Debates between Lord Callanan and Lord Vaux of Harrowden during the 2019 Parliament

Mon 14th Mar 2022
Wed 9th Mar 2022
Wed 17th Jun 2020
Corporate Insolvency and Governance Bill
Lords Chamber

Committee stage:Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords

Energy Bills Discount Scheme (Amendment) Regulations 2024

Debate between Lord Callanan and Lord Vaux of Harrowden
Tuesday 12th March 2024

(2 weeks, 3 days ago)

Grand Committee
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Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
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My Lords, these regulations were laid before the House on 7 February 2024. As we are all aware, Russia’s illegal invasion of Ukraine led to an exceptional rise in energy prices. At the time, the Government responded decisively to these unprecedented circumstances by delivering critical support to households and non-domestic energy consumers facing significant increases in their bills.

Through the energy price guarantee and energy bill support scheme, the Government have spent more than £35 billion supporting households. Non-domestic customers will receive about £8 billion through the energy bill relief scheme and the energy bills discount scheme, which I will refer to as the EBDS. The swift action to introduce this legislation protected consumers from these inflated prices, mitigating what would have been more severe effects of this economic pressure had the Government not intervened.

The EBDS provides a discount on energy bills for the 2023-24 financial year for energy customers on non-domestic tariffs. The EBDS provides a further, higher level of support where those on non-domestic tariffs have domestic end-consumers. This is to support customers on heat networks who were not supported by the energy price guarantee that was available to other domestic customers.

Heat network customers were not protected as heat networks normally purchase their energy through commercial contracts, which they then sell on to domestic customers. All eligible heat suppliers with domestic customers were required by the EBDS regulations to apply for this additional level of support and to pass this benefit on to their customers. They were required to do this within 90 days of the scheme being launched or within 90 days of becoming eligible. The support given by this scheme ensured that householders who might have otherwise been exposed to the full wholesale market price were instead protected. This support is estimated to be worth about £180 million in total or an average of £1,200 per customer supported.

I turn to the specific amendment to the EBDS regulations that we are discussing. Under current regulations, if a heat supplier has failed to apply to the scheme within the deadline set by the rules, it can still apply for support. Indeed, we have required heat suppliers still to apply for support in order to ensure that as many households as possible can benefit. However, the current regulations allow suppliers to apply for support even after the scheme ends at the end of this month. This means that a customer would not get their support in a timely manner, and it also means that the Government would be legally required to process and pay for the administration of applications potentially indefinitely, at a large administrative cost to the taxpayer.

Therefore, this amendment instead provides for an end date, after which no further applications can be made. The final date will be specified in rules that will be made and published if this instrument is approved by the House. The deadline we intend to set is 31 March 2024, which aligns with the end of the period of cover of the EBDS. We have publicised this 31 March end date widely across the relevant sector. There would be one exception to this 31 March deadline for heat suppliers that become eligible so close to the deadline that it would be unreasonable to expect them to apply. Those heat suppliers would have until 14 April to apply.

I come to the most important aspect of this scheme: the impact it has on households facing high bills. It is right to introduce this deadline for those customers too, so that they benefit from this scheme when they need it most, not at an undetermined point in the future. It is essential that as many people as possible benefit from this support, and my department has been conducting extensive engagement to encourage applications from all eligible heat suppliers.

We are also mindful of the number of vulnerable domestic customers who live on heat networks. We have taken action to try to ensure that these customers receive the support they need, for example, by working with applicants in the social housing sector to ensure that all those applications are approved.

To be clear, this deadline does not stop customers being able to seek redress where their network has failed to apply. The Energy Ombudsman in Great Britain and the Consumer Council for Northern Ireland can provide support with dispute resolution and require payments to be made to customers. If necessary, customers can also choose to pursue claims through the civil courts.

To conclude, this instrument amends the EBDS regulations so that the duty for heat suppliers to apply for support is a duty to apply in a timely way, ahead of a deadline. This is a responsible step to ensure that we support customers while limiting the administrative burden on the taxpayer as pressures from energy bills, thankfully, ease. I commend these regulations to the Committee, and I beg to move.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, I remind the Committee of my interests as a generator of small-scale hydroelectricity and as a recipient of feed-in tariff payments.

