Rolls-Royce

Lord Balfe Excerpts

Wednesday 14th October 2020 Lords Chamber

[Lord Callanan (Con)]

The noble Lord needs to understand the difficult environment in which Rolls-Royce is operating. Its revenues have fallen off a cliff, and we all know what has happened to the passenger jet market. It has to consolidate its operations across two sites, and that was the commercial decision it took. As I said, we are offering it extensive support and we are in regular and ongoing dialogue.

[Lord Balfe (Con) [V]]

Will the Minister include trade union representation in any discussions and acknowledge the hard work put in by the two trade unions at Rolls-Royce to maintain in the UK jobs which are vital to keeping a skilled workforce and helping us to build back better?

[Lord Callanan (Con)]

I know my noble friend feels strongly about these matters. The unions are involved in the aerospace growth partnership, which is our main method of engaging with the UK aerospace industry, and we continue to have regular dialogues with Unite and other unions.

Trade Bill

Lord Balfe Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 29th September 2020 Grand Committee

[Lord Balfe (Con) [V]]

My concerns are rather general. I have been associated with the European Union for a very long time, as many people know: since 1979. I was at the TUC when Jacques Delors came and won the TUC over to the fact that the European Union could lay down standards which would benefit working people all over Europe, not just in Britain. I am very concerned that the Bill should not weaken any of those standards.

I am not going to point a finger at the Government and say, “Oh, that's what they are trying to”, but I would welcome a clear statement from the Minister that the Bill does not aim to give British working people lower standards or enable people to work around the standards that have been laid down and enjoyed for a long period. That is a fundamental matter.

When we look at where those standards come from—I follow the noble Lord, Lord Judd, in this—we see that the International Labour Organization has played an historic and noble role in working people’s standards for the past 100 years. It is the only part of the League of Nations that is still in being in its original state. The ILO and its conventions must be at the centre of any trade agreement negotiated by the British Government. If we are to have trade agreements, we cannot ignore the ILO’s standards or the basic standards of human and workers’ rights, and this is one way in which we can do it.

We heard a lot in the referendum, after the referendum and in the election about taking back control, but I hope that we are not going to be taking back control in order to weaken standards which have been hard won over the years. One of those standards is the democratic participation of Parliament in lawmaking and the making of trade agreements. This is highlighted in Amendment 100, and I share the sentiments of the noble Lord, Lord Rooker, who said how important it is that each House of Parliament has a say. We cannot delegate democracy. If we are a two-part Parliament, this House must also have an input.

What concerns me about the whole approach is that we are not taking back control to Parliament; we are taking back control from a Parliament, the European Parliament, and seem to be putting it quite firmly into Whitehall—largely, it would seem, in an unaccountable manner. I hope that the Minister will be able to assure us that there will be a central role for both Houses of Parliament in how the trade agreements to be negotiated under the many clauses of this Bill are implemented.

The final point I want to make is this. The noble Lord, Lord Lennie, mentioned the TUC. I have not heard a word from the TUC so I put it to its representatives, who I presume will be monitoring this debate, that if they want to protect workers’ rights, they should remember that a third of all workers do not vote for the Labour Party, they vote for the Conservative Party, a good number of them vote for Plaid Cymru and a fair number vote for the Green Party, the SNP or the parties in the north of Ireland. I would say to the TUC, “If you are issuing briefs, please issue them to everyone. If you’re not, please wake up”, because this Bill has enormous import for the future of workers in Britain and they deserve the TUC to be a little more proactive than it has been up to now.

[Lord Purvis of Tweed (LD)]

My Lords, I wish to address Amendment 6, referred to my noble friend Lord Fox, and to support Amendment 3, spoken to by my noble friend Lady Birt and to which she has put her name. In so doing, I thank the noble Baroness, Lady Noakes, for supporting in principle the idea that we are asking the Government to outline how they will be supporting British business to take advantage of the GPA agreement of which we are now a member in our own right as agreed by the other members. I reassure her that this Bill will never be long enough to address all the fears that me and my colleagues may have of this Government, but the amendment is practical, sensible and simply asks the Government to be clear. We will not rely on the Minister’s winding-up speech in this short debate in Grand Committee; rather, as my noble friend Lord Fox has indicated, we are asking for a proper report from the Government setting out how they will support our businesses.

We want the UK to prosper and our businesses to benefit from any new opportunities while also not being burdened if trading relations with our biggest market in Europe are harder. Procurement is one area where our businesses can seek contracting opportunities across all the GPA members, but there are practical barriers to those, whether it is language, knowledge of that country’s government procurement system, having local partners or legal protections. These are just some of the factors among many and it is a complex area in which to do business.

