Commercial Payments Bill [HL]

Lord Fox Excerpts

Report stage
Tuesday 15th September 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to this group on behalf of my noble friend Lord Holmes of Richmond, who sends his apologies to the House for his absence today. Before I begin, I note my gratitude to the Minister, who has been incredibly receptive in listening to and addressing our concerns with the Bill. I believe that we have ended up broadly in agreement on the final form that the Bill should take, so I commend him and his officials for the cross-party work they have put in.

My noble friend’s two amendments from Committee seek to address three technical matters. Amendment 1 aims to provide the supplier with guidance on how to submit a notice. Amendment 5 seeks to clarify that a payment is defined as such only when the supplier has clear and unequivocal use of funds. Amendment 10 would prevent the import-export exemption being extended past the implementation of the Electronic Trade Documents Act.

As in Committee, we remain broadly supportive of all three amendments. Amendment 1 reflects the fact that good payment practices can be ensured only if both parties are aware of the maximum payment terms and the supplier has submitted a notice in good time. Amendment 10 reflects a much-raised concern that imports and exports are currently exempt from the Bill. The Electronic Trade Documents Act means that this will not have to be the case, so I hope that the Minister can assure us that there are plans for incorporating import and export into the payment regime upon the full enactment of that Act.

Finally, it is a shame to see that the aim behind Amendment 5 has not been accepted by the Government. The Bill aims to improve payment practices between firms, largely because, currently, too many exchanges are delayed at the expense of the supplier. If a payment is made through an intermediary and remains there for an indefinite period—perhaps beyond the 60-day payment term—and does not fall under the provisions of the Bill, the Bill is of little use to the supplier awaiting payment. Amendment 5 would ensure that payments were considered as paid only when they reached their final recipient. That principle was the reason for the Minister rejecting my Amendments 2 and 4 in Committee: that, regardless of delays, payments should count only when received by the supplier. I hope that the Minister can today confirm that this definition will be made explicit in all cases.

I turn to my amendments. Alongside my noble friend Lord Hunt of Wirral, I have retabled several probing amendments arising out of concerns about the effects of the maximum payment terms. Amendments 2, 4 and 19 are concerned with payments that are delayed by either bank holidays or bank processing times. Amendment 9 probes the economic and opportunity costs of the exemption of upwards payments from payment term restrictions. Amendments 3 and 6 seek to add a definition of nationalised bodies to the Bill, reflecting the fact that, while they will be treated as regular commercial bodies, their business models are self-evidently different and, as such, there is a risk that their payment practices reflect this. These are all questions that we would benefit from seeing answered; however, that does not detract from the fact that we support the general aim of Part 1.

It is also true that the best way of judging the effectiveness of a policy is through analysing its effects in practice. Therefore, I welcome the compromise that the Government have made with the noble Lord, Lord Fox, giving the Secretary of State the powers to shorten payment terms alongside mandating a consultation about the decision. The proposed new clause under Amendment 15 does not commit the Government to any specific action but simply requires a review of the effects of the maximum payment terms and allows for adjustment if necessary. That is a sound, self-correcting approach and I therefore thank the Minister for agreeing to this measure. I beg to move.

[Lord Fox (LD)]

My Lords, I feel a great wave of consensus flowing over me. I will speak to Amendment 8 in my name. As we discussed before the Recess, much of the consultation process proposed a 45-day limit, yet the Bill offers no easy route from the 60 days it proposes to a shorter timeframe. My amendment would require the Secretary of State, within five years, either to lay draft legislation reducing the maximum payment period for private purchasers from 60 to 45 days, or to explain to Parliament why not.

The Minister’s reaction and response to this issue have been typical of the very strong consensus that we have been able to build. I echo the words of the noble Lord, Lord Sharpe, that both the Minister and his team have been extremely helpful in this. That is why I am delighted to note that government Amendment 15 and the various consequentials lock in very much what I was looking for, including—as the noble Lord, Lord Sharpe, mentioned—the need for consultation within five years, with a view to shortening the payment period. This government amendment is an excellent response to my Amendment 8, thereby making my amendment unneeded.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, prior to introducing the government amendments, I wish to express my personal thanks for the positive engagement across the House, and particularly to the noble Lords, Lord Hunt and Lord Sharpe, on the Opposition Front Bench, and the noble Lord, Lord Fox, and the Liberal Democrats for their very thoughtful scrutiny of the Bill.