I do not have any specific comments on the SI, which simply fixes a wrinkle in the various energy support schemes, but I point out the concern raised by the Secondary Legislation Scrutiny Committee that up to 60,000 domestic customers may be missing out on the support available. The Minister has given some examples of what the Government are doing, but it seems that more could be done to ensure that domestic customers do not miss out on this money. How many heat networks are there and have we made attempts to contact all of them to push them into making applications?

I take this opportunity to ask the Minister more generally about progress in dealing with the underlying distortions that made the schemes necessary in the first place. As he said, the support schemes arose because of the substantial increases in energy prices following the Russian invasion of Ukraine. It was entirely understandable and right to support people and businesses under those circumstances, but those schemes did nothing to fix the underlying distortions in the electricity markets that are, in part, the cause of the high pricing.

The key feature is the fact that the price is driven by the marginal pricing of electricity and therefore by the price of gas. That means that the price of electricity from all sources, including renewables, where the generation cost fell during the same period, was driven by the increased gas cost. It meant that people on apparently 100% renewable tariffs saw their electricity prices more than double, even though the cost of renewables had fallen. Quite apart from raising the question of how legitimate those renewable-only tariffs are, this led to some generators earning supernormal profits at the expense of consumers. The support schemes meant that we saw the strange situation of some generators having their excess profits subsidised by the Government. The same was even more true of the gas producers.

I realise that it is more complex than that, as I am sure the Minister will say, especially with the expansion of contracts for difference, but it is generally recognised that electricity prices need to be decoupled from the marginal rate, and especially from gas prices, to remove the distortions and fluctuations that the current situation generates. I asked the Minister about this in an Oral Question on 6 September 2022. He referred then to

“the review of market arrangements, which is looking urgently at that exact situation”.—[Official Report, 6/9/22; col. 91.]

Yet I see that the Government have today launched yet another consultation covering, among other things, exactly the same issue. Launching another consultation does not feel like the urgency that he promised 18 months ago. Can he provide an update on progress and when we might finally see electricity pricing decoupled from the marginal cost of gas generation and the market distortions reduced?

Road Fuel Prices

Debate between Lord Callanan and Lord Vaux of Harrowden
Tuesday 4th July 2023

(8 months, 4 weeks ago)

Lords Chamber
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Lord Callanan Portrait Lord Callanan (Con)
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My noble friend makes a good point. For many rural areas, where filling stations perhaps do not get the throughput of customers, prices tend to be higher anyway. It is certainly something we want to keep an eye on to make sure that rural customers are not disadvantaged.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, the supermarket premium is apparently about 6p per litre, but that is nothing compared to the prices charged in motorway service stations, where it is often a further 18p to 20p above that. The noble Baroness, Lady Kramer, referred to the 6p as gouging. If that is gouging, what is the situation with motorway service stations and what are the Government going to do to fix it?

Lord Callanan Portrait Lord Callanan (Con)
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The noble Lord makes a very good point. Those of us who use motorway service stations are often baffled as to why fuel is so expensive in them. This is something that we will want to keep a close eye on; again, price transparency—that is, motorists having the ability to check what fuel might be available just by taking an exit and going to a service station that is relatively close to a motorway—would be much more beneficial.

Domestic Heat Pumps: Budget Underspend

Debate between Lord Callanan and Lord Vaux of Harrowden
Tuesday 28th February 2023

(1 year, 1 month ago)

Lords Chamber
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Lord Callanan Portrait Lord Callanan (Con)
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My noble friend makes a very good point: huge investment is required to both upgrade and reconfigure the transmission grid. We are moving away from a system based on point loads to a much more diversified system of renewables, et cetera. The point is valid. Billions of pounds are being invested in the grid and we have a plan to upgrade it. It is worth saying that there will be ongoing demand for gas; it will be declining, but we will still be using it.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, we have just heard claims that are often made about heat pumps—that they generate four to five times the energy you put in. That is only in ideal circumstances, typically where the outside temperature is 15 degrees and the water temperature is about 38 degrees. The reality is that you get out about two and a half times the energy you put in. That is a good result, but not if you are expecting four to five times. I worry that these unrealistic claims of real-life performance may undermine consumer confidence and reduce the uptake of heat pumps. Can the noble Lord please ensure that real-life performance is always made clear and included in the MCS database?