According to the OECD, taxpayers’ money that is spent by the Government on goods, services and infrastructure such as roads, hospitals and schools accounts for over 13% of gross domestic product, so there is a huge market. I can reference Amendment 51 in a later group, but let me refer to the NHS here at home. My noble friend Lord Fox gave the figure of £67 billion of UK procurement. NHS England spends around £27 billion on goods and services every year. Ward consumables are delivered through the American-founded and German-owned DHL. Mental health beds are operated by American companies providing about 13% of in-patient beds in England. In some areas, the proportion of US-owned mental healthcare facilities is much higher. In Manchester, patients have a 50:50 chance of being admitted to a privately owned hospital and a one in four chance of that bed being provided by an American-owned company. Patients think that the NHS is purely British from beginning to end, but services are being provided by an American-owned company. There is thus no question about the need for the British Government to provide more support for British companies to take up opportunities abroad. The Government strategy is for the NHS supply chain to be expanded and to make it easier for companies around the world both to bid for and to secure NHS services within this country. Of course, they will assist British businesses in doing the same but—I am not necessarily critical of this—the Government operate a level playing field.

The US sees this market as a valuable one because it is colossal, so it is no surprise that it has within its negotiating mandate with the United Kingdom to ease barriers so that its companies can benefit from greater market access to provide over £30 billion-worth of basics and consumables in addition to £7 billion in deals for capital contracts. It has been interesting to note that procurement opportunities within the UK have expanded and that that is positive. It opens up the UK to more international co-operation, but as my noble friend Lady Birt, has said, we want to see greater support for British businesses to enable them to take up some of these opportunities too.

It is interesting to note that the European Union has emphasised that the final market access offer presented by the UK for membership of the GPA was

“commercially credible and viable, replicating the UK’s current coverage under the EU schedule with minor technical adjustments.”

The EU was a fairly enthusiastic supporter of the UK application, and why would it not be? It replicates the same basis as it has at the moment.

I note that the noble Baroness, Lady McIntosh of Pickering, asked the Minister about the thresholds. She referred to $130,000 being the threshold. That is the threshold of every single GPA member other than Japan and Aruba, which have it set at $100,000. Can the Minister say, if we are to have opportunities in our own right, why that threshold is the same as what we had within the European Union?

The reason the WTO and the EU were enthusiastic about replicating what we have at the moment is because the WTO said when it approved our GPA membership in our own right

“It was underlined that the United Kingdom accounts for over a quarter of the EU’s total procurements covered by the GPA and that, when taking into account just central government entities, the UK accounts for nearly half of the EU’s covered procurements.”


There is no doubt that the EU is happy because it has retained market access to nearly half of all of that covered within the EU.

We were led to believe that the Government would negotiate nothing without using British leverage to get a better deal for Britain. Can the Minister explain what we have done with that? The Government did not include procurement in their mandate for a future relationship with the EU, while the EU’s mandate did. It wanted to go beyond the GPA, including utilities and supplementing the GPA with additional areas of coverage which would have opened up the European market for British businesses under procurement. But, no, the Government wish to go on the GPA model, which means that the European Union has in effect preferential access to UK procurement where we have not sought to open up some of the barriers to the European market.

I have a final question to ask the Minister regarding what is happening here at home. The 1998 devolution settlement means that public procurement is an area of responsibility for devolved government in Scotland and Wales. The Government have indicated that they wish to seek divergence in our current approach to procurement. How would this be seen in the devolved areas? I know this as a former constituency Member in the Scottish borders who fought many campaigns on the issue of being against centralisation and the Government centralising procurement policy and bundling up contracts, which makes it harder for smaller, local businesses, as my noble friend Lady Birt has indicated. The White Paper states

“For both goods and services, these provisions will be supplemented by the non-discrimination principle. For goods, non-discrimination will apply within certain excluded areas such as procurement.”


Paragraph 145 goes on to say that the Government are considering

“whether and to what extent it should apply to public procurement, in particular for above-threshold procurements.”

That means that, in effect, the UK Government for England can decide what the threshold levels and the policies for procurement would be for the devolved Administrations. No reference is made to procurement in the Bill, so can the Minister clarify the position on procurement within the internal market?

Trade Bill

Lord Balfe Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

[Lord Balfe (Con)]

I also congratulate the Minister and the right reverend Prelate on their maiden speeches, which gave us a taste of what is to come—something we can look forward to, I think.

