Hollinrake]

The hon. Gentleman raises a very important issue relating to the concerns about de-banking that we have across the economy. The Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith) is looking at it, as is the Treasury. In future, it is our intention to ensure that when banks close accounts they give a valid reason why, rather than closing them summarily. He is absolutely right to raise the point and I am very happy to engage with him on it, because it affects businesses as well as community groups.

To conclude, I encourage everyone to agree with the Government’s position on these two areas. It is vital that we achieve Royal Assent without delay, so we can proceed to implement the important reforms in the Bill as quickly as possible.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

It is an honour to speak on the Bill again. I was hoping that we could conclude the proceedings on the Bill as soon as possible and it is disappointing that the Government are yet to make further compromises. The Bill is welcome in principle, but it should not have taken the war on Ukraine to prompt the Government into action. I am grateful to my right hon. Friends the Members for Barking (Dame Margaret Hodge) and for Birmingham, Hodge Hill (Liam Byrne), and to Members across the House for working together to improve the Bill.

Economic crime poses a threat to our country’s national security, our institutions, our economy, and causes serious harm to our citizens and wider society. Conservative estimates place the cost of economic crime at £290 million a year, according to the National Crime Agency, and the failure to stop criminals benefiting from the proceeds of their crime can fund further criminality. That can include offences such as funding organised crime groups, terrorist activity, drug dealing and people trafficking—this is a very serious issue.

Economic crime, as the Minister knows, has many victims. For too long, the Government have turned a blind eye to corrupt and dirty money, allowing Russian illicit finance to flood into Britain. That lets Putin’s cronies stash ill-gotten gains and even recycle the proceeds of crime into luxury properties. That is well documented and has been highlighted by many Members across the House, as well as in Select Committees. According to analysis by Transparency International, properties to the tune of £6.7 billion have been bought through suspicious wealth. Of those, almost a quarter in value were

“bought by Russians accused of corruption or links to the Kremlin.”

Most are held via secretive offshore companies. That drives up property prices for ordinary people in our country. More than two-thirds of English and Welsh properties held by foreign shell companies do not report their true owners. Research by the London School of Economics and Warwick University shows that the Register of Overseas Entities is not fully effective. For 71% of such properties, essential information about their beneficial owners remains missing or publicly inaccessible, despite the register. That means we still cannot know whether sanctioned individuals, money launderers or other corrupt individuals are benefiting from those properties.

We must not sustain economic growth off the back of dirty money. The Government have already delayed the Bill and these actions for too long. In that time, money has been lost, economic crime has become ingrained and the UK economy has once again lost out. Given that the nature and necessity of the Bill has already been discussed at length, I will focus on addressing the two amendments.

During the passage of the Bill, helpful alterations have been made to ensure that it is robust. The Lords amendments before us today seek to address two omissions. We are very disappointed that the Government are not willing to compromise and not willing to heed the wise and expert input of the Lords. That is deeply disappointing, because a great deal could be achieved if the Minister and his Government took note, including from hon. and learned Members on their own side.

[Kevin Hollinrake]

rose—

[Rushanara Ali]

If the Minister is brief, rather than talking the Bill out like he did last time, I will give way.

[Kevin Hollinrake]

I will be very brief. On the question of compromise, the hon. Lady will have noticed that there was no “failure to prevent” offence when the legislation was first tabled, nor was there an identification doctrine. There has been significant compromise on the Government side. Our preference, clearly, is to move forward in that spirit of compromise. We have achieved a great deal with the Bill, which has moved from under 300 pages to 400 pages. I do not think it is right to say that the Government have not compromised.

--- Later in debate ---

[Kevin Hollinrake]

The right hon. Lady is making very important points. However, the “failure to prevent” offence, as drafted, would not cover that situation, because it covers only situations where the benefit is to the corporation concerned or an officer within it. A situation in which a third party hijacked systems would not be covered, whatever the threshold.

[Dame Margaret Hodge]

That is an interesting point. The simple response is that, obviously, the drafting of the “failure to prevent” offence needs further improvement to ensure that it covers that sort of instance.

There were similar arguments about the burden on SMEs when we introduced the Bribery Act 2010. In 2015, a survey of SMEs found that nine out of 10 had no concerns or problems with the Act, and 90% also said that it did not affect their ability to export. Although fears are expressed before legislation is introduced, once it is on the statute book people find that it actually helps them. Under the terms of the Bill, SMEs already have an appropriate defence, as the Minister well knows: that they should only take actions that are reasonable in all circumstances. That test of reasonableness would protect microbusinesses and SMEs from having to engage in overly bureaucratic procedures.

Although the argument is overwhelming, the Minister does not agree. We had hoped that the Government would support and accept our amendment. If they were to do so, we would not put all these amendments to the vote. This means that the next Government—a Labour Government, we all hope—will seize the opportunity that the Minister has missed and grasp the issue. Labour will become the anti-corruption champions, saving our country and our economy.

This Bill arrived in a sorry state and we have improved it—I accept that—with the identification doctrine, clauses on strategic lawsuits against public participation, the improvement of accountability with an annual report to Parliament, and the reluctant acceptance that there may be an increase in fees for Companies House. But there are still large gaps. Trusts have not been covered, as they should be, and authorised corporate services providers could end up with a future dud register. Cost caps, which other hon. Members have alluded to, are not in there, the whistleblower regime is not in place, and asset seizure still has to be tackled.

We hear whispers that there is a third economic crime Bill. I am pleased about that, but if we had achieved more with this Bill, we might not have needed another one. After all the work that all of us have done to achieve cross-party consensus, and given the values that we all share, I would hope that the Minister would be bold enough to accept our tiny little compromise and put this Bill to bed so that the proposed legislation could be passed by the time we prorogue.

--- Later in debate ---

[Liam Byrne]

My right hon. Friend is absolutely right. This is a point of cross-party consensus. I know it is a point of cross-party consensus because it was the Minister who used to use precisely the same argument to argue for some of the changes that we see in the Bill.

We all know that our country does well, because, by and large, we have a reputation for clean trade around the world. When companies file and incorporate in this country, that is a credential that does them well around the world. That is a credential that we must do everything in this House to protect, which is why the amendment is so important. We cannot leave a weakness in our armour as crime and fraud multiplies.

The Minister said that the proposal would be a cost to British business that we could not withstand or sustain, but the truth is that, while it might be a cost to some British businesses, it would also be a saving to British business, to the British economy and to British taxpayers, because it is always cheaper and more effective to prevent fraud in the first place than to have to police it or to prosecute fraud after the event. When 64% of businesses—small businesses—in this country are victims of fraud, we can only imagine how widespread that cost of fraud has now become. That average is much higher than international averages and therefore there is an additional argument that we need to go that one step further to make sure that we are doing everything in our power to prevent fraud from arising in the first place.

All we ask in this amendment is for the Minister to face the facts. He should bring the facts together, put them in a report, assess them, analyse them and present some conclusions to the House. How can we have a situation where the Minister is essentially asking for the freedom to look away? That simply cannot be the basis of good policy. I am grateful to my new colleagues on the Business and Trade Committee who agreed yesterday that we will ask representatives of Companies House to come before us for hearings. Frankly, if the Minister is not prepared to put the facts around fraud in one place, I shall ask the Select Committee to do the job for him.

[Kevin Hollinrake]

With the leave of the House, I wish to thank Members who have contributed to the debate. We have much in common, despite the fact that some small differences still remain. As I said earlier, the Government have come a long way since the original tabling of the legislation. The number of pages have increased by more than 100, so the contents of the Bill now stand at nearly 400, which shows the importance of the legislation that we are debating.

I did not agree with the shadow Minister when she said that the Government have not been willing to compromise—that is not the case at all. The “failure to prevent” offence, particularly the identification doctrine, are key, world-leading measures. In my opening remarks, I made the commitment—and I make it again—that will we keep this matter under review, and that includes, in particular, the threshold. Even if there were a requirement for review in statute, there is no requirement on the Government to make changes following that review, so it is important to maintain the goodwill that we have experienced during the passage of the Bill.

[Dame Margaret Hodge]

Perhaps the Minister can tell me what he means when he says that he will keep this matter under review. What precisely does that mean?

[Kevin Hollinrake]

The way that we have legislated here, and the reason for doing so in that way, have always been informed by information that has come from third parties—from Spotlight on Corruption, Transparency International and others—that have been interested in the Bill. The right hon. Lady and I have worked together on this issue in the past in various all-party groups. Those are the kind of bodies that will inform progress as we implement this legislation, which again I say is world leading.

The shadow Minister talked about a level playing field and said that these measures move away from that. I could not disagree more. The key thing is that we do not have a level playing field now. In small companies, it is much easier to identify who is responsible for a fraud. That is why it is more difficult in large companies, which is why we are applying this to large companies. Fraud is fraud whatever the size of the company. This legislation does not allow smaller or medium-sized companies to facilitate fraud—if they are guilty of fraud, they are guilty of fraud and it is far easier to identify the people concerned.

Let me address the comments of my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) and thank him for all the work that he has done on this legislation and on the Justice Committee. I ask him not to doubt my motives; I have not been influenced by the Treasury at all. I am influenced by wanting to do the right thing in terms of both tackling economic crime and making sure that we do not put undue burdens on businesses. I can assure him that, for as long as I am in this role, we will keep this under review and make sure that the threshold is fit for purpose.

My hon. Friend talks about good business, but it is good business to make sure that we do not put undue burdens on business. I can promise him that, from my experience—while I was chief executive of my company—we implemented the rules on bribery and tax evasion, which were significant in our business. These would be significant measures for businesses. I say to him and to my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) that they will have a real impact on businesses and significant costs of implementation. I do not think that they would be proportionate or needed within smaller enterprises, because of the ease of identifying the people responsible if fraud were facilitated in an organisation.

I appreciate the kind words of my right hon. and learned Friend and the work that he has done. I remember lobbying him on this issue when he was the Secretary of State for Justice—and a fine job he did. We have got much further this time than we did at that time, which shows our collegiate way of working all the way through the Bill’s passage.

The hon. Member for Glasgow Central (Alison Thewliss) has also done fantastic work in this area, and I appreciate all her efforts. She says that we do not agree. We have a right to disagree where we disagree, and we honestly disagree about whether this proposal is required. We do not want to put unnecessary burdens on businesses.

I completely understand the strength of feeling of the right hon. Member for Barking (Dame Margaret Hodge) on this matter. I, too, feel strongly about implementing the right measures to tackle economic crime while not putting undue burdens on businesses, so I say to her again, in the spirit of good will that we have operated under for many years, we will keep this under review. If the threshold needs to be changed, we can do that under secondary legislation.

I congratulate the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) on his election as Chair of the Business and Trade Committee. I know that he will do a fine job. He is right that, in that spirit of good will, we have achieved much in the manifesto that we launched just over the road. Again, I hope that he does not doubt my motives in what we are doing to tackle economic crime without putting undue burdens on business.

I urge everyone to support the measures that we have in place already, and I ask those in the other place to respect the clear will of this House.

Question put, That the amendment be made.

Rural Postal Services: Sustainability

Kevin Hollinrake Excerpts

Wednesday 25th October 2023 Westminster Hall

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

It is a pleasure, Mr Hosie, to speak with you in the Chair. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this important debate on a subject close to my heart, as a rural MP.

The post office network plays a unique and vital role as part of the UK postal system. Although consumers have more choice than ever when it comes to purchasing postal products, many still turn to bricks-and-mortar post offices. As the hon. Member rightly said, post offices are part of the social fabric of our communities.

There are currently over 6,000 rural branches, which constitute 54% of the total post office network. Over 3,000 of those rural branches are described as the last shop in the village. Recent research highlights how vital these branches are. They enable people to access vital services without needing to drive or use public transport. They are particularly cherished by older people and those who might struggle to travel far to access services. In my constituency we have lots of bus passes but not many buses, so it is very important that those rural post offices exist, as they are also integral to businesses operating in rural areas because of their important role in providing access to cash.

Cash being the word, the Government have provided significant financial support to sustain the network nationally, adding up to more than £2.5 billion over the last 10 years. The Government are providing a further £335 million for the Post Office for the period between 2022 and 2025. As part of that support, the Government have committed to maintaining the annual £50 million subsidy to safeguard services in the uncommercial parts of the network until 2025.

The Government protect the sustainability of the branch network, and the rural network in particular, by providing funding on the basis that the Post Office meets its minimum access criteria, to ensure that across the country 99% of the population live within 3 miles of their nearest post office, as the hon. Member referred to. The Post Office meets its access criteria obligations nationally, making it the largest retail network in the UK with an unrivalled reach, especially in rural areas. Indeed, in 2022 98% of the rural population lived within 3 miles of their nearest branch.

The Government remain committed to the long-term sustainability of the Post Office, but we have to recognise that there is not a bottomless pit of money. Of course, with a network of this size, we are likely to see a fluctuation in the number of branches that are open at any one time. However, the network is certainly not in decline at a national level. As its chief executive officer recently confirmed, the network is as large today as it has been for five years, with around 11,700 branches open.

[Marion Fellows]

The count of the number of post offices includes drop and go facilities. Those are not in any sense post offices, as all Members here would recognise them. Does the Minister think that is fair?

[Kevin Hollinrake]

Drop and go branches perform an important service, as do mobile post offices, of course. However, there is no doubt that there are challenges in maintaining the size of the network, which I will come to shortly. Of course this is public money that we are spending, so we must ensure that it is spent well, while being appropriate to the need locally, particularly in rural areas.

