United Kingdom Internal Market Bill

Debate between Lord Callanan and Baroness Henig

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Wednesday 2nd December 2020 Lords Chamber

[The Deputy Speaker (Baroness Henig) (Lab)]

I call the Minister to make a Statement on legislative consent.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I am required to inform the House that on 7 October the Scottish Parliament voted not to grant legislative consent because of its assertion that the Bill negatively impacts the devolution settlements. We have remained open to engagement with the Scottish Government on the contents of the Bill, and this offer still very much stands. The Senedd and Northern Ireland Assembly have not yet voted on legislative consent, but we have continued to engage with both Administrations on the Bill’s contents in recent weeks. This engagement has been fruitful, and the Government have listened closely to concerns. It has resulted, for example, in the Government tabling an amendment to ensure that the devolved Administrations have a strong role in appointments to the Office for the Internal Market panel, in light of Welsh Government proposals.

We appreciate the significance of the UK Government legislating without consent for this Bill. Our ambition, of course, remains to secure legislative consent Motions for the Bill. As I have said throughout the passage of the Bill, the UK Government remain open to discussions with all the devolved Administrations.

Clause 12: Modifications in connection with the Northern Ireland Protocol

Amendment 1

United Kingdom Internal Market Bill

Debate between Lord Callanan and Baroness Henig

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th November 2020 Lords Chamber

[Lord Callanan (Con)]

I thought that I had put the matter to rest by writing the letter to the noble Lord, Lord Purvis, on which the noble Lord, Lord Fox, has commented. In our view, there is no doubt that the regulation of tuition fees is outside the scope of the Bill and, therefore, beyond the scope of the office for the internal market’s functions. But as the letter to him confirmed, we will keep the matter under review and not hesitate to take action if there is a problem, which we do not believe exists.

[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

The noble Lord, Lord Stevenson, and the noble Baroness, Lady Neville-Rolfe, also wish to speak after the Minister.

[Lord Stevenson of Balmacara (Lab) [V]]

I asked the Minister a specific question on whether the framing of Clauses 38 to 40 was exactly the same, or differed from, the existing powers of the CMA. He did not answer that. I do not want to delay us too much today but perhaps he could write to me about it.

--- Later in debate ---

[Lord Callanan (Con)]

I thank all noble Lords who have taken part in this debate. I apologise to the noble Baroness, Lady Hayter, if she found my letter disappointing; I will try to do better next time. The noble and learned Lord, Lord Falconer, looks disapproving; I am not going to write him any more letters if that is the case.

With regard to exclusions on services, all services subject to the authorisation requirements or the regulatory requirements are affected under the Bill unless they are specifically excluded from some or part of the rules under Part 2. I hope that that clarifies the noble Baroness’s question—if not, I will be happy to write her another letter. She is shaking her head in disbelief.

I say to the noble Baroness, Lady Bowles, with regard to her question on consultation, that we consulted on the general office, what enforcement provisions there should be and whether or not it should be included as part of an arm’s-length body. Once we had made the decision that it should be located within the CMA, there was of course extensive discussion between officials and the CMA on the powers and how they will be enforced. I say to my noble friend Lord Tyrie that I am of course aware of the proposals that he refers to on the CMA and I will be happy to take another look at them.

Addressing the specific questions on this clause stand part debate, I will set out the rationale for these clauses. Clause 38, as I believe we already discussed in the previous group, sets out the powers that the Competition and Markets Authority will have to gather information in support of its monitoring, advisory and reporting functions. As I said previously, in order to carry out its functions the OIM must have access to high-quality information to produce accurate, relevant and credible reports. Clause 38 will ensure that the CMA is able to require the assistance of third parties to perform its functions and is able to independently gather evidence in a timely manner.

I hope that the noble Baroness, Lady Bowles, agrees with me that presenting analysis based on partial or inaccurate information could be detrimental to the regulatory decisions taken as a result of OIM reporting and monitoring and would damage the reputation of the OIM among many key stakeholders in these fields. The powers in this clause are therefore put on a strong statutory footing. They will ensure that the reporting that the OIM undertakes will be as effective and comprehensive as possible for the benefit of policy-makers in the UK Government and the devolved Administrations, significantly strengthening existing stakeholders’ ability to navigate the new UK internal market.

Clause 39 describes what action the CMA is able to take in response to non-compliance with the information requests described in Clause 38. As noble Lords said, the CMA has existing powers under the Enterprise Act 2002 regarding non-compliance with its information requests. This is necessary to enable the CMA to carry out its functions effectively. As with Clause 38, the provision for the OIM in Clause 39 is modelled on those powers. The clause will allow the CMA to determine the most appropriate policy approach and the amount of any financial penalty to be imposed within the limits that have been prescribed. The clause also sets out the conditions where financial penalties may not be imposed because more than four weeks has expired since the CMA exercised its relevant functions.