Like some noble Lords, I am sorry that we need this Bill at all. Our trading arrangements have been well looked after by the system we have followed for the last 40-plus years. As someone who has had a little to do with the European Union, I reflect that there is much higher democratic oversight by the European institutions of the trade agreements as they are negotiated, and a far greater opportunity for the European Parliament to intervene, approve and—crucially—amend and deal with these things as they are negotiated.

One of the weaknesses of the Constitutional Reform and Governance Act is that it was not passed for this purpose. It was passed at a time when withdrawal was not even on the distant agenda, and it is not fit for purpose for what we want to do. The time limit of 21 days is frankly not only woefully inadequate but the wrong way of going about things. Parliament should be involved as treaties develop, not presented with them at the end.

If you read the Government response to the reports we debated yesterday in Grand Committee, you will see the number of times that the Government said that they “may” take account and “could” envisage looking at—but there were no firm commitments to Parliament at all. Of course, we also have four bodies of Parliament—the International Trade Committee, the Joint Committee on Human Rights, the Constitution Committee and our own EU Committee—all of which have severe reservations about this procedure. We are not in a good place.

When we talk about Australia and the United States, people have said that the Government of Australia have stronger powers, but they are much more beholden to what is called the trade committee of the Australian Parliament. We have no equivalent of this committee. Robert Lighthizer wants us to follow the science, as he says, but the United States Senate and the House of Representatives do not follow the science; they follow the democratic wishes of their constituents, and good for them. We need to look a lot more firmly at what we are dealing with.

Finally, I shall say a word about the National Health Service. I do not go along with the shroud-wavers who say we are going to have a US system. I have said many times, “Of course we’re not”, because the Conservative Party relies on the votes of the aged. However, we must have structures in place which do not let investor protection and dispute resolution procedures override the democratic will. We cannot have NHS price control mechanisms undermined. We need a clear defence of the NHS and, frankly, we need it in the Bill. I challenge the Minister to bring something forward that will achieve that objective.

Russia: Trade

Lord Balfe Excerpts

Tuesday 28th July 2020 Lords Chamber

[Lord Grimstone of Boscobel]

My Lords, UK companies are well aware of what aspects of trade are covered by sanctions. I would be most surprised if any of them do not abide by those rules strictly. We believe that trade that is not covered by sanctions can, as I have said before, be a lever for stabilising relationships.

[Lord Balfe (Con) [V]]

I point out to the noble Lords, Lord Foulkes and Lord Rooker, that the last Labour Government were also very keen to get Russian government money into Britain, but the Russians have clearly got their measure now, because they do not give them any money. Trade involves interaction. If we are going to keep Russia onside, we need to remember not only the human rights side of things but the need to promote trade and encourage western values, and we need to encourage people to go to the St Petersburg fair. Can I have the Minister’s assurance that we will pursue an even-handed strategy, as opposed to a prejudiced one, when dealing with Russia?

[Lord Grimstone of Boscobel]

My Lords, we are quite clear that trade does not have to come at the expense of labour, the environment, human rights or sustainable development. We use trade because we want to ensure that economic growth and development and environmental protection can go hand in hand.

Corporate Insolvency and Governance Bill

Lord Balfe Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

[Baroness Taylor of Bolton (Lab) [V]]

My Lords, I echo what the noble Baroness, Lady Fookes, said. She and I serve on the Constitution Committee, which raised quite a few concerns about this Bill. I want to say a few words about Clause 22. As the Minister outlined, the Government are now adding a limitation to it so that the expiry date cannot be extended beyond two years after Royal Assent. That amendment is very similar to the one that I moved in Committee. I am very pleased that the Government have acknowledged what the Constitution Committee said about the extent of the power that was being given, and I am glad that this change is being incorporated in the Bill.

Having said that, and having welcomed the changes that the Government have introduced in other areas, there are some very significant general concerns, that I and many others have, that have been highlighted by this Bill and by the extent of the government amendments that have had to come forward following Committee. Committee raised a series of genuine problems, some of which the Government have addressed, but this illustrates some of the dangers of fast-tracking legislation, even when, as the noble Lord, Lord Callanan, said, there have been previous consultations. It certainly illustrates the dangers of using emergency legislation. We all accept that emergency legislation in this area is needed because of Covid-19, but it illustrates the difficulty of using emergency legislation to make permanent changes at the same time in this very rushed way.

I ask the Minister to bear in mind that we will have other legislation coming forward. I hope that Ministers will learn the lessons of this legislation. This is a complex Bill—the previous debate showed that—and this is not really an adequate way of scrutinising such complex issues. Therefore, I hope that when we have other legislation because of Covid-19 or Brexit, the Government are mindful and give time for proper consideration of all aspects of such Bills.