The percentage of the network serving rural communities has remained steady at 53% since 2016. We appreciate that it is very challenging for communities that lose their post office service and the Post Office endeavours to restore services as quickly as possible.

[Tim Farron]

The Minister is a good man; I am very grateful to him for being so generous, indeed super-generous, to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) earlier.

The thing about individual post offices is that I can think of a couple of villages in Westmorland and Furness —Hawkshead and Shap—that have lost their post office and where Post Office Ltd. is working hard to restore them. Will he pay particular attention to those communities to make sure that we get those replacements over the line, because we are all but done with getting them back on the street and back open?

[Kevin Hollinrake]

We are very happy to take up any particular issue that Members raise, as we do regularly through correspondence and other measures. Where there are closures of post offices, we will endeavour to reopen them, but that can be challenging. However, if there is a particular issue, I am very happy to meet the hon. Gentleman to discuss it.

[Patricia Gibson]

Does the Minister think there is a case for giving greater UK Government support to rural post offices, which, by definition, cannot compete on footfall because they serve smaller populations, so that our island and rural communities can keep hold of our post offices, even during these difficult times?

[Kevin Hollinrake]

As I said earlier, I am bound to stand up for rural areas, just like the hon. Lady and others in this debate, but there is a limit to taxpayers’ money, and we are talking about £2.5 billion over 10 years and significant funding requirements now, in terms of the needs of both the network and the compensation schemes, which I will refer to in a second. We do not have a bottomless pit of money. However, there are other measures we can take, which I will mention, to make the Post Office sustainable and make individual branches profitable, which is the key to this conversation.

Returning to specific branches, I am glad that the hon. Member for Caithness, Sutherland and Easter Ross referenced the Balintore post office, which reopened at the Seaboard Memorial Hall last year, thanks to the efforts of the post office and the hall’s committee, and indeed Maureen, the postmaster. However, we are in no way trying to pretend that the rural network is not facing challenges—not at all. As I have said before, the Post Office works with communities to ensure that services are maintained, and the Government’s access criteria ensure that however the network changes, services remain within local reach of all citizens.

My hon. Friend the Member for Havant (Alan Mak) rightly references post boxes, which are another key part of this matter. Royal Mail is there to ensure that there is a post box within half a mile of the premises of at least 98% of users of postal services. If that is not the case, I am very happy to engage with my hon. Friend to get answers for him and change in his local area.

My hon. Friend the Member for Penrith and The Border (Dr Hudson) challenges the Government on what more we can do to ensure the sustainability of post offices. It is important we take into account that many of the challenges facing post offices are because of the changes in consumer habits—just like the rest of the high street, which is seeing those changes too. That is also related to Government services such as driving licences, passports and other similar services, mentioned by the hon. Member for Motherwell and Wishaw (Marion Fellows), who does a fantastic job as chair of the all-party parliamentary group on post offices. Many consumers now want to access such services online, which can be done very efficiently. I do not think it is for us to dictate to those citizens how they access those kinds of services if they can do so more quickly and efficiently online. That would be the wrong thing to do.

[Marion Fellows]

The Government will be dictating to our constituents how they access those services if they are withdrawn from post offices, because digitally excluded people will not be able to use them online.

[Kevin Hollinrake]

If that was what the Government were doing, that would be something the hon. Lady could hold us to account for, but that is not the case. There is a clear negotiation between different Government Departments over the cost of providing those services, with negotiations between the passport service, the DVLA and the post office network itself. I very much hope there is a good commercial relationship that properly remunerates postmasters for the work they do, which is key.

As I say, there has been a diminution of hundreds of millions of pounds in revenue into the post office network because of the change in consumer habits, so we need to find ways to make the network sustainable in its own right. We do not have a bottomless pit of money. We are talking about £2.5 billion over 10 years. This year, the UK economy deficit in terms of public spending, expenditure and income will be about £140 billion.

The hon. Member for Selby and Ainsty (Keir Mather), whom I welcome—this is the first time I have responded to him in a debate—challenges us to do more and provide more funding. There are challenges with that. To govern is to choose, so we have to be careful how we spend taxpayers’ money. Nevertheless, we want to make sure that the post office network is sustainable in its own right, wherever possible, to ease the burden on the taxpayer. We are, of course, determined to retain the network wherever possible and to find ways to do that.

The hon. Member for Westmorland and Lonsdale (Tim Farron) rightly raises the issue of the banking framework. This is a relationship between banks and post offices, in terms of how post offices are renumerated for providing many of the services banks used to provide when they had branch networks across the country. Since 2015, there have been 5,500 bank closures—at the last count—across the network and collectively across the different high street brands. That saves those banks somewhere in the region of £2.5 billion to £3 billion a year.

We are very keen for the Post Office, in its negotiations with the banks via UK Finance or other means of negotiation, to get a better deal and better remuneration from that relationship. Increases in remuneration should go, wherever possible, into the branch network or into automation to make those branches work more efficiently, so that they can be more profitable. A key thing that we would like to see is a fairer relationship, which shares some of the savings banks are making from the closing of their branches with the network that is providing those services since their closure. While we want to see access to post office services retained for our communities, we also want things like access to cash, both in terms of dispensing cash and cash deposits. That is vital, particularly for small and medium-sized enterprises, and for the 2 million people in this country that do not have a bank account and the 8 million people who use cash every single week.

[Jamie Stone]

At the beginning of my contribution, I outlined the success story that is the work of Councillor Maureen Ross to establish a post office in Balintore. I know from having talked to the good lady that she is thinking of increasing the opening hours and has thoughts on banking, as we have no bank branches in the villages at all. I suggest to the Minister that it might be constructive if perhaps some officials from his Department went up there and talked to Councillor Ross, and saw what a good idea that would be.

[Kevin Hollinrake]

I would be very happy to visit if I find myself in that part of the world. It is quite a way away from even my constituency, but Maureen obviously does a fantastic job for the hon. Gentleman and his community, and we are keen to support those efforts. I am very happy to facilitate a conversation to ensure that Maureen has the best opportunity to make her business as viable as possible.

The Government are also funding the cost of the replacement of the Horizon IT platform that caused so many difficulties. Again, we hope that will provide new opportunities too, both in terms of efficiency and new services. We see post offices becoming parcel hubs, and the Post Office sees that as an opportunity to be frequented not just by custom from Royal Mail but also DHL, DPD, Amazon and other providers. There are future revenue opportunities that we should encourage to ensure that the network is sustainable.

Briefly on Horizon, last week’s written ministerial statement announced our intention to provide additional financial support to the Post Office as it continues to respond to the Horizon IT scandal. That is further proof of our commitment to the network.

There are certainly challenges ahead, but we continue to work with the Post Office to ensure that it is fit for the future, and we always welcome views from across the House on the network and how we make it sustainable for the future. I therefore once again thank the hon. Member for Caithness, Sutherland and Easter Ross for securing today’s important debate, and thank all other Members for their contributions.

Question put and agreed to.

Regulatory Impact Assessments Bill

Kevin Hollinrake Excerpts

2nd reading
Friday 20th October 2023 Commons Chamber

[Philip Davies]

My hon. Friend is absolutely right, and I agree wholeheartedly. That is why, as I say, for the life of me I cannot see why a Minister would not want to do that impact assessment.

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

May I suggest an instance where we might not want to do an impact assessment? My hon. Friend makes a good point, and of course the default position is that we should, but in a situation earlier this year the economy faced being ground to a halt because of industrial action—strikes—across the country. Does he think that sometimes the Government have to legislate quickly and may not have time to go through the processes that he and I would normally like to see?

[Philip Davies]

The Minister makes a fair point. Perhaps it is one of the reasons that I am perhaps not quite as persuaded as I would normally be by one of the Bills from my hon. Friend the Member for Christchurch. I want to come back to the point made by my right hon. Friend the Member for Tatton.

--- Later in debate ---

[Philip Davies]

My hon. Friend is highlighting how shrewd a politician he is and what shrewd decision-making skills he has. Ultimately, he was successful in getting the project stopped, but I cannot speculate on whether that was due to the number of tunnels. However, perhaps he helped, and more power to his elbow, because in places like Shipley we support the Prime Minister in wanting better connectivity across the north. The bit that works is north to south; it is across the north that it does not work, and the Prime Minister is absolutely right to focus his money on that. Whether it was down to the cost of the tunnels, I do not know, but it cannot have done much harm.

Finally, the other element of the Bill that I am nervous about, even though it is logical, is how much extra power it gives to what my hon. Friend described in a previous debate today as “the blob”. If we were to be, in effect, governed by cost-benefit analyses in the way that he envisages and in the way that I would like things to be done, I do not think that it is beyond anybody’s imagination that the civil service would, if it was particularly keen on the Government adopting a policy, miraculously produce figures that showed a tremendous benefit and not much of a cost. I am pretty sure that it is not beyond people’s imagination to think that, were the blob, as he described it earlier, particularly determined to block a proposal from the Government, its advice to the Government would be that the cost far exceeded the benefit. I am rather nervous about giving civil servants more power over Government decisions than they already have.

[Kevin Hollinrake]

I think the hon. Member raised that point earlier in his remarks. I am sure that he is aware that whatever figures the Government produce, they are then scrutinised by an independent body, the Regulatory Policy Committee, to make sure that those figures hold water. Is he not reassured by that?

[Philip Davies]

No, I am not. I know the Minister well—he is a very good man—and I know he would not be swayed by what the blob was trying to tell him to do or not do. He is a man of his own mind and a very talented Minister, and I have no doubts about his decision-making skills. However, I am afraid that the idea that I should be reassured at the Government, in effect, handing over more decision making to some unelected body of the great and the good of the elite, and that I should put all my trust in them, does not give me any reassurance. To be perfectly honest, it somewhat horrifies me that the Government are farming out these things to the great and the good of the establishment.

--- Later in debate ---

[Justin Madders]

I would like to wait and see what the inquiry says about the way that that was handled. An awful lot of evidence has been given about Government decision making at the time, which it makes clear was less than ideal. It is probably best for us to wait and see what comes out of the inquiry on how we as a Parliament can best deal with these issues in future. Hopefully that situation will never repeat itself, but the hon. Member for Shipley (Philip Davies) made the point that the solution to many of these challenges lies in Members robustly challenging Government when opportunities arise.

The House of Lords Committee said that an impact statement

“should not just be treated as an item on a ‘to do’ list but be an integral part of the policy formulation process… One of our major concerns is that IAs which are published late, or that appear to have been scrambled together at the last minute to justify a decision already taken, may undermine the quality of the policy choices that underpin the legislation.”

Again, that theme has been picked up in the debate.

[Kevin Hollinrake]

Reflecting on that particular statement, does the hon. Gentleman think his party was wrong to call for longer lockdowns on the basis of no evidence in cost-benefit analysis?

[Justin Madders]

That is a bit rich from a Minister of a Government who did not introduce any impact assessments when they first brought in the lockdowns or various restrictions. I can recall on numerous occasions asking Ministers why people were limited to being in groups of six or why pubs had to close at 10 o’clock. We never got a satisfactory answer to any of those questions, so for the Government to try to put that on us is a little rich.

--- Later in debate ---

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

I congratulate my hon. Friend the Member for Christchurch (Sir Christopher Chope) on his important Bill. I very much agree with his sentiments about ensuring that we have good financial justifications for our policies as soon as they are introduced to this House, although—as I said in an intervention on my hon. Friend the Member for Shipley (Philip Davies)—I think there are occasions on which we must be able to set those things aside.

What my hon. Friend the Member for Christchurch seeks to do through his Bill is to formalise a process that should happen anyway, by making impact assessments a statutory requirement as soon as primary or secondary legislation is introduced. Currently, this is a process that happens through collective agreement.

As I always do when speaking in this House, I will try to put myself in the shoes I was in when I was in business. This place is not always that businesslike; I think it should be more businesslike. When someone in business is about to spend some money or invest in a new policy area, they will look at the costs and benefits of the interventions they are likely to make. However, I do not think that any business will simply bind itself to its own process. This legislation is itself a form of regulation, so I think it is right that we look at outcomes rather than processes. The Government are strongly committed to ensuring proper assessment of our policies, assessing the impacts and seeking to ease the burdens. That is the principle behind my hon. Friend’s Bill.

On my travels around the business community, I talk to many businesses. The principal issue raised by small and medium-sized enterprises is access to finance, but for the large businesses operating in our economy, which are clearly hugely important, the principal concerns are about the impact of regulation and sometimes about the slowness of the regulatory framework; I will come on to that point in a second. Importantly, we are making changes right now that I think my hon. Friend will approve of and that will meet his objectives.

There has been much speculation about the role of Parliament. My hon. Friend asked whether we are simply nodding donkeys. He certainly is not one, and neither is anybody who has spoken in this debate. Parliamentarians across the House can always make changes if they can apply enough pressure to the Government of the day. In my seven and a half years on the Back Benches, I certainly did not feel that I was a nodding donkey.

My hon. Friend wants impact assessments to be carried out prior to legislation even being tabled. He is absolutely right. That point feeds into something even more important, which is that we will ensure we introduce only legislation that is fit for purpose and will have a positive effect on our economy. With the better regulation framework we are introducing, our intention is that consideration of the impact assessment and the cost-benefit analysis will happen even before the legislation has been drafted. That is the principle.