Lord Callanan Portrait Lord Callanan (Con)
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The noble Lord makes a very good point. Performance will vary depending on the temperature outside. It is also worth saying that heat pumps have been installed extensively across Europe, including in countries which typically have much lower ambient air temperatures than the UK does, such as Norway. But his point is valid: we need to make sure that people are given accurate information.

Renewable Energy: Generation Licences

Debate between Lord Callanan and Lord Vaux of Harrowden
Tuesday 13th December 2022

(1 year, 3 months ago)

Lords Chamber
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Lord Callanan Portrait Lord Callanan (Con)
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I disagree with the premise of the noble Baroness’s question. We are already a renewable energy superpower. She talks about lack of ambition. In the last auction, round 4, we delivered more than 11 gigawatts and 93 renewable power projects—enough to power 12 million homes. We have the largest offshore wind capacity in the whole of Europe and the second largest in the world. We want to scale-up that ambition and deliver more, but I think the noble Baroness should give us some credit for what we have already achieved.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, I remind the House of my interests in the register. Now that the feed-in tariff has ended, there is not much incentive for people to install more capacity on their homes than they use themselves. The smart export guarantee pays typically between only 1p and 5p per kilowatt-hour, which is not enough to encourage people to install excess generating capacity. Does the Minister agree that a peer-to-peer trading facility that allows people to sell their excess power to their neighbours might increase returns to generators and improve the incentive, and also reduce the cost of power to neighbours?

Lord Callanan Portrait Lord Callanan (Con)
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It is an interesting concept. As the noble Lord knows, the smart export guarantee is a market-driven mechanism, and it is for suppliers to determine the value of the exported electricity to them, taking account of their administrative costs. There are a number of schemes, such as the one mentioned by the noble Lord, and I am certainly very happy to look at it. However, we always have to bear in mind that any subsidy offered to certain generators is paid for by every other customer on the network.

Low-Income Families: Energy Cost Support

Debate between Lord Callanan and Lord Vaux of Harrowden
Tuesday 6th September 2022

(1 year, 6 months ago)

Lords Chamber
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Lord Callanan Portrait Lord Callanan (Con)
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I think my noble friend is talking about the warm homes discount, which we retargeted in the summer. Another three-quarters of a million people became eligible for it—some three million people are now eligible—and we were trying to target it at the most vulnerable. Clearly, there are lots of different groups that we will need to look at very closely.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, my postman asked me a question the other day that I was not able to answer, so I hope the Minister can help. He is on a tariff that guarantees him 100% renewable electricity. The cost of generating renewable electricity has fallen, yet his bill is more than doubling. He does not understand this, and neither do I. Either these renewable tariffs are nothing of the sort—they are just greenwashing—or companies must be profiteering outrageously. Which is it? If it is profiteering, is it right that the taxpayer should subsidise that?

Lord Callanan Portrait Lord Callanan (Con)
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That is another good question, and the answer is complicated. The marginal rate of electricity is set because of the highest contributor to that, which is gas-fired generation at the moment. This is why we have launched the review of market arrangements, which is looking urgently at that exact situation. The noble Lord makes a powerful point.