Having said that, I welcome the specific change to Clause 22, and I am very pleased that the noble Lord, Lord Callanan, having said last week that he would look at this again, has produced this government amendment.

[Lord Balfe (Con) [V]]

My Lords, I want to say a few words in support of Amendment 48, tabled by the noble Baroness, Lady Fookes. I know from experience that when you have a requirement to report on anything without a time limit, there is always the tendency not to do it. There is always something more pressing, and even if the Minister raises it, the civil servant will say, “Well, no one has actually asked for it, Minister, and we have got this or that.” The only way to keep a piece of legislation or a policy under review is to have it timetabled. Whether it is every three months, four months or six months, the key point is that you have a timetable and you have a requirement to report at the specific point of that timetable, because then it gets into the system.

I urge the Minister, thinking not of himself but of Ministers in years to come, to accept this amendment or a close variant of it, that, crucially, puts in a time limit. A refusal today could snooker us when trying to get reports in the future, as we end up with parliamentary questions such as, “When is the Minister proposing to review?” and answers saying, “He or she is certainly thinking about it”, but not getting the review. I urge the Minister, looking to all our political futures, to accept some sort of time limitation. As such, I am very happy to support the amendment tabled by the noble Baroness.

[Lord Wallace of Tankerness (LD) [V]]

My Lords, my colleagues on the Constitution Committee, the noble Baronesses, Lady Taylor and Lady Fookes, have made their points very clearly, so I am very happy to rest behind their submissions.

--- Later in debate ---

[Lord Balfe [V]]

My Lords, I am concerned at the way in which the Pension Protection Fund is currently heading. It has been burdened with more and more liabilities. This is a direct attack on it. We need to remember that the idea of pledged assets came as an alternative to companies having to put real cash into their pension fund deficits. The PPF was prepared to accept pledged assets on the basis that they were literally a pledge that could be redeemed against the deficit. If that is going to be removed, it will mean that any responsible trustee in any company in this country—whether the company has financial problems or not—must, as soon as this legislation comes into being, review those pledges. It does not matter whether the company has any financial problems. The pension trustees will have to say to the company, “Look, this is not worth the paper it is written on. I am sorry, but you have got to turn these pledges into financial support.” The Pension Protection Fund—if it is to do its job—will have to back those trustees, because this Bill is saying that the benefit of a pledge is worthless. That is the real problem. It is not about the handful of companies that will go under; it is about the large number of companies that will float, but with trustees who will have a duty to their pensioners to secure the pension no longer being able to place any trust in a pledged asset.

I urge the Minister to accept this. There is, anyway, a grave danger that the pensions’ lifeboat is going to sink. You cannot keep on putting the costs of failure on to an ever-decreasing number of schemes. The levy itself is in somewhat of a crisis. I hope that the Minister will step back and look not just at the individual company in trouble but at the impact on the pension scheme itself and on the position of any responsible trustee and of any pensioner who will be saying to their trustees, “If you are to fulfil your legal obligation to us to secure the pension, you must renounce these assets which have been pledged on the basis on which they have been pledged and turn them into real, hard, secure money”. If we do not accept this amendment, we are in grave danger of causing ourselves yet more problems. The law of unintended consequences will sweep through the trustee world. Certainly, if I am advising or taking part in any trustee meeting, I shall be saying to trustees, “Do not accept a pledged benefit”.

[Baroness Drake [V]]

My Lords, the Government have tabled a number of helpful amendments in this group to address concerns raised about the impact of this Bill on the position of pension schemes, PPF and the Pensions Regulator, including access to the table, the court and the deployment of creditor rights during any moratorium or subsequent restructuring process. I thank the Minister for that.

However, I remain concerned that a PPF assessment period and a pension scheme Section 75 debt are not triggered during a moratorium or a restructuring plan. In a company voluntary arrangement, they would have been triggered when the proposal was filed with the court. This means that the PPF access to the share of the vote, exercised on behalf of the pension scheme, relates to the scheme’s full debt, giving it greater influence. In a restructuring plan, the voting rights to be exercised by the PPF would be set by the court. The Bill makes no provision as to what these should be. Given that the scheme’s full debt will not have been triggered, the most likely outcome will be reduced voting rights, reflecting a much smaller allowance for the defining of the debt. This will unquestionably put the PPF as a scheme at a disadvantage compared with other creditors such as loan providers, where the full value of their debt will be recognised, or landlords who will likely have voting rights based on the valuation of their full contract.