Before a Department decides to legislate, it must first consider other routes that would achieve the same end. If it ultimately decides to legislate in a certain area, a key moment is the write-round, which is where a Minister or Secretary of State writes to other Departments to say that they want to legislate. At that point, the impact assessment should be made available to other Ministers. Hopefully, that will prevent unnecessary legislation resulting from other measures being brought forward that would have the same effect.

I think our recent reform to the better regulation framework meets the intent of my hon. Friend’s Bill. I do not want to put words in his mouth, but I am sure he agrees that the intent is to reduce business burdens. Reducing burdens on business means supply-side reform and more competition, and we know that more competition is the best regulator.

We are focusing on three things within the framework. The first is the existing stock of regulation on our statute book; the second is the flow of new regulation and the need to ensure that anything we introduce has the right purpose and the right effect; and the third, which has not really been discussed in today’s debate, is regulatory practice. What do our regulators actually do in practice when they are carrying out their regulatory duties?

On the existing stock of regulation, for the purposes of the Retained EU Law (Revocation and Reform) Act 2023, we have been hunting out bits of regulation that can be removed or amended now that we have the ability to amend what were previously EU requirements. However, the programme covers a wider area than retained EU law; we are looking for other areas in which we can streamline regulation. My right hon. Friend the Member for Gainsborough (Sir Edward Leigh) was right to say that, as a Conservative Government, we should be in favour of low tax and low regulation, and that is certainly our intention. My right hon. Friend referred extensively to his local RAF base, and we have had many discussions about that because we have had similar experiences over the last couple of years. He may be reassured to know that future impact assessments will look beyond purely economic impacts, and may include some of the measures to which he alluded.

We have already reformed or revoked more than 1,000 pieces of legislation, and 1,000 more reforms and revocations are under way. We have, for instance, either reformed or revoked 500 measures in the Financial Services and Markets Act 2023 and the Procurement Bill. We have also consulted on reforming retained EU employment law, such as the working time directive recording requirements and wine sector reforms, and consultations are currently taking place on the product safety review and the fire safety of domestic upholstered furniture. The latter two consultations will future-proof our approach to product regulation, alongside our proposal to extend recognition of the CE mark indefinitely.

A number of observations have been made about the work of parliamentarians and its effect on regulation. I congratulate my right hon. Friends the Members for Chipping Barnet (Theresa Villiers) and for Chingford and Woodford Green (Sir Iain Duncan Smith) on their work on the taskforce on innovation, growth and regulatory reform, which made 69 recommendations for the easing or simplification of regulations. We have already implemented 10 of those recommendations, and are in the process of implementing a further 49. They involve key issues such as grid connections and reform of our clinical trials process.

We have simplified or scrapped many other regulations. Our reform of the nutrient neutrality rules will potentially release 150,000 previously stalled homes into the marketplace. The reform of the GDPR requirements will save businesses about £1 billion, and the reform of the working time directive recording requirements will have similar benefits. There are also pension and Solvency II reforms and changes, the setting aside of the requirement for small and medium-sized enterprises to provide insurance cover and audited accounts when bidding for public sector contracts in advance of those contracts—that should make it much easier for SMEs to secure such contracts—and changes relating to gene editing, holiday requirements and listing rules for the London Stock Exchange. My hon. Friend the Member for Christchurch mentioned the increase in the number of burdens placed on businesses over the last few years. I cannot comment on the figure that he mentioned—I think it was £14 billion—but regulation does, of course, have its purpose at times. We cannot have clean rivers without regulation. However, I am happy to write to my hon. Friend. I thought he might also mention smart meters, which are included in those figures, because I have heard him mention them in the Chamber before. As we know, the roll-out of smart meters is important to reducing energy use. We have also reformed measures on climate-related reporting in large companies, the energy efficiency of buildings and electric vehicle charging, so that we can have charging stations all around the country. I declare my interest here: as an electric vehicle driver for the past six and a half years, I welcome that, because I know all about range anxiety. The telecoms measures relating to national security—that alone was £2.4 billion—resulted from concerns raised in the House the security threat from foreign actors.

To complement the work that we are doing on the existing stock of regulation, we are working on controlling the flow of new regulation. The better regulation framework, about which I will say more shortly, has been reformed to make it more effective at putting a downward pressure on that flow.

[Philip Davies]

Back in the dim and dark past—when David Cameron was Prime Minister, I think—the Government introduced a “one in, one out” rule for regulations, and then increased that to a “one in, two out” rule. Does that still apply to the Government?

[Kevin Hollinrake]

No, that does not currently apply to the Government. As I say, there are reasons why we regulate, and I have pointed out some of those reasons; I am very happy to write to my hon. Friend regarding some of the reasons we do need to regulate. That is not necessarily the right way to go about it: looking at costs and benefits across the piece is important. In his speech, which I listened to very carefully, he cast some doubts on our ability to properly analyse costs and benefits, so I think it is right that we look at this issue across the piece. Our policymaking should be more nuanced than that.

I have mentioned the landscape of regulators. The third important part of our smarter regulation agenda relates to ensuring we have a well-functioning landscape of independent regulators. These have a significant footprint on the economy, and it is essential that they work well for the United Kingdom. They should operate in an agile and outcome-driven fashion, helping to drive economic growth while protecting consumers and ensuring that markets work as well as they can.

We have launched a series of consultations aimed at improving the outcomes that independent regulation delivers, including a strategic steer for the Competition and Markets Authority and a strategy and policy statement for energy regulation. We have also published findings of an independent review into the Civil Aviation Authority as part of the Cabinet Office’s public bodies review programme. Most recently, we consulted on extending the existing growth duty to Ofgem, Ofcom and Ofwat.

We have launched a call for evidence on the regulatory landscape as a whole, seeking views from businesses, consumers and regulators on what works well and what could be improved on to deliver for the sectors they serve. That call for evidence also seeks views on any further steps we can take to reform the stock of regulation to remove unnecessary burdens, so I can assure my hon. Friend the Member for Shipley that this Government are completely committed to doing everything possible to keep the impacts on business to an absolute minimum. Those impact assessments play a key role when it comes to controlling the flow of new regulation. They set out the conclusions of evidence-based processes and procedures that assess the economic, social and environmental aspects of public policy for businesses and wider society.

My hon. Friend the Member for Christchurch mentioned some of the legislation that has not necessarily been accompanied by an impact assessment. He may want to ask questions of the different Ministers responsible for the policy areas concerned: net zero, HS2, and renters’ reform. For something as strategic as net zero, for example, it is hugely complex to identify both costs and benefits: there are some things that we simply do not know. While listening to my hon. Friend speak about those issues, a famous quote from the former Chinese Premier Zhou Enlai came to mind: in 1972, he was asked about the impact of the French revolution, and he said, “It’s too early to tell.” There are so many things that we just do not know, which I think was a point raised by my hon. Friend the Member for Shipley. As I used to say in our boardroom, “You can make anything look good on a spreadsheet”, so we have to cast a critical eye over any cost-benefit analysis.

The other thing I would say about more parliamentary scrutiny is that we hear from businesses all the time that they are crying out for us to get on and deliver certain key infrastructure projects, so I do not think it would be helpful to extend the time they take to deliver. One example is the East Anglia pylon project, which is 112 miles of electricity cable going through the east of England. I realise that that project is very controversial, but stopping these things from happening has a cost to business, too. There are different dynamics going on in this conversation.

Impact assessments have evolved into an important and valuable component of the UK’s better regulation system. They have added transparent accountability to the work of supporting policy development. As I have said, independent scrutiny by the Regulatory Policy Committee should offer some reassurance to Ministers, parliamentarians and other stakeholders that the impacts have been considered rigorously. The UK’s approach is already highly regarded internationally, and we continue to score highly in impact assessments and post-implementation reviews compared with the other 38 OECD members. We should be justifiably proud of our world-leading reputation in this area.

The reforms to the better regulation framework deliver on the intent set out in May in the “Smarter regulation to grow the economy” document, and will put downward pressure on the flow of new regulation. The reforms require policymakers across Government to think even more carefully about alternative approaches, before concluding that regulation is the best answer. They will also encourage impact assessments, supporting proposals to focus on a wider range of impacts than was the case under the old system that had a narrow focus on impacts on business. The reforms encourage earlier consideration of how to evaluate whether regulations have achieved what was intended, so they can be revised or removed where they are not working as intended.

To support that, our new approach brings independent scrutiny by the independent advisory body, the RPC, to earlier in the policy cycle. That means that the RPC’s opinion can better inform Ministers’ decisions at an earlier stage on whether proceeding with regulation is the right approach, and whether the impacts are proportionate. All that should further improve the quality and value of the impact assessments that will reach Parliament, and help to ensure that the Government are regulating only where necessary, and designing regulation that is both proportionate and future-proof. We want this to drive the best regulatory environment, and ensure that UK businesses can grow and consumers stay safe.

My right hon. Friend the Member for Tatton (Esther McVey) raised the issue of covid and the Public Health Act, and she is right to say that we must learn from our experiences during that time. There is always a price for acting and a price for not acting, and it is right that we look at policy decisions that were taken to ensure that we make better decisions in future—not that we ever want to suffer from the same experiences again.

My hon. Friend the Member for Shipley spoke about the Government frittering money away, and suggested that both parties do that. I am not saying that money is not wasted sometimes. I come from Yorkshire and that is not something we do on an everyday basis—we are keen to avoid it. However, in my eight and a half years in Parliament, and even though we are guilty of it at times, it has always occurred to me that those on the Opposition Benches have an awful lot of money to spend. Time after time, they have voted for tax cuts, or against tax increases, while at the same time calling for increased spending. It simply does not add up.

To conclude, although the Government are not minded to support the Bill, we recognise the vital role that regulatory impact assessments play both in ensuring that Government consider the need for, and likely impact of, new regulations to support legislative change, and in informing decision making and parliamentary scrutiny. The Government do not think the Bill is necessary because there are already proportionate requirements around impact assessments. The framework has always evolved to target regulatory impact assessments where there is the greatest benefit, and we believe our recent reforms move further in that direction.

In the spirit of smarter regulation, which I trust I have shown I very much care about, we should not create new legislation about impact assessment requirements unless it is essential to do so. Our recent changes to the better regulation framework seek to reinforce the processes used in Government, while removing regulation rather than adding to it. We believe that is the correct approach. I again thank my hon. Friend the Member for Christchurch for his contributions to this debate, as well as everyone who has worked hard to raise awareness of the vital role that regulatory impact assessments play when legislative or policy changes are made.

Post Office: Additional Funding

Kevin Hollinrake Excerpts

Friday 20th October 2023 Written Statements

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

I am announcing that the Government intend to provide additional financial support to Post Office Ltd of up to £150 million, plus any contingency that may be required. This funding will enable the company to meet the costs of participating in the Post Office Horizon IT inquiry and of operating compensation schemes for postmasters.

The final level of funding required is currently being finalised. The Government will confirm to the House the outcome of considerations on financing needs at the earliest opportunity following finalisation.

The Government also intend to provide additional funding to help with the development of the replacement for the Horizon IT system and to ensure that the Horizon system is maintained before that replacement is rolled out.

This funding is subject to compliance with subsidy control requirements, including referral to the subsidy advice unit—part of the Competition and Markets Authority—for review under the Subsidy Control Act 2022, and no award of funding will be made until this is completed. The subsidy advice unit should publish a report within 30 working days, in addition to a preliminary assessment being carried out and a subsequent review period where the outcomes of the review are considered.

[HCWS1081]

Smarter Regulation Programme

Kevin Hollinrake Excerpts

Tuesday 17th October 2023 Written Statements

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

My noble Friend the Minister of State for the Department for Business and Trade (Earl of Minto) has today made the following statement.

Today the Department for Business and Trade has launched a Call for Evidence into the regulatory landscape. The Call for Evidence can be accessed via the following link: https://www.gov.uk/government/calls-for-evidence/smarter-regulation-and-the-regulatory-landscape.

The Government are driving regulatory reform across Whitehall via the Smarter Regulation Programme, which launched on 10 May with the publication Smarter Regulation to Grow the Economy. Smarter regulation means only using regulation where necessary, and ensuring its design and use is both proportionate and future-proof.

Since then, we have announced numerous reforms across these areas. For example, on the stock of existing regulation, we have launched consultations on reforming employment law; wine sector reforms; and the product safety and furniture fire consultations. The latter will future proof our approach to product regulation, alongside indefinitely extending CE recognition. Additionally, we launched a series of consultations aimed at improving the outcomes that independent regulation delivers—this includes Strategic Steers for the Competition and Markets Authority; the Strategy and Policy Statement for Energy regulation; and most recently we consulted on extending the existing growth duty to Ofgem, Ofcom and Ofwat.

We know there is concern around the complexity of the regulatory landscape; the agility and proportionality with which regulators make decisions; and governance and accountability. This Call for Evidence is an opportunity to further understand the detail of these issues and test how widespread they may be, providing an evidence base from which to identify improvements that can be made over the short and longer term.

The first step in addressing such concerns will be to collate evidence on precisely how the regulatory landscape is impacting businesses, consumers, and regulators. Our first and principal focus is to understand what works well and what could be improved in how regulators operate to deliver for the sectors they serve. It seeks views on regulatory agility; proportionality; predictability and consistency of approach. Secondly, it asks whether there are any further steps we can take to reform the existing stock of regulation on the UK statute book—both retained EU law and wider regulations.

This will be accompanied by an ambitious programme of workshops with consumers, consumer groups, businesses, regulators and think tanks.