Clause 40 sets the parameters that the CMA should consider for financial penalties in cases of non-compliance with an information-gathering request notice. Let me first say that I understand the concerns of noble Lords, but the preference and expectation will always be that information gathering is on a voluntary basis. The Government do not anticipate that the CMA will need regularly to fall back on the information-gathering and non-compliance powers. However, it is important to ensure that this facility is available to the CMA to detail how penalties will be set. As with other provisions, the Government have chosen to mirror the relevant provisions of the Enterprise Act 2002.

I can say to the noble Lord, Lord Tyrie, and my noble friend Lady Neville-Rolfe that the Secretary of State will make regulations specifying the maximum amounts in practice within the specified ceilings for these penalties in consultation with the CMA and other interested parties. I can confirm for the benefit of the noble Baroness, Lady Hayter, that the devolved Administrations will of course be consulted as part of this. In addition, and as noted in our debates on previous groups, I confirm to the noble Baroness, Lady Bowles, and the noble Lord, Lord Tyrie, that the CMA will not be able to issue a financial penalty against the UK Government or any devolved Government. Let me be very clear about that. Let me also assure the noble Baroness, Lady Bowles, that the Government are committed to not taking any steps to bring in the financial penalties until there is credible evidence that there is a need do so, so we will not commence these provisions without that credible need being demonstrated.

I will deal with a couple of other questions. The noble Baroness, Lady Bowles, asked about third-party requests. Such requests would be permissible if they were within the scope of Clause 31 and the CMA thought that they were appropriate. As I confirmed earlier, the White Paper invited consultation responses on how the functions to be delivered should be implemented as well as on whether an existing arm’s-length body should deliver them or bespoke arrangements should be established. As is obvious, we decided after that consultation that the OIM should be situated within the CMA.

With the reasons I have set out, I hope that I have been able to reassure noble Lords on their legitimate concerns and on why this clause should stand part of the Bill. I hope that the noble Baroness will feel able to withdraw her amendment.

[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

I have had a request to speak after the Minister from the noble Lord, Lord Fox.

--- Later in debate ---

[Lord Callanan (Con)]

With regard to the noble Lord’s first question, I understand why his cleaning abilities might not be up to standard and he might not get his tea. With regard to the questions asked by the noble Baroness, Lady Bowles, on reasonableness, we certainly do not intend to create disparity within the CMA over the functions it carries out and the processes it follows.

To be serious, of course I understand the difference between being asked to do something voluntarily and being asked to do something voluntarily with the back-up of potential penalties. The powers and penalties in question are similar to those used by the CMA for its existing functions, such as conducting market studies. This will ensure consistency in the way that the CMA, under its existing and its OIM capacities, interacts with stakeholders across all its functions. We do not intend to commence the powers on fines until it is proved that they are necessary, as I said.

[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

I have had a request to speak from the noble Baroness, Lady Neville-Rolfe.

[Baroness Neville-Rolfe (Con)]

I thank my noble friend for his assurance on commencement. He did not answer my specific questions, but I think that the answer in general terms was that the Government have taken the same powers as the CMA has on competition and applied them pro rata. Perhaps I can pick up something that the noble Lord, Lord Stevenson, said earlier. I wonder whether we could look at this line by line to see whether things are or are not all the same; that would be a helpful Committee-type process.

I really got up to ask a question about examples. The Minister helpfully gave an example of a penalty regulation—he said that he might make regulations with penalties under £30,000, perhaps at a lower level for particular things—but I am confused about what kind of regulations are going to be made here. That may be an impossible question to answer but if my noble friend could give us some more examples, perhaps ones that are in draft or have gone out to consultation, it would be incredibly helpful.

[Lord Callanan (Con)]

I referred in my earlier speech to the need to make regulations setting the maximum penalty, which the Secretary of State will do, but I will write to my noble friend if there are any other examples of regulations that we feel we may need to make.

[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

Does the noble Baroness, Lady Bowles, wish to respond to any of the points made?

UK Internal Market: White Paper

Debate between Lord Callanan and Baroness Henig

Wednesday 29th July 2020 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

I thank the noble Lord, Lord Stevenson, and the noble Baroness, Lady Kramer, for their questions. I pay tribute to the support that he offered for the principles of this legislation, for which I am grateful. He asked about the timetable. As he is aware, consultation on the White Paper closes on 13 August and we are committed to bringing forward legislative proposals following that when parliamentary time allows—likely to be as soon as possible after the Summer Recess.

The noble Lord asked about the continuing discussions on common frameworks. Indeed, those discussions continue, and our proposals will maintain consistently high standards across the whole UK, promoting co-operation between the UK Parliament and the devolved legislatures. He referred to the Agriculture Bill and the Trade Bill. Those are, of course, separate discussions and separate legislation, but let him be in no doubt that we are committed to high standards across the whole United Kingdom. Under our proposals, the devolved Administrations will continue to have the power to regulate within their areas, and they are going to gain a whole load of new powers when we leave the European Union transition period at the end of this year and will continue to be able to exercise their powers in those areas, as long as they do not discriminate against goods and services from other parts of the country. He also asked about state aid. I cannot give him a timetable for that, but it is under active consideration by the Government at the moment.