Corporate Insolvency and Governance Bill

Lord Balfe Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Liddle (Lab)]

My Lords, I would like to make three points—briefly, I hope. The first is a point of process. It would be nice if the Minister acknowledged that this is clearly not a normal Committee stage. We are grouping different subjects in a way that we would not do normally, because of the urgency of the Bill. Given that we are moving to a critical economic situation, I accept that urgency, but this is not a normal way of proceeding. As the noble Viscount, Lord Trenchard, and the noble Lord, Lord Hodgson, have just said, the Government are trying to deal with the situation by mixing things that are required for the immediate economic urgency with longer-term reforms, and, at the same time, trying to deal with the uncertainties of what they will face by including lots of Henry VIII powers in the Bill.

This is a classic example of where effective post-legislative scrutiny is needed. We should have a committee to look at how the Bill is implemented, and to bring forward proposals for reform after six months, or a year, or whatever seems reasonable. My first point is that this is not satisfactory, and we need a process of post-legislative scrutiny.

Secondly, I am not an insolvency practitioner and I have never had to deal with anything insolvent. However, I am greatly interested in questions of industrial policy. Prior to the Labour Government coming to power in 1997, I read a lot of academic pieces about our bankruptcy and corporate insolvency provisions which suggested that our law was much tougher than that of the United States, and, as a result, was a barrier to the entrepreneurship that all sides of this House want to see flourish in this country. Indeed, the Labour Government went on to reform the bankruptcy and insolvency laws.

There is of course always a tension in this. The introduction of something equivalent to the US Chapter 11 has also led to abuses, and we have all seen instances of companies going insolvent, where, on the face of it, it looks as though their boards have behaved with a great deal of irresponsibility. It would be nice, therefore, to have a statement from the Government on what they think the responsibilities are to be of the monitor that is being introduced. In whose interests will the monitor be acting? What is the public interest in these legal reforms? This is not a matter for legislation, but rather for a major speech by Ministers, which would then be taken into account in subsequent interpretation of the legislation by the courts. As someone said, I am sure that there will be a lot of that.

On my final point, I have of course a lot of sympathy with my Labour colleagues who have pointed out that the trade unions, workers and employees have not had a fair deal in these matters in the past. I would like to see their rights strengthened in this legislation, but there has to be a balance. One of the most disastrous experiences of a crisis happened in the coal industry in 1926, when the union position of “Not a penny off the pay, not a minute on the day” led to a human tragedy of awful proportions in Britain. To save their company, the workers may be prepared to make sacrifices, but their position needs to be strengthened. Again, I would like from the Government a high-level political statement to say that they accept that our culture of capitalism has to change, that we have to move in a more partnership- driven direction, and that when dealing with the details of things such as insolvency law, we should try to reflect in legislation the need for a balanced set of rights and obligations.

I must apologise to the Minister: I have another engagement, which may mean that I will not hear his reply at the end of this discussion. I will, however, be coming back to the Committee as soon as I can.

[Lord Balfe (Con) [V]]

My Lords, I begin by endorsing what the noble Viscount, Lord Trenchard, said about the way we are conducting this. We are in a very unusual time, I accept, but I hope that as soon as possible we will get back to a normal House and a normal way of dealing with Committee stages—and with everything else, for that matter.

My second point is for the Minister, who of course comes from the north-east—not a traditional Conservative area, but one that has always had a strong Conservative vote. As we move forward, one thing we need to remember is that the last Labour Government was not exactly the best thing that trade unionism ever saw. They did basically nothing that the Conservatives wanted to repeal when they came in. I ask the Minister to remember that some of the great social legislation of Britain was actually passed by the much-reviled Neville Chamberlain when he was Minister for Local Government and Chancellor of the Exchequer in the 1920s and 1930s: such things as wage councils and some basic rights. The way Stanley Baldwin handled the aftermath of the General Strike contributed tremendously to the fact that the Conservative Party ran Britain for two-thirds of the last century and is well on the way to achieving that again. I make that point in beginning.

My next point is that insolvency is a sad necessity—in a capitalist economy companies go up and down—but it is as much a sad necessity for the workers as it is for the people who own the company, and we should never forget that. The workers in any industry do not go home at night thinking, “My company does not matter”; they are often devoted servants and they are as hard-hit by insolvency as anyone else. I ask the Minister to remember that, as we move forward into the 21st century, we may well need to rewrite the historic deal between the working people and the state in the same way that we did 100 years ago. As such, I will not endorse all these amendments, but I am particularly interested in Amendment 84 tabled by the noble Lord, Lord Hendy, and supported by the noble Lord, Lord Hain, on unpaid remuneration for workers.