The Smarter Regulation programme covers three pillars:

Reforming the existing stock of regulation—both retained EU law and wider domestic regulation—to cut business burdens and future proof our regulatory frameworks;

Ensuring regulation is a last resort and not a first choice, by putting downward pressure on the flow of new regulation and deploying alternatives wherever possible; and

Ensuring that independent regulators perform as well as they can and deliver the right outcomes for consumers. This includes supporting the drive for innovation and economic growth.

The Call for Evidence forms part of the third of these pillars.

The Call for Evidence will run for 12 weeks and invite businesses, public sector bodies, individuals, and other interested stakeholders to set out their priorities for an improved regulatory landscape.

The information that the Government receive through this exercise will be beneficial in shaping our approach to regulations and our priorities and objectives, ensuring that our final approach is informed by stakeholder needs.

We welcome responses from all stakeholders across all sectors in the economy but note that we are not seeking views on financial services regulators and regulations. These are handled by HM Treasury, where there have been positive and industry-welcomed reforms in this space in recent years.

Statutory Instrument Programme

In parallel to today’s Call for Evidence the Government are continuing their programme of Statutory Instruments under the Retained EU Law Act, which seek to optimise retained EU law for the UK and ensure the law is clear and accessible. Yesterday we laid Statutory Instruments (SIs) that will ensure we can continue the effective operation of rail passenger services and ensure our intellectual property framework continues to function. We will keep pursuing our drive to reform retained EU law by bringing further regulations for Parliament to consider.

Next Steps

The Government are committed to lightening the regulatory burden on businesses to help spur economic growth. We will publish a summary of responses and will continue to keep Parliament, the devolved Administrations, UK citizens and businesses updated, as we make progress.

[HCWS1069]

Post Office Compensation

Kevin Hollinrake Excerpts

Monday 18th September 2023 Commons Chamber

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

With permission, Madam Deputy Speaker, I will make a statement on the latest steps the Government are taking to ensure that swift and fair compensation is made available to postmasters whose Horizon-related convictions are overturned.

This House is aware of the distressing impact that problems with the Post Office’s Horizon IT system have had on the lives and livelihoods of many postmasters. Starting in the late 1990s, the Post Office began installing Horizon accounting software, and over the years the Horizon accounting system recorded shortfalls in cash in branches. Between 1999 and 2015, those shortfalls were treated by the Post Office as caused by postmasters, and that led to dismissals, recovery of losses by the Post Office and, in some cases, criminal prosecutions. We now know that Horizon data was unreliable. I pay tribute to colleagues on both sides of this House, and in the other place, who have supported postmasters in their efforts to expose the truth and see justice done.

The Government have supported the Post Office to make significant interim payments up front—set at £163,000—to those with overturned Horizon convictions. We are also funding the Post Office to reach final settlements with these postmasters. To date, 86 convictions have been overturned. The Government and the Post Office have been clear that we want to see the victims receive swift and fair compensation. I have been monitoring the delivery of compensation to those with overturned convictions, and more than £21 million has been paid out to date. Although good progress has been made on personal damages, such as for mental distress and loss of liberty, thanks in large part to a successful early neutral evaluation process overseen by Lord Dyson, progress on full and final settlements has been slower.

That is why I can announce today that the Government have decided that postmasters who have their convictions on the basis of Horizon evidence overturned should have the opportunity, up front, to accept an offer of a fixed sum in full and final settlement of their claim—the sum will be £600,000. It will not be up to £600,000; it will be £600,000. There will be no requirement for evidence to support the claim, other than the ability to demonstrate that the individual has an overturned conviction. We have arrived at that figure by looking at existing claims that have been processed and applying a generous uplift. This will be delivered by the Post Office, with funding from the Government. To be clear, this up-front offer is available to those postmasters whose convictions have been overturned as they were reliant on Horizon evidence at the time. This payment will be made net of any sums already received, such as interim payments and partial settlements, to settle the claim fully.

Any postmaster who does not want to accept this offer can, of course, continue with the existing process. It will therefore be completely optional to accept the offer of £600,000, and the Government will continue to fund the legal costs of these postmasters to ensure that they receive independent advice ahead of making a decision. However, we hope that the change I am announcing today will provide more reassurance and quicker compensation to those postmasters who would prefer this option over going through the full assessment process. Almost certainly, there will be fewer people taking the option of the full assessment process. To be clear, any postmaster who had their conviction overturned as it was reliant on Horizon evidence and who has already reached a settlement with the Post Office for less than £600,000 will be paid the difference.

Postmasters who have been wrongfully convicted have some of the most severe circumstances, having lost clean records and, in some cases, their liberty, and having suffered significant financial losses and an overwhelming impact on their lives. The Government recognise that those postmasters have suffered gravely in relation to the Horizon scandal, and for too long, and so should be able to settle their claim swiftly if they wish. The Post Office is contacting the legal representatives of eligible postmasters with further information about this offer. I appreciate that some details will need to be worked through, such as how long the up-front offer remains open. I am committed to consulting the Horizon Compensation Advisory Board, which includes Members of this House, such as the right hon. Member for North Durham (Mr Jones), and Lord Arbuthnot, on this matter to make sure we get this right. However, we did not want to delay informing postmasters that there will be an optional quick and straightforward route to settlement. Postmasters may choose to have their claim fully assessed if they prefer, whereby each claim is assessed on the basis of its individual losses.

The Post Office will continue to process these claims as quickly as possible and we are encouraging it to continue to work actively with postmasters’ legal representatives to make offers and payments as soon as possible. The Post Office has made offers to all 73 formerly convicted postmasters who have submitted a claim for non-pecuniary damages—non-financial personal losses. Awards for non-pecuniary damages are guided by Lord Dyson’s early neutral evaluation. With regard to pecuniary damages—financial losses—only 21 claims have been submitted to date and the Post Office has made offers on 12 of these, five of which have been accepted.

The Post Office has been engaging with claimant advisers on pecuniary principles for assessing financial losses to support swifter formulation and assessment of claims. The Post Office plans to move to a remediation model of claim assessment, involving an independent assessor to facilitate settlements and resolve disputes. This remediation approach will bring greater transparency to the existing process.

We know that hundreds of postmasters were convicted during the period when Horizon was in use. The Post Office contacted over 600 postmasters to help them to appeal their conviction and that work was later taken over by the Criminal Cases Review Commission as an independent party. However, still only 86 convictions have been overturned to date and we recognise that there are a number of postmasters who have not yet sought to appeal their conviction. It is for the courts to decide whether a conviction is unsafe, but we encourage all postmasters who think their conviction may be unsafe to come forward and start the process. We hope that being transparent about the level of compensation available via a straightforward route will encourage even more people to seek to overturn their conviction.

I am pleased to provide the House with an update on the other areas of Post Office compensation. To date, £79 million has been paid under the Horizon shortfall scheme, with offers made to 99% of the original cohort of applicants. The Post Office has made offers for 58% of eligible late claims.

Under the group litigation order scheme, the Department has paid £22 million to date. We also announced interim payments in June last year, and 99% of claimants have received the share of the £19.5 million to which they are entitled. The scheme opened for full applications in March this year. To date, 32 claims have been submitted and first settlements have been reached. I am pleased to inform the House that my Department will be publishing data online regularly on the progress of compensation delivery.

In addition to providing compensation, it is important that we learn lessons so that something similar can never happen again. That is why the Government have set up the Post Office Horizon IT inquiry and put it on a statutory footing to ensure it has all the powers it needs to investigate what happened, establish the facts and make recommendations for the future. The inquiry is progressing and we will continue to co-operate fully to ensure that the facts of what happened are established and lessons are learned. I commend this statement to the House.

[Sarah Jones (Croydon Central) (Lab)]

I thank the Minister for his statement and for advance sight of it. This is, of course, an issue of great importance and I thank him and his Department’s civil servants for the progress they have made and the work that has gone on to achieve it.

As this is my first time speaking on the matter from the Front Bench, may I put on record my tribute to the Justice for Subpostmasters Alliance and to all those who have campaigned for decades for compensation, justice and truth? I also recognise the efforts of Members across the House on behalf of their constituents, as well as the work done by colleagues in the other place. In particular, I thank my right hon. Friend the Member for North Durham (Mr Jones). As the Minister said, he is unable to be in the House today but he has played an instrumental role in helping to chart a route to justice for thousands of people and we 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. While 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.

Labour will act in good faith on any announcements that aim to facilitate justice for those involved in the Horizon scandal. Having listened to the Minister, I understand the logic behind the approach that he has announced today, but I would be grateful if he answered some initial questions. First, how many people does his Department anticipate will take up this offer? Secondly, what assurances can he give the House that the compensation being offered to those 86 individuals whose convictions have been overturned will be at a sufficient level? I have spoken to one MP today who has a case in which various accumulated costs amount to millions of pounds. What can the Government say in response to the question that, if people go through the full scheme, the compensation would be much higher? I would be grateful if he addressed what he thinks the balance is between his figure and what other people might expect to get.

Thirdly, while I welcome what the Minister has said, the wider issue, as he mentioned, is the much larger group of people whose convictions have still not been overturned. I know that there have been some proactive attempts to engage with them, but the Minister must share our frustration with the lack of progress. What more can he do to expedite this process of reaching out, contacting and talking to those people?

We understand the logic behind today’s announcement, but we would appreciate the Minister’s thoughts on those issues. As I said earlier, we are happy to work in good faith with the Government to get this right and take one of the many steps required if we are to make amends for what has been the most insidious of injustices.

[Kevin Hollinrake]

I am very grateful to the shadow Minister for her questions. First, may I welcome her to her place? I look forward to our exchanges across the Dispatch Box. I echo her comments in relation to the Justice for Subpostmasters Alliance. I met Alan Bates very early on in my tenure as a Post Office Minister. He has done an incredible job and we would not be as far on as we are without campaigners such as Alan and, as the shadow Minister said, people across this House who have worked so hard to ensure that the overall cases are heard and that people are treated fairly in terms of compensation.

I thank the shadow Minister for her support for today’s initiative. Eighty six people have come forward so far. That is frustrating because we think that there should be about 600 in total who are reliant on Horizon evidence. We are frustrated, but we are keen to do what we can. We believe today’s announcement will help. People can see that they will not have to go through months of claims assessments and that they will not have to engage with lawyers unless they wish to do so—and we will cover the costs of doing that—so it will be a quick and easy process for people. Anything that is said across this Dispatch Box that encourages people to come forward would be welcome. We will continue our efforts elsewhere, to make sure that the people concerned are contacted and are aware of this particular option for them.

On the levels of compensation, this will not take away from the original route. People can still go down the full assessment route. If somebody thinks they have a claim worth millions of pounds, they may well decide to go down the full route. However, I would also say that we know of about 60 people who have sadly passed away while awaiting compensation. Clearly, that is wrong and an injustice. For some people, it will be the right thing just to be able to take this money and draw a line under the whole sorry situation. If people feel they have a claim, which is at a much higher level, they can go down the same route, as that option is still available to them. That is a judgment that they will have to make in conjunction with their legal advisers. I thank the shadow Minister for her comments.

[Holly Mumby-Croft (Scunthorpe) (Con)]

Like many Members across the House, I have heard from people who have been truly badly affected by what has been done to them here, so I welcome today’s statement. Will my hon. Friend confirm that the group litigation order postmasters will pay no income tax, capital gains tax, national insurance contributions, inheritance tax or VAT on these compensation payments, and that the process will be as smooth as possible for them?

[Kevin Hollinrake]

I thank my hon. Friend for her question and for her work in this area. As she knows, this is something that we dealt with following the concerns that were raised about the compensation schemes and their treatment of tax. It is also important to say that there is a benefit disregard as well. We have done some similar work to make sure that people who had access to the Horizon shortfall scheme were also treated in the same way. I think we have tried, wherever we can, to be fair and to move quickly when instances of concerns have been brought to us, and we will continue to take that approach.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson.

[Kirsty Blackman (Aberdeen North) (SNP)]

I echo the words of the hon. Member for Croydon Central (Sarah Jones) and the Minister about the campaigners who have fought so hard for justice. I thank the Minister for advance sight of the statement and for his conversations with my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) in advance of his announcement. [Interruption.] There have been some travel issues today.

The announcement is a welcome further move, but it cannot return the lost years, reunite families or bring back those who are gone. It is something, but it is not enough. Will those who opt to go through the full assessment process be guaranteed a minimum of £600,000, or will they possibly be offered a lower settlement as a result?

In his answer to the hon. Member for Croydon Central, the Minister mentioned the 60 individuals who have sadly passed away, at least four of whom took their own life as a result of this scandal. Can he give us more clarity on how the compensation offer will apply to those who have died? It was not set out in his statement. Will their families be offered the same £600,000? He sort of mentioned it in one of his answers, but if we could have absolute clarity for those who are watching, it would be incredibly helpful.

[Kevin Hollinrake]

I am grateful to the hon. Lady for her questions and her support for today’s announcement. She is absolutely right: no amount of financial compensation can truly compensate people for what has happened. It is an horrendous set of circumstances and one of the biggest scandals that this nation has ever seen.

The hon. Lady is right, but as I say, it was important that we drew the line somewhere on what the compensation level would be. We looked at the average compensation claims that were coming through for overturned convictions, and we settled on a figure on the generous side of that. We think it is a fair figure, but of course people can still take the other option and go down the full assessment route.