Economic Crime (Transparency and Enforcement) Bill

Debate between Lord Callanan and Lord Vaux of Harrowden
Lord Callanan Portrait Lord Callanan (Con)
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Yes, but they would have to be tabling notices to any potential beneficial owners in order to update the register. We think that if we have a yearly update, any third party transacting with that entity would then have sufficient legal certainty to be able to proceed. The point is not that the entity might not register the change of ownership but that the third party, and indeed Companies House, have no way of knowing whether it has. Therefore, a third party could engage in a transaction thinking that the original entity is compliant and then discover afterwards that it has not updated its register and is non-compliant, and therefore potentially lose its money and be unable to proceed with the transaction because it cannot register the property. On balance, we think the better option is to have a yearly update cycle, but I realise that this is a point of debate and I am happy to discuss it further. I know that the noble Lord, Lord Vaux, is engaged in this.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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The Minister has not addressed the point that this can easily be dealt with by bringing forward the annual update, which a company has the ability to do under—I think, from memory—Clause 7. If that were done as part of the property transaction, that solves the problem completely. Does the Minister disagree with that?

Lord Callanan Portrait Lord Callanan (Con)
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No, I do not disagree with that. It is, of course, perfectly possible—

--- Later in debate ---
Lord Callanan Portrait Lord Callanan (Con)
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The noble Lord often suggests setting up special Committees of this House. He will know that it is way above my pay grade to dictate to the House authorities what committees they wish to set up for examining particular Bills. I know from appearances that there are some extremely good and effective committees already in this House examining all parts of the Government’s legislative agenda and all departments—but, if the noble Lord can forgive me, I will not get into instructing the House authorities on what committees to set up to future scrutinise our work.

Relevant firms, including financial institutions, law firms, accountancy firms and estate agents, under the anti-money laundering framework, must inform Her Majesty’s Treasury as soon as practicable if they know, or have reasonable cause to suspect while carrying out their business, that they have encountered a person subject to financial sanctions, or a person who has committed a financial sanctions offence. They must state the information on which the knowledge or suspicion is based, and any information they hold about the person by which they can be identified. It is already an offence to fail to comply with this reporting obligation. I understand that the noble Lord does not think that the legislation is applied properly—perhaps we can look at that—but there is already an offence on the statute book.

Activity which seeks to evade these new beneficial ownership reporting obligations should be taken into account in the course of these firms taking a risk-based approach to anti-money laundering, and any suspicions of sanctions evasion should be reported in accordance with their legal obligations. I am pleased to say that Treasury Ministers will be writing to the anti-money-laundering supervisors of the relevant professional enablers on this matter, highlighting that the Government will be expecting everyone in these sectors to be particularly vigilant.

I hope that, with the reassurances that I have provided on this important issue, the noble Lord will feel able to withdraw his amendment.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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The Minister was kind enough to offer to meet with me about my Amendment 24. I actually asked about meeting regarding the verification regulations in Clause 16. Is he prepared to do that, probably with others, as it is very important that these regulations get the input of all these highly intelligent people around the Committee before they are issues, rather than afterwards?

Lord Callanan Portrait Lord Callanan (Con)
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Yes, I am happy to meet with the noble Lord and his colleagues to discuss that matter.

Economic Crime (Transparency and Enforcement) Bill

Debate between Lord Callanan and Lord Vaux of Harrowden
Lord Callanan Portrait Lord Callanan (Con)
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I said there was a robust system in place under the money laundering regulations in response to the various points that were made about financial services professionals, estate agents, et cetera. That is not to say that we cannot improve the system; we certainly look to do that. Providing information and transparency on property ownership, unexplained wealth orders and the sanctions regime, which is what we are doing, will help to supplement that system.

In July 2021, the CPS amended its legal guidance on money laundering offences for prosecutors to make it clear that it is possible to charge someone under Section 330 of POCA, which relates to the failure to disclose money laundering in the regulated sector. This closes a long-standing gap in law enforcement’s toolkit, which will better enable us to tackle the small minority of complicit professional enablers.

In addition, the Solicitors Regulation Authority—the largest legal PBS which supervises approximately 75% of regulated legal service providers in the UK—undertook a broad range of enforcement action in 2021. This included issuing 14 fines totalling £163,000, suspending membership three times and cancelling membership 13 times, effectively preventing an individual conducting regulated activity.