The Bill builds upon the important reforms that were enacted by the previous Conservative Government. The provisions in the Bill have been drafted following extensive consultation with businesses, with more than 850 responses to our consultation, which was undertaken between 31 July and 23 October 2025. We have brought forward a Bill that reflects that consultation.

Our decision to impose stricter maximum payment terms of 60 days received support from 66% of consultation respondents. This is a significant strengthening of current law. No longer will large businesses be able to impose payment terms of over 60 days upon their suppliers. The question remains whether 60 days should be the end of that journey. We have heard loud and clear from smaller businesses that the Government should consider reducing maximum payment terms to 45 days or even 30 days. I have listened carefully to all noble Lords across the House encouraging us to go further on this. I am pleased to say that the Government have tabled amendments to provide a power that may be used in future to reduce the maximum payment terms.

These amendments allow the Government to consult on whether payment periods should be reduced, ensuring that any future decisions are informed by evidence and experience of how the new measures are operating in practice. Furthermore, the Government will not use this power to reduce maximum payment terms for at least five years. I hope noble Lords will agree that this is a sensible change and a balanced approach, maintaining the payment periods consulted on and included in the Bill, providing stability and certainty while businesses adapt to the new reality of 60-day maximum payment terms, and ensuring that there is a clear route to go further in future if the evidence supports it.

I turn to the amendments tabled by other noble Lords. In response to Amendment 2, increasing the maximum payment term for public authorities beyond 30 days would undermine the Procurement Act 2023 and delay payment to suppliers. In response to Amendment 4, increasing the maximum period for non-public authority purchasers beyond 60 days would delay payments to suppliers and move away from the position consulted upon with strong levels of support.

Regarding Amendments 3 and 6, national ownership does not by itself determine the applicable payment regime. Under the Bill, a nationalised body that meets the definition of a “public authority” will be subject to a 30-day maximum payment period. A nationalised body that does not meet that definition will be subject to the 60-day maximum payment period that applies to other purchasers. I recognise the intention and ambition of the noble Lord, Lord Fox, in Amendment 8 to reduce maximum payment terms.

On Amendment 19, the Bill takes important steps by introducing clarity and consistency around payment terms, building on the reforms introduced by the previous Conservative Administration. We are not aware of public holidays being raised as a concern by any businesses or stakeholders during last year’s extensive public consultation.

Amendment 1 is already covered by the Bill. We are setting out clearly the trigger points that can be agreed to start the clock on payment and the implied term if payment is not explicitly made.

Regarding Amendment 5, the Government believe that the Bill is clear. For the purposes of whether a payment has been made on time and when interest on late payment will start, payment will be considered made at the point that funds have been received by the supplier. On both Amendments 1 and 5, the Small Business Commissioner will provide advice and information on compliance with legal obligations on these points. On Amendment 10, I outlined in Committee how the removal of this exemption would place UK businesses at a competitive disadvantage.

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Moved by

[Lord Fox]

7: Clause 1, page 3, line 37, at end insert—
“2CA Payments collected by intermediaries(1) This section applies where, under or in connection with a contract to which section 2B applies (“the supply contract”), a person other than the supplier (“the intermediary”) receives all or part of a relevant payment from the purchaser for onward transmission to the supplier.(2) This section applies regardless of—(a) whether the intermediary acts as agent for the supplier or the purchaser or otherwise, and(b) the legal characterisation of any contract between the intermediary and the supplier or the purchaser.(3) For the purposes of this section, a relevant payment is not to be treated as made to the supplier until the amount received by the intermediary is received by the supplier.(4) It is an implied term of any contract between the intermediary and the supplier that the intermediary must pay to the supplier any amount received from the purchaser in respect of a relevant payment under the supply contract before the end of the period of 7 days beginning with the day on which the intermediary receives that amount.(5) A term of any contract is void so far as it purports to—(a) provide for payment to the supplier later than is required by subsection (4), or(b) treat a relevant payment as made to the supplier earlier than is provided by subsection (3).(6) Where the intermediary fails to comply with the implied term in subsection (4), the unpaid amount is to be treated as a qualifying debt owed by the intermediary to the supplier for the purposes of this Act (and statutory interest runs accordingly).(7) Subsection (4) does not require the intermediary to pay an amount to the supplier so far as the intermediary is entitled to deduct or withhold that amount under a term of a contract with the supplier that is fair and reasonable having regard to the matters specified in Schedule 2 to the Unfair Contract Terms Act 1977, and it is for the intermediary to show that any such term satisfies that test.”Member’s explanatory statement
This amendment closes the online marketplace loophole by providing that payment is not treated as made to a supplier until the supplier actually receives the money, and by requiring any intermediary that collects payment on a supplier’s behalf to remit it within 7 days regardless of how the intermediary is legally characterised.