The hon. Lady makes a very good point about whether people who have been awarded less through the full route would get the minimum level. That is something on which we are working with the advisory board. We are very keen to engage with the advisory board; I think it is very important that people who are looking for compensation have the reassurance that the advisory board is in place. Its parliamentary members have been very vocal campaigners on the issue for a long time.

For anybody who had an overturned conviction, but who has passed away: yes, if they had received a lower amount, it would be topped up to £600,000.

[Mark Pawsey (Rugby) (Con)]

The Select Committee on Business and Trade heard some absolutely harrowing accounts of the impact on postmasters who were falsely accused. Is the Minister happy that we can now finally conclude this matter and get people back to living normally?

[Kevin Hollinrake]

I thank my hon. Friend for all his work, not least on the Select Committee, of which he has been a member for a long time; he does a fantastic job on it. He is exactly right: we want people to be able to draw a line under the devastating impact this has had on their lives and livelihoods, and move on. It is one thing establishing what went wrong, but a compensation scheme then has to be put in place. It invariably takes a lot of time to assess somebody’s loss, because of the complexities around financial losses and the impact on people’s personal lives. This is a way to draw a line under things very quickly, which is exactly the intention behind the scheme. We hope that people will step forward and then be able to move on with their lives.

[Clive Efford (Eltham) (Lab)]

I pay tribute to the Minister for his handling of the matter. I also pay tribute to his predecessor, the hon. Member for Sutton and Cheam (Paul Scully), to Lord Arbuthnot and to my right hon. Friend the Member for North Durham (Mr Jones): they have done an excellent job on what is an unbelievable scandal.

My constituent was convicted and went to prison under the Horizon scheme, but the Post Office has never accepted that it was Horizon evidence that sent him to prison. What position does that leave him in? Does the Minister agree that it would not be fair for the corrupt Post Office to be able to deny that person the compensation to which he is clearly entitled? The chances that Horizon had nothing to do with his conviction are minuscule. It should not be possible for the Post Office to prevent him from getting compensation. Can the Minister reassure me that my constituent will be able to access the scheme?

[Kevin Hollinrake]

I echo the hon. Gentleman’s sentiments about my predecessors, not least my hon. Friend the Member for Sutton and Cheam (Paul Scully), who did a brilliant job and has been hugely supportive of the work I have done since taking over his responsibilities. I also thank the hon. Gentleman, who I think has spoken in every statement and debate on the matter in which I have participated as a Back Bencher or as part of my ministerial duties. He does an excellent job representing his constituents and many others.

The hon. Gentleman makes a very interesting point about Horizon evidence. I am happy to meet him to discuss his concern about the case. Of course, we do not interfere with what the courts decide. That is the difficulty: the courts follow independent processes under the separation of powers, as he is aware, so a conviction cannot be overturned unless the court so decides. However, I am very happy to look at the case, perhaps in conjunction with his constituent. I am keen to help wherever we can.

[Richard Foord (Tiverton and Honiton) (LD)]

My question is slightly related to the previous one, and I agree that our focus must be on ensuring that everyone who was caught up in this scandal is properly compensated. Some of the postmasters who were dismissed because of the scandal were not formally prosecuted, perhaps because they paid the cash difference for the alleged shortfall before prosecution happened. Nevertheless, they still faced dismissal and many of them were still dismissed. It has been incredibly difficult for those people to get compensation, and this whole ordeal continues to drag on. Can the Minister outline what steps have been taken to ensure that everybody receives swift and fair compensation, including those postmasters who were not prosecuted?

[Kevin Hollinrake]

The hon. Gentleman raises an important point. It is right that everyone is fairly compensated, and the detriment that people experienced will vary. As he rightly says, not all were prosecuted. That is why we have the historical shortfall scheme running, and 99% of those cases have been made offers. We also have the group litigation order scheme, which is about to be rolled out and is open for claims right now.

As I said in a previous answer, the process of assessing someone’s claim is complex and difficult, and in every single compensation scheme I have been involved in, including some of the banking schemes, it has taken a long time to settle those losses. We are looking at every possible way to expedite not just the overturned convictions scheme, but the other schemes, and we have some other ideas on how we might do that. We share the hon. Gentleman’s sentiment and we are working night and day to get those claims settled more quickly.

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

I thank the Minister for his statement today. Decent, honest people have had their lives torn apart. They have been put in prison, they have been made to wait years for justice and it has been a long, painful and arduous process to get convictions overturned and seek access to compensation. Could the Minister provide an estimate of the timescale for compensation completion for those he considers eligible and not yet fully compensated? Could he also update the House on the next phase of the public inquiry? That is critical, as representatives of the Post Office, the Government and the Japanese firm Fujitsu are due to give evidence. Why has it taken so long for evidence to be taken from those key stakeholders and for them to be held to account?

--- Later in debate ---

[Kevin Hollinrake]

I thank the hon. Lady for her work in this area, from both the Front Bench and the Back Benches. She is right to say that it has been a long and arduous process for those postmasters. That is one reason we brought forward this scheme, because we do not want the compensation process to be long and arduous. We hope to deliver all compensation by our August 2024 deadline, but we are keen to deliver compensation before that. This scheme will be a new way to try to accelerate the process. As I have said before from the Dispatch Box, we will not let an arbitrary date get in the way of paying somebody fair compensation. It is important to say that.

The public inquiry is independent; we do not put pressure on it to hear things within certain timescales, and Sir Wyn Williams is more than capable of making sure that people give evidence in good time. For me, and I think for others in this House, this is not just about lessons learned. If we can identify people who were responsible for this scandal, they should be held to account.

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

Within weeks of being elected to this House in 2010 I had a meeting with my constituents, Mr and Mrs Rudkin, and was told how they had been treated at the Post Office, and the huge miscarriage of justice. I was delighted when Mrs Rudkin was one of the first nine to have her criminal conviction overturned—back in December 2021, I think—but it is clear that hundreds have not had their convictions overturned yet and are not able to claim the compensation. For them, the misery will go on. To anyone in this House who thinks that they are guilty—they are not. The clear evidence is there in the paperwork. The Post Office relied on the fact that it maintained in court that no one could alter those sub-postmasters’ computers remotely without them knowing about it, but we know from the evidence that Fujitsu was doing it day after day, fixing problems in the Horizon system. Therefore, all those convictions are unsafe. Let us get on, get them the compensation they deserve and bring this sorry episode to an end.

[Kevin Hollinrake]

We absolutely agree with the hon. Gentleman. I thank him for all his efforts on behalf of Mr and Mrs Rudkin and others. Clearly, his role in the campaign has brought the issue to light and got us towards a position where we will get justice quicker. Of course, we want to ensure that the convictions on the basis of Horizon evidence are overturned. Sadly, we cannot do that without people coming forward, so the united call from this House to the probably 520 people who have not yet come forward is this: please come forward; if your conviction is unsafe, it will be overturned, and compensation, which we are keen to pay out quickly, will be waiting for you.

[Sammy Wilson (East Antrim) (DUP)]

I thank the Minister for the energy and dedication that he has put into trying to move this issue along, which I know will be sincerely appreciated by those who have been affected. However, no compensation will ever reflect the financial losses, family disruption, social stigma and mental trauma that people were put through as a result of deliberate lying by the Post Office and Fujitsu about Horizon. I hope that he will ensure that those who are guilty of this gross miscarriage of justice do not escape the process unscathed.

[Kevin Hollinrake]

I am grateful to the right hon. Gentleman for his kind words and for his campaigning on this issue, about which he has spoken often. He describes some of the horrendous experiences that people have had following the prosecutions and dismissals, and he is absolutely right that no amount of compensation could really make up for the destruction of lives. He talks about people lying, or lying by omission. The biggest part of this scandal is that people in the Post Office realised what was going on 10 years ago but said nothing, despite the fact that some people were in jail and they must have known that those convictions were unsafe. It is absolutely unacceptable; it is scandalous; and I absolutely join his call for people, when identified as responsible, to be held to account.

[Duncan Baker (North Norfolk) (Con)]

This whole episode has shown very clearly just how beloved the institution of our post office network is—I can say that as a former postmaster. The banks will not stop what they are doing; their trend is to remove as many branches as possible from our high streets up and down the land. Of course, that puts enormous pressure on the post office network, which has to pick up the slack—I have talked to the Minister about that before. Can he assure me that he will put every effort into ensuring that post offices are invested in properly so that they can be the future dealer of authorised financial services on our high streets, perhaps making them the pinnacle of banking hubs in the future?

[Kevin Hollinrake]

I thank my hon. Friend for all his work in this area. He, too, has been a consistent campaigner on this matter, and, as the only Member of Parliament who was previously a postmaster, he understands it well. I could not agree more with his comments: the post office network is held in such high regard across the country. This scandal has not in any shape or form affected the brand itself, which is still highly regarded around the country and has a very bright future as long as it is properly remunerated. He raises an interesting point—one that I have raised with banks, with UK Finance and others, and with fellow Ministers, including the Economic Secretary to the Treasury, who is on exactly the same page as me—that if banks want to save money by closing branches up and down the country, that is a commercial choice for them, but they have to leave behind provision for access to cash and deposits. If that means that they have to pay the Post Office and postmasters more for that service, so be it. I very much encourage the Post Office to take a robust line in negotiations to ensure that we get the best possible deal.

UK Export Performance

Kevin Hollinrake Excerpts

Monday 18th September 2023 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

It is always a pleasure to follow the hon. Member for Newcastle-under-Lyme (Aaron Bell). I am not sure that I can be quite as animated as he was during his speech, but I will do my best.

The issue was clearly laid out by the shadow Minister, the hon. Member for Harrow West (Gareth Thomas), with the stats on exports. The Government are incredibly positive about how wonderful exports are, but the reality is, when we are compared to G7 partners, the stats tell a very sorry tale.

Of course, we are the only country in the world dealing with the hangover from covid—no, wait, that is not right. We are the only country in the world dealing with the impact of the war in Ukraine—no, that is not right, either. We are the only country in the world dealing with demographic challenges—no, that is not right, either. The thing is, we are the only country in the world dealing with removing ourselves from our largest trading partner. That is the differential. That is why we are not seeing the growth in trade.

The Minister talked about the fact that there are agreements in place with 73 countries. Fabulous. We left the EU, which has agreements in place with 72 countries. So with all that work and all the running around that Government Ministers have been doing, we currently have one more country with which we have a trade agreement in place than the EU. It almost seems as if the immense amount of uncertainty that everybody—individuals and businesses—has been put through was not really worth it after all.

We could go back to 2016 and make different decisions about how to make Brexit work—six different leaders of Labour and Conservative colours have spoken about it—and how to make the best future for the economy, the wellbeing of people throughout these isles. What the Government should have done was ask, “What do we export the most? What is our trading relationship with the EU?” We exported a lot of services to the EU before Brexit. So, if it had been me taking decisions on this, I would have done everything I could to try to protect those services. I would also have done everything I could to protect those communities that would be decimated by the loss of something, such as fish processing—and whisky, which the Minister mentioned a moment ago. The Government should have been focusing on those things. Instead, they put forward that their No. 1 priority in negotiating Brexit was to end freedom of movement. They have had to suffer the economic losses that go along with that. So they have sacrificed the beneficial position we were in before Brexit, affecting a number of businesses and individuals as a result, not just because of the decision not to prioritise services but for the loss of freedom of movement. That has meant that our farmers, for example, are struggling to find people to work on their farms. It is the same issue in food processing and across some of our most rural communities, which are being decimated as a result of how much harder it is for people to come and live and work in the United Kingdom.

In the automotive debate, we heard comments about the rules of origin. I first raised the rules of origin in relation to the automotive industry in this House five or six years ago, and the problem has not been solved. That level of uncertainty has been hanging over the automotive industry since then, and there is no clear answer. The clock is ticking; there is a very short period of time before this kicks in, and decisions need to be made. At that point, I spoke about diagonal cumulation. We need to ensure that there is certainty or we will continue to see those large manufacturing companies with bases all over the world choosing to invest in improving their factories in European countries rather than those in the United Kingdom. It has been decimating for our manufacturing.

I was glad that the hon. Member for Newcastle-under-Lyme mentioned the numbers—£3 billion—in relation to the Australia and New Zealand trade deals. The Office for Budget Responsibility estimates that we will lose £100 billion as a result of Brexit—£3 billion does not touch the sides of that number and the 4% drop in GDP that we see as a result. Whenever trade deals like these are signed, we might see an improvement in exports. In fact, after the Japan trade deal was signed, we saw a reduction in exports to Japan, so the jury is out on whether they work. However, regardless of whether there is an increase in exports, throwing beef and lamb farmers under the bus is not the way to go.

According to the OBR, there is likely to be a 15% reduction in trade intensity. The OBR has those figures as a result of the Government’s economic plans, the deals signed and the proposals in place. Our food processors and producers, who are producing the best food in the world—as a Scottish MP, hon. Members would expect me to say that—are being massively undercut because the Government have the wrong priorities when signing trade deals. We have already seen beef exports go down by 22% since the deal was signed. The price of producing lamb in Australia has reduced again, which will undercut our farmers and make us less likely to become a nation self-sufficient in food production, because it will cost us more to rear the lamb. That is a problem. The Government have prioritised the wrong things.

The Government have missed the opportunity of renewables, and not just in terms of capitalising economically on climate change and the move towards a just transition. In fact, they have missed the opportunity to invest in amazing innovations in renewable technologies and to export them around the world. During the oil and gas boom, Aberdeen in north-east Scotland became known for exports. My constituency was top for the number of patents per head of population. There is an amazing amount of research and development as a result of the oil and gas industry. We are seeing declining amounts of oil and gas and an increase in the number of countries looking to capitalise on and use renewable technologies. Because we are not seeing investment in things such as carbon capture, utilisation and storage, we are not able to stay ahead of the curve and use that tech to assist other countries around the world in the way that we were able to do with oil and gas.