To take another example, the Institute of Chartered Accountants in England and Wales—the largest accountancy PBS—undertook a broad range of enforcement action. This included issuing 59 fines, totalling £178,000, and cancelling the membership of firms six times—again, effectively preventing an individual conducting regulated activity.

The noble Lord, Lord Carlile, suggested that we should consider how we can make legal professionals report matters relating to national security in a structured way and without the benefit of legal professional privilege. This is a complicated matter and not for this Bill, but I certainly welcome his contribution and his engagement, and we will certainly look at that.

The noble Baroness, Lady Kramer, raised an important point on protecting whistleblowers. We recognise how valuable it is that whistleblowers are prepared to shine a light on wrongdoing and believe that they should be able to do so without fear of recriminations. The whistleblowing regime enables workers to seek redress if they are dismissed or suffer detriment because they have made a so-called protective disclosure about wrongdoing. It is right and proper that the Government review the whistleblowing framework once we have had sufficient time to build the necessary evidence of impact of the most recent reforms. We are considering the scope and timing of a review.

A number of noble Lords—the noble Lord, Lord Macdonald, in particular— raised an important point concerning the wording “knowingly and recklessly”. The wording is drafted on precedent, coming from the Companies Act. This clause is intended to provide a necessary and proportionate deterrent to those who may otherwise provide inaccurate or misleading information on the register of overseas entities. This was debated at length in the other place and the Government have already made a commitment to reconsider the drafting. I also welcome the comments of the noble Lord, Lord Macdonald, on the sanctions proposals.

The noble Baroness, Lady Kramer, and the noble and learned Lord, Lord Garnier, asked about the issue of the register and trusts. If the assets are owned via an overseas legal entity, then this entity is within the scope of the draft Bill and will be required to register the trustees as beneficial owners with Companies House and state the reason that they are the beneficial owner—that is, because they are the trustees of that trust.

Her Majesty’s Revenue and Customs introduced a register of trusts in 2017. Trustees of trusts that acquire UK land or property are required to register and provide information on the beneficial ownership of the trust. The information on the register can be shared with law enforcement authorities and enables them to access information on the trustees and beneficiaries of all trusts. Reforms to unexplained wealth orders will also allow law enforcement to investigate the origin of any property held via trusts.

I now turn to the points raised by the noble Lords, Lord Vaux and Lord Eatwell, on verification. Clause 16 requires the Secretary of State to make regulations requiring the verification of information before an overseas entity makes an application for registration, complies with the updating duty or makes an application to be removed from the live register. To ensure that regulations are laid in a timely way, we have added a requirement for regulations to be made before applications may be made for registration in the register of overseas entities. We expect that UK anti-money laundering supervised professionals may have a part to play in this, and we will set out details on the verification scheme in regulations. Overseas entities will be required to update their information annually, and Companies House will be given broad powers to query information it holds via the further legislation to come later in the year. Also, the very public nature of the register means that there will be many eyes viewing the data, which will of course aid in identifying any inaccuracies. I thank my noble and learned friend Lord Garnier for his comments on whether we are capturing the ultimate beneficiaries of property. This is an important point.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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The Minister has not answered the question about why the register is updated annually, not 14 days after a transaction in the way that the PSC rules have to be updated.

Lord Callanan Portrait Lord Callanan (Con)
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I will come to that in a second. The new register is designed to allow investigators to get behind opaque companies. Whether a title is held by a company or an individual, the noble Lord is right that there may be a different beneficiary of the property. That is something investigators may explore further. The task of this register is to look through the company, and that is where we are focused in scope. The question of recording the ultimate beneficiaries of property is a far wider point and would apply to properties held by individuals and UK companies too.

I thank the noble Lord, Lord Carlile, for sharing his experiences with Companies House. We have outlined in the White Paper, published last week, what we are proposing to do under register reform. We are seeking to limit the risk of the misuse of companies by ensuring more reliably accurate information on the companies register, reinforced by identity verification of people who manage or control companies and other UK- registered entities. We will give greater powers to Companies House to query and to challenge the information it receives, and we will give enhanced protection of personal information provided to Companies House. There will be more effective investigation and enforcement and better cross-checking of data with other public and private sector bodies. Companies House will be able to proactively share information with law-enforcement bodies where they have evidence of anomalous filings or suspicious behaviours.