One of the great tragedies and wrongs of recent events has been that workers—Thomas Cook is a good example—can put in a month’s work, suddenly their company goes bankrupt and they do not even get the three weeks’ wages for which they have just worked. I ask the Government not necessarily to accept Amendment 84 but to look at a way at least to prioritise the fact that if a company goes into insolvency, wages that are more or less immediately due to the workforce are paid—taken out of the present system, as I understand they are in Germany, and paid to the workers.

I also have sympathy with Amendment 27, in the name of my good noble friend Lady Altmann, which would prevent insolvency practitioners disposing of items that are pledged to a pension fund. If items are pledged, they are pledged and cannot just be taken back and sold off willy-nilly. I think the relationship between company pension funds and company assets needs to be looked at. Certainly, my noble friend’s amendment is well worthy of us having a look at to see what we can do.

I also point to something that will come up in a number of subsequent amendments, which is the need to protect pensions. Pensions are a worker’s deferred wages: it is not some bonus pot in the distance that they can have if they are lucky, but part of their remuneration. In a funny sort of way, one of the advantages of a defined contribution scheme is that at least it generally goes to the workers as it is earned, rather than being held on to by the company, but even that needs further looking at.

My final point is that I think we need to look at how the concerns of workers can be heard by the courts. Although I and many others often refer to trade unions, it is worth remembering that the trade union movement in the private sector is incredibly weak and we have to look well beyond trade unions at ways in which working people can be represented in insolvency situations. They should have some rights to be heard, and I believe that those who judge insolvencies should at least be prepared to, and be required to, listen to what they say and, in coming to their decisions, to make their reactions to their representations part of the response: in other words, workers have a right to be heard and to be responded to.

Having said these things, I welcome the legislation. There is never a right time for a Bill such as this. I have reservations about the Henry VIII powers, but I am prepared to see if this will work. Fundamentally, I think that the Minister, with his background, understand the concerns of working people, particularly working people from outside London, and I am sure that he will do his best to strengthen the Bill in the ways we are urging him to do.

--- Later in debate ---

Given the Minister’s response to the noble Baroness, Lady Northover, at the end of the last debate, would he be willing to discuss the concerns which Members of the Committee have expressed in this debate before the Government publish their amendment in time for Report?

[Lord Balfe [V]]

I will be brief. One good thing is that there is no time limit today so people have tended to speak on a bit, shall we say?

First, I endorse everything that was said by the noble Baronesses, Lady Drake and Lady Warwick. I hope that there might be an opportunity for a meeting before the final publication. My only point in addition to that is that we seem to imagine that the PPF is safe for ever. I have always—or at least over the past year or so—said that, one day, this lifeboat is going to sink unless someone puts some effort into making it float and keeping it alive. I suppose that BEIS and the DWP are separate departments but we run the danger of ignoring pension schemes to a point where the levy will become unsustainable and the whole edifice will come crashing down on us. I ask the Minister to look carefully at this.

In closing, I repeat the point that I have made ad nauseam: pensions are deferred earnings of the workers in the company, often stretching back over many years, and they deserve priority. That remains my fundamental position.

[Baroness Altmann [V]]

My Lords, I will speak to Amendment 27, which is in my name. I support whole- heartedly Amendments 20, 39, 63 and 64, as well as Amendment 118, to which I added my name.

I echo the wise words of the noble Baronesses, Lady Drake and Lady Warwick, and my noble friend Lord Balfe. It is of deep concern that the Bill did not originally encompass provisions to protect the deferred pay of workers in an insolvency or restructuring situation. Indeed, as it stands, the Bill drives a coach and horses through the protections that, as the noble Baroness, Lady Drake, so rightly outlined, were carefully crafted and put in place in 2004 to ensure that workers’ pensions were protected, having been through several years during which it was discovered that many members of defined benefit pension schemes had lost much, or even all, of the pension that they had been relying on for their retirement.

The Bill is a significant change to the usual priority order for unsecured creditors in an insolvency or a restructuring situation. It is an existential threat to defined benefit pension schemes in the UK to give super-priority status to unsecured financial debt over that of other unsecured creditors—including the associated pension scheme and the rights of the Pension Protection Fund, which protects all other defined benefit pension schemes in the UK. I urge my noble friend—I thank him for at least recognising that this is an issue and saying that the Government will table amendments—to listen carefully to the concerns expressed in the debate on this group of amendments and ensure that consultation is put in place, as other noble Lords have requested, so that we can try to get this right.