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

I am slightly confused about the hon. Lady’s policies and those of her party. I think she said that oil and gas production was coming down. Is it not her party’s policy to prevent any new exploration of oil and gas in Scottish fields? Is her own policy in disagreement with that of her party? I am very confused on that matter.

[Kirsty Blackman]

The party’s policy is that every new oil and gas licence should go through a rigorous environmental assessment. As much as the Conservatives try to paint it as something else, that is the party’s policy. The vast majority of my constituents who contact me would like no new licences to be granted. Far more constituents contacted me to tell me that Cambo was a disaster and should not go ahead. I have a large university in my constituency, and a huge number of people from all around the world, who are massively concerned about the impacts of climate change. I urge the Minister to come and spend some time in my constituency, to see the passion on the ground for a just transition.

My constituents really like having jobs. Most people do. It is great to be able to take a salary home. My constituents, in the main, are not terribly fussed if the job that pays them lots of money is in oil and gas or in the renewables sector. When I talk to people, they tell me that they would like a good job. Those people in the oil and gas industry ask for their tickets to be transferable so that they can go to offshore wind just as easily as they can go to oil and gas platforms. The UK Government have failed to capitalise on that. They failed to invest in CCUS. In fact, back in 2015 the then Chancellor pulled the plug on CCUS without even telling the industry. He stood at that Dispatch Box during the Budget and did that.

The UK Government have failed to prioritise improving our food exports. If they were serious about supporting our farmers, they would do everything they could to ensure them access to the labour that they need to pick the fruit, butcher the pork and export all that wonderful produce. If the UK Government were serious about supporting people and businesses in Scotland, they would have come forward far quicker with the decision on Horizon. They would have prioritised ensuring that our world-leading scientists across these islands, and particularly in my constituency, continue to have access to those research grants. They would have ensured that they could continue to work closely with European counterparts to develop the really cool tech of the future and to develop drugs for Alzheimer’s and heart disease in my constituency. All those things would have been prioritised by the UK Government if they cared about supporting individuals and businesses. They would have taken these things seriously, and they would have prioritised those industries rather than simply prioritising the removal of freedom of movement.

A number of Members have mentioned making Brexit work. It is not possible to make Brexit work. We cannot make Brexit work, because Brexit does not work. Various Conservative leaders have stood there saying, “Make Brexit work.” The Labour party has stood there saying “Make Brexit work.” It cannot work. It is not the positive economic future that we want. The Scottish National party will continue to stand for being in the single market. We will continue to support being members of that single market and, yes, having freedom of movement. Freedom of movement is great for economic benefit. In nine out of the last 10 years—and eight years running—Scotland has had the highest levels of foreign direct investment of any area, country or region in the United Kingdom other than London. That is because the Scottish Government are doing everything they can to ensure that we continue to trade and export, and continue to have a great relationship with as many countries in the world as we possibly can.

The UK Government do not even have a published trade strategy document that pulls everything together. If they had an internal trade strategy document, it would be great if they would publish it, so that we can all see their strategy. Conservative Members say that there are missed opportunities in international trade because they are not prioritising work on selling renewables around the world. Clearly, something is missing. It would be great to see that strategy so that we can provide the appropriate scrutiny. If they continue to hide it, no one can scrutinise it. We do not know what they are trying to do because they are not willing to tell us and share the strategy with us, if they have one.

The only way to ensure that trade with the EU continues to go up and to bring back freedom of movement is for Scotland to free itself from Westminster and take its own decisions on immigration and trade, ensuring we have as close a relationship with the EU as possible, not by making Brexit work but by being back as a member of the EU and the single market. That will protect our economy and our freedom of movement, and ensure our scientists have the best possible access to collaboration. That will ensure our farmers have a level of protection they do not currently have in being able to export food without whatever is going to happen with the Windsor framework, which could be disastrous for our farmers. The United Kingdom Internal Market Act 2020 continues to go over the top of what the Scottish Government would like for our future, our farmers and our food producers. I recommend that everybody looks very closely at the SNP’s next manifesto, in which we will lay out those policies even more clearly than I have this evening.

--- Later in debate ---

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

It is a pleasure to respond to this important debate. I thank all the Members who have contributed.

Obviously, the House is united on the importance of exports to our economy, but it differs somewhat on how we go about it. I was interested in the remarks of the shadow Minister, the hon. Member for Harrow West (Gareth Thomas). He talked about 13 years of economic failure. He can choose his own opinions, but he cannot choose his own facts. May I give him some facts? We are now the eighth largest manufacturer in the world; we have moved from ninth. We have just overtaken France, which is a bit of a double-win. We are the fifth largest global trader in the world, up from sixth in 2021. We are the third fastest growing economy in the G7 since the pandemic. Since 2016, we have grown faster than Germany and France and, since 2010, we have grown the third fastest in the G7. The only countries ahead of us since the pandemic are the US and Canada. Of all the major economies in the European Union, we have a great story on growth. Those are three things we have achieved on growth. Those are the facts.

The hon. Gentleman may want to depress the nation. I have met many pessimists in my life. I have never yet met a happy pessimist or a successful pessimist. The same goes when trying to get elected. The public want a dealer in hope, not these Jeremiahs who are determined to talk this country down. That is deeply unhelpful and deeply incorrect.

I have some more facts. The hon. Gentleman talks about export performance since 2010—he said there have been 13 years of failure—but it is 31% up in real terms. How is that a failure? I have a great deal of time for him away from the knockabout of politics, but his quotes were all about goods. He never touched on services. He will recognise that 80% of our economy is not goods but services, which is hugely important. It is why our export performance, in real terms, is growing.

The hon. Gentleman said that exports are down this year. In the 12 months to July 2023—these are facts, not projections—there were £849 billion of exports, up 16% on the previous year. In this debate, we should focus on the facts.

[Kirsty Blackman]

The UN figures are actually for goods and services, so the UK is sixth in the G7, at 6% growth, behind Canada, the US, Italy, France and Germany, on 22%. Those are UN figures on goods and services.

--- Later in debate ---

[Kevin Hollinrake]

Again, the hon. Lady is picking out certain figures. May I give her a figure? Does she know the UK’s largest export in the food and drink sector? It is whisky, at £6.3 billion. Fifty-three bottles of whisky are exported every single second. It is a huge success story and one that we are determined to mirror across the economy, and this is the strategy we are employing to do it.

As the Minister for International Trade so eloquently laid out, we are pursuing a trade policy that is unrelentingly focused on growth. I am proud that this Government have such high ambitions in this area but, to borrow an analogy from the Secretary of State, free trade agreements are like motorways—they work only if we get cars driving up and down them. That is why our Department is focusing on how to create the environment that exporters need to succeed. We must also ensure that the right support is in place.

I have seen at first hand the appetite for export growth in the UK, both in my work before I entered Parliament and today as Minister for enterprise, markets and small business. That is why the Department for Business and Trade has established a dedicated free trade agreement utilisation team to help to improve FTA awareness and take-up. The team’s first major project has been to develop new business guidance resources for the UK-Australia FTA, working with businesses and business representative organisations to ensure it captures everything businesses want and need to know, and in business-friendly language. Similar work is under way to prepare for the entry into force of the comprehensive and progressive agreement for trans-Pacific partnership—TPP is far snappier—to ensure that businesses are equipped with the knowledge they need on fast-growing markets and the benefits of that deal for them.

We understand that taking a business global can be a daunting prospect—if you’ve never exported before, where do you start? You start where Wold Top Brewery, in my constituency, started. It is run by the wonderful Mellor family, a farming family from near Hunmanby. They started making their own beer because they had grain on their farm and an artesian well. They make some fantastic beer, including Wold Gold, which I heartily recommend. It has been in the Strangers Bar and I will tell you when it will be again, Mr Deputy Speaker. They used our trade advisers to start exporting to Italy very early on in their business growth—they did not wait until they had conquered the UK market—and they have been hugely successful, so much so that they are expanding now into Filey Bay whisky, a wonderful whisky, which, again, is exported around the world. That is the kind of export strategy we want and it is supported by the Government’s export strategy, “Made in the UK, Sold to the World”, which is built around a 12-point plan to give firms of any size the support they need on their exporting journey, be it practical, promotional or financial.

Our newly expanded Export Support Service is a one-stop shop for exporting advice. As well as an online library of resources available 24/7, our expert trade advisers are on hand with free and impartial advice. Since April 2022, they have handled 9,600 market inquiries. They work closely with our network of in-market specialists across 100 countries globally to share market insights, identify opportunities and connect businesses with buyers. We have also rolled out our export academy across the country, offering SMEs a programme of masterclasses, roundtables and networking events.

A special mention must go to our fantastic community of export champions for all they do. I have had the great pleasure of meeting some of them in person, such as those from Briggs Automotive Company, in Liverpool, and we are very grateful for all they do. As the Minister for International Trade mentioned, this is all underpinned by the important work of the Government’s award-winning export credit agency, UK Export Finance, which provided £6.5 billion to support 532 UK companies win exports and trade internationally. Eighty-four per cent of those companies were SMEs, and 82% were based in constituencies such as mine and yours, Mr Deputy Speaker. Of course, the Government have also backed the British Business Bank to provide more than £12.2 billion of finance to more than 96,000 small businesses, including more than 100,000 start-up loans since 2012.

I wish briefly to pick up on some of the points made in the debate. The shadow Minister, the hon. Member for Harrow West, said, “Why not enter into a veterinary agreement?” If he wants to become a rule taker again, he can do that, but it would rule out things such as gene editing, which was a fantastic opportunity for this nation. That is what he has to try to square the circle of, rather than just playing both ends against the middle.

As for the difficulties of trading with the EU, there is no doubt that those are abating. Eurotunnel said earlier this year that trade between the EU and the UK is back to where it was pre-Brexit in terms of the speed of processing lorries. Of course this is not all within our gift and the EU negotiates in its interests. Apparently, he is going to take a completely new approach. He says they are not going to join the single market or the customs union, yet he is going to wave a magic wand and all these problems will disappear. As my hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) pointed out beautifully, the Labour party’s approach is to see which way the wind is blowing. First, the Leader of the Opposition was a remainer, then he wanted a second referendum, then he made the case for free movement of people, and now he wants a complete renegotiation of the trade and co-operation agreement, even though earlier he said he did not.

The approach is simply all over the place—all at sea—despite the fact that we have made huge progress since the trade and co-operation agreement, not least because of the Windsor framework. I understand the concerns raised by the hon. Member for Strangford (Jim Shannon) about that, but it is a good basis for co-operation in future and it is very popular with businesses. There have been other steps forward, including the inclusion of the UK in the Horizon programme. There are a variety of issues that we need to work through and the Department is working hard on those. In terms of the trade agreement with India, we are very keen, but it is about the deal, not the date, as we have said many times, and getting that deal right. We have just completed the 12th round of negotiations, so I hope there will soon be some positive news about getting that deal together.

The hon. Member for Aberdeen North (Kirsty Blackman) made some interesting points. She made a point about the EU agreement and how wonderful it was, and then talked about services. Well, the EU agreement did not even cover services, or not to any extent, and the Swiss-EU deal did not cover services at all—a 50-year-old agreement. The UK is 80% services, so it is important to look at the issue in the round and do what is right for the UK, not what is right for Germany. Such a deal might suit Germany but it does not suit the UK—we stand up for what is right for the UK.

The hon. Lady talked about oil and gas as a failing industry, and then would not commit to any new licences, which seems very strange. She talked about farming and said people would be better off inside the EU, but when we discussed the potential for Brexit, that was not the perspective of my farmers. She completely ignored fishing. Is the SNP’s perspective that we should rejoin the common fisheries policy? That would be highly unpopular with the fishing industry in Scotland.

Our export strategy is working. We hit £815 billion of exports in 2022 and we plan to go further this year. Our ranking as second in the world for exports of services in 2022 highlights that further. We want businesses to be ambitious in their exporting. The strategy laid a challenge for businesses and Government to “race to a trillion” exports per year by 2030. We need the support of all types of businesses, in all parts of the UK, to make that happen. Unlocking the UK’s exporting potential will help to level up the country and boost the UK’s economy, and I look forward to seeing how much further we can go.

Question put and agreed to.

Resolved,

That this House has considered UK export performance.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Thursday 14th September 2023 Commons Chamber

[Theresa Villiers (Chipping Barnet) (Con)]

5. What recent progress she has made on regulatory reform.

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

My Department is making it easier to do business every single day. Our smarter regulation programme—which includes implementation of the reforms recommended in the report by the taskforce on innovation, growth and regulatory reform, co-authored by my right hon. Friend the Member for Chipping Barnet (Theresa Villiers)—is reducing regulatory burdens for business and reducing costs for consumers. We have announced reforms to employment law, wine regulation and product safety regulations, and further reforms will be announced soon.

[Theresa Villiers]

I thank the Minister for his answer, but can we have more urgency across Departments on regulatory reform? Using our Brexit freedoms to modernise our regulation is a key way to grow the economy and raise living standards, so can we see more progress on reforming regulation in areas such as personal data, clinical trials, agri-tech and satellites?