The noble Baroness, Lady Kramer, referred to the creation of a UK body. We are indeed suggesting that for consultation in the White Paper but we envisage that such a body will act to monitor the operation of the internal market across the country. We do not envisage it as having compliance powers, and of course dispute resolution is ultimately a matter for the courts.

The noble Baroness also referred to trade deals. Again, that will be subject to separate legislation—a separate Trade Bill is coming before your Lordships. However, I reiterate that our commitment is to the highest possible standards across the whole country, and we have no intention of watering them down.

[The Deputy Speaker (Baroness Henig) (Lab)]

We now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

Corporate Insolvency and Governance Bill

Debate between Lord Callanan and Baroness Henig

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

4: Clause 1, page 4, line 23, at end insert—
“(c) in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and(d) in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by section 126 of the Pensions Act 2004, the Board of the Pension Protection Fund.”Member’s explanatory statement
This amendment extends the monitor’s duty to give notice that a moratorium has come into force.

[The Deputy Speaker]

I remind noble Lords that Members other than the mover of an amendment and the Minister may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this or any other amendment in the group to a Division should make that clear in the debate.

[Lord Callanan]

My Lords, the amendments in my name make provisions relating to pension schemes in the moratorium and the restructuring plan. Although the moratorium is not an opportunity for employers to walk away from their liabilities, it may become the point at which preparations for and discussions about a restructuring proposal begin. Where the pension scheme would be a large unsecured creditor in any insolvency, should the employer ultimately fail, restructurings can have a significant and immediate impact on the expected outcome of the scheme.

There is the possibility that the company may seek to reschedule payments to provide working capital to give time to shore up its operations. This might result in lower payments to the scheme for a period of time. A rescue may also involve certain other creditors, such as new lenders providing rescue finance, taking security over company assets. This would mean that there would be less available for other creditors, including the scheme, in the event that any such rescue ultimately failed.

Some insolvency procedures are designated as “insolvency events” under existing pensions legislation. One effect of such designation is that the Pension Protection Fund has a statutory role to play, acting as a creditor in place of the trustees of eligible schemes. However, the new procedures are different. They are not qualifying insolvency events, as they are focused entirely on giving the company every opportunity to achieve a rescue as a going concern. This would be the best outcome for a pension scheme: moving forward with the support of its newly rescued sponsoring employer.

Nevertheless, there is concern that these procedures could result in the pension scheme being disadvantaged as an unsecured creditor of the company. The PPF, as the provider of protection for members of eligible schemes in specified circumstances, could potentially face a greater loss. An example of this would be if the company subsequently fails and the scheme falls into the PPF with a larger deficit than it originally had.

Consequently, it is agreed that there is a need to build in specific protections. These focus on the interests of the scheme and its members, and the interests of the PPF and its levy payers. This would be by ensuring that the PPF has a seat at the table in any restructuring proposal and that its voice is heard. After all, it is the statutory compensation scheme for members of eligible defined benefit schemes, and ultimately bears the risk for the scheme should the company subsequently fail.

The challenge has therefore been to strike the right balance between the interests of the trustees, the board of the Pension Protection Fund, the company and its creditors. Taken together, these amendments achieve this balance. They provide for both the PPF and the Pensions Regulator to get appropriate information in the case of both a moratorium and a restructuring plan. The regulation-making power will allow the Secretary of State to provide for the board of the PPF to act in the place of the trustees of the scheme as a creditor in certain circumstances. The board of the PPF and the Pensions Regulator will have the right to the same information as creditors, concerning the start and end point of a moratorium and any change in the monitor, in specified circumstances. The board of the PPF will have the same rights as trustees to challenge in court the monitor’s or director’s actions in specified situations where the interests of the trustees as a creditor are considered to be unfairly harmed by those actions.

Where a restructuring plan is proposed and the company is a sponsoring employer, provision is made for the board of the PPF and the Pensions Regulator to receive the same information sent to creditors, in specified circumstances. This means that they are informed that a proposal has been made and they can then consider what action, if any, to take.

In respect of both the moratorium and the restructuring plan, where the trustees of a PPF-eligible scheme are a creditor of the company concerned, the proposed amendments provide a regulation-making power. This power will give the board of the PPF the ability to exercise the creditor rights of the trustees; again, in appropriate circumstances. These rights include attending the creditors’ meeting, voting on the restructuring plan and making representations to the court. The powers are drafted to allow an appropriate balance between the trustees and the Pension Protection Fund’s interests by allowing creditor rights to be exercised concurrently where appropriate. Conditions can also be placed on the exercise of any rights given to the board of the PPF.

Restructuring will always involve trade-offs. Employees will be concerned that the rescue ensures that their jobs are secure, but at the same time they will be interested in the impact on the company pension scheme if they are a member. The changes tabled in my name have balanced the interests of employees and scheme members with those of a company and its creditors, giving them all the best chance for survival, in our view. I beg to move.