The pension promises are so important for workers but, as it stands, this legislation would appear to legitimise the actions in connection with pensions that have been considered egregious over the years. The Pensions Regulator’s reports on the pension schemes of BHS or Carillion, for example, make it clear that the pension funds were at risk of being gamed by other financial creditors passing the parcel or elevating themselves ahead of the interests of the pension schemes.

Amendment 27, for example, would ensure that if an insolvency was in the offing and the monitor applied to the court to remove protection from assets that were previously secured, such consent could not be given without the approval of the Pension Protection Fund. That is really important. With the provisions proposed in, for example, Amendments 63 and 64, the PPF would already have been involved because a PPF assessment would have been triggered. After a PPF assessment period is triggered, the PPF can come in and protect its own position and that of the pension fund; that is, the creditor rights.

At the moment we have a system whereby trustees carefully work out integrated risk management proposals to ensure that the contributions to the pension scheme demanded of employers are reasonable and proportionate in terms of helping the company to survive and thrive, but also protecting the scheme should the company not do so. In that regard, many schemes have been pledged assets belonging to the company so that, if insolvency occurs, they will be available to boost the pension scheme. Under the current proposals in the Bill, without Amendment 27 the assets pledged to the scheme would potentially disappear and the banks would potentially secure themselves a win-win situation while jeopardising the interests not only of the pension scheme attached to the company in question but of all other defined benefit schemes protected by the Pension Protection Fund and the millions of members in those schemes. I hope that my noble friend will listen carefully and take seriously the concerns expressed across the Committee that banks should not be given preferential status.

I would also like to pick up on what my noble friend the Minister said in the debate on the first group of amendments: that the intention behind the moratorium is not to make creditor positions worse. However, in the context of a defined benefit pension scheme, should the Bill’s measures not be amended in line with the types of amendments proposed here, there will be a fundamental change if an insolvency winding-up or administration takes place within 12 weeks of the moratorium, and the moratorium and pre-moratorium debts take priority over creditors such as those with Section 75 unsecured pension debt.

I welcome my noble friend the Minister’s comment that the Government plan to bring forward their own proposals to address some of the concerns covered by my Amendments 94 and 95, and I thank the Law Society very much for its help and support in addressing these inconsistencies or insufficiencies in the Bill. I hope that my noble friend will bring forward amendments to ensure that pension schemes are protected, that contribution notices and financial support directions are not overridden, and that the pensions of scheme members across the country—pensions on which they rely for their retirement security—are not significantly jeopardised by this well-intentioned and important Bill.

Corporate Insolvency and Governance Bill

Lord Balfe Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Lord Balfe (Con) [V]]

My Lords, I too start by thanking the Minister, not only for his clear presentation of the Bill but for his letters and briefings; they have been most useful. I shall make just a couple of points. They concern members of trade unions as well as employees who have a legitimate interest in what is happening due to this Bill. I speak as someone who has a son who runs a small business, so I am not completely unfamiliar with this. It is important to remember when we pass this legislation that employees also have legitimate interests when restructuring plans are adopted. I realise that, particularly in small enterprises, the level of trade union membership is very low; however, whether in a union or not, employees deserve protection and to be taken into account.

I would like the Minister to clarify, on the record, his attitude to protection for people who work in these businesses. In the debate in the other place, the Minister said:

“Importantly, a court can refuse to sanction a plan if it is not fair and it is equitable to do so. When making this assessment, one would expect the court to be mindful of the interests of employees in any pension schemes affected by that plan”.—[Official Report, Commons, 3/6/20; col. 952.]


I would like the Minister to say that he is happy with that statement, made by a Minister in his own department, and to place it on the record in the House of Lords. I would also like him to confirm that the Government expect courts to satisfy themselves that plans placed before them are indeed mindful of the interests of employees, if necessary by inquiring whether there are any relevant trade union staff associations or other bodies and whether they have been consulted and have any views to place before the court. We cannot just leave it to the court to hope that things go right: they need to be proactive, to an extent.

I also hope the Government will consider giving pension scheme deficits the status of a priority creditor. This would give them priority over unsecured creditors, and in defence of this proposal I remind the House that a pension scheme is as much a part of an employee’s income as the rest of their monthly or weekly salary. It represents, in short, deferred earnings: it is not a bonus at the end of one’s working life but something that accrues daily throughout it. As such, I believe it has a right to be considered near the front of any queue. I look forward to hearing the Minister’s response to these points and hope he will feel able to clarify them for the record.