I move on to unexplained wealth orders. I thank the noble Baroness, Lady Chapman, the noble Lords, Lord Vaux and Lord Carlile, and my noble and learned friend Lord Garnier for the points that they raised on the use of UWOs. The threat of substantial legal costs has been a barrier to the use of UWOs. Likely subjects of UWOs are the most litigious persons. To ensure that unexplained wealth can be investigated in the maximum number of cases, we are reforming the cost rules to ensure that agencies will not be burdened with high legal costs if they act with integrity. If an agency acts dishonestly, unreasonably or improperly, it may still be ordered to pay the costs of those subject to a UWO, which is to ensure fairness. An important point to raise regards the changes to the cost rules to limit law-enforcement liability following an adverse court ruling. Protection from costs means that the court has discretion to award costs against an enforcement agency only if it acted dishonestly, unreasonably or improperly. This will remove a key barrier that has discouraged the use of UWOs, while of course providing a safeguard against arbitrary use of the powers.

The noble Lords, Lord Vaux and Lord Carlile, expressed concerns relating to resourcing for law enforcement agencies. The Government have developed a sustainable funding model that demonstrates our commitment to tackling economic crime. The combination of this year’s spending review settlement and private sector contributions through the levy will provide economic crime funding totalling around £400 million over the spending review period. That includes the £63 million that I mentioned earlier for Companies House reform. Since 2006-07 nearly £1.2 billion of the assets recovered under the Proceeds of Crime Act has been returned to law enforcement agencies, prosecutors and the courts to fund further asset-recovery capability or work that protects the public from harm.

Account freezing and forfeiture orders are a hugely impactful tool in the law enforcement toolkit. AFOs have proved their worth in a wide range of cases and are seen by law enforcement agencies as a quick and effective method of disrupting criminals and recovering their assets. In 2020-21 just under £219 million of the proceeds of crime were recovered within England, Wales and Northern Ireland. This continues the general trend of improved performance since 2016-17.

The noble Baroness, Lady Kramer, raised an important point on Clause 18 of the Bill and the exemptions for which it provides. The phrase used in the draft Registration of Overseas Entities Bill, published in 2018, was that the Secretary of State may exempt a person from the requirement to register only for “special reasons”. This was intended to mirror the wording used in the Companies Act 2006 in respect of the persons with significant control regime. However, the pre-legislative scrutiny committee that examined the draft Bill in 2019 was of the opinion that the reasons why an exemption could be granted should be explicit in the Bill. The Government accepted the committee’s concern that otherwise the power may be too wide, and we amended the Bill accordingly—I think that also addresses some of the points made by the noble Lord, Lord Carlile. The circumstances outlined in the Bill have been carefully considered to provide clarity but also flexibility for unforeseeable but legitimate scenarios. Given that the key objectives of this register are to improve transparency and combat money laundering, these exemptions will be used very carefully, and only for evidenced and legitimate reasons.

The noble Baronesses, Lady Bennett and Lady Kramer, raised the subject of freeports. Throughout the bidding prospectus and subsequent business-case processes, prospective freeports were required to set out how they would manage the risk of illicit activity. Those plans were scrutinised by officials in Border Force, HMRC, the National Crime Agency and others. The Government already require each freeport governance body to take reasonable efforts to verify the beneficial ownership of businesses operating within the freeport tax site and to make that information available to HMRC, law enforcement agencies and other relevant public bodies. Given the nature of the information, we do not think it would be appropriate for the freeport governance body to release that information publicly because it is a third party and does not have the locus to release such information about a business to the public. Furthermore, the requirement would also partially duplicate the people with significant control register at Companies House, where there is already an onus on the company itself to provide information.