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[Lord Fox (LD)]

My Lords, as we all know, economic activity is switching from familiar structures and supply chains to a situation where businesses market their goods or services via third-party online marketplaces or virtual intermediaries. The amendment would bring such marketplaces and intermediaries into the context of the Bill. It would close a loophole by providing that payment is not treated as made to a supplier until the supplier actually receives the money, which seems reasonable, and by requiring any intermediary that collects payment on a supplier’s behalf to pay it within seven days, regardless of how the intermediary is legally characterised. The Minister is Minister for Small Business, and I am sure that very many of the businesses that are now under his purview would agree that their cash flow can be majorly impacted by how quickly these online marketplaces settle.

We have debated the role of online intermediaries in a number of Bills and contexts. For example, we have talked about their role when considering product safety. In every case, the Government—both Governments —have found arguments to eliminate these important businesses and sectors from whatever legislation we have been considering. So it is quite clear that we have to move on from where we are now. We cannot keep exempting what is becoming a major part of our economy from the legislation that we consider. An ever-increasing proportion of the UK economy is shifting in this direction, and we need to grasp the nettle.

At the very least, I am looking for some assurance from the Minister that the Small Business Commissioner, the Government and departments can actually take a look at the role of these businesses in all walks of the economy and find a way of bringing them on board and making sure that they are not a loophole in the laws that the Government are very properly introducing. With that, I beg to move Amendment 7.

[Lord Hunt of Wirral (Con)]

My Lords, this amendment touches on very much the same point as my noble friend Lord Holmes of Richmond’s Amendment 6 in the first group. The principle that payments should be considered as such only when received by the supplier underpins several of the amendments that we on this side of the House have brought back from Committee. As such, His Majesty’s loyal Opposition support this amendment, as we did in Committee. I do not think that a payment should fall under a different regime from direct payments simply because it is made online and happens to travel through an intermediary. Similarly, ensuring the prompt forwarding of payments by intermediaries is an integral part of promoting good payment practices. This amendment aims to do that, and I warmly commend the speech of the noble Lord, Lord Fox. I join him in hoping that the Minister can confirm that these issues have been considered and addressed.

[Lord Leong (Lab)]

My Lords, I am grateful to the noble Lord, Lord Fox, for Amendment 7 and thank him for it. I recognise that it was tabled in a constructive spirit, and I thank him once again for the engagement we have had on this matter, both in person and by correspondence. The Government share his aims of ensuring that suppliers are paid promptly, payment processes are clear and purchasers cannot use contractual mechanisms to delay payment unjustly. I entirely agree that, when a small business sells through a platform or marketplace, the money due to that business should not be held unnecessarily.

I want to be absolutely clear that the use of intermediaries does not affect a supplier’s right to be paid within 60 days. Chapter 1 of Part 1 ensures that, for business-to-business contracts for the supply of goods or services, the maximum payment time is 60 days. If payment is more than 60 days overdue, the purchaser is in breach of contract and liable to pay interest. The use of an intermediary does not alter this position.

I reassure all noble Lords that persistent attempts to circumvent the maximum payment terms through intermediaries constitute poor payment practice. Under Clause 19, this constitutes grounds for the Small Business Commissioner to investigate and potentially levy a financial penalty on larger businesses that persistently engage in this practice. Under Clause 18, the commissioner will also be able to adjudicate payment disputes where a larger business owes money to a small business, including where the debt arises from the use of an intermediary.

The Bill addresses late business-to-business payments. It is not intended to regulate broader business relationships such as those between retailers using agents to sell goods to consumers or between a platform or marketplace and others when the platform or marketplace is holding, processing or transmitting funds between them. Those are subject to separate regulation. The contracts through which the majority of small businesses trade on online marketplaces are either business-to-consumer or consumer-to-consumer contracts and are subject to consumer legislation. These contracts were outside the scope of our impact assessment and our public consultation.