[Kevin Hollinrake]

My right hon. Friend the Member for Chipping Barnet is absolutely right to push us on this issue. We are working across Government to implement reforms. So far, we have delivered 10 of the 69 recommendations identified in the TIGRR report, in areas such as offshore wind and reforms to the Medicines and Healthcare products Regulatory Agency. Delivery of a further 49 is ongoing, in high-profile areas such as artificial intelligence reform, easing clinical trials, pensions, the ability to invest in venture capital, the General Data Protection Regulation and the seed enterprise investment scheme, all of which is saving businesses billions of pounds. My right hon. Friend the Secretary of State will shortly write to my right hon. Friend the Member for Chipping Barnet to confirm all those points.

[Andrew Selous (South West Bedfordshire) (Con)]

6. What steps her Department is taking to support business exports.

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[Kenny MacAskill (East Lothian) (Alba)]

7. What recent discussions she has had with (a) NGOs and (b) charities on the inclusion of human rights considerations in trade negotiations.

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

The Government are committed to universal human rights, the rule of law, free speech and fairness. Those values guide all aspects of our international policy, including our approach to trade.

[Kenny MacAskill]

As trade talks continue with many countries that have deplorable human rights records and as discussions continue with India, will the Minister ensure that we receive binding commitments on human rights—particularly in relation to labour practices—rather than simply warm words, and that discussions continue with NGOs, which are well placed, and often better placed than the Foreign, Commonwealth and Development Office, on what is going on?

[Kevin Hollinrake]

I thank the hon. Gentleman for his question. The UK will continue to show global leadership in encouraging all states to uphold international human rights obligations and to hold those who violate or abuse human rights to account. The UK has successfully included labour, environment and gender provisions in the free trade agreements that we have signed—with Australia and New Zealand, for example. Those both contained dedicated chapters on trade, gender equality, labour and the environment. They uphold human rights but, crucially, also level the playing field for our UK businesses.

[Patrick Grady (Glasgow North) (SNP)]

9. What recent assessment she has made of the impact of her trade policies on the cost of food.

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[Deidre Brock (Edinburgh North and Leith) (SNP)]

14. Whether she has had recent discussions with (a) Cabinet colleagues and (b) the Scottish Government on support for Scotland’s hospitality sector.

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

As the hon. Member will be aware, hospitality support is devolved. We continue to provide energy support via the energy bills discount scheme, benefiting hospitality businesses across the UK. I would be happy to meet her and any of her colleagues to see how we can help hospitality businesses across the whole UK.

[Deidre Brock]

That is excellent to hear, because the hospitality sector plays a crucial role in Scotland’s economy, but it has consistently been let down by the UK Government, who repeatedly fail to support the industry with the unique challenges it faces. Businesses across Scotland are grappling with inflationary pressures, labour and skill shortages and the ever-increasing complexity of trading rules with 27 countries we once traded with freely. Why will the Minister not accept that Brexit lies at the heart of these problems?

[Kevin Hollinrake]

If the hon. Lady looks again, she will find that the Scottish Government lie at the heart of these problems. In England, all eligible businesses can get 75% relief on their rates, subject to a cap of £110,000, while in Scotland, rates relief is available only to small businesses and could be as low as between 25% and 0% for individual properties with rateable values from £15,000. There is far more support available for English businesses than for Scottish businesses. I think she should go back and look again at the facts.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

15. Whether she has had discussions with courier services on deliveries to isolated rural areas.

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

I appreciate the hon. Member’s interest in ensuring a fair deal for his constituents. The Government’s universal service obligation on Royal Mail guarantees delivery of parcels at uniform rates throughout the UK, without any geographical restrictions. Where other courier businesses decide to serve should be a commercial decision for them.

[Jonathan Edwards]

A constituent who visited my surgery recently complained that one courier service in particular would not deliver to his isolated rural property. The choice of courier is, of course, currently a matter for retailers. Do the Government agree, though, that there is a case for saying that large retailers could offer the consumer the choice of which courier service should be used? That would empower consumers and hopefully improve performance via competition.

[Kevin Hollinrake]

The hon. Member raises a very important point. Competition plays a role in this, of course. It is absolutely right that retail business should look at this and try to get the lowest cost for their customers in terms of courier charges. It is, as he acknowledges, a commercial decision for individual retailers, but I absolutely applaud the points he raises. These businesses should be aware of those costs, because they can add significantly to the costs of the products they are selling.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

T1. If she will make a statement on her departmental responsibilities.

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[Dame Andrea Leadsom (South Northamptonshire) (Con)]

T2. Do Ministers agree that delegates to the Parliamentary Partnership Assembly, which was set up under the trade and co-operation agreement with the EU, should be there to promote Britain’s interests overseas, and that those who do not want to do so and who simply want to be apologists for Brexit and to act against the UK’s interests should leave the PPA?

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

My right hon. Friend raises an important point. The Parliamentary Partnership Assembly created under the trade and co-operation agreement is a parliamentary body independent of Government. The Government value its work and its role supporting a mature and constructive relationship with the EU, rooted in shared values and delivering on shared interests. She is right that we should look forward, not backwards.

[Mr Speaker]

I call the shadow Secretary of State.

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

The loss of Wilko is a significant blow to the nation’s high streets. However, more concerning is that no rescue has proved possible because several bidders have said that town centre retail is no longer a viable business model. In the light of that, do the Government really believe that their current policy environment is sufficient for British high streets to thrive?

[Kevin Hollinrake]

We are very concerned for the families affected by Wilko’s demise. The world of retail is a very competitive marketplace. I do not accept the hon. Gentleman’s premise that the high street is dead—not at all. It is reshaping itself, and while it does so we will help it, such as with the £13.6 billion of rates relief over the next five years.

[Jonathan Reynolds]

Ministers’ answers do not match the scale of the problem; 12,500 Wilko workers alone are at risk of redundancy. Labour’s plans for the high street are about reforming business rates, tackling late payment, cracking down on antisocial behaviour and stopping premises being left empty, with councils having more powers. The problem demands a response from Ministers. Based on their answers today, this Government have simply given up on the British high street.

[Kevin Hollinrake]

That is complete nonsense. This week, I met Helen Dickenson from the Retail Sector Council to discuss this matter closely. There are certain situations in certain companies of course. I guard the hon. Gentleman against political opportunism on the back of those 12,500 jobs, many of which have been picked up by other retailers such as Poundland in rescues of stores. On his point about business rates, which I hear time and again, all the Labour party has done is say that it will cancel £22 billion of business rates, without saying how it will replace those taxation receipts. Where is the money coming from?

[Bob Blackman (Harrow East) (Con)]

T4. The Secretary of State and the Prime Minister have both been in India recently and had the opportunity to negotiate further on the wonderful trade deal that we wish to do. Her predecessor but one or two promised a trade deal with India by Diwali. Of course, they did not mention which year. Diwali this year is later than normal; what confidence does she have that we will have it in place by Diwali this year?

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[Deidre Brock (Edinburgh North and Leith) (SNP)]

T3. Recent figures show that small businesses in the UK are owed more than £32 billion in late payments. When coupled with a 40% rise in energy costs and other inflationary pressures that I mentioned before, that is making running small businesses in my constituency impossible. On Tuesday, the EU set out its SME relief package, which will help to tackle the problem. What is the Minister doing to combat late payments for SMEs?

[Kevin Hollinrake]

The hon. Lady raises an important point. That is why we launched a payment and cash flow review earlier this year, which is due to report very shortly. We are ambitious to make sure that small businesses get paid more quickly through putting more pressure on larger companies, the results of which will be announced very shortly.

[Dr Luke Evans (Bosworth) (Con)]

In August, I was lucky to be invited to the 70th anniversary of Caterpillar being founded in my constituency. It was the first place outside the US it set up a base in, and it now employs 1,300 people, making things such as the electric backhoe loader. Will my hon. Friend congratulate Caterpillar on its investment here, from where it exports across the world? Would she like to come and see exactly what it does in Bosworth?

[Judith Cummins (Bradford South) (Lab)]

T5. The loss of Wilko is devastating, in particular for the thousands of workers who will lose their livelihoods. Will the Secretary of State confirm that she will seek answers from Wilko management about why clear warnings were ignored and the business was driven into the ground, at the same time that shareholders collected hundreds of millions in dividends? Will she meet me and the GMB trade union to assure us that those basic failures will not be repeated?

[Kevin Hollinrake]

The hon. Member raises an important point. There is certainly, as part of the administration process, an obligation on the administrators to look at the circumstances that led to the demise of that company and report to the Insolvency Service. I am sure that she, like I, will be very interested in the outcome of that investigation.

[Theresa Villiers (Chipping Barnet) (Con)]

As chair of the all-party parliamentary group for events, can I highlight the huge benefits the sector brings us in promoting trade, exports and inward investment? Will the Department do more to promote the UK worldwide as a great place to bring international events, business meetings and conferences?

[Ms Anum Qaisar (Airdrie and Shotts) (SNP)]

T6. Airdrie and Shotts is home to some fantastic local businesses. Recently, I had the pleasure of visiting Christie’s bakery and sampling some of its delicious domino cake. I also met Angela from Gin Blossoms, a florist on Alexander Street. Small businesses across Scotland play a vital role in the local economy, yet many are feeling the brunt of the rise in prices of raw materials caused by increasing import-export costs. To be frank, this is another direct impact of Brexit that Scotland did not vote for. Can the Minister outline how the UK Government will compensate businesses for the damaging losses that Brexit continues to cause?

[Kevin Hollinrake]

The hon. Member raises an important point about the cost of living impact on businesses. These are global issues, not domestic issues, and she should be clear on that with her businesses. As I said in response to the question from her hon. Friend, the hon. Member for Edinburgh North and Leith (Deidre Brock), the Scottish Government might look at increasing the generosity of the business rates relief scheme, as the rest of the UK has.

[Peter Aldous (Waveney) (Con)]

In the period leading up to 2021, sector deals were a very effective means of boosting productivity, innovation and skills in such sectors as aerospace, AI and offshore wind. What plans are there to review, revitalise and extend those effective public-private sector partnerships?

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

T7. We know that phoenixing, unpaid-for services rendered, puts a burden on legitimate SMEs, but it also puts a burden on the taxpayer through unpaid taxes. That is acutely felt by all hard-pressed local authorities which have significant unrecoverable debt owed. Given that the Minister did not accept my amendment to the Economic Crime and Transparency Bill, can he explain what the Government are actually doing to prevent this practice?

[Kevin Hollinrake]

I am happy to engage with the hon. Member. I missed the earliest part of his question, but we are providing an awful lot of support for small businesses in various ways. I cannot remember his amendment to the Bill, but I am happy to engage with him to see what we can do to help.

[Andrew Selous (South West Bedfordshire) (Con)]

May we have an update on our proposals for a carbon border adjustment mechanism?

[Kevin Hollinrake]

The Treasury published a consultation in March on a range of measures to mitigate carbon leakage. Potential policies include a carbon adjustment mechanism on managing product standards. I am sure it will report shortly.

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

T8. Yesterday, I joined my hon. Friend the Member for Cardiff West (Kevin Brennan) on the all-party parliamentary group on music for the launch of UK Music’s impressive “Manifesto for Music”. The opportunities and risks of AI are a key issue for the industry. Will the Government commit to musicians having a voice and a place at the table for the AI summit in November?

--- Later in debate ---

[Andrew Gwynne (Denton and Reddish) (Lab)]

Many small businesses, particularly in the retail and hospitality sectors, still rely on high street banking. Earlier this month, the last bank in Denton town centre—the Halifax—closed. It was not just the last one in Denton but the last one in the Denton and Reddish parliamentary constituency, leaving small businesses without access to high street banking. It is not good enough, is it?

[Kevin Hollinrake]

The hon. Gentleman makes an important point, and we urge banks to listen to their customers about keeping their doors open. Of course, we have the banking framework relationship with the post office network, which provides deposit and cash facilities for small businesses on high streets in Denton and other parts of the country. We are determined to make that relationship more generous to the Post Office to ensure the sustainability of the post office network.

[Kerry McCarthy (Bristol East) (Lab)]

Over the recess, I had the pleasure of visiting the historic Harland & Wolff shipyard in north Devon, where we talked about the potential for UK shipbuilding jobs linked to the offshore renewables sector. Given last week’s disappointing auction round, to put it mildly, what can the Minister say to convince the shipbuilding industry that there is a future for it in making those service vessels?

Economic Crime and Corporate Transparency Bill

Kevin Hollinrake Excerpts

Consideration of Lords message
Wednesday 13th September 2023 Commons Chamber

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

I beg to move, That this House agrees with Lords amendments 23B and 23C.

[Mr Deputy Speaker]

With this it will be convenient to discuss the following:

Lords amendments 151B and 151C, Government motion to disagree, and Government motion to insist on amendment 151A.

Lords amendment 161B, Government motion to disagree, manuscript amendments (a) and (b), and Government motion to insist on amendment 161A.

[Kevin Hollinrake]

It is always a pleasure to speak with right hon. and hon. Members on the Economic Crime and Corporate Transparency Bill, which they will know is close to my heart and contains many vital measures for which I have long campaigned. The Bill will give us the powers we need to crack down on those who abuse our open economy, while ensuring that the vast majority of law-abiding businesses can grow and flourish.

I am grateful that both Houses have reached agreement on several issues, including those relating to the register of overseas entities and on removing the extension of the failure to prevent offence to money laundering. However, we are here today as agreement is still outstanding on a handful of remaining issues. I urge this House to accept the Government amendments, to settle those remaining topics and ensure that we can proceed to Royal Assent and implementation of these important reforms without delay.