I fear that I am running out of time—

Economic Crime: Planned Government Bill

Debate between Lord Callanan and Lord Vaux of Harrowden
Monday 31st January 2022

(2 years, 1 month ago)

Lords Chamber
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Lord Callanan Portrait Lord Callanan (Con)
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I thank the noble Lord for his fascinating question.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (CB)
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My Lords, it seems that this Bill will be some time in coming, but surely there are things we can do more quickly. For example, the Companies Act 2006 sets out clearly what information is required on directors and shareholders. Is it actually necessary to legislate for Companies House to verify that information? It may not be able to refuse to register the information, but there is nothing to stop it flagging the fact that the information is unverified.

Lord Callanan Portrait Lord Callanan (Con)
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I am afraid that it is necessary for primary legislation to enact the reforms of Companies House. This is an area for which I am responsible, and I work closely with Companies House on it. I get a steady flow of complaints from noble Lords and from Members of Parliament about abuses of the Companies House register. There is a certain amount that we can do with the funding that I announced in terms of reforms, but the primary reforms require primary legislation.

Corporate Insolvency and Governance Bill

Debate between Lord Callanan and Lord Vaux of Harrowden
Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 17th June 2020

(3 years, 9 months ago)

Lords Chamber
Read Full debate Corporate Insolvency and Governance Act 2020 View all Corporate Insolvency and Governance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 114(a) Amendments for Report - (17 Jun 2020)
Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
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I thank and pay tribute to my noble friend Lord Hodgson for ably introducing this grouping and speaking so powerfully on this subject. In fact, such is the power with which he speaks that when he spoke, claps of thunder echoed around the Chamber. We do not have any of our right reverend Prelates here to advise us, but perhaps my noble friend’s amendments have support from authorities even higher than those in this House. I am also grateful to the noble Lord, Lord Vaux, for speaking so eloquently on this topic, and grateful to him, my noble friend and the noble Lord, Lord Mendelsohn, for the time that they made available for us to discuss these issues in the last couple of weeks.

At the risk of further increasing my noble friend’s blood pressure, I say to him that the measures in the Bill are indeed intended to help companies to maximise their chances of survival during the Covid-19 emergency, to protect jobs and support the recovery of the economy. That is why other measures, which would not necessarily alleviate the impact of the current emergency, have not been included in the Bill.

I will reply also to the points from the noble Lords, Lord Adonis and Lord Mendelsohn. The Pre Pack Pool wrote to me on this subject a few weeks ago, and I responded on 29 May. I understand its concerns; officials will be meeting the pool and the Insolvency Service to take forward the discussions and the concerns that it has rightly raised.

I also see that the Small Business, Enterprise and Employment Act 2015 has provided some inspiration for these amendments, which would require mandatory reference to the aforementioned Pre Pack Pool. Aside from specific considerations as to whether a requirement for a positive opinion from the pool might conflict with the strategy duties of the administrator, I would be concerned that the amendment might impose an additional burden on businesses at this difficult time. Furthermore, as my noble friend Lord Hodgson reminded us, the Pre Pack Pool operates as a limited company, and I ask whether it is right to restrict the required opinions to one source of supply.

There are already legislative and professional regulatory requirements in respect of pre-pack sales. When deciding whether to go ahead with any sale in administration, the administrator is required to take into consideration the statutory objectives of administration, which include rescuing the company as a going concern and achieving a better result for creditors as a whole. The administrator must also send a detailed narrative explanation to creditors, justifying why a pre-pack sale was undertaken. That is sent to the administrators’ regulatory body, which monitors it to ensure that administrators comply with the spirit as well as the letter of this requirement. At Second Reading, I explained that we continue to work with regulators and industry stakeholders to discuss the options for strengthening the professional regulatory requirements. I can tell noble Lords that if that fails to give greater assurance to creditors, we will consider bringing forward further legislation.

For the reasons that I have set out, I am therefore unable to accept these amendments and I hope that my noble friend and the noble Lord, Lord Vaux, will therefore be able to withdraw and not press their amendments.

Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden [V]
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In his response, the Minister did not answer the question of whether he believes that the Pre Pack Pool is useful, sustainable on a voluntary basis, and whether it matters if it ceases to exist. Could he answer that now?