Insolvency Practitioner Regulation Reform

Kevin Hollinrake Excerpts

Tuesday 12th September 2023 Written Statements

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

The Government have today published their response to their consultation “The Future of Insolvency Regulation”, which was published in December 2021. This consultation was open for 13 weeks and outlined proposals for significant reform to the regulatory framework for insolvency practitioners.

The insolvency profession plays a key role in driving economic growth and supporting those in financial distress. The unique responsibilities that insolvency practitioners bear and the decisions they take help save jobs and businesses, and deliver a fair, effective and orderly winding up to deal with financial failure where that is not possible. The vast majority of insolvency practitioners do a good job in challenging circumstances, but there continue to be instances of poor conduct that directly impact those closely involved. This tarnishes the reputation of the whole profession and undermines confidence. Insolvency practitioners should be regulated within a modern framework that reflects the way the insolvency sector has developed since formal insolvency regulation was first introduced in 1986.

The Government received 102 detailed responses to the consultation. Officials also obtained further relevant evidence through targeted stakeholder engagement. Most proposals received significant support amongst a broad range of stakeholders. We are grateful for the views and evidence provided as part of the consultation process, which has informed the package of reforms we will take forward when parliamentary time allows. This most notably includes:

challenging the current four professional body regulators to deliver significant and measurable improvements to the quality of regulation through non-legislative means, whilst keeping options to replace the current regulatory model with a single regulator of insolvency practitioners under review;

expanding regulation to include firms providing insolvency services, alongside the existing regulation of individual insolvency practitioners;

reforming the way ethical and professional standards for the profession are set;

introducing a public register of authorised insolvency practitioners and firms providing insolvency services, that will include relevant and proportionate regulatory information;

developing and consulting on proposals to introduce a compensation-redress scheme for those affected by an insolvency practitioner’s acts or omissions;

strengthening the bonding framework, which requires insolvency practitioners to hold security in the event of their fraud or dishonesty.

The Government’s response to the consultation reaffirms their commitment to ensuring the insolvency profession is effectively and robustly regulated, with a regulatory framework fit for the future. These reforms, which represent the biggest change to the regulatory framework in nearly 40 years, will address weaknesses with the current regulatory framework, modernise the regime and increase public confidence in regulation.

A copy of the consultation response may be found online at:

https://www.gov.uk/government/consultations/the-future-of-insolvency-regulation

[HCWS1013]

Non-disclosure Agreements in the Workplace

Kevin Hollinrake Excerpts

Tuesday 5th September 2023 Westminster Hall

[Jess Phillips (Birmingham, Yardley) (Lab)]

I want to lend my voice to what has already been said by Members, especially by the right hon. Member for Basingstoke (Dame Maria Miller). She and I came to the issue of NDAs together in one of the most egregious cases—the case of Zelda Perkins, who has already been mentioned and who suffered for years in silence. In that case and others that I have seen, certainly, around Oxford University colleges, I want to stress how the issue of this process being about power and control should not be undermined— this was also mentioned by my hon. Friend the Member for York Central (Rachael Maskell). It is used to victimise people. It is literally the tool of an abuser.

When I met some of the whistleblowers in the Philip Green case, they told me a story about how he had said to them, “Keep on adding zeros. I will pay anything and you will go away.” That was the attitude. That is an abuser standing in front of somebody they know is weaker than they are. This is absolutely classic in all interpersonal violence relationships. They say, “I am more powerful than you. You will do as I say because I am the strong one.” Currently, the laws in our country allow that. The law in our country is written so that that it is completely acceptable for an angry, sexually abusive bully to stand in front of a member of his staff and say, “I am bigger, stronger and better than you.” Currently, we go, “He’s got a point. He is stronger. He has more zeros to add to the end of that cheque. He can shut you up.” That is the situation today. This will be happening to somebody today. Right now, as we speak, somebody who is trying to speak up about something bad happening is being told, “You’re weak. You’re pathetic.” That is a form of coercive control, and a form of violence. It is absolutely a form of victimisation, and I lend my support and voice to the amendments that the right hon. Member for Basingstoke has tabled to the Victims and Prisoners Bill.

The crux of the problem is that we, as lawmakers and policymakers, are saying, “That’s fine. That’s okay. Don’t worry because, you know, trade secrets.” That is the situation today, but let us make it so that tomorrow—

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

The hon. Lady speaks passionately, and I absolutely accept many of the comments made in the debate, but the law specifically does not allow a non-disclosure agreement to prevent somebody from going to the police about a sexual abuser. That absolutely is not the law.

[Jess Phillips]

I did not say that it did.

[Kevin Hollinrake]

You absolutely said that the law allowed that.

[Jess Phillips]

I did not say that the law said that, although incidentally Zelda Perkins’s NDA did say that. I do not know what is written in all the NDAs in the country, although I have quite a lot in my inbox, so I have an idea of some of the things that people get asked for.

Of course what the Minister describes is illegal, but it is not illegal to say, “You can’t speak about this. You can’t tell the woman in the next cubicle along that the man you work for has been groping you, because you’ve been silenced.” That is what we are apparently saying is okay; we are fine with that.

--- Later in debate ---

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

It is a pleasure to serve with you in the Chair, Ms Ali. I commend my right hon. Friend the Member for Basingstoke (Dame Maria Miller) for securing this debate and for her long-standing and effective campaigning in the area of non-disclosure agreements—she will remember that I engaged with that as a Back Bencher—and the negative effect they can have when used inappropriately. I thank hon. Members across the House for their very valuable and passionate contributions.

These agreements, which are also known as confidentiality clauses, can be used in a variety of contexts and contracts—for example, to protect commercially sensitive information. However, I will restrict my comments to the area of concern, which, as Members have discussed, is NDAs used in settlement agreements in cases of discrimination or harassment.

The Government have already taken significant steps to prevent the use of NDAs in the higher education sector to protect students, who are in a particularly vulnerable position as they have moved away from family and support networks for the first time. In January 2022, we introduced a world-leading pledge, with the campaign group Can’t Buy My Silence, that commits higher education providers to voluntarily ending the use of NDAs in cases of sexual misconduct. As of 1 September, 84 providers, covering almost two thirds of students, have signed the pledge.

The Higher Education (Freedom of Speech) Act 2023 goes further and bans the use of NDAs in cases of sexual harassment, sexual misconduct and other forms of bullying and harassment in higher education. It is expected to take effect in 2024, and I recognise the important contributions made by Members here today—my right hon. Friend the Member for Basingstoke and the hon. Members for Oxford West and Abingdon (Layla Moran) and for Birmingham, Yardley (Jess Phillips)—throughout the passage of that Bill.

As a Minister in the Department for Business and Trade, I know that good employers will look to tackle bad behaviour head-on and improve their organisational culture and practice, rather than attempting to cover it up, as the hon. Member for Glenrothes (Peter Grant) clearly outlined. Organisations that do not treat such complaints in the way that he described are, in my experience, missing an opportunity.

Members of this House and organisations such as Can’t Buy My Silence have brought to light examples of where NDAs have been drafted to intimidate employees from making disclosures to anyone, as mentioned by my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon).

It is important to note that there are existing legal limits on the use of NDAs in the employment context. Some key ones were raised by my hon. Friend the Member for Cheadle (Mary Robinson)—I thank her again for all the work she does on the all-party group on whistleblowing—and by the hon. Member for York Central (Rachael Maskell), who talked about the seven NHS staff. An NDA cannot prevent a worker from blowing the whistle. That means that an NDA would be unenforceable if it stopped a worker from making a protected disclosure about wrongdoing, for example, to a lawyer or certain regulatory bodies or other prescribed persons for whistleblowing purposes.

My hon. Friend the Member for Cheadle pointed out that the current whistleblowing regime has limited scope—I think those were her words—and, as she knows, we are now undertaking a review, which will conclude by the end of this year. Indeed, officials involved in that review are in the Chamber today, so they will have heard her points clearly.

[Peter Grant]

We all understand that an NDA cannot prevent an employee or an ex-employee from making certain kinds of disclosures, but that is no good if the former employee does not know that. Does the Minister agree that we should change the law to require every NDA to say explicitly, on the face of the document, that it does not apply to particular kinds of disclosures, so that the former employee who has a copy of the agreement knows exactly what rights they still have?

[Kevin Hollinrake]

I will come on to some other points on that issue, including on the guidance that we have given to ACAS in that area.

NDAs cannot prevent workers from reporting a crime to the police or from co-operating in a criminal investigation, because such a clause would be unenforceable—[Interruption.] I may have misheard what the hon. Member for Birmingham, Yardley said, but it is very important that anybody listening to this debate, who is considering what their rights are, knows very clearly that such an agreement cannot prevent them from reporting a crime in this area.

Furthermore, the use of an NDA by an employer could amount to a criminal offence—for example, if it is an attempt by the employer to pervert the course of justice or conceal a criminal offence. Independent legal advice is a requirement for settlement agreements to be valid.

In 2019, the then Department for Business, Energy and Industrial Strategy consulted on the misuse of NDAs in an employment context. The consultation followed evidence found by the Women and Equalities Committee that individual workers may not be aware of their existing statutory rights and may be intimidated into pursuing claims even where the NDA is unenforceable—a point raised by the hon. Member for Oxford West and Abingdon. Again, my right hon. Friend the Member for Basingstoke does very important work in that area.

The consultation also heard evidence that individuals are pressured into signing NDAs without the appropriate legal advice, and therefore do not understand that their NDA is unenforceable. That is why the Government took action in developing extensive guidance, which was published by the Equality and Human Rights Commission and ACAS. It is clear that NDAs should not prevent individuals from making disclosures to the police and medical or legal professionals.

We have already legislated to prevent higher education providers using NDAs, as I said. We are keen to see how that works in practice, and it will come into force in 2024. The Government held a consultation on the matter in a wider context in 2019. We all agree that these agreements should not be used to intimidate individuals or conceal criminal conduct or illegal wrongdoing, as pointed out by the hon. Member for Strangford (Jim Shannon). I point out to him that it is in the capability of the Northern Ireland Administration to implement that in Northern Ireland if they choose, with the matter being devolved to Northern Ireland.

[Dame Maria Miller]

The Minister wants to do the right thing. He wants to be a role model; he wants to be a good employer; he wants to set the tone. Will he meet me and Can’t Buy My Silence and consider signing its voluntary agreement to stop the use of NDAs? Surely the Government can lead the way on this.

[Kevin Hollinrake]

Of course I will meet my right hon. Friend, and I am very happy to meet the campaigning organisation as well. The consultation found some support for NDAs when they helped victims to make a clean break and move on—I think that point was also raised by the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders). We feel that an outright ban across all organisations may therefore not be appropriate and could have unintended consequences for employees.

The Government have listened carefully to the experiences shared through a consultation on sexual harassment. We are legislating through the Worker Protection (Amendment of Equality Act 2010) Bill, first introduced in the Commons by the hon. Member for Bath (Wera Hobhouse), which will strengthen protections for employees against workplace sexual harassment by placing a duty on employers to take reasonable steps to prevent sexual harassment of their employees.

Protecting and enhancing workers’ rights while supporting businesses to grow remains a priority for this Government. We are clear that the use of NDAs to intimidate victims of harassment and discrimination into silence cannot be tolerated. We are already taking action in the higher education sector; we have published extensive guidance and consulted on the use of NDAs in the workplace; and we are carefully considering how to tackle wrongful practices in a wider context.

Economic Crime and Corporate Transparency Bill

Kevin Hollinrake Excerpts

Consideration of Lords amendments
Monday 4th September 2023 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 6, 7, 9 to 12, 14 to 21, 30, 32 to 34, 54, 68, 115, 117, 120, 124, 125, 173, 174 and 178 to 201. If those Lords amendments are agreed to, I will cause the customary entry waiving Commons financial privilege to be entered in the Journal.

After Clause 46

Register of members: information to be included and powers to obtain it

6.50 pm

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

I beg to move amendment (a) to Lords amendment 23.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss:

Lords amendment 151, and Government amendment (a).

Lords amendment 153, and Government amendments (a) to (c).

Lords amendments 115 and 117, and Government motions to disagree.

Lords amendment 159, and Government motion to disagree.

Lords amendment 161, Government motion to disagree, and Government amendment (a) in lieu.

Lords amendments 1 to 22 and 24 to 55.

Lords amendment 56, Government motion to disagree, and Government amendments (a) to (c) in lieu.

Lords amendments 57 to 114, 116, 118 to 150, 152, 154 to 158, 160 and 162 to 229.

[Kevin Hollinrake]

It is a pleasure to bring this Bill back to the House. It is crucial in ensuring that we can bear down on kleptocrats, criminals and terrorists who abuse our open economy, while also strengthening the UK’s reputation as a place where legitimate business can thrive. I am pleased to say that the Bill is now in a better place and there is a great deal more of it than when it left for the other place back in January. When introduced, the Bill ran to some 239 pages; it is now closer to 400. That reflects the spirit of genuine collaboration across both Houses and the fact that the Government have listened and taken many sensible proposals on board. I take this opportunity to thank Members of both Houses for their collaborative and cross-party approach.

The Government made significant amendments to the Bill in the other place. It is now unquestionably a milestone piece of legislation that takes the UK’s fight against economic crime to an entirely new level. I will summarise a few key changes, starting with the game-changing reforms to corporate criminal liability. As the Minister for Security, my right hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), committed to, the Government tabled amendments to introduce a new failure to prevent offence, which will drive cultural change towards improved fraud prevention in organisations and, failing that, hold organisations to account with prosecutions if they profit from fraudulent actions.

[Layla Moran (Oxford West and Abingdon) (LD)]

I thank the Minister for giving way so soon. It is undoubtedly a positive thing that failure to prevent, or at least part of it, has now been included in the Bill, but does he have any sympathy for those warning that because this measure is targeting the larger firms, the small boutique firms—the one-man bands that are very aware of what they are doing and know how to get around the system—will still be allowed to freely operate? Would he consider supporting the Lords amendment that would close that particular loophole?

[Kevin Hollinrake]

I will speak in detail to the various amendments, including the non-Government amendments, one of which is on the threshold that the hon. Lady refers to. If I may, I will defer addressing that until later in my remarks.

The Government have also introduced reforms to the identification doctrine for economic crimes to make it easier to prosecute corporations in their own right for these offences. The House will know that this is the largest and most meaningful change to corporate criminal liability in decades. It will have a transformative effect on our ability to hold corporates to account for the actions of criminal individuals. I thank 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) for all their work and engagement to further the cause for the reform of corporate criminal liability.

We have also made amendments to tackle strategic lawsuits against public participation, known as SLAPPs, that feature economic crimes. We believe that this is the first national legislation in the world to combat SLAPPs. The new clauses will enable an appropriate, fair and effective early dismissal procedure against SLAPP cases. I very much thank the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) for his work in this area.

Members will also be pleased to hear that the Government have tabled amendments to improve the new statutory objectives for the registrar of companies, and I hope my hon. Friend the Member for Barrow and Furness (Simon Fell) and the hon. Member for Feltham and Heston (Seema Malhotra) in particular will welcome these improvements, given their previous amendments.

We also recognise the points made by several Members of this House, as well as in the other place, about the role of authorised corporate service providers in the identification process, and we have tightened the framework. Our amendments will improve the transparency of ACSPs, including by requiring verification statements made by ACSPs when they carry out ID verification on behalf of an individual to be made publicly available on the register.

Furthermore, we have tabled a number of important amendments to strengthen and increase the transparency of the register of overseas entities, which I trust the hon. Member for Aberavon (Stephen Kinnock) and the right hon. Member for Barking (Dame Margaret Hodge) will welcome, given the amendments they proposed in Committee. I must pay tribute to my ministerial colleagues Lord Sharpe of Epsom, Lord Johnson of Lainston and Lord Bellamy for all the work they have done to get this important Bill to where it is now.

[Jim Shannon (Strangford) (DUP)]

May I thank the Minister? He always brings his points of view to the Chamber with clarity and helpfulness, and that is appreciated by everyone, including me.

We as a party are of a mind to support the Government on this Bill tonight. I want to ask a question that is probably very specific. It relates to Northern Ireland, where criminal gangs—that is what they are; they masquerade as paramilitaries, but they are criminal gangs—delve into business and economic crime. I am seeking assurance from the Minister—I think he probably will respond positively, but at the same time I seek to get his response on the record. Will this Bill ensure that criminal gangs that use illicit money and launder money from across the whole of Europe and further afield will be accountable, by ensuring that we can catch them, detain them and put them in jail?

[Kevin Hollinrake]

I thank the hon. Gentleman for his work and his intervention. It is clear that fraud and money laundering are already criminal acts; what the Bill principally does is help to prevent fraud by requiring organisations to make sure that fraud is not happening within them in the first place. I think he has spoken to that in the past, as have I as a Back Bencher. I fully support it as the Minister concerned, and I absolutely believe that the Bill will have a major impact in clamping down on economic crime.

We must do more to tackle crime, but we must also ensure that the UK remains a great place to start and grow a business. As such, the Government strongly oppose putting additional burdens on legitimate business, unless there is a clear rationale for doing so. Any amendments made to strengthen the Bill have been carefully weighed up, and the Government are confident that we have struck the right balance in tackling economic crime and preserving the UK’s welcoming business environment.

[Sir Jeremy Wright (Kenilworth and Southam) (Con)]

I know that my hon. Friend will come on to make points about failure to prevent offences in relation to burdens on small businesses. May I tell him first that I welcome wholeheartedly the arrival of failure to prevent offences? Like my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), I have argued for that when I was Attorney General and since, and I am glad to see it. In relation to failure to prevent and Lords amendment 151 in particular, the Minister will wish to argue that he is seeking to prevent excessive burdens on smaller organisations by limiting that offence to large organisations, but can he explain why subsection (4) of the new clause introduced by Lords amendment 151 does not do that job? It states:

“It is a defence for the relevant body to prove that, at the time the fraud offence was committed…the body had in place such prevention procedures as it was reasonable in all the circumstances to expect the body to have”.

Why would one of those circumstances not be the size and capacity of the organisation in question?

[Kevin Hollinrake]

I thank my right hon. and learned Friend for his point and his work in this area. I will come on to that amendment, if I may, later in my remarks. He makes a valid point, and we want to ensure there are no loopholes while at the same time maintaining the position that the Bill does not put new burdens on businesses that are not likely to have a systemic effect on economic crime.

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

I interrupt my hon. Friend to pick up the intervention he received from my right hon. and learned Friend the Member for Kenilworth and Southam (Sir Jeremy Wright). I warn those on the Front Bench about what he just said. Leaving the burdens on business to the courts or whichever procedures to define is not a reasonable protection for small businesses. They need the protection that the Minister outlines, because in such circumstances people will go to the most conservative position they can. Although my right hon. and learned Friend suggested that that would provide significant and effective protection, it will not do so in practice as behaviour will change and burdens will increase. I think the Minister is getting the right balance on this.

[Kevin Hollinrake]

My hon. Friend makes the other point, and these measures are about the delicate balance that we want to strike, ensuring that the right provisions are in place to prevent fraud without putting undue burdens on business. I am pleased that those interventions reflected both those positions so that we can see the legislation holistically rather than just through the lens of failing to prevent fraud.

[Dame Margaret Hodge (Barking) (Lab)]

Will the Minister give way?

[Kevin Hollinrake]

If I may, I will make a little progress on that point.

We believe that the six non-Government amendments for debate would pose significant and disproportionate burdens on business, penalising reasonable companies and businesspeople with limited evidence that the burdens would be outweighed by any meaningful benefits. I will go into each amendment in detail, but I will begin by emphasising the Government’s position. We must insist that the balance achieved in the Bill through Government amendments made in the other place is maintained.

[Dame Margaret Hodge]

I am grateful to the Minister for saying that, because it was on that point that I wanted him to give way. Does he not think that any honest, upright business, whether large, small or micro, would aim within its own procedures to avoid fraud or money laundering?

[Kevin Hollinrake]

The vast majority of the business community is honest and upstanding—that is the point. What we are trying to ensure is that those businesses are not disproportionately affected by putting in controls, checks and balances. I speak as a businessperson who did have to implement failure to prevent bribery and tax evasion measures in our business, and I tell the right hon. Member that there were significant administrative burdens around that legislation, and I believe they would be more so for fraud. I will come to that point in more detail.

I turn to Lords amendment 23. The inclusion of lines 84 to 96 would require all UK companies to declare whether they are holding shares on behalf of or subject to the direction of another person or persons as a nominee, and if so to provide details of the person or persons. Fundamentally, that is not necessary. Provisions in the person with significant control framework, as strengthened through the Bill, already require the disclosure of a person of significant control behind a nominee on pain of criminal sanction for non-reporting. That achieves the same intent. A combination of measures already in the Bill, the material discrepancy reporting regime in the Money Laundering and Terrorist Financing Regulations 2022 and Companies House’s new intelligence hub will more effectively flush out undeclared PSCs and deter the provision of false information.

I am afraid that the proposed approach is something of a blunt instrument. It would apply to all shareholders, when we should be focusing on the transparency of individuals exerting significant influence as already provided for under the PSC framework. As such, we would risk burdening millions of companies and their shareholders with new information requirements for no useful purpose. The proposition may sound sensible, but nominee arrangements can be complex, including having multiple layers of nominees and large numbers of beneficiaries for entirely legitimate reasons. For example, pension funds that own shares in a company would be caught. Listed companies would be particularly impacted as their shares are often held by nominee arrangements for legitimate administrative reasons—for example, in stocks and shares individual savings accounts, by custodian banks and by corporate sponsored nominees.

Listed companies report similar information about those owning 3% or more of their shares to the Financial Conduct Authority, so the Lords amendment would partly duplicate existing arrangements. In summary, lines 84 to 96 of the amendment risk disproportionate burdens on legitimate actors and would most likely be ignored by illegitimate actors. Those acting as nominees on behalf of shady individuals behind the scenes are already adequately on the hook if found to have provided false information, as is the company itself.

The effect of inserting those lines into part 8 of the Companies Act 2006 would be to cut across a tenet of UK company law: those running a company—usually the directors—must know its legal owners and act in the interests of the legal owners of the company. Those legal owners are recorded on the register of members. Companies shall have regard to their members record and not, for example, to anyone holding any underlying beneficial interest in their shares.

Lords amendment 115 would introduce two new duties for overseas entities. It would first require event-driven updates on beneficial ownership information and, secondly, require overseas entities to update their record no more than 14 days before the completion of a land transaction rather than the existing requirement to do so annually. Although the amendments are well intentioned, they would significantly increase burdens on both overseas entities and third parties transacting with them, as well as introduce an element of risk in land transactions that the annual update prevents.

As my ministerial colleague Lord Johnson of Lainston explained in the other place, in the case of an overseas entity that owns large commercial premises split into units, the amendment could result in the entity needing to provide updates twice a month, which is a disproportionate burden. There are a number of other technical challenges and impracticalities with setting such a duty on these entities. The Government are not alone in those views. The Law Society of Scotland, the Law Society of England and Wales and the British Property Federation have all expressed their concerns. The Government therefore cannot support the amendment.

Lords amendment 117 would make information about trusts submitted to the register of overseas entities publicly available by removing it from the list of material listed as unavailable for public inspection. It is important to note that the information on trusts is already provided to the registrar when an overseas entity registers on the register. Furthermore, the registrar already discloses trust information to His Majesty’s Revenue and Customs, law enforcement and other persons with functions of a public nature if and when necessary and appropriate. This is not a loophole.

In the other place and in this House, including from the right hon. Member for Barking, the Government have heard and acknowledged that there is a case for broader transparency over trust arrangements beyond law enforcement agencies. The Government therefore added a regulation-making power in the law to allow third-party access to trust data in certain circumstances. That will enable individuals such as civil society organisations and investigative journalists to access such information under certain circumstances.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I am grateful to the Minister for his thanks for the progress we have made together on SLAPPs. Because of the amendment made on SLAPPs, we are now providing journalists and other truth-tellers with important protections when it comes to investigating economic crime. The Lords amendment is a complement to that. The truth is, there will never be enough enforcement resources for Companies House, HMRC and others, so we do need civil society to be able to bring the disinfectant of sunlight and undertake investigations. It is therefore vital that trust information is provided. Has he seen the new research published by Arun Advani, Andy Summers and their colleagues that shows that the current arrangements shield something like 152,000 properties from that transparency? If we genuinely want to be able to investigate where things are going wrong, where there is corruption, surely it is in the national interest for us to make that information more widely available.

[Kevin Hollinrake]

I thank the right hon. Member for his intervention. I have seen the report and the media release around it and we do not accept those numbers or the interpretation of beneficial ownership used in drafting the report. Nevertheless, we share his concerns and absolutely want to ensure that transparency will be greater than it is today.

The Government have every intention of exercising the power and intend to ensure that access can be granted in a straightforward way. Information currently held by Companies House was submitted by overseas entities in the expectation that it would not be available for public inspection. Making such information available for public inspection would come with a number of risks, including the possibility of legal challenge. Moreover, publishing the data by default would likely have significant unintended consequences, including potentially exposing information about vulnerable individuals and minors. It is therefore right that the Government take the time to consult properly on this important issue to address the benefits and risks of greater transparency and how this can be achieved.

[Nick Smith (Blaenau Gwent) (Lab)]

On transparency and trustees, the Minister says that he does not accept the estimate of 150,000 properties that ought to be looked at in more detail, as my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), said. What is the Government’s estimate of the properties that need transparency?

[Kevin Hollinrake]

Around 3,000 entities have not properly registered at this point in time. Enforcement action is being taken on them: some 100,000 communications already have gone out to those particular entities, and a number of fines have been issued—about half a million pounds in fines so far. We do not accept those numbers. We are happy to have a conversation with whoever has concerns about the legislation so far. We do not want legislation that cannot be properly enforced and implemented. It is important that we compare like-for-like to ensure this legislation is fit for purpose.

[Sir Chris Bryant (Rhondda) (Lab)]

I may have misheard, but I think the Minister said that enforcement activity is going on against 100,000 companies—he will correct me when I sit down—and that there have been half a million pounds-worth of fines. That would be £5 a company, would it not?

[Kevin Hollinrake]

It would be if the hon. Gentleman’s numbers were right, but that is not what I said. Three thousand entities are not currently registered, to our knowledge. Many of those will have already ceased to exist or will have disposed of the property they owned. We are trying to find out the exact numbers. That is about the enforcement action. We have had 100,000 communications with those 3,000 entities, and half a million pounds of fines so far, but those fines can rise exponentially if they continue not to comply properly with the legislation.

[Liam Byrne]

The Minister has wisely equipped himself with an order-making power, which he referred to earlier. He told the House that he plans to undertake a consultation. It would be of comfort to some in the House—not to all—if he could tell us when he plans to launch that consultation and, in his own mind, when he would like the consultation to be implemented through the power with which he has equipped himself.

[Kevin Hollinrake]

We intend to launch the consultation by the end of the year, and we would like the regulations in place as soon as possible. It is quite clear that we want to do that. We all agree on the transparency—I agree with the right hon. Gentleman’s point that sunlight is the best disinfectant. I am absolutely keen to do it, but we must make sure we do it right. We do not want any unintended consequences. It is right that we consult widely with the different sectors to make sure that this legislation—and the regulations, when they come—are fit for purpose.

[John Penrose (Weston-super-Mare) (Con)]

When my hon. Friend does his consultation, will he reassure those of us who are anxious to maintain the distinction between significant control and general beneficiaries? If he is going to try—rightly—to protect minors for example, who he mentioned in his earlier remarks, will he focus on people who may be misusing trusts because they have control of them? That might be trustees—in some cases it could be beneficiaries if they have effective control of the trustees as well, but in many other cases it will not. Will he try to make sure that he makes that distinction? It is absolutely essential and reads directly across from the persons of significant control legislation that we have elsewhere in disclosing information about shareholdings as well.

[Kevin Hollinrake]

I thank my hon. Friend for all his work in this area. He makes the point very well. We need to ensure that when we bring forward these measures, they are properly considered and do not result in unintended consequences. He may want to raise those points as part of that consultation when we launch it.

The Government firmly believe that their own amendment and their commitment to consult better achieve the aim of improving trusts’ transparency, as intended by Lords amendment 117, while ensuring that we have time to analyse and stress test the risks in greater depth, including legal risks. We therefore do not support the amendment.

Lords amendment 151, in effect, removes the threshold, as right hon. and hon. Members have already raised, that the Government introduced as part of the failure to prevent offence, which exempts small and medium-sized entities. As I have set out, the Government are extremely mindful of the significant pressures that small companies are under, and do not want to place unnecessary and duplicative burdens on legitimate businesses.

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

I agree that we have made huge progress on the Bill, but why is the threshold on small businesses not present in the failure to prevent bribery and tax evasion offences? They are alike offences that have caused a regulatory burden to already exist. What difference will the Bill really make? Why are we not giving it the full fat treatment?

[Kevin Hollinrake]

I think there is a difference in the regulatory burden of failure to prevent fraud versus failure to prevent bribery and tax evasion. It is more complicated to do it, so it would have a much greater impact on SMEs than bribery and tax evasion. It is a balance of risk and benefits when making sure where those regulatory burdens sit.

--- Later in debate ---

[Dame Margaret Hodge]

I hear the Minister’s plea on behalf of SMEs, and I have sympathy that we do not want to overburden them with regulation, particularly small businesses. However, the threshold that the Government have chosen to set for exclusion from the failure to prevent fraud is extremely high. If I take just one example, law firms—he will know as well as I do that lawyers are among the key enablers of many schemes that lead to both fraud and money laundering—out of the 10,400 law firms in the UK, only 100 will be caught by the legislation as it is currently framed. Is he willing to negotiate with us on the Back Benches and members of the House of Lords to look again at the level at which he defines an SME in this legislation?

[Kevin Hollinrake]

The threshold is set at one of these three: 250 employees, £36 million turnover or £8 million in gross assets. We think that is the right level. We always listen to what the right hon. Lady has to say. The legal sector is covered by current money laundering regulations, as is the estate agent sector, for example. It is not right to say that they are not covered by money laundering regulations.

[Liam Byrne]

The Minister is being characteristically generous. I, too, respect what he is trying to do with the regulatory burden. I have taken a business from two people and a business plan and grown it into a multi-million pound organisation, so I respect what he is trying to do on regulation. However, does he not risk the growth of businesses with a turnover just below £36 million—perhaps £35 million—explicitly set up to be the conduits for bad behaviour? He will remember at the public Bill evidence sessions that representatives from the financial services community told us about the way in which money came into a bank and was split up between several different organisations and their bank accounts to blur what was really going on before the money went on to be laundered. Is there not a risk that clever people who are corrupt will just set up a whole hive of small businesses with a turnover below £35 million, to circumvent the safeguards that we are all trying to put in place?

[Kevin Hollinrake]

I do not accept that. It would be extraordinary if someone set up a business just for the purpose of keeping turnover below £36 million. Besides, it is already much easier to pinpoint fraud in small organisations than larger organisations. That is already the case. It is easier to take forward those kinds of prosecutions on that basis.

[Sir Robert Buckland]

My hon. Friend is being very generous. I have two points on that. First, I take the point that the Government amendments have already mitigated the issue about parent companies and the division into subsidiaries—that is welcome. But the threshold has been taken from modern day slavery legislation. What is the separate rationale for that threshold in the context of economic crimes? I have not heard any.

Secondly, money laundering is already a criminal offence under the Proceeds of Crime Act 2002, just like fraud, false accounting and theft. Why on earth are we conflating the regulations that are all about neglect, which are used by the FCA admittedly on some major cases, but not that often, with what is already a criminal offence? Why can we not just extend money laundering, which already is part of the regulatory burden of businesses in any event?

[Kevin Hollinrake]

I will come to the point about money laundering and broadening the sectors that money laundering regulation applies to, but, on SMEs, in my experience, in the work I did as a Back Bencher and in the work others have done, every case of fraud or money laundering I have seen has been by larger companies, not small companies. A number of cases the Serious Fraud Office has tried to take forward have been against larger companies, which is where the failure to prevent requirement comes in. It is much easier to take forward—

[Sir Robert Buckland]

rose—

[Kevin Hollinrake]

I will just finish my point.

It is much easier to take that forward where the failure to prevent offence comes in, of course. The act of money laundering is a criminal offence—of course it is—and the act of fraud is a criminal offence. This is about a failure to prevent those activities and imposing that would, in our view, impose a significant regulatory burden on businesses.

[Sir Robert Buckland]

I am grateful. The Minister is right to cite the SFO, but he knows that the threshold the SFO applies is very high. It will only prosecute high-value, complex or novel cases. It does not deal with the warp and woof of fraud in this country. He is right to say that the majority of this fraud is committed by byzantine, large organisations, but I have to ask him again: what is the regulatory burden? We know that companies already have to face regulations anyway. We have failure to prevent offences. Why is it—I suspect it is the hand of the Treasury, with respect to him—that the Treasury is trying to hold things back on this offence?

[Kevin Hollinrake]

My right hon. and learned Friend says it is the Treasury. Actually, I am responsible for the business framework and I am concerned about putting £4 billion of regulatory burdens on businesses. That burden has been calculated in the same way that we calculated the burden for bribery, so I think it is a figure we can rely on. Our natural position is that we do not regulate businesses that would find it more difficult to deal with that regulation. That tends to be SMEs. They might find it more difficult to deal with regulation, rather than larger companies, where it is easier to put those controls in place.

We have heard arguments that the threshold means 99% of companies will not be in scope, but we do not think the number of companies is the right metric by which to assess the effect of the new offence. We believe economic activity is more appropriate. I can assure the House that 50% of economic activity would be covered by the organisations in scope of this new offence with the threshold in place. It is, of course, already easier for law enforcement to prosecute fraud in smaller organisations that fall below the threshold. Given those factors, the Government cannot support the amendment.

Lords amendment 158 seeks to introduce a failure to prevent money laundering offence. The UK already has a strong anti-money laundering regime which requires the regulatory sector to implement a comprehensive set of measures to prevent money laundering. Corporations and individuals can face serious penalties, ranging from fines to cancellations of registration and criminal prosecution if they fail to take those measures. The money laundering regulations and the money laundering offences in the Proceeds of Crime Act are directly linked and can be seen as part of the same regime. A failure to prevent money laundering offence would be hugely duplicative of the existing regime. In our conversations with industry, it has been very clear that that duplication would create a serious level of confusion and unnecessary burdens on businesses. We should be supporting legitimate businesses, rather than hampering them with overlapping regimes. The Government therefore do not support the amendment.

Lords amendment 160 would prevent enforcement authorities from having to pay legal costs in unsuccessful civil recovery proceedings, subject to certain intended safeguards. This type of amendment would be a significant departure from the loser pays principle and therefore not something we should rush into without careful consideration. The risk of paying substantial legal costs is just one of a multitude of factors that inform an operational decision to pursue an asset recovery case.

Several hon. Members and noble Lords have pointed to the similar changes made to the unexplained wealth order regime by the first economic crime Act, the Economic Crime (Transparency and Enforcement) Act 2022. The key difference is that UWOs are an investigatory tool that do not directly result in the permanent deprivation of assets, whereas civil recovery cases covered by the amendment could do so. There could, therefore, be a host of serious unintended consequences of such a change to the wider civil recovery regime, so the Government cannot support the amendment. However, we recognise the strength of feeling on the issue and the potential merits of reform. We have therefore tabled an amendment in lieu which imposes a statutory commitment to review the payment of costs in civil recovery cases in England and Wales by enforcement authorities, and to publish a report on its findings before Parliament within 12 months.

I hope the House is assured that the amendments the Government have laid are minor but sensible tweaks to the Bill. As I have set out, the Government have listened and made substantial important amendments to the Bill throughout its passage, significantly improving and strengthening the package where we recognise improvements could be made and where it makes sense for businesses. We must now, however, stand firm where we believe the amendments will not work or will place disproportionate burdens on businesses. I very much hope Members will support our position today and that the other place will note the Government’s movement on cost protection and reconsider its position on the six amendments when the Bill returns there. We must get on with implementing the vital measures in the Bill without further delay.

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

It is a pleasure to speak in this debate on behalf of myself and my hon. Friend the Member for Aberavon (Stephen Kinnock). I thank the Minister for his opening remarks, and for the call last week with him and his officials. I thank the officials, pay tribute to their work on the Bill, and thank all those who have supported and taken part in the Bill’s proceedings.

We are in no doubt about the importance of the Bill. Britain has become a global hub for dirty money. The cost of economic crime now runs to as much as £350 billion, equivalent to our annual health and education budgets combined. Economic crime hits our constituents and our businesses. It hurts our public finances and it damages our reputation around the world. Action on economic crime was first promised in 2016, then 2018 and 2019. It matters because in the years from 2016 we saw a significant increase in economic crime, much of which could have been prevented if the Government had acted then. It took the invasion of Ukraine for the Government to step up. Strengthening the law has been urgently needed, which is why the Labour party has actively supported the Bill’s important passage through both Houses and sought to ensure that we leave no loopholes unchecked. Where the Government fail to act, we will.

We recognise that the Bill has made real progress in strengthening the law to tackle economic crime and its enablers. I particularly thank my right hon. Friends the Members for Barking (Dame Margaret Hodge) and for Birmingham, Hodge Hill (Liam Byrne), my hon. Friend the Member for Rhondda (Sir Chris Bryant), and the all-party parliamentary groups on anti-corruption and responsible tax and on fair business banking for their research and relentless campaigning for change. I also thank other Members who have made significant contributions to our debates, including some who are here: the hon. Member for Cheadle (Mary Robinson), the right hon. and learned Member for South Swindon (Sir Robert Buckland) and the right hon. and learned Member for Kenilworth and Southam (Sir Jeremy Wright). The Bill brings significant reform of Companies House, improving the accuracy and transparency of the register, with new powers for the registrar to become a more active gatekeeper over company creation.

Let me speak first to Government amendments which we support. I congratulate the Minister on the number of U-turns on areas that Labour argued for in Committee and on Report, including on closing loopholes around third party enablers and introducing a failure to prevent fraud offence. We welcome Government amendment 1, passed in the other place, which would expand the scope of objective 2 in clause 1, requiring Companies House to also take into account the accuracy of information already on the register before the Bill comes into effect. Government amendments 35 to 50, which all relate to the authorisation of corporate service providers, are vital amendments, especially amendment 35, which requires the registrar to publish the name of the authorised corporate service provider who has carried out ID verification. We welcome amendment 43, which requires the registrar to refuse the application for authorisation as a corporate service provider if it appears that the applicant is not a fit and proper person to become an ACSP.

Government amendments 146 to 150 introduce further provisions limiting SLAPPs that feature economic crime. I particularly thank my right hon. Friend the Member for Birmingham, Hodge Hill for his advocacy on this issue throughout the passage of the Bill and in Committee. SLAPPs are a form of abusive proceedings. It is for us to send a signal and to change the law in the public interest. I would, however, ask the Minister for clarity on the Government’s intention to cap costs via secondary legislation, set out in one of the Bill’s factsheets. It would be helpful if he could give us an idea of when the Government are considering doing that, and how quickly he expects it to happen.

Lords amendments 151 to 158 introduce an offence of failure to prevent fraud, which I know was a priority for the Minister as well before he took on his present role. This is a huge step forward, which also follows considerable pressure and work between the Government and both the Opposition and their own Back Benchers throughout the Bill’s passage. The amendments take us forward, but the evidence shows that we need to go further, which is why we will support Lord Garnier’s amendment 159.

--- Later in debate ---

We sought further amendments to tighten this and prevent these brass plaque addresses from being used for hundreds and thousands of companies. There is certainly more the Government could be doing to ensure that trusts do not fall down on this point; allowing people to register trusts in a similar way will result in the same issues.

[Kevin Hollinrake]

Is the point not that in the 400 pages of legislation we have before us we are doing exactly that: closing these loopholes, making it easier for businesses and making it easier for Companies House to make sure that these entries are valid? We are also committed to increasing the fees at Companies House to make sure that the proper resources are in place for it. Indeed, we have increased the resources for enforcement at the National Crime Agency by 40% since 2019, with this now standing at just below £800 million a year.

[Alison Thewliss]

I thank the Minister for that point, but the number of incorporations is massive and the resource to Companies House is not keeping pace to check on each and every company that is going. I direct him to the tweet from Graham Barrow highlighting some of these issues, because there are so many companies and we need as many eyes as possible on this data. Companies House does not have the resource to do this and neither does law enforcement. Allowing those researchers who have the time, expertise and patience to tease out this data to do this and do it well is important. They must be allowed to do this.

Let me turn to the amendment on failure to prevent fraud, from Lord Garnier. I recall the Minister being keen on such an amendment beforehand and there is an awful lot more the Government could be doing on this. As other Members have said, if this can be done for bribery and tax evasion, there is no reason why doing it for fraud should present an additional burden. As the Minister himself pointed out, 99% of businesses are not in scope under what is being proposed here—again, that is ludicrous.

There is also an effect on small and medium-sized businesses to consider, because they also stand to lose money through fraud. They stand to be targeted by those who want to commit this fraud. So those businesses that are perhaps more exposed—those local businesses that do not have the power to stand up to those who would bully them to engage in such activity—are put at risk and should be better protected by this legislation, were they to be kept in line with it.

--- Later in debate ---

[Dame Margaret Hodge]

I shall start where that brilliant speech by the right hon. and learned Member for South Swindon (Sir Robert Buckland) ended. I would also say to the Minister, and also to the Minister for Security, the right hon. Member for Tonbridge and Malling (Tom Tugendhat) were he still in his place, that they have shown from their time as Back Benchers a real understanding of all the issues around economic crime. They knew what needed to be done. They helped to develop the agenda that would work through smart regulation, transparency, tough enforcement and proper accountability. When the Bill arrived in the House, it was, I hope the Minister will agree, a bit half-baked. I am not blaming the civil servants in the box, but it was a bit half-baked. It was full of loopholes and serious omissions. But in this year that we have been considering the legislation, it has gone through tremendous transformations, so I salute the Minister for what he has done, but urge him to go that step further. I thank the Labour Front-Bench team for their assiduous and detailed work on this, but I particularly salute the Back Benchers—Back Benchers from all parts of this House who have joined together to bring forward a set of pragmatic, practical amendments that really will make this Bill fit for purpose. I also thank those in the House of Lords who have worked across parties, with the Cross Benchers, to ensure that we have some serious amendments that will give us a good framework to start the eradication of the malignant infection that we have with dirty money.

I say to the Minister: do not undo that good work; do not emasculate what has happened and where we have got to; and do not give into the voices of enablers who want to make a fortune on the back of dirty money. I wonder, as the right hon. and learned Member for South Swindon has wondered, why on earth is the Minister not listening to what we are saying. Everybody in Parliament wants this. Everybody in the country wants this. Nobody supports dirty money. As I have said time and again, the country will not sustain economic prosperity and wealth on the back of dirty money. There is no future in that. I give the Minister another commitment, which I really regret having to say. I will not be here, but I want a future Labour Government to commit to never having a system that allows any political party to exist on the back of donations of dirty money. I say: do not let this opportunity go. Do not betray the principles and do not cave into the lobbying. The Government should look at the excellent amendments and please go forward.

I wish to focus on some new points. Lord Agnew’s excellent amendment in relation to trusts needs to be considered. The Minister said that he did not accept the research that was published today by really respected academics. These are people I have worked with over the years in whose work I have total and utter confidence. I challenge the Minister to bring them in and talk to them and then see if he comes to the view that what they are saying is not true. What they are saying is that we do not know the beneficial owner of 70% of the properties identified as owned by an overseas entity. And we do not know the beneficial owner of two thirds of that 70% because there is a trust that hides the real beneficial ownership. The Minister should have regard to what they say, as they are distinguished. I urge him to talk to them. I am happy to join in a meeting with them. In 87% of cases where information is either missing or inaccessible, it is because of Government choices in the design of the scheme. It is not because people are not obeying the law. It is because the Government have chosen to design the scheme in that way.

[Kevin Hollinrake]

rose—

[Dame Margaret Hodge]

I am conscious of time, but I will give way to the Minister.

[Kevin Hollinrake]

When the LSE looked at beneficial ownership, I think that it included tenants of properties rather than the ownership of properties, and the register of overseas entities only deals with the ownership of those properties. There is definitely some disconnect between the Government’s position on this and the legislation and the interpretation that has been taken with this research from LSE.

[Dame Margaret Hodge]

I have met the key academics involved in this on a number of occasions, and I urge the Minister to do so as well. I think the differences are between the entities and the properties. We started asking for a register of properties that were owned by overseas entities in 2012, 2014 and 2016. It was absolutely ages ago. It was when David Cameron was Prime Minister. It was finally enacted last year, but it has been enacted badly. I have to say that it is the secrecy that matters. We can have transparency and we can protect vulnerable people. Transparency will enable all eyes—many, many more eyes—to interrogate the data and the Minister knows that to be true.

Let me put in this basic point. He and I own properties. We are not ashamed of showing the ownership of those properties. Why should we reveal the ownership of the properties in which we live, when rich people—often kleptocrats, often criminals, often money launderers—are able to use trusts as a mechanism to hide their ownership? That is a basic unfairness that the Minister should deal with. May I quote to him the words of one of the firms of lawyers that is exploiting the loophole? It is Payne Hicks Beach—Baroness Fiona Shackleton is a member of that firm. The firm says:

“On the face of it, the lacuna would seem to defeat the purpose of the legislation”—

this is lawyers saying this—

“so may be tightened up”—

hopefully tonight—

“in the future, but for the time being, using a nominee to hold UK property will continue to provide privacy as far as the ROE is concerned.”

Lawyers are exploiting that loophole, and we should stop it because—I hope that the Minster will agree with this—it is damaging our sanctions policy. Usmanov has been able to hide a lot of his wealth in property through trusts. Abramovich has done it, Fedotov has done it, and it is time that we brought it to a stop.

The other key issue is the failure to prevent. I will quote to the Minister what he said time and again. This is not about additional burdens on SMEs, or filling the courts with criminal cases; this is about trying to change the behaviour in our society, so that preventing fraud and money laundering becomes embedded in our culture, in the same way that preventing bribery has become embedded in business culture. The example that the Minister used when he was on the Back Benches is very potent. When we used to have a lot of accidents and deaths on construction sites, we reformed the health and safety at work legislation. We did not suddenly fill the courts with builders and construction people being taken to court, but overnight the number of accidents went down by over 90%. That is the principle that we are working on. That is the evidence that we want to use, and it is vital that we do it here.

--- Later in debate ---

[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

I would like to pay my respects to my hon. Friend the Member for Feltham and Heston (Seema Malhotra) for her excellent opening on our behalf, as well as to my right hon. Friend the Member for Barking (Dame Margaret Hodge) for her excellent knowledge and understanding. The time she has put in is just unbelievable. She spoke about Bill Browder—no one can read his work without realising just how serious this issue is. I also thank my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), who covered it so aptly and brought it down to how dangerous and very serious this is for our democracy and our economic equality. What could happen, and what I think will happen, is frightening.

I want to focus on the importance of legislating on the failure to prevent fraud and money laundering, which are crimes committed in the shadows. Currently, there is a severe lack of provisions to prevent economic crime, which we know is the best, cheapest and most effective way to tackle our dirty money problem. These crimes are committed and witnessed by some of the most senior professionals at a company, and even if they are not participating but just happen to witness fraud, surely they must be under a legal duty to report it. Amendment 159 was introduced in the other place, and I pay my respects to the other place for its absolutely wonderful scrutiny of the Bill. I commend it to the Minister. He has spearheaded the Bill to where it is now, but he just needs to go that bit further.

We must have reasonable prevention mechanisms in place. The failure to prevent measures would work on multiple fronts. First and foremost, they would act as a deterrent, forcing companies to act and to take economic crime seriously if they know they would be held liable. Deterrence is proven to work. As a health and safety professional, I know that regulations to make companies and directors liable made tremendous inroads on health and safety. We may wonder why there were always so many disputes on construction sites, but it was because there was no health and safety. The workers had to fight for everything, and they could not do it without legislation. That is why we are here: to tackle things when they are not being tackled, and economic crime is not being tackled at the present time. That legislation resulted in a 90% drop in deaths and serious injuries on construction sites, which could have involved just building a few houses.

Secondly, regulatory factors such as the fines that exist are not sufficient to bring about the required change. After all, the fines could be a lot less than these companies are earning from economic crime, and they become a cost factored into doing business for those companies. This cannot be right, and it simply cannot continue. To our shame, Britain is the global hotbed of economic crime, at a cost of £350 billion a year. The people of Ukraine are feeling the impact of this unchecked economic crime, as some of the main benefactors have been Russian oligarchs, the Russian state and Putin himself. There are the Magnitsky sanctions, but it tells us a lot, does it not, when Putin kills his own people as a deterrent? When we look at the invasion of Ukraine, we cannot sit back and let this continue unchecked.

The Government amendments to cover this do not go far enough. Well-organised criminal entities would easily get around legislation that only touches the largest companies and the largest businesses. They take advantage of small and medium-sized businesses, as my right hon. Friend the Member for Birmingham, Hodge Hill said. That is exactly what they do—they do whatever it takes. They are cleverer than us, and they are doing it now. Well-organised criminals will get around it. As 64% of companies have experienced fraud, this would help those companies.

The Government legislation fails to make failure to prevent money laundering an offence. The justification for doing that is the money laundering regulations, yet there has been only one corporate conviction since they were introduced—that of NatWest in 2021. Clearly, the money laundering regulations are not good enough. The new legislation would make companies prove that they have the right procedures in place to prevent money laundering. This is the type of tough legislation we need to crack down on economic crime. For too long Britain has been the laundromat for foreign despots and dictators.

I heard a Member across the Floor talking about feeling the chill; what is more chilling than seeing what is going on and turning a blind eye, not washing the blood off our hands for the crimes against humanity committed for the very money being laundered around our country? I urge the Minister—I know where his heart is—not to throw away this wonderful opportunity to save so much. Democracy is at risk. It really is not acceptable. Please be brave enough—be brave enough and you will sleep at night.

[Kevin Hollinrake]

I thank all Members for their contributions. I will not reiterate all the points I made in my opening speech, which addressed many of the points raised in the debate but shall talk to a few of the points made.

My right hon. and learned Friend the Member for Kenilworth and Southam (Sir Jeremy Wright) made some points that were also reflected by my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland). My right hon. and learned Friend the Member for Kenilworth and Southam challenged me to explain why subsection (4)(a) of the proposed new clause in Lords amendment 151 does not prevent excessive burdens on SMEs. That measure says we must have in place “such prevention procedures” and there is a concern that many millions of SMEs across the country would have to put in place prevention procedures despite there probably being no chance of any fraud at that organisation. So there would be burdens that otherwise would not exist on those businesses.

[Sir Jeremy Wright]

The Minister is right, but subsection (4)(a) refers to

“such prevention procedures” as are

“reasonable in all the circumstances”,

so in very many cases that would be a very minimal requirement and probably only what companies that are behaving responsibly are doing already. Secondly, as I am sure the Minister is about to point out, subsection (4)(b) states that it might not be

“reasonable in all the circumstances to expect the body to have any prevention procedures in place.”

So if it was not considered reasonable to have any, it would be possible to rely on that defence if they did not.

[Kevin Hollinrake]

I think my right hon. and learned Friend will accept there will also be a requirement to analyse actuarily the business to see what risks there are, and any perceived risk would of course require those prevention procedures to be put in place. We have analysed this and tried to get some context around the costs to businesses and think it would be in the order of £4 billion, so there would be significant burdens. For that reason, we are not persuaded to change our threshold.

Let me correct myself to the hon. Member for Rhondda (Sir Chris Bryant). I was only out by a factor of 100 when I talked about the number of warning notices sent to overseas entities; 1,000 warning notices have been sent.

The hon. Member for Feltham and Heston (Seema Malhotra) talked about the introduction of SLAPPs, and we are clearly keen to do that at the earliest possible time. We have to work with the Civil Procedure Rule Committee to implement a new cost protection scheme for SLAPPs defendants and the early dismissal mechanism via secondary legislation as soon as possible. We cannot give a definite date, however.

I thank my hon. Friend the Member for Cheadle (Mary Robinson) for all the work she does with the all-party group on whistleblowing, which I was heavily engaged with as a Back Bencher. We have a review of whistleblowing that should conclude by the end of 2023. On extending SLAPPs to areas of our economy outside the economic sector, we are considering further legislative options. Clearly, in this proposed legislation it could only pertain to economic crime due to the extent of the Bill.

The hon. Member for Glasgow Central (Alison Thewliss) rightly talked about enforcement resources and also some of the limitations in the current regime, and that is exactly why we are legislating. The provisions we will make will increase the incorporation fee for Companies House. In addition to the £63 million we have put in to pump-prime this work—the extra people at Companies House will therefore be resourced, and there are already 400 people there to enforce the provisions of this legislation—we expect to increase incorporation fees to around £50 and also to extend the costs of annual returns to raise the money as necessary to make sure that the requirements of the Bill are fully implemented.

[Alison Thewliss]

Given the woefully low number of fines for false filing and the single one for not registering a person of significant control for Scottish limited partnerships, will we see that increase?

[Kevin Hollinrake]

That is exactly why we are legislating. These are the biggest reforms to Companies House in 170 years. We have to legislate first and ensure that the resources and the enforcement are in place. We are on the same page in this area.

Business and Trade

Kevin Hollinrake Excerpts

Thursday 20th July 2023 Ministerial Corrections

The following is an extract from the 11th sitting of the Digital Markets, Competition and Consumers Public Bill Committee on 29 June 2023.

[Kevin Hollinrake]

Of course, as part of my role, or my successor’s role if I move from this position back to the Back Benches or wherever, we regularly have meetings with the CMA to discuss its activities and where it is using its powers. Indeed, we write an annual letter to the CMA, which sets out where we expect its focus to lie.

[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 29 June 2023, Vol. 735, c. 283.]

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

An error has been identified in my contribution. The correct information should have been:

[Kevin Hollinrake]

Of course, as part of my role, or my successor’s role if I move from this position back to the Back Benches or wherever, we regularly have meetings with the CMA to discuss its activities and where it is using its powers. Indeed, we write a letter to the CMA, which sets out where we expect its focus to lie, and update this when required.

The following is an extract from the 13th sitting of the Digital Markets, Competition and Consumers Public Bill Committee on 4 July 2023.

[Kevin Hollinrake]

The provisions apply specifically to traders to consumers, not traders to businesses. On how we determine the exemptions, such as for magazines, delivery services, gyms, software and so on, a range of stakeholders, including regulators, businesses and consumer groups, developed the list and the scope of sectors that are exempt from the subscription measures.

[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 4 July 2023, Vol. 735, c. 344.]

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

An error has been identified in my contribution. The correct information should have been:

[Kevin Hollinrake]

The provisions apply specifically to traders to consumers, not traders to businesses. On how we determine the exemptions, a range of stakeholders, including regulators, businesses and consumer groups, developed the list and the scope of sectors that are exempt from the subscription measures.

The following is an extract from the 14th sitting of the Digital Markets, Competition and Consumers Public Bill Committee on 11 July 2023.

[Kevin Hollinrake]

The CEO and chair of the CMA regularly appear before the relevant Select Committee—five times as the hon. Member said. Most recently, they appeared before the House of Lords Communications and Digital Committee. Indeed, they meet me on a regular basis, and we also provide an annual strategic steer.

[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 11 July 2023, Vol. 736, c. 406.]

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

An error has been identified in my contribution. The correct information should have been:

[Kevin Hollinrake]

The CEO and chair of the CMA regularly appear before the relevant Select Committee—five times as the hon. Member said. Most recently, they appeared before the House of Lords Communications and Digital Committee. Indeed, they meet me on a regular basis, and we also provide a strategic steer.

Post Office Horizon IT Scandal: Compensation

Kevin Hollinrake Excerpts

Tuesday 18th July 2023 Commons Chamber

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

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the interim report of the Post Office Horizon IT scandal inquiry relating to compensation.

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

I thank the right hon. Member for his question and his tireless campaigning on this issue. I am also grateful to Sir Wyn Williams for his work and for publishing his interim report. We will, of course, consider that properly in the coming days and provide a formal response to the House.

Sir Wyn’s report recaps the progress made in delivering compensation. He notes our repeated commitment, which I reiterate again, that that compensation should be full and fair. He notes allegations from some lawyers that there are impediments to providing such compensation, but says that he cannot see any legal reason why we cannot deliver our commitment. He is right, and that commitment will be delivered.

Sir Wyn’s first four recommendations deal with the advisory board, of which the right hon. Gentleman is a member. As he knows, the board was established at the instigation of my Department, and its composition and remit were extended as a result of discussions between Ministers, officials, himself and the rest of the board. It has already performed a very valuable service. Notably, its last meeting made recommendations about an appeals process independent of the Post Office. We are considering that recommendation and will reply in due course.

Sir Wyn also refers to the tax treatment of compensation payments. The right hon. Member will acknowledge that when we worked with him and the board on that matter, it resulted in £26 million of additional payments in the historic shortfall scheme, and exemptions from income tax, capital gains tax and national insurance contributions. Sir Wyn also suggests that we should legislate to extend the deadline for the group litigation order compensation scheme.

As we have stated, we will not let an arbitrary date stand in the way of paying full and fair compensation to postmasters. As compensation is being delivered under the sole authority of the Appropriation Act, spending on it is limited to a two-year window that closes in August next year. The Government are determined to deliver compensation by that date. That remains perfectly possible, but challenging. If it seems likely that we will not be able to compensate everyone in time, we shall of course consider legislation, as Sir Wyn recommends. I want to deliver by that date not for some legalistic reason, but in the interests of postmasters who have waited too long for justice.

[Mr Jones]

May I start by declaring an interest, as a member of the Horizon compensation advisory board? I thank the Minister for his remarks and for the positive and constructive approach with which he has addressed this issue. I also thank Sir Wyn and the inquiry for their ongoing work. I agree with many of Sir Wyn’s recommendations. I would be interested to know exactly when they will be responded to, especially because a lot of them were in the note that the advisory board sent to the Minister at the last meeting.

The three compensation schemes have become unwieldy, but the fundamental point is that equal and fair compensation has to be paid to all the people across the three schemes. I would be interested to know from the Minister when the recommendations will be addressed, particularly on extending the remit of the advisory board. I accept what he says: our aim—and certainly his—is to get compensation to people as quickly as possible.

The elephant in the room that needs to be addressed is the continued obstructive role of the Post Office. I found it remarkable that yesterday on BBC radio, the chief executive, Nick Read, said that the “sheer scale” of the problem has

“gone above and beyond anything that anybody could realistically expect”.

That begs the question of what he has been doing for the last four years and why he has been accepting bonuses for his and his management’s role in the inquiry.

The inquiry was stalled last week because again, the Post Office failed to disclose documents to it. When is this issue going to be dealt with? It either gets dealt with, or Nick Read and the entire board have to be sacked. The Minister knows, because he has met many of the people who are waiting for compensation, that they have gone through a lot. They need justice, and they need action. Ill-conceived comments from the present chief executive of the Post Office are rubbing salt in the wounds of the victims. Either he has to go, or something has to radically change at the Post Office.

[Kevin Hollinrake]

I am grateful to the right hon. Gentleman for his work. He is right to say that there are three schemes, which might be described as suboptimal. As Sir Wyn has said on this occasion and previous occasions, we are where we find ourselves, and we must push on. That is the easiest way and the best way to get compensation for those affected.

I referred in my initial remarks to the request that the right hon. Gentleman has made for an appeal mechanism. We are considering that carefully. I think he would acknowledge that whenever he has come to me with something that he thinks we should consider, we have always done that and are keen to deliver the mechanisms that the board requires.

The delays in disclosure were unacceptable, without question, and the Post Office has apologised for that. You are only as good as your last game, and the Post Office has to up its game; there is no doubt about it. We have a governance review into earlier issues around remuneration and the metrics regarding bonuses, which were found to be completely inappropriate. We are waiting for that report, which I should receive by the end of this month. We will take that under advisement, as we do any other evidence we receive about the operation of the board of the Post Office.

[Bob Blackman (Harrow East) (Con)]

I thank my hon. Friend for the update. Some 555 individuals have suffered incredible destitution and injustice for far too long. This has gone on for more than 20 years, and some people have died during this process. Will he ensure that the Post Office owns up to what it has done and that the individuals who were responsible for covering this up 20 years ago are brought to justice, rather than this leaving a stain on the reputations of the postmasters and postmistresses, who are totally innocent of any crime?

[Kevin Hollinrake]

I am grateful to my hon. Friend for his work on this issue. He is right: 62 people have passed away while awaiting compensation. It is simply unacceptable. My Department is looking at creative ways of accelerating the process of providing compensation to the victims.

I agree with my hon. Friend about the need for people to be held to account, and I spoke about that on a number of occasions from the Back Benches. It is right that people are held to account. It is also right that due process is followed. Sir Wyn Williams’s inquiry is there to identify what went wrong and why and who was responsible, and once that is done we should make a judgment about what happens to those people, but I am keen, like my hon. Friend, that people are held to account.

[Mr Speaker]

I call the shadow Minister.

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

Nine hundred prosecutions—all the postmasters involved have their own stories of dreams crushed, careers ruined, families destroyed, reputations smashed and lives lost. Innocent people have been bankrupted and imprisoned. This may well be the largest miscarriage of justice in our country’s history, and I pay tribute to Members on all sides of this House who have worked for justice, none more so than my right hon. Friend the Member for North Durham (Mr Jones). I also thank the advisory board and Sir Wyn for their work, as well as the Minister for the constructive approach he has taken on this issue to date.

However, as Sir Wyn’s interim report makes clear, the compensation schemes for postmasters are a mess. The commitment to give fair compensation should apply to all postmasters. Sir Wyn specifically recommends that terms of reference should enable the monitoring of individual cases. Can the Minister say that he will act on that recommendation, and when can we expect him to respond in full to the report’s recommendations, including maximising the use of the Horizon compensation advisory board and providing clarity about the tax status of compensation payments? Can he also provide a final figure for claims that have been made to the historical shortfall scheme and how much the Government anticipate the final compensation will cost?

I also ask the Minister what he is going to do about Post Office management. As the only shareholder in the Post Office, does his Department take responsibility for addressing those management issues? The leadership team accepted bonuses for their work on the inquiry, which is just unacceptable. When will the Minister deal with this? Sub-postmasters have had their lives ruined: they must be confident that lessons will be learned from those failures. Sadly, it seems that the Post Office has failed to do so.

[Kevin Hollinrake]

I add my thanks to the advisory board and the right hon. Member for North Durham, but also to Lord Arbuthnot—who is a tremendous campaigner in this area—and other individuals such as Professor Moorhead, who we were keen to include on the advisory board. I also thank campaigners on both sides of this House who made sure that the issue came to light and that action was taken to address these horrendous situations.

On individual cases, as I said to the right hon. Member for North Durham, we are looking at Sir Wyn’s recommendation. There is an appeals mechanism, and condition D of the terms of reference does not prevent us from looking to make sure that claims have been settled fairly and fully. That is something we are looking at and we will respond in due course. On the tax position, as I said earlier, we have provided an extra £26 million to address that. We are keen to make sure that not only all the settlements, but all the tax treatments of those settlements are fair across the board. On the totals for the historical shortfall scheme, we have made offers totalling over £100 million in value and £72.8 million has been accepted, so we have made good progress, but we are keen to make further progress on the remaining claims that are yet to be accepted.

On the Post Office management, there have been a number of unacceptable matters relating to what has happened in the governance of the Post Office. That is why we put in place a governance review, which is being conducted by a very competent legal firm. It is due to report by the end of this month. We will study that review carefully and respond accordingly.

[Karl MᶜCartney (Lincoln) (Con)]

The Minister in place at the moment will realise that former colleagues have stood at the Dispatch Box and given excuses. The procrastination from his Department has been terrible and the effects are ongoing. Fulsome and full compensation is to be welcomed, but the word that was missing from the Minister’s statement was “timely.” Therefore, the first part of my question is this: why two years? Why not two months or two weeks? Pay the compensation to the postmasters affected.

The second part of my question is about the senior management team. So far, they have got away with it. They need to be held to account, as do their IT consultants. When will something positively be done to bring those people to book?

[Kevin Hollinrake]

Again, I know my hon. Friend was one of the key campaigners on this particular issue. I cannot speak for previous Ministers—although I have a great regard for my immediate predecessor certainly—who have dealt with this issue. I have not seen any procrastination and we are driving this as quickly as possible within the Department.

On why not two weeks, rather than two years, settling compensation claims is complicated. It is about specific instances of pecuniary losses and non-pecuniary losses; it is complicated. We are keen to get that money out the door as quickly as possible and, as I have said, we are looking at creative ways to do that. I am just as ambitious as my hon. Friend is to get that money into the hands of the people who need it. There have been interim payments of around £20 million on both outstanding schemes—the GLO and overturned convictions schemes. Nevertheless, full and fair compensation is what we desire.

On people being held to account, I refer my hon. Friend to what I said earlier. We need to see the results of the inquiry—that is what Sir Wyn Williams is there for and we need to see the outcome of his inquiry—and, where he can identify blame, we are very keen to make sure those people are held to account.

[Mr Speaker]

I call the SNP spokesperson.

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

I do not know where to start—there is so much—but here I go. The SNP welcomes Sir Wyn Williams’s interim report on compensation. His recommendations would go a huge way to ensuring that victims are fully and fairly compensated, and it is about time. The enhanced role for the Horizon compensation advisory board is welcome as well. But the question, as one hon. Member has already said, is: when is this all going to happen? I know the Minister cannot give us an answer to that today, but he updated something I had in my notes: it is now 62 claimants who have died without receiving full and fair compensation. We need to move this on.

Funnily enough, we had a meeting of the all-party parliamentary group on post offices this morning, at which the chief executive officer of Post Office Ltd appeared and answered some questions. The culture at Post Office Ltd has not changed since the new CEO took on his role in 2019. He promised to change the culture; he has not yet done so. We are mired in obfuscation still, and we cannot get to the truth of stuff because of the delay in providing evidence to Sir Wyn’s inquiry. Will the Minister agree to put pressure on the CEO to get this done?

[Kevin Hollinrake]

The hon. Lady is one of the Members of Parliament I engage with more often than not in this place and she does a fantastic job, not least in chairing the all-party parliamentary group on post offices, so I thank her for her work. I agree with everything she said about the pace of delivery, the quality of delivery from the Post Office and making sure it meets its obligations. We have this constantly under review and we are driving this issue. We are determined to look at creative ways to accelerate compensation for all those affected by this, so we can finally draw a line under the matter. I accept we will not draw a line under it until we have held people to account for what has gone wrong, so that is something we are extremely keen to do.

[James Sunderland (Bracknell) (Con)]

Where there has been such a grave miscarriage of justice, it strikes me that we should be pulling out all the stops to ensure that justice is done and in a timely fashion, so perhaps the Government might consider bringing criminal charges against the Post Office and its IT advisers as a way of accelerating the process.

[Kevin Hollinrake]

On pulling out all the stops, I could not agree more, and that is definitely what we are doing in the Department. My days are never without one or other post office issue, which is not the situation we want. On bringing forward criminal charges, of course the Government do not do that, but when our enforcement agencies determine that there have been criminal actions, wherever those criminal actions have emanated from, we would of course expect them to take action.

[Mr Speaker]

I call the Chair of the Business and Trade Committee.

--- Later in debate ---

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

The victims of the Post Office Horizon scandal should be fully compensated, so that they are put back into the position they would have been in had they not been a victim of this miscarriage of justice in the first place. The Minister has agreed with that statement from the Dispatch Box before, but it is not happening. Can I say that it is not a complicated process to be able to quantify their losses and to be able to compensate them fully? My Committee, I understand the advisory board and the statutory inquiry have suggested that one way to try to improve this is to remove the Post Office entirely from this process and to make it an independent process, properly budgeted, with the requirement to fully compensate the victims in the way I have described. Why will the Government not just do that?

[Kevin Hollinrake]

I thank the hon. Member for his work in challenging us in this area. I would probably push back a bit. It is complicated to assess loss. Both I and the right hon. Member for North Durham sat in on a long call with the HSS panel recently and some eminent lawyers gave us a lot of confidence that this was being done right, on an inquisitorial basis, but it is complicated to assess those losses. I would refer to Sir Wyn Williams’s comments. He basically says that we should carry on what we are doing. He would not necessarily have advised this route in the first place, but what he says now is that the best thing we can do is push on with the frameworks we have in place. There are three different schemes. We need to push them on more quickly of course and I am very keen to do that.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

As a former post office counter clerk myself, I understand at first hand how the Horizon IT debacle had a devastating impact on postmasters, their families and their businesses. Will the Minister assure the House that lessons have been learned from this terrible case?

[Kevin Hollinrake]

Certainly, we have learned the lesson in this place to heed those warnings more quickly. I am sure the new management of the Post Office have seen what has gone wrong, and we are clearly keen to make sure it never happens again. I do not think we will be able to say we have learned the lessons and this will not happen again until we have received the final results of the inquiry and then decided what action can be taken against the individuals responsible, because that will be the ultimate deterrent in stopping these things happening again.

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

The significance of Sir Wyn bringing forward an interim report of this sort is something that should not be underestimated. I was with the hon. Member for Motherwell and Wishaw (Marion Fellows) in the APPG meeting this morning and it was clear that, as far as the chief executive of the Post Office is concerned, in dealing with historical matters such as this, he sees it as a major barrier to changing the culture within the Post Office. Whether that is a reason or an excuse remains to be seen, but he has to ensure that that barrier is removed so that there can be no further excuses about changing the culture.

[Kevin Hollinrake]

I agree, and we are determined to play our part in that of course. I was very grateful for the report and I have read the recommendations. Clearly, there is a lot of detail in the report that I want to study and consider fully, but I thought it was very helpful. I did not see anything in the recommendations I immediately objected to. As I say, I want to make a good study of those things, but a number of different processes have to take place. We have to give due process the time to do its work in making sure that we establish exactly what has gone on, so that we can put those matters right.

[Paul Howell (Sedgefield) (Con)]

I, like many others, have sub-postmasters who have suffered in this space. I would just like to thank Members across the House, most notably the Minister, his predecessor, my hon. Friend the Member for Sutton and Cheam (Paul Scully), the hon. Member for Bristol North West (Darren Jones)—I was on the Select Committee when we were particularly looking at this issue, and thank him for his time on that—and obviously the right hon. Member for North Durham (Mr Jones) for his energy there. Could I just reiterate what so many have said and ask the Minister to accelerate, with all energy, the payments to the victims, and will he please follow through on the consequences for the Post Office leadership and its IT consultants?

[Kevin Hollinrake]

I thank my hon. Friend for the points in his question, and we absolutely agree that we need to accelerate compensation payments. As I say, we have made significant progress on the HSS scheme. For the two other schemes—the GLO scheme and the overturned convictions scheme—we need to get those payments resolved as quickly as possible. There have been around £40 million of interim payments through those schemes, but the full and fair compensation—the final compensation—is where we need to get to. On holding people to account, he will have heard what I said earlier and I absolutely agree with him on that point.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

The report states that there are

“something like 230-250 late applications to be determined and that there may yet be significantly more”

late applications as well. Can the Minister confirm that those applications will be seriously considered and that those victims may be entitled to compensation? Can he provide an assessment as to whether the numbers I have quoted are accurate or are actually higher?

[Kevin Hollinrake]

The hon. Gentleman raises an interesting point, as does Sir Wyn Williams, and we are looking at that recommendation carefully. It is our intention that everybody who has been affected by this is fully and fairly compensated, and we will look at any further issues that might get in the way of that. We are keen to resolve those kinds of issues.

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

I have been involved in the investigation into the Post Office Horizon scandal since my arrival in this House back in 2010, representing my constituents Mr and Mrs Rudkin. By 2014, following the investigation by Ron Warmington of forensic accountants Second Sight and his evidence, I knew that they had been wrongly convicted. The right hon. Member for North Durham (Mr Jones) knew and had evidence that they had been wrongly convicted. The Post Office had evidence that they had been wrongly convicted. Importantly, the Government had evidence that they had been wrongly convicted. Will the Minister explain why, more than nine years after we all knew they were innocent, they are still waiting for full, fair compensation and closure on this issue? They are the real victims in all this—the sub-postmasters.

[Kevin Hollinrake]

We certainly agree with that, and we should leave it to the Williams inquiry to establish who knew what when, and what could have been done earlier, and hold those people to account. Getting wider compensation out to those affected is the No. 1 priority, and the why, who and when is a secondary point to ensuring that people are fairly compensated. That is the No. 1 thing on my agenda, and I thank the hon. Gentleman for all his work on this issue over a number of years.

[Tonia Antoniazzi (Gower) (Lab)]

Will the Minister explain why Fujitsu, whose IT software is at the heart of this scandal, continues to win Government contracts, including a recent extension to a Post Office contract worth £42 million?

[Kevin Hollinrake]

Those decisions are made by others, not by me, so I cannot comment on those specific cases. The hon. Lady raises an interesting point. To be fair, in this country people are still innocent until proven guilty, and it is right that due process is followed and guilt established before we make decisions on how we treat companies or individuals down the line. Like me, she would like to see the full results of the Williams inquiry as soon as possible, so that we can determine blame.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

Decent, honest people—postmasters—have had their lives ruined and been put in prison, and they are now being made to wait years for justice and compensation. The public inquiry also exposed racism and discrimination at the Post Office’s Fujitsu-run IT help desk during the Horizon scandal. Will the Minister outline what the Government are doing with regard to the appropriateness of Fujitsu winning public contracts in future?

[Kevin Hollinrake]

I dealt with that question a second or two ago. It is right that the presumption of innocence is followed until proven otherwise, and the Williams inquiry is looking at Fujitsu’s role in this, as well as the roles of individuals in the Post Office and elsewhere. With regard to the document he refers to, clearly that is inappropriate, and the Post Office has apologised for it. That document, among others, forms part of the Horizon inquiry, which will need to establish the full facts before we decide what action to take.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Member for North Durham (Mr Jones) and others who have assiduously pursued this matter and doggedly ensured a Government response. I know of postmasters who have lost their shirts because of the dreadful scandal. While it might be acceptable to push the date back on paper, in reality that could mean more defaults on payments and loans, and further humiliation for those people who have been tarred as dishonest, when we all know them to be decent and honourable. Can something be done to ensure that those who need it the most now have access to their reparations, as that will help them on the road to recovery from the trauma that they are feeling at this moment in time?

--- Later in debate ---

[Kevin Hollinrake]

I am grateful to the hon. Gentleman for speaking out about this matter on a number of occasions. One of my constituents—Sam Harrison of Nawton near Helmsley—passed away prior to receiving full and fair compensation, and that situation should never have been allowed to happen. Interim payments are available, so some compensation is available. In the terrible situation where somebody has passed away, that compensation will still be paid to their estate. That is slim comfort of course, and the hon. Gentleman’s central point that we should get the money out the door as quickly as possible is one I totally agree with.

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

Some individuals who have already been compensated have been devastated to find that a significant portion of that money has gone straight to paying back creditors. They are then in the position of having to make a second compensation claim, suffering additional stress and anxiety. What talks have there been about ensuring that any payments made are sufficient to cover all expenses, as well as properly compensating individuals for their hardship and loss, without the need for additional claims?

[Kevin Hollinrake]

I am grateful to the hon. Lady for her question, and I am happy to look at any specific cases. If she is talking about those who are bankruptcy claimants, Sir Wyn in his report agrees with our view that insolvency practitioners should not be able to take a share of group litigation order compensation. We have taken advice from specialist counsel on how best to deal with that issue, and we will look to take further action on that in due course.

Strikes (Minimum Service Levels) Bill

Kevin Hollinrake Excerpts

Consideration of Lords message
Monday 17th July 2023 Commons Chamber

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

I beg to move, That this House disagrees with Lords amendment 2D.

This House has been asked these questions before and twice this House has said no with an overwhelming majority. We are asked to consider for a third time an amendment that significantly expands on previous versions that have already been rejected. Members of the other place referenced the report of the International Labour Organisation’s committee of experts as a reason to reconsider. However, I should note that this ground has already been well covered by both Houses. It was argued that Lords amendment 2D requires Ministers to do what the ILO is requesting: to undertake consultation when considering introducing regulations to implement minimum service levels. The Bill already requires Ministers to do just that, as they have done in undertaking public consultations on their intentions to bring forward minimum service levels to passenger rail services, ambulance services and fire and rescue services. Impact assessments were published alongside those consultations and final impact assessments will be published alongside the regulations the Government bring forward for approval in Parliament in due course.

My colleague Lord Callanan was right to say in the other place that the ILO did not say that the legislation was not compatible with ILO conventions. It simply said that it should be compatible and that we should ensure that it is. As stated in Parliament when introduced and throughout its passage, the Bill is compatible with the UK’s international obligations. The Government will continue to uphold their international obligations as the minimum service regulations are introduced.

Lords amendment 2D also seeks to ensure that the “reasonable steps” that unions should take to make sure that their members comply are considered as part of the consultations that are required before minimum service regulations are made. Members will recall that when this House last considered the Bill, I confirmed that the Government were willing to consider whether there was a case for providing further detail on the reasonable steps that unions must take under new section 234E to ensure that identified workers comply with a work notice given by an employer. In the light of the recommendations from the Joint Committee on Human Rights and points raised in both Houses during the Bill’s passage, the Government accept that further detail would give unions more legal certainty and foresight with regard to their obligations than the Bill provides in its current form. The Government will therefore introduce a statutory code of practice on the reasonable steps that must be taken, using existing powers under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. These powers enable the Secretary of State to issue a code of practice to promote the improvement of industrial relations.

[Rachael Maskell (York Central) (Lab/Co-op)]

Will the Minister spell out exactly how trade unions are to comply with and enforce a code that is outwith their jurisdictions in making workers go into work?

[Kevin Hollinrake]

The code of practice will be consulted on so that all parties are clear about what the obligations of the unions will be. We expect them to be quite straightforward. They have been debated at length, along with various ideas about how this might operate.

[Rachael Maskell]

rose—

[Kevin Hollinrake]

I want to end my speech shortly, but I will give the hon. Lady one last chance to intervene.

[Rachael Maskell]

As has been pointed out on numerous occasions, the measures that the Minister is trying to introduce are outside the jurisdictions of trade unions, which therefore do not have the powers to implement them.

[Kevin Hollinrake]

As I have said, we intend to consult with all parties to make sure that they have a chance to comment on what reasonable obligations a union might be required to take. I think that it is pretty straightforward, and, indeed, unions will be familiar with the code of practice on picketing that was issued under section 203 of the 1992 Act. This code will be subject to statutory consultation, including consultation with ACAS, and to the approval of Parliament. The consultation will give trade unions, employers and any other interested parties an opportunity to contribute to practical guidance on the steps that a union must take in order to make it as practicable, durable and effective as possible.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

If the Minister is so willing to consult, why is he rejecting an amendment which confirms that there should be a consultation?

[Kevin Hollinrake]

We are not happy with a number of other parts of the amendment. We are proposing a measure that we have already proposed in earlier debates. It is, of course, up to those in the other place to decide how they take their amendments forward, but we believe that this is fair. We are satisfied that it is an effective way to provide for clarity, and that the individual consultations for specific minimum service levels in relevant services required by Lords amendment 2D are not needed. The real impact of the amendment would be a delay in the implementation of minimum service levels, given the additional and lengthy consultation and parliamentary requirements which we strongly suspect are its purpose. Unnecessary delays in the protection of the lives and livelihoods of those whom we have been elected to represent cannot be justified.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

--- Later in debate ---

[Richard Burgon (Leeds East) (Lab)]

The Minister has let the cat out of the bag in relation to the Government’s attitude to this dreadful Bill and to amendment 2D from the other place. The Minister objected to Lords amendment 2D because it would delay the implementation of the Bill. Let us be clear: the Bill makes history for all the wrong reasons. It is the biggest attack on the role of our trade unions in our democracy for many a long year. Why are the Government so desperate to rush the Bill through? One almost thinks they cannot stomach the idea of even a small delay because they want it to be presented at the Conservative party conference as a bit of red meat to the party faithful—classic anti-trade union politics and trade union bashing.

Let us think about where we are in terms of industrial relations. The Bill, which the Government do not want to consult on properly, comes shortly after over 100,000 nurses in this country voted to take strike action—the result in that recent ballot was that 84% of nurses who cast a vote did so to take strike action. However, because of the Government’s dreadful Trade Union Act 2016, an 84% vote in favour of strike action does not count, is worthless and does not result in strike action, because the turnout was 43%.

The Government helped drive down the turnout by not allowing people to vote by electronic ballot. The former Prime Minister, the right hon. Member for South West Norfolk (Elizabeth Truss), who made such a mess of this country in her short tenure, was elected by electronic ballot of Conservative party members. Not allowing people to vote by electronic means reveals the contempt the Government have for the biggest voluntary organisations in our society—the trade union movement. They will not even give workers in our country the modern dignity of being allowed to vote online or in the workplace.

The Government object to Lords amendment 2D and do not want to consult on it. Is that any wonder? The greater the consultation that takes place in relation to this abhorrent Bill, the more it becomes clear that the Bill is a complete offence. Let us be clear: the Bill, which the Government do not want to have a proper consultation on, requires trade unions to take reasonable steps to get their own members to break trade union picket lines. This Bill requires trade unions to completely change their function in our democratic society. It is the job of a trade union to persuade trade union members to honour a strike vote, not to break a strike. We see the hand of this authoritarian Government attempting to extend into our trade unions, trying to try to use them as a tool of the state to do the bidding of a Conservative Government, or the bidding of employers. The Bill is rotten and it is no wonder that the Government do not want to consult on it. Any fair-minded person, whatever their politics, would realise that that is not the function of trade unions in our society. We have heard Ministers boasting about how this will result in people being sacked if they do not comply with the requirement to go to work.

[Kevin Hollinrake]

indicated dissent.

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[Mick Whitley (Birkenhead) (Lab)]

May I draw the attention of the House to my entry in the Register of Members’ Financial Interests?

The Lords have been set an unenviable task in attempting to amend a piece of legislation as ill-conceived as this one. As a lifelong opponent of the principle of an unelected second Chamber, I am surprised to find myself now commending the thoughtfulness and diligence that the other place has demonstrated in its many sittings concerning this legislation. It has been a breath of fresh air when compared with this Government’s recklessness in attempting to rush the Bill through Parliament.

I rise in support of Lords amendment 2D. Its purpose is simple: to ensure that perhaps the most significant piece of trade union legislation to be considered by this House in more than a century is subject to appropriate scrutiny before it is added to the statute book. I wish to repeat the comments that I made when we considered the Lords amendments on 22 May. I said that no number of amendments could ever salvage this Bill. It is rotten to the core. It targets a right that should be sacrosanct in any democracy—the right to withdraw our labour.

In sectors such as education and health, the provisions of the Bill will hobble the ability of working people to fight for the dignity and fairness that we all deserve in the workplace, and make the trade unions themselves unwilling accomplices in undermining the effectiveness of their own industrial action.

Worse still, in sectors such as air traffic control or nuclear decommissioning, minimum service regulations will, in effect, amount to a ban on taking any strike action at all. Ministers have repeatedly insisted that their policies towards the trade union movement conform with international standards and our treaty obligations. That was not the view taken by the High Court last week when it quashed the Government’s law allowing employers to bring in scab labour to break strikes. The court’s verdict was damning: that the Government’s approach was so unfair as to be “unlawful” and, indeed, “irrational”.

Despite the claims made by this Government that the International Labour Organisation supports minimum service standards, the director general of the ILO has made an unprecedented intervention in voicing his concern about the effects of the Bill on workers and of the Government’s strategy of imposing minimum service requirements on workers instead of encouraging them to be negotiated between unions and management.

Most embarrassingly of all for the Government, the Bill has been slammed by their own independent Regulatory Policy Committee as being not fit for purpose. The question that all of us should be asking is why the Bill was not withdrawn the moment the RPC slapped it with a red rating in February. Why are we still debating proposals that have been condemned by not only my friends in the trade union movement but a vast swathe of trade associations and the business community? Their verdict is astoundingly clear: they do not think the Bill will work. They are concerned, with good cause, that it will make industrial relations in this country worse. They simply do not want the Bill.

The answer is simple. The Government are aware of their impending electoral oblivion. They are intent on driving through reforms that will realise their decades-long dream of a world in which workers are stripped of all their rights and left helpless at the whims of their employers. It is about time for a little more candour from those on the Government Benches.

[Kevin Hollinrake]

I thank all Members for their contributions to the debate. I think that it is time to agree to disagree with some of the points that have been made by Opposition Members. The Bill is compatible with our international obligations, which the Government will continue to uphold. We have announced a new code of practice, which will provide the clarity that Opposition Members have been asking for throughout the Bill’s passage. I encourage the other place to take note of the strong view of this House, and that its will should be respected.

Question put, That this House disagrees with Lords amendment 2D.

Post Office Horizon IT Inquiry: Interim Report

Kevin Hollinrake Excerpts

Monday 17th July 2023 Written Statements

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

The Post Office Horizon IT Inquiry is led by retired high court judge Sir Wyn Williams who has over 28 years’ judicial experience. Sir Wyn is tasked with ensuring there is a public summary of the failings which occurred with the Horizon IT system at the Post Office leading to the prosecution and conviction of postmasters, with 86 having those convictions quashed to date, and the incorrect repayment of shortfalls by thousands more. The inquiry will look to establish a clear account of the implementation and historic failings of the system starting from its roll-out in the late 1990s.

Today the Post Office Horizon IT Inquiry has published an interim report, which has been laid before the House. The report can be found at: www.postofficehorizoninquiry.org.uk.

Government will review this report and consider how to respond to its content in due course.

I would like to thank Sir Wyn Williams and to everyone in his team for their ongoing work and commitment to delivering the inquiry’s work on these issues. It is vital that we establish the facts behind this scandal and learn the lessons so that something like this can never happen again.

[HCWS950]

Post Office Ltd: Management Culture

Kevin Hollinrake Excerpts

Thursday 13th July 2023 Westminster Hall

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

It is a pleasure to speak with you in the Chair, Sir George. I thank the hon. Member for Motherwell and Wishaw (Marion Fellows) for securing today’s important debate and for her constant work in this area on the all-party parliamentary group on post offices. It is always a delight to work with her in these areas. We share her passion for the post office network and the services that it provides to communities up and down the country.

A positive management culture is paramount for the health of any organisation, so I welcome today’s debate on the culture of the Post Office. As raised by the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), culture is critical to any organisation. As Emerson once said,

“An institution is the lengthened shadow”

of a single person, so leadership is hugely important in this context.

The Horizon scandal has had a devastating impact on those affected and on Post Office itself. It has now rightly accepted that it got things very badly wrong. I thank all right hon. and hon. Members for all the work they have done in campaigning over many years, including the hon. Member for Motherwell and Wishaw, my hon. Friend the Member for Telford (Lucy Allan) and the right hon. Member for North Durham (Mr Jones). I also thank the noble Lord Arbuthnot, who is in the Gallery, and the many other people associated with this work, including the barrister Paul Marshall, the journalists Tom Witherow and Nick Wallis, Dan Neidle and, of course, Alan Bates and the 555 people who took the matter to court. We would not be here without them, and we are at least starting to put these matters right.

When the current chief executive of Post Office, Nick Read, started his job in September 2019, he made it clear that Post Office needed to apologise for the events of the past, fully address them and, of course, compensate those who suffered detriment. A key part of that will clearly be the restoration of trust between Post Office and postmasters. That is so important, because, as I said previously in other debates, there is no post office network without postmasters.

In December 2019, the parties to the group litigation order in Bates v. Post Office Ltd took part in a mediation session and issued a joint statement confirming Post Office’s commitment to resetting its relationship with postmasters. Since then, Post Office has appointed two non-executive director postmasters, who were elected by other postmasters, to the Post Office board. This ensures that postmasters’ voices are being heard at the highest level—something that I witnessed yesterday when I attended the board meeting at the company’s offices. It is crucial that senior management is cognisant of the impact that its strategies and changes will have on those who are on the frontline of delivering services. Post Office has also appointed a current postmaster to a new director role, who leads the day-to-day relationship with postmasters.

Alongside those appointments, Post Office has looked into operational matters to improve culture and trust between senior management, staff and postmasters. Improved training packages, and the hiring of more than 100 new area managers to provide dedicated local support, are examples of positive changes. On the Government’s part, I enjoy chairing our regular working-group meetings with Post Office and the National Federation of SubPostmasters, as I did yesterday, and I find them to be a useful forum to discuss the high-level issues affecting postmasters.

On compensation, it is right to say that in order to look to the future, Post Office must first address and learn from its past mistakes so that it can rebuild trust in the business. We are determined that postmasters affected by the Horizon scandal receive the compensation they deserve, and the Government are supporting Post Office with funding to deliver that.

The shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), challenged me on what the Government are doing to make sure that justice is delivered to those affected, and I am determined to make sure that we do everything possible in that regard. I am grateful to the right hon. Member for North Durham for his work on the advisory board, to which he referred. The board initially looked after just the GLO part of the scheme, but that was extended to all three schemes on the request of him and his colleagues on the board. I am delighted to see the work it is doing, and I am determined to give it what it needs to make sure that the schemes are fit for purpose and delivering outcomes as expected. Indeed, we expanded membership of the board to include, for example, Professor Moorhead, who has been a leading advocate in this area.

Although there is still work to do, good progress has been made across the different compensation schemes. For postmasters who were wrongfully convicted due to Horizon shortfalls, Post Office has to date paid out over £20.4 million in compensation. That includes initial interim payments to 81 individuals and, additionally, 65 partial settlements, top-up payments or hardship payments. Post Office has reached full and final settlement with four claimants, and will continue to process claims that are lodged as quickly as possible. The Horizon shortfall scheme, which was set up as part of the settlement in the 2019 group litigation case against Post Office, provides redress for postmasters who repaid shortfalls but were not convicted or part of the court case. Over 99% of the original claimants to the HSS have now received an offer, and the value of the offers is more than £100 million. A further £2.1 million has been offered to the 91 late claims that have been processed so far.

The hon. Member for Motherwell and Wishaw says she believes the claims have been settled at the lowest possible level. I do not accept that. The advisory board, including the right hon. Member for North Durham and the noble Lord Arbuthnot, and I attended a session with the HSS panel and the lawyers connected to that panel. It was clear to me, and I hope to other Members who attended that call, that the panel works on an inquisitorial basis, trying to identify any detriment, financial or otherwise, and to ensure compensation in full on those matters.

The group litigation order scheme is being delivered by my Department—the Department for Business and Trade—rather than the Post Office. It is always tragic to hear the many cases that relate to these issues. I have a constituent—Sam Harrison of Nawton, near Helmsley—who sadly passed away while waiting for her claim to be paid from the GLO. That is unacceptable, and we need to accelerate outstanding payments through all schemes. To date, the Department has paid out over £21 million in compensation, including through interim payments. We have received 18 claims. Across those areas, our priority is providing fair and swift compensation to those affected, so that postmasters achieve the justice they deserve. Indeed, we have made some adjustments to the scheme and to previous schemes, in terms of the tax treatment of the HSS. When the board has come to me on any matter, we have delivered on its suggestions.

[Mr Kevan Jones]

I would like to put on the record my thanks to the Minister and his predecessor, the hon. Member for Sutton and Cheam (Paul Scully), for the way in which they have approached the Horizon compensation scheme scandal. The board made some recommendations to the Minister at the last meeting. When will he be in a position to respond to those recommendations?

[Kevin Hollinrake]

I am keen to respond, as the right hon. Member knows, on a potential appeals process. I am looking at this carefully, and we will continue to engage on that, but we want to ensure that everything is fair and that people are confident in the process for getting the compensation they deserve. We want to ensure that the compensation is delivered on time. We have an August 2024 deadline, as the hon. Member for Motherwell and Wishaw mentioned. We are keen to deliver on that deadline and are looking again at further ways to expedite payments to all those still waiting.

On governance, Post Office Ltd is a public corporation, and as such its board retains responsibility for the strategic direction of the company.

[Lucy Allan]

This debate is about the culture of the Post Office, and we have raised issues around the bonus arrangement, non-disclosure of documents, and racism and the use of categories. Will my hon. Friend move on to discuss the points raised by hon. Members?

[Kevin Hollinrake]

I certainly will. This is all context to the issues that many people have raised around compensation, but I will certainly come on to those points.

Through the shareholder’s representative on the board, the Government oversee the Post Office’s corporate governance, strategy, performance and stewardship of its financial and other resources. The Post Office reports to the Government on key issues at the regular shareholder meeting. The hon. Members for Motherwell and Wishaw and for Paisley and Renfrewshire North (Gavin Newlands) asked about the future of the Post Office and our plan for it. We all recognise that post offices are a valuable social and economic asset for communities. They deliver essential services and play a key role on our high streets.

The hon. Member for Motherwell and Wishaw spoke about post offices being the front office of Government. We very much see them as the front office of Government, but we do not dictate to consumers how they access vital services. Many consumers look to acquire services in different ways. Many people renew their passports and driving licences online these days rather than at the post office, and we want to give them the convenience of doing that. That creates challenges for the sustainability of the Post Office and of individual branches. We have to acknowledge that. The Post Office is putting together its future plan, and we are working with it on things such as banking services and access to cash, which we have now legislated for. We are looking at whether the Post Office network is getting a fair share of the savings that the banks are making by closing branches and making the Post Office the first point of call for access to cash, for example.

[Marion Fellows]

I recognise what the Minister has done, and I acknowledge that more and more people are going digital, but post offices serve their communities. In communities with high levels of deprivation such as mine and others represented by hon. Members in this Chamber, we need post offices. The Government have to stop withdrawing contracts from them, as that prevents people from accessing those services.

[Kevin Hollinrake]

I am not aware of any withdrawal of services. There is a Driver and Vehicle Licensing Agency issue, and there is a negotiation between the Post Office and DVLA. It is absolutely right that postmasters get fair remuneration for those kinds of services; we agree on that.

On senior pay and bonuses, what happened with the setting of the metric, and the awarding of the bonus around it, was unacceptable. The Post Office’s internal investigation has reported, and the Government have commissioned a separate review of the governance around Post Office decisions. We have not sat on that; it has not reported back yet. One thing we all agree on is that we need to follow due process in our oversight of the Post Office. Our review is being led by Simmons & Simmons, and we expect it to report to me by the end of the month, and of course I will wait for that before taking action.

My hon. Friend the Member for Telford talked about the inquiry and disclosure. The Post Office apologised and has taken urgent steps to put things right. Its disclosure to the inquiry was clearly unacceptable. I am not aware of any breach of the Companies Act, but we will certainly look into that.

My hon. Friend and the hon. Members for Rutherglen and Hamilton West and for Paisley and Renfrewshire North all asked about matters pertaining to the inquiry— what happened, why it happened and who is responsible. When the inquiry reports and assigns blame, we should be able to take action against those responsible.

The Government are very supportive of the Post Office’s efforts to improve its culture and its relationship with postmasters, and to right the wrongdoings of the past. Despite the positive progress since 2019, there clearly are still many improvements to be made, and the Government will be watching closely to ensure they are properly implemented.

Draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023

Kevin Hollinrake Excerpts

Wednesday 12th July 2023 General Committees

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

I beg to move,

That the Committee has considered the draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023.

It is a pleasure to serve under your chairmanship, Mr Vickers. The purpose of this statutory instrument is to ensure that the Windsor framework, in respect of European Union directive 2014/34/EU, known as the ATEX directive, is properly implemented in Northern Ireland, and to introduce provisions regarding UK(NI) marking.

The ATEX directive aims to prevent equipment or protective systems from becoming sources of ignition in atmospheres that could be explosive if conditions lead to dangerous levels of flammable gases, mist or dust. Settings where these conditions could arise include petrol stations and a range of mainly industrial locations, such as mines, agricultural silos and chemical processing plants. ATEX-compliant handheld radios would, for example, be mandatory for safe communication in environments with potentially explosive atmospheres, where a spark could react with the air to cause an explosion.

There are separate GB and Northern Ireland regulations covering ATEX requirements. The Northern Ireland ATEX regulations—the Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017—were made by the Department for the Economy in Northern Ireland, with the Health and Safety Executive for Northern Ireland enforcing them. Currently the Northern Ireland ATEX regulations refer only to the EU market, which no longer includes Northern Ireland.

Conformity assessment bodies perform the vital role of assessing whether specified requirements relating to a product, process, system, person or body are fulfilled, carrying out calibration, testing, certification and inspection activities. For the ATEX directive, as for other directives, there is a system of mutual recognition of conformity assessment bodies, meaning that a given EU country recognises the results from a conformity assessment body located in another EU country.

This system of mutual recognition does not apply to UK conformity assessment bodies, which are now outside the EU. To address that, relying on a derogation in the framework, the UK previously legislated for a new UK(NI) marking to be applied in addition to the CE marking, where goods requiring mandatory third-party conformity assessment have been tested against EU requirements by a UK body. The UK(NI) marking applies when placing such products on the Northern Ireland market.

This instrument makes the necessary amendments to ensure that the Northern Ireland ATEX regulations reflect the fact that the UK has left the European Union. For example, it ensures that references to member states are replaced with an appropriate term that includes Northern Ireland—but not GB—and the European economic area states. It also ensures that information obligations on the UK to inform the Commission and member states apply only to information in respect of Northern Ireland and not the rest of the UK.

The instrument introduces new provisions on the UK(NI) marking into the Northern Ireland ATEX regulations. In line with the Windsor framework, a manufacturer that wants to supply an ATEX product for the Northern Ireland market will need to manufacture that product to EU requirements. If that product requires third-party conformity assessment under the relevant EU legislation, and if a UK conformity assessment body is used to do that, the manufacturer will be legally required to apply the UK(NI) indication, which must accompany the CE or other relevant conformity marking. Failure to comply with this new requirement will be a criminal offence in Northern Ireland. The Northern Ireland Department of Justice has confirmed that the new offence of failure to comply is consistent and proportionate and will not have a detrimental impact on the criminal justice system in Northern Ireland.

As a result of the additional UK(NI) marking requirements, some businesses may incur costs associated with familiarisation with the new requirements and the labelling itself. However, the impacts of these changes are expected to be very limited.

My officials in the Office for Product Safety and Standards will be providing online industry guidance to coincide with this instrument coming into force, to ensure that businesses have all the information they need on how to comply with the new requirements. They are also liaising with the Health and Safety Executive for Northern Ireland, which is responsible for enforcing the Northern Ireland ATEX regulations and ensuring that it has all the necessary information to do so.

In summary, this instrument is needed to ensure that the Windsor framework, with respect to the ATEX directive, is properly implemented in Northern Ireland. It does that by amending the Northern Ireland ATEX regulations to reflect the fact that the UK has left the EU and by introducing provisions on UK(NI) marking. I urge the Committee to approve this SI.

--- Later in debate ---

[Kevin Hollinrake]

I am grateful to the shadow Minister for her important points, and I thank the Committee for its consideration.

On the costs to businesses, the majority of businesses likely to be impacted are SMEs, with micro and small totalling 91% and medium being 8%. Prior UK CA changes were applicable to all businesses, so no business is likely to be impacted more than another.

On the impact assessment, according to the OPSS business population estimates in 2022, 5,445 businesses in the UK were subject to ATEX regulations. As that is an estimate, we provide a 10% upper and lower band, resulting in a high estimate of 5,900 businesses and a low estimate of 4,900. Firms would incur a familiarisation cost in the first year they were made aware of the changes. The cost is around £13,000.

On the points the hon. Lady raised about consultation, where there have been previous, similar instruments in this area, informal consultation did take place with a good cross-section of stakeholders, including trade associations and other industry representative bodies across the product areas covered by the instrument. Stakeholders were supportive of the need to maintain a functioning product safety and metrology regime on EU exit that mirrored the framework in operation the day before EU exit as closely as possible. As the hon. Lady rightly pointed out, an impact assessment has not been prepared for this SI, because measures resulting from the Windsor framework are out of scope of assessment.

To conclude, it is vital for the reasons I am about to summarise that this instrument comes into force in Northern Ireland. It is needed to properly implement the Windsor framework with respect to ATEX products. It achieves its main purpose by amending the Northern Ireland ATEX regulations to reflect the fact that the UK is no longer part of the EU and by introducing provisions on the UK(NI) marking, which will enable UK conformity assessment bodies to assess ATEX products for the Northern Ireland market and ensure conformity. The impact of the changes is likely to be very low for businesses and to be associated with familiarisation with the new UK(NI) marking requirements and the labelling itself. I am happy to commend this instrument to the Committee.

Question put and agreed to.

Companies House Public Targets 2023-24

Kevin Hollinrake Excerpts

Tuesday 11th July 2023 Written Statements

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

I have set Companies House the following targets for the year 2023-24:

Remove in excess of 16,000 pieces of information relating to identity details and/or addresses used without permission, in order to minimise the risk of records kept by the registrars creating a false or misleading impression to members of the public.

Register of Overseas Entities: Issue financial penalties for non-compliance in cases that we have identified and prioritised.

Ninety-seven per cent of companies on the register have filed an up-to-date confirmation statement.

Digital services are available for a minimum of 99.5% of the time.

Eighty per cent of customers satisfied with Companies House.

Increase the resource in the operations and intelligence teams by up to 241 new posts to enable legislative reform.

Manage expenditure within budgetary limits and utilise central Government funding.

[HCWS926]