I will now speak to those remaining topics. In the other place, the Government tabled two amendments on nominee shareholders—amendments 23B and 23C, in lieu of Commons amendment 23A, and in response to Lord Vaux’s amendment 23 on this topic from Report stage in the other place.

The Government’s amendments will allow the Secretary of State to make regulations to make further provision for the purpose of identifying persons with significant control in cases where shares are held by a nominee. This will allow the Government to work with relevant stakeholders to target the regulations in an effective and focused way that does not impose disproportionate burdens. Members of the other place agreed with the Government’s proposal and I trust that Members of this House will therefore agree with it today.

Lords amendments 151B and 151C would apply the exemption from the failure to prevent fraud offence to micro-entities only, rather than the Government’s position of excluding all small and medium-sized enterprises. The Government appreciate that Lord Garnier has moved closer to the Government’s position in agreeing to the principle of applying a threshold. However, our position remains that such an amendment would still incur significant costs to businesses. Reducing the exemption threshold to only micro-entities would increase one-off costs for businesses from around £500 million to £1.5 billion. The annual recurrent costs would increase from £60 million to over £192 million.

[Sir Robert Buckland (South Swindon) (Con)]

Where do those figures come from?

[Kevin Hollinrake]

We used very similar analysis to that used for the failure to prevent bribery and failure to prevent tax evasion offences. We have used a common methodology. I have not seen any figures that contradict our figures here, but in my view—having run a business and dealt with some of the failure to prevent bribery provisions—there is no doubt that there are significant costs. There may be external consultants to bring in, for example. Even if one is compliant, one might not know whether one is compliant, so there are definite associated costs to ensuring that reasonable efforts are made to prevent fraud, as it would be in this case.

Those costs would still be disproportionately shared by small business owners, when law enforcement can attribute and prosecute fraud more easily in these smaller organisations; and, as I have set out before, we must be mindful of the cumulative impact on SMEs across multiple Government requirements and regulations. In all the work I have done in the past from the Back Benches on failure to prevent, it was invariably the case that all cases involved larger businesses, not SMEs.

Large companies have the resources and specialist expertise to cope with additional burdens, whereas small businesses often have to dedicate a significant amount of time and resource, often paying for external professional advice to assess what new rules would mean for them. That is the case even where they subsequently assess that they already have adequate controls in place. That is time and resource that could otherwise have been used to grow and generate wealth for their businesses and jobs for their staff. The Government are extremely mindful of the pressures on companies of all sizes, including SMEs, and therefore do not feel it is appropriate to place this new unnecessary burden on over 450,000 businesses. I therefore urge Members of this House to support the Government motion to disagree with the Lords amendments, to ensure that we take a proportionate approach and do not impose unnecessary measures that would curb economic growth.

Turning to Lords amendment 161B, made by Lord Faulks, on cost protection for law enforcement in civil recovery cases, the Government remain of the view that the amendment would be a significant departure from the loser pays principle and therefore should not be rushed into without careful consideration. There is no clear evidence that such changes would help to achieve their intended aim of increasing the capacity of law enforcement to take on more civil recovery cases. There have been no adverse cost rulings against an enforcement authority carrying out this type of civil recovery in the past six years.

Costs are just one of many factors that determine whether law enforcement will take on a case. For example, the evidence available to pursue a case, particularly where evidence is required from overseas, often proves more vital to an operational decision. There are already a number of ways in which an enforcement agency’s liability to legal costs can be protected under the civil procedure rules in England and Wales. For instance, rule 44.2 gives the court discretion as to the payment of costs by either party, including whether they are payable to another party, the amount, and when they are payable. In addition, a cost-capping order can be applied for under rule 3.19 to limit any future costs that a party may recover under a later costs order. If we are to introduce further legislation, we must consider what gap this is trying to fill. We should also consider civil liberties and property rights that underpin our economy. We will potentially be handing huge powers to the state, which could be held over an individual.

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Secondly, on the cost cap, Lord Faulks was absolute right to ask: if not now, when? The reason that there have not been many cases is that there has definitely been a dampening effect on authorities bringing these civil proceedings. The intention in the Proceeds of Crime Act 2002 was for a lot more use of part 5 in civil proceedings, but we have seen that vanishingly irregularly. We need more of those in order to burnish Britain’s reputation as a centre of clean money.

[Kevin Hollinrake]

I have listened carefully to my right hon. and learned Friend’s points. He said a few seconds ago that this would relate only to fraud that benefits the body concerned. Paragraph 1(b) of Lords amendment 151 also covers the body or an associate within that body providing services, so this is not just about the benefit to the organisation itself.

[Sir Robert Buckland]

I will take that qualification. I was seeking a short cut because time is brief. My hon. Friend is right to mention the agency point, but it is still a much narrower ambit of the offence than fraud in general. That is the point I would ask him to take away, because I am not persuaded. I think the amendments should remain within the body of the Bill as amended, and I will be voting accordingly.

--- Later in debate ---

[Kevin Hollinrake]

I welcome the hon. Member for Bethnal Green and Bow (Rushanara Ali) to her place. We worked closely together on the Treasury Committee and it is a pleasure to work across the House with her today. I also pay tribute to her predecessor, the hon. Member for Feltham and Heston (Seema Malhotra) for her similar approach to the work we have done on this legislation. I thank all hon. and right hon. Members for their contributions to this debate and their support for the Government’s amendments made in the other place. I want to refer to a number of points that have been raised today.

The shadow Minister, the hon. Member for Bethnal Green and Bow, referred to the Government turning a blind eye to the issue of economic crime, but nothing could be further from the truth. Many of us have worked on this cross-party across the House from the Back Benches and now on the Front Benches, and this is the second piece of legislation we have brought forward on economic crime in the past 18 months. These are groundbreaking new measures. This Bill contains further reforms to the Register of Overseas Entities introduced in the previous legislation. Our legislation on strategic lawsuits against public participation—SLAPPs—is world leading, and we now have the “failure to prevent” offence, which I will speak to in a moment.

The hon. Lady also referred to the resources made available to our law enforcement agencies. We are continuing to invest in measures to tackle economic crime, and we have increased the budget of the National Crime Agency year on year since 2019. Its budget has now increased 40% from the figure in 2019 and stands at just over £700 million.

Together, the recent spending review settlement and private sector contributions through the new economic crime levy will provide £400 million of funding over the spending review period, and the levy is estimated to bring in £100 million per annum starting from this financial year, 2023-24. There will be a wide-ranging review by the end of 2027, providing transparency on how the levy is performing against its original purpose, including on how the money is spent. Existing efforts will move at pace to enhance and further drive forward the unit in what are inevitably complex and lengthy operations. In considering this legislation, we have often debated the extra resources that we are determined to deliver for Companies House and will pay for at least 400 more people. That is an incredibly important part of the Bill.

My hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) stated very clearly that he feels the failure to prevent threshold is too widely drawn, and I understand his point. As I said in my opening speech, all the cases I have dealt with in this place—whether it be Lloyds HBOS Reading, HSBC, NatWest or others—have involved large organisations that turned a blind eye to fraud or let it happen on their watch. We believe it is right to strike a balance between the offence’s crime prevention benefits and the burden placed on business. There is a balance between risk and regulation, and we want to make sure that the regulations do not put excessive costs on business.

My right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) made similar points. He cast doubt on the figures I have in front of me on the costs of the burden on business, which we believe will be £1.5 billion of implementation costs and around £192 million of recurrent annual costs. I am happy to look at other costs and analyses, but those are the figures before me.

My right hon. and learned Friend makes an interesting point that the threshold will facilitate economic crime in certain companies, but the Lords amendment allows some companies to be outside the rules. I am not sure how he can draw a line to say that there will be economic crime in some companies and not in others. It is very difficult to draw a line, and we believe that drawing a line at larger companies is right.

[Kit Malthouse]

Lines matter. At a point in a business’s evolution, as my hon. Friend will know from building his own business, it crosses a line. It is perfectly possible, under the definitions in Lords amendment 151C, that a company that satisfies the financial criterion will decide to go from nine employees to 10 or 11, and suddenly it crosses into this world of pain—the compliance people show up, and the company needs a whole new process and procedure that comes with employing that single extra person, on top of all the other employment and safety regulation it is having to deal with. Setting these thresholds at a level at which companies can absorb the step up in responsibility, and without a disproportionate amount of cost, seems critical. Does he agree?

[Kevin Hollinrake]

I do agree. I listened closely to my right hon. Friend’s remarks. He said he might be the only small business owner currently in the Chamber, but he is talking to one. I have owned a business for 30 years, growing it from a small business to a larger one, and I absolutely agree that it is not just the legislation itself but its implementation and the requirement to implement prevention procedures. As he puts it, that would almost create a new industry of advisers to advise on what needs to be done, be they accountants or third parties. He is right to raise those concerns on behalf of small and medium-sized enterprises.

My hon. Friend the Member for Bromley and Chislehurst asked about setting the threshold at a different level, the small company threshold rather than the current micro company threshold. The small company threshold is 50 employers, £10.2 million of turnover and a £5.1 million balance sheet, according to Companies House, whereas we think a 250-employee threshold would be more appropriate. That is where we differ, but I am happy to continue that conversation.

[Richard Fuller (North East Bedfordshire) (Con)]

I want to ask a question that I do not think was addressed last time we debated Lords amendments, and that I do not think the Government have addressed today. What are the implications if there is an explicit threshold? What further thought have the Government given to the implications of putting in a threshold? Are they satisfied that some of the concerns raised by Opposition Members and Conservative Back Benchers have been taken into account?

[Kevin Hollinrake]

We are very clear that we believe we have the right threshold. Larger companies clearly have the capacity and the human resources and risk compliance departments to mitigate these kinds of risks, whereas small and medium-sized enterprises are rightly much more focused on driving their business forward, which is very important to the economic health of our country. I think we have it right. My hon. Friend made a similar point in our previous debate on this issue, and he makes it very strongly. The fact that both he and my right hon. Friend the Member for North West Hampshire (Kit Malthouse) have made that point today counterbalances some of the arguments on the other side for extending the threshold further.

The hon. Member for Glasgow Central (Alison Thewliss) spoke about my previous comments. I think I have been pretty consistent in everything I have said in the House, unless she can point to anything different I have said from the Back Benches—[Interruption.] The shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), laughs, but I have always been a champion of the “failure to prevent” offence. If Members look back to the original Bill, which I think was 260 pages long—it is now nearly 400 pages long—they will see that I have been very keen to make sure that we listen to hon. Members on things like the “failure to prevent” offence and the identification doctrine, which both now feature in the Bill. All the cases I dealt with on the Back Benches, and indeed the information I have seen as a Minister, show that the kind of fraud the law enforcement agencies have not been able to prosecute is happening in larger companies, not smaller companies.

We believe that these circumstances are different from unexplained wealth orders, for which we obviously put cost-capping measures in place. Of course, unexplained wealth orders are not a process for taking somebody’s assets from them; they are a process for freezing assets. Lords amendment 161B is entirely different. In my view, there is definitely a civil liberties issue in terms of the power of the state versus the power of the individual. This measure potentially delivers an imbalance of power between the state and the individual. I would be keen to have a conversation with the very learned Members in the Chamber, but they must understand that the state is powerful and well resourced compared with the individual. Obviously there are some individuals who are very well resourced, but we still operate on the presumption of innocence in this country, and we have to be very careful. That is why we want a review to look into this and report back to Parliament within 12 months.

We have communicated with the National Crime Agency to ask for evidence on where it feels these measures are needed. All law enforcement agencies want more power and more provision, of course, but I have seen no clear, significant evidence from the enforcement agencies that cost-capping orders would be needed in this situation.

I, too, have spoken to Bill Browder, and I have spoken to officials about whether this measure is needed in the UK regime. Members will be aware that Mr Browder principally looks at the parallels with the US situation, where adverse costs do not apply across the system. Members have talked about the chilling effect of such provisions, but there is potentially a chilling effect on the other side of the equation.

Yesterday I met a barrister who defends people against such actions, and he was very concerned about the imbalance of power that would result. I have not seen any significant evidence, and I am very interested in the evidence that my hon. Friend the Member for Bromley and Chislehurst gave to the Cambridge crime symposium, at which I have spoken in the past, on whether this is needed. However, I am not aware of anything the Justice Committee or the Law Commission has done in this area. It is important that we look at that kind of evidence before we implement these kinds of measures.

The right hon. Member for Barking (Dame Margaret Hodge) accuses me of being party political. I am surprised she takes that view. I have worked on a cross-party basis from the Back Benches and, as she knows, I do the same from the Front Bench, and I will continue to do so to make sure that we get this legislation right.

In conclusion, throughout the passage of the Bill, the Government have worked hard to get the balance right between tackling economic crime and ensuring that the UK remains a place where law-abiding businesses can flourish without unnecessary burdens. The motions tabled by the Government today achieve that balanced and proportionate approach, and I therefore urge Members on both sides of the House to support them.

Lords amendments 23B and 23C agreed to.

After Clause 180

Failure to prevent fraud

Motion made, and Question put,

That this House disagrees with the Lords in their Amendments 151B and 151C and insists on its Amendment 151A.—(Kevin Hollinrake.)

The House proceeded to a Division.

[Mr Deputy Speaker (Mr Nigel Evans)]

Will the Serjeant at Arms investigate the delay in the Aye Lobby?