As tabled, the amendment would therefore not address the issue raised by the noble Lord, Lord Fox. Tackling the issue of late payments outside a business-to-business context would move the Bill into a completely different area of regulation and would require the establishment of a new statutory regime for online marketplaces and payment intermediaries. This would cut across existing legislation, rather than maintaining the Bill’s core focus on commercial payment practices between suppliers and purchasers.

The amendment would also interfere with existing commercial models that operate in the interests of the relevant parties and serve legitimate purpose. For example, where most intermediaries operate a system in which payments are pooled in a small business account and are drawn down by the small business on a regular basis, the amendment would mean that each individual sale, however small, would have to be remitted directly to the small business, significantly increasing transaction numbers and costs and reducing the flexibility of the operating model. Another example is payment providers holding funds for more than seven days to allow for fraud checks or other compliance requirements. The amendment would increase small businesses’ exposure to fraud and undermine the regulatory and legal framework governing payment providers.

However, I understand and share the noble Lord’s concerns about withholding funds from small businesses. I am therefore happy to ask the Small Business Commissioner to review this issue with a view to developing guidance for small businesses so that they understand how the Bill applies to trading activity on online marketplaces. This can build on the guidance that the commissioner produced last year to help small businesses understand why their accounts may be frozen or funds withheld and how they can take action to avoid this. This included a 10-point pledge to online marketplaces and payment providers which was signed and promoted by several major companies. As the Minister for Small Business, I commit to examining how the Government can further support small businesses in addressing this issue faced by those who use online platforms, including engaging with other government departments and regulators where they have responsibility.

For those reasons, and given the commitments that I have made, I respectfully ask the noble Lord, Lord Fox, to withdraw Amendment 7.

[Lord Fox (LD)]

I thank the noble Lord, Lord Hunt, for his support for this amendment. One point of consternation or otherwise is that I would suggest that the supplier-marketplace relationship is a B2B relationship, not a B2C one. I am not sure where the argument that I am somehow pushing this to a different sort of relationship came from, but I will set that to one side and mull on it later.

I thank the Minister for the latter part of his speech and his undertakings to focus the SBC on this issue and to ensure that his department looks at ways of making sure that small businesses understand their rights. That is really the point. The way in which the first part of his speech was set out made it clear that there are all sorts of rights for small businesses in this, but I am not sure that small businesses are necessarily aware of those rights or how they can go about exercising them and being sure that it is not a time-consuming, overwhelming process. It would be useful to hear from the Minister—and perhaps the Small Business Commissioner, as time goes by—how small businesses will be engaged to make sure that they are fighting on an even footing with the marketplaces, many of which are, let us face it, absolutely huge and very difficult organisations to take on. It can be difficult even to find the right person to speak to in them to start with.

I thank the Minister for the work that he will do in future, and I beg leave to withdraw Amendment 7.

Amendment 7 withdrawn.

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[Lord Fox (LD)]

My Lords, the noble Lords, Lord Hunt and Lord Sharpe, were right to raise the issue of definitions in Committee. Rather than simply echo them, I decided to add something to the debate through Amendment 35, which sets out something of the Tower of Babel that exists around definitions. Subsection (2) of the new clause proposed in Amendment 35 gives examples of the many phrases and words that are used in a variety of different contexts. Proposed new subsection (3) identifies seven Acts—not the six that the noble Lord, Lord Sharpe, came up with; we managed to find another one—where these phrases are prevalent but not necessarily synonymous. Proposed new subsection (4) really sets out what we are looking for the Minister to do, which is work out to what extent the definitions in proposed new subsection (2) differ from those in subsection (3).

There is a compliance cost to businesses in these differing definitions, because they have to make different decisions for different legislative frameworks. The extent to which this gives rise to uncertainty and undermines the law, and the effect it will have on the functions of the Small Business Commissioner, are just some of the things that should be taken on board by the Government to bring a state of order to what has been an organic process of legislation following legislation and definition following definition. To help the Minister’s new constituency of small businesses in particular, now is the time to bring these things under control and bring definitions into order.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords for Amendments 11, 12, 13, 14, 35 and 46. I recognise the concerns raised by the noble Lords, Lord Sharpe and Lord Fox, in Committee regarding the number of existing definitions of company sizes on the statute book and their desire for clear and consistent definitions to avoid confusion for businesses. I would like to reassure noble Lords that our intention is to use the company size thresholds set out in the Companies Act 2006 and the Enterprise Act 2016 as the basis for defining company size in the Bill.