Covid-19: Businesses and the Private Sector

Lord Balfe Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Balfe (Con)]

My Lords, first, I thank the noble Lord, Lord Dobbs, for initiating this much-needed debate. Secondly, I declare my interest as the father of a small businessman who has a chain of bicycle shops—a very good thing to have at the moment. Many small business people have worked far harder during this closedown than at any time, because they have had to juggle staff—some of whom have wanted to be furloughed, as they have been in vulnerable positions—and a multitude of problems.

When this is over, they will be looking for a level playing field and fair treatment. They have heard what the Chancellor said about higher taxes for small businesses and they are prepared to pay their fair share. But they also look around and see many large businesses, often not domiciled in the United Kingdom for tax purposes, queuing up and asking for large amounts of money from public funds.

The Government must, with the help of the OECD, the EU and other international bodies, tackle the business of tax avoidance and make sure that everybody pays their fair share into what will be a crippled economy. It is necessary that the Richard Bransons and Philip Greens of this world are also brought to the chequebook when paying their taxes. I ask the Government to commit to getting a fair deal from big businesses, as well as tax from small businesses. If they do that, I am sure that all workers in small businesses will join together in the same common endeavour in which they have been engaged for the last few weeks.

Covid-19: Business

Lord Balfe Excerpts

Wednesday 13th May 2020 Lords Chamber

[Lord Callanan]

Of course, we are always reviewing these measures and acting on scientific advice. I think we all have to accept that that scientific advice will evolve as the knowledge of the virus increases. The noble Baroness, as she usually does, makes an important point: these are things that we keep under constant review, so that we can get the country back to work as quickly as possible.

[Lord Balfe (Con)]

My Lords, one of the good things that has come out of this crisis has been the way in which people work together and in particular the contribution of the trade union movement to working with the Government. I know that the unions welcome the positive attitude of the Government. I would like a reassurance, which I am sure that the Minister will be happy to give, that they will continue to work with the unions. As these measures wind down, of course there will be a lot of detailed points, but where responsible trade unionism and a listening Government come together, I hope that we can continue to have the good relations that we have had up until now. I welcome the Minister being able to confirm that the good relations with the trade union movement will continue.

[Lord Callanan]

I am indeed happy to confirm to my noble friend that we are very happy to work with all responsible trade unions, and we included them in developing this guidance and we are happy with the many constructive contributions that we receive. We continue to work with them on developing sensible guidance for business that gives UK workers the utmost confidence that they can return to work safely. Of course, we will always consider any new, sensible suggestions.

Covid-19: Employment Support

Lord Balfe Excerpts

Thursday 19th March 2020 Lords Chamber

[Lord Callanan]

I thank the noble Baroness for her questions. Their extent reveals the number of different sectors of the economy that we will need to look at. As she says, they range from sole traders to small businesses and to the very largest companies. We are looking at a comprehensive package. There are a number of different international models that have been introduced. A number of think tanks in the UK have also produced suggestions. They are all being examined at the moment. We are guided by three principles: it has to be a comprehensive package; it has to be co-ordinated; and it has to be coherent. The noble Baroness will understand that we need to look at these things properly. It is no good having a scheme that comes into effect in six months’ time. It needs to work now, it needs to be available and it needs to be deliverable. We are doing all those things, and we will make the appropriate announcements as soon as we possibly can. I understand people’s natural frustration and their wish for urgent action.

[Lord Balfe (Con)]

I wish to make a very minor but important point. At the moment, if a company is insolvent, the workers do not get paid. They can have worked for several weeks up to the date of insolvency but when insolvency comes, their pay is basically at the mercy of the receiver, or whoever is winding up the company. In the Statement the Minister said that any business that needs cash to pay salaries will be able to access a government-backed loan. In other words, a company that cannot pay salaries but is not becoming insolvent will apparently be able to access it. I know that in its submission to the Government the TUC has asked for a relaxation of the rules on insolvent companies, and I realise that it will probably be beyond the Minister’s pay grade to agree that that will be done, but will he agree to reflect to the Government that this point has been raised and possibly to write to let us know what has been decided? This is a small category, but companies are going to go bankrupt and workers may be denied their wages, while others in companies that have not gone bankrupt will be able to access a loan. It is a small point, but it is very important.

[Lord Callanan]

The noble Lord speaks with great authority on these matters. This might be a small point, but I agree with him that it is important. Actually, within my ministerial portfolio I have responsibility for the Insolvency Service, although not for the Treasury and the guarantees that it will provide. I take on board my noble friend’s point and will make sure that it is conveyed to the Chancellor. My noble friend’s intervention is welcome.