However, it is important that we consult with businesses and industry experts to ensure that these definitions are appropriate for the purposes of this Bill. That consultation may indicate that, for the purposes of the Bill, company-size definitions should be revised or simplified. Any modifications to existing definitions will be made only when necessary.

For example, we may choose to simplify definitions to make it easier for businesses to use exemptions, while still using existing definitions as the basis. We may find through consultation that different parts of the legislation require different definitions to ensure precision and effectiveness. For example, we might be required to simplify the size definitions for the purposes of the Small Business Commissioner’s powers, so that they are based solely on headcount. We should not constrain ourselves by introducing rigid definitions now, as this could make the powers and protections afforded by the Bill more difficult for businesses to understand and administer than is necessary.

I also do not consider it necessary to delay the Bill’s commencement pending a further statutory review of definitions used across a range of legislation. The Government are already committed to consulting on any regulations made under these powers and to taking into account relevant existing definitions when developing them. The delegated power in Section 2E will be subject to consultation and parliamentary approval under the affirmative procedure, giving your Lordships’ House the opportunity to vote on the regulations before they are introduced.

In conclusion, the definition of business sizes will be set out in secondary legislation. These regulations will be informed by consultation to ensure that they are appropriate. The Government intend to use the existing definitions as the basis for this Bill and will keep definitions as simple and effective as possible.

I also commit that, before making any regulations in this area, the Government will have regard to the definitions in the Companies Act 2006, the Small Business, Enterprise and Employment Act 2015 and the Enterprise Act 2016. I also commit to meeting up with the noble Lord, Lord Sharpe, to look into these definitions going forward. For these reasons, I respectfully ask that Amendment 11 be withdrawn and that noble Lords do not move the remaining amendments in the group.

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[Lord Sharpe of Epsom (Con)]

My Lords, I begin by reiterating my support for the Government’s position on retention payments. We support the right to the free exchange of goods and services and the right of firms to enter into mutually agreed contracts, but it is also clear that retention payments have become misused and are therefore untenable. Some 65% of retention payments are paid back late, while almost 25% are never paid back at all. They have become a tool for big firms to retain cash flow to prop up other ventures while the supplier, often a smaller firm, suffers as a result.

However, we must not lose sight of retention payments’ original purpose. Retention payments as a concept are wholly justified, in that they offer an insurance against defective or untimely work and incentivise the remedying of that. As I am sure many noble Lords would agree, I would hesitate to commission construction work on a private property if I did not have a way to ensure that it was done to an acceptable standard, and we should not expect firms to be any different. Therefore, some middle ground must be reached.

As in Committee, I have tabled, along with my noble friend Lord Hunt of Wirral, two amendments that propose alternatives to retention payments; namely, escrow and staged payments. I am aware that the Minister has outlined that these would be permissible following the enactment of the Bill, but, as far as I am aware, they are currently a small part of the market share of construction insurance. The primary goal of these amendments is to seek clarity from the Minister on what steps the Government are taking to promote these, and indeed other, alternatives. They are consulting with industry; what conclusions have they reached from those discussions? Which other forms of insurance do the Government deem effective, and how are they acting to promote them? I hope the Minister is able to give some clarity from the Dispatch Box on all those questions.

Amendment 24 would exempt resident-run or resident-owned blocks of flats from falling under the retention ban. The Minister has made it clear that this ban is intended to target commercial contracts rather than those of private citizens. Resident-run properties fall into an odd medium in that they are technically commercial properties, but they are run as if they are private. There is clearly a category issue here. Does the Minister accept that these are not run as commercial properties and, if so, does he have the data in front of him on the scale of this issue and whether the incoming ban will pose a risk to the resident-run property market?

Finally, I will touch on Amendments 25 and 26 in my name and those of my noble friends Lord Hunt of Wirral and Lord Leigh of Hurley. These amendments seek to prohibit the imposition of requirements from large to small businesses. In particular, we are concerned about the forced use of specific currencies that advantage the larger supplier, or the imposition of ESG requirements that allow the larger business to meet requirements in its annual reports without having to bear any of the costs. Much of the Bill seeks to support small businesses by placing them on an equal footing. It recognises that there is often an asymmetrical relationship between the buyer and the seller when either is larger. Our amendments simply seek to extend that recognition to these two well-known practices. I hope the Minister will agree with me, and I beg to move.

[Lord Fox (LD)]

My Lords, there are no amendments in my name in this group, but I will speak very briefly on Amendment 24, which, as we heard, seeks to remove the ban on retention, with the very worthy aim of helping ensure that resident-owned or resident-run blocks of homes can police work done on the grounds of safety. On the face of it, that sounds like a worthy idea. I am concerned that it opens a can of worms, and my instinct is that there has to be a better way of ensuring that the work is done properly. Perhaps it is the noble Lord’s idea of escrow, which I believe could, if mutually agreed, be possible.

There is a danger of watering down the retention ban if we were to accept the noble Lord’s ideas. The definition of “safety defect remediation work” could be broad, or it could be very narrow. I have had briefings from a number of different organisations which have been contradictory to each other, so I am passing the buck to the Minister to explain how he is going to solve the very worthy issue that the noble Lord, Lord Sharpe, has identified, which is resident-run or resident-owned properties, while not prising open the lid of the can of worms.

[Lord Leong (Lab)]

My Lords, first, I thank the noble Lords, Lord Sharpe and Lord Hunt, for the amendments in this group.

I will take Amendment 22 first. I reassure the noble Lords that the Bill does not prevent parties in any sector, including construction firms, making use of payment arrangements through a bank or an escrow provider to facilitate the transfer of funds. The important distinction is between a third party facilitating payment of money that is due and a third party holding back that money as security for the supplier’s performance. The former remains permitted, the latter could amount to a retention and would therefore fall within the prohibition. Therefore, Amendment 22 is unnecessary.

The Government’s view, shared by many in the industry, is that construction should move away from cash retentions and towards modern, more secure and equitable forms of surety. We know that there are alternative forms of surety, including performance and retention bonds, already available in the UK which can mitigate risks for clients and firms. There are also alternatives used in other countries, such as warranty bonds, which are very common in Europe and are available in the UK. We will be working with surety providers to ensure that a range of alternatives is available when the ban comes into force.

In relation to Amendment 23, I reassure noble Lords that the Bill does not prescribe when stages or milestones must occur or prevent parties from agreeing interim valuations and payments. It regulates the period within which an amount must be paid once that payment becomes due. Genuine staged and interim payment arrangements will therefore remain entirely permissible. However, describing a withholding of money for work already completed and where payment is due as a staged payment would not prevent it falling within the prohibition on retention if, in substance, the money was being retained as security for the performance of contractual obligations.

The right for firms to be paid in staged payments on projects lasting more than 45 days is already enshrined in Section 107(2) of the Housing Grants, Construction and Regeneration Act 1996. The Bill does not amend, qualify or undermine that right. Therefore, this amendment is unnecessary. In implementing the provisions of the Bill, the Government will engage directly and closely with construction industry clients, specialist providers and representatives of smaller firms to provide guidance that legitimate payment arrangements can continue while preventing contractual devices being used to recreate cash retentions under another name.

On Amendment 24, we recognise the understandable intention that resident-led and resident-owned companies should have assurance that building work is completed properly and of high quality, and that defects are remedied without additional costs falling on leaseholders. We do not believe that retentions ensure this. To agree to this amendment would create a broad exemption for construction contracts entered into by resident management and right-to-manage companies. That would leave firms working on those buildings exposed to the risks associated with cash retentions. It could also create uncertainty where different ownership and management structures exist within the same building or development.

In addition, the process required by the Building Safety Act 2022 for delivering work on high-risk building places an emphasis on safety and quality. It includes numerous gateways, information requirements and independent reviews of the building. If clients and firms in their supply chain are meeting the requirements of the Act, there should be no need to deduct retentions. As Dame Judith Hackitt has noted, retentions are ineffective and undermine the effectiveness of the supply chain, which is why alternatives are required. For this legislation to be effective, it must incentivise the industry and its clients to end the practice of cash retentions and to adopt alternative forms of surety, together with improved quality management.

Finally, I address the request made by a number of noble Lords in Committee for further information about the work to develop alternatives to retention. The Construction Leadership Council has now appointed a new industry lead for this area, and we will be increasing our engagement with stakeholders across the industry in relation to alternative forms of surety and quality improvement from September. This will give us plenty of time to address those issues in advance of the introduction of the proposed ban.

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Moved by

[Lord Fox]

27: Clause 18, page 22, line 35, at end insert—
“(5A) The adjudicator must reach a decision determining a relevant payment dispute before the end of the period of 60 days beginning with the day on which the dispute is referred to adjudication under the scheme.(5B) The adjudicator may compel parties to share relevant information with itself, if the sharing of such information is necessary for the fulfilment of the duty under subsection (5A).(5C) The Commissioner may extend the period in subsection (5A), in relation to a particular dispute, by such further period as the Commissioner considers reasonable, having regard in particular to the complexity of the dispute and the conduct of the parties.(5D) Where the Commissioner extends the period under subsection (5C), the Commissioner must notify the parties of the extension and of the reasons for it.”Member’s explanatory statement
This amendment requires payment disputes referred to the adjudication scheme to be resolved within 60 days, unless the Small Business Commissioner considers a longer period reasonable.

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[Lord Fox (LD)]

My Lords, in moving Amendment 27, I shall also speak to Amendment 34. They are both in my name. Amendment 27 would require payment disputes referred to the adjudication scheme to be resolved within 60 days unless the Small Business Commissioner considers a longer period reasonable. The Bill creates a 60-day limit by which large private organisations must pay back small businesses. However, although, in the case of a dispute, there is a time limit for the dispute to be raised, there is no such limit on when the case should be resolved. This means that large companies could, in effect, contest a dispute and delay resolution, putting pressure on the SMEs to settle.

The amendment calls for the adjudicator to reach a decision determining a relevant payment dispute before the end of the period of 60 days, beginning from the day on which the dispute is referred to the adjudicator under the scheme. The 60 days suggested in the amendment is itself more generous than the 28-day time limit that is currently covered for the construction sector but should, at the very least, be seen as a backstop. I look forward to hearing from the Minister what limit he thinks the adjudication figure should be and how it would be applied in practice as the Bill stands.

Amendment 34 simply looks to lock in sufficient funding and government support for the Small Business Commissioner, to reflect her vastly wider remit. I am persuaded that some moves have already been made and that some are in the offing that will boost the capacity for the commissioner, but, as we have seen with Companies House, transforming an organisation into an investigative body is a huge undertaking. It is a cultural change that requires both resources and great resolve from the leadership team in that organisation. Both Houses need to be reassured that sufficient resources and government support are being made available, because if the Small Business Commissioner fails that will undermine the whole pretext of the Bill. I beg to move.

[Lord Hunt of Wirral (Con)]

My Lords, we are all very grateful to the noble Lord, Lord Fox, for moving his amendment. Before I speak to this group, I once again thank the Minister for his engagement. We entered this part of the Bill with some apprehensions, not least regarding the funding of the Small Business Commissioner’s office. It is perhaps too soon to say that all those concerns have been quelled, but I appreciate the time that the Minister, the Small Business Commissioner herself and her team have taken to try to address the questions that we have all put forward.

I begin by addressing the amendments to which I and my noble friend Lord Sharpe of Epsom have added our names, namely those in the name of my noble friend Lord Leigh of Hurley. Amendments 28 and 29 aim to bring some transparency to the Office of the Small Business Commissioner by requiring written reasons for declining to adjudicate a dispute, and by requiring the definition of a sufficient number of occasions to trigger an investigation into payment practices.

On the latter point, I accept the Government’s reasoning that a numerical definition does not sufficiently account for the scale of different poor payment practices. However, I hope that the Minister can therefore confirm that there will be some framework on which these decisions to investigate will be based.

I hope that the Minister will be able to outline the Government’s position on the former point—written reasons for declining to adjudicate a dispute. I understand that discretion and disclosure are considerations, so perhaps a middle ground that requires the informing of decisions to decline, without necessarily including the reasons for doing so, would be acceptable.

My concerns remain about putting a time limit on resolving disputes, as Amendment 27 would do. Although disputes should of course be addressed in a timely manner, the fact is that different disputes will require different resources and be of vastly different scales. An arbitrary time period risks rushing the commissioner’s office or forcing it to prioritise, or perhaps even to accept trade-offs. We do not believe that the benefits of a 60-day limit off-set those risks.

Finally, I am grateful to the Minister for providing us with a briefing beforehand on some of the previous funding of the Small Business Commissioner’s office and the Government’s plans for the future. We are satisfied that these have been modelled on the best predictions possible. I am sure your Lordships’ House would be grateful if the Minister could outline some of that data when he comes to reply to this debate—certainly at the Dispatch Box at some stage. I finish by asking whether there is a way to scrutinise the commissioner’s funding in the future. As I have said, we are satisfied with the predictions, but they are still only predictions. I am sure that there will be an internal review process into the effectiveness of these reforms, but this House deserves the opportunity to have some input into that process, so I look forward to hearing the Minister’s response.

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These are concrete commitments that show the Government are already taking the necessary steps, so there is no need to include a separate budget publication requirement in the Bill. I will be happy to provide further updates ahead of commencement. For these reasons, I respectfully ask the noble Lord to withdraw Amendment 27 and not to move the other amendments in the group.

[Lord Fox (LD)]

My Lords, I thank the Minister wholeheartedly for his response to both my amendments. The response to Amendment 27 was more ambitious than I was proposing, so I am very happy with that. His response to Amendment 34 on resources has been more than fulsome. On that basis, I beg leave to withdraw Amendment 27.

Amendment 27 withdrawn.

--- Later in debate ---

Moved by

[Lord Fox]

30: Clause 24, page 37, line 42, leave out “in the United Kingdom”
Member's explanatory statement
This amendment concerns regulations enabling the Small Business Commissioner to impose financial penalties for breach of payment reporting requirements. This amendment has the result that the penalties need not be linked to turnover in the United Kingdom.

[Lord Fox (LD)]

My Lords, I shall move Amendment 30 and speak to Amendments 31, 32, 43, 44 and 45, which sounds daunting but they are all the same amendment. These amendments are in my name, and I am happy to say that they have been countersigned by the Minister. The effect of these changes would be to remove the requirement for the Small Business Commissioner to use UK turnover alone when making an adjudication. I thank the Minister for his contribution to this.

There may well be cases where it is appropriate for UK activity only to be the basis for any fine—in fact, in most cases that will be the case—but there may be others where a broader turnover is appropriate; for example, where a company’s accounting practices effectively shrink UK turnover in order to shrink a penalty. In these cases, we need to give the Small Business Commissioner the power to prevent avoidance through profits-shifting and turnover-shifting. In Committee, I used the example of the Digital Markets, Competition and Consumers Act 2024, which makes the same point and puts in place a different solution. Removing the UK from the description of how the Small Business Commissioner calculates any sanctions or giving that option to the Small Business Commissioner would give flexibility for the commissioner to pitch the right sanction to an errant business. For that reason, I beg to move Amendment 30.

[Lord Sharpe of Epsom (Con)]

My Lords, as we come to the end of Report, I once again place on record my thanks to noble Lords on all sides of the House for their engagement with the passage of this Bill. Up to this point, we have had a very chummy time with a lot of cosy consensus, so noble Lords will be very pleased to know that I intend to introduce a note of disagreement on this amendment.

I begin by stating that I do not disagree with the premise of Amendment 30, in the names of the noble Lord, Lord Fox, and the Minister. Companies should ensure that they have good payment practices and that these are reported, and should be incentivised where necessary. I equally understand the reasoning behind giving the Small Business Commissioner the powers to both oversee and enforce the reporting of payment practices and performances. The office will have a closer knowledge of small business payment practices than regular departmental officials, so it makes sense that it is given this responsibility. The issue is therefore not one of principle but one of proportion.

Two other arms of the Government have the power to fine businesses based on global turnover rather than domestic turnover. They are the Competition and Markets Authority and the Information Commissioner’s Office. These bodies deal with some of the most important and wide-reaching areas of our economy: the former with the upkeep of fair and competitive markets, the latter with the protection of the public’s private information.

Those issues are far greater in scale and gravity than what Clause 24 and the new Section 3A will give the SBC—the Small Business Commissioner—powers over. These powers are not even dealing with payment practices; they are dealing with the reporting of payment practices. Yet the office will be able to fine companies 1%, without even the discretion to fine less than 1%, of global turnover. To His Majesty’s loyal Opposition, this seems disproportionate, to say the very least. We do not believe that this is the right vehicle to address the subject of the profit shifting that the noble Lord Fox mentioned.

One of the key concerns that we have heard from stakeholders during the passage of this Bill is that, while they support maximum payment terms, there will be a transition period to implement the technology and payment systems. This is particularly the case with large multinational corporations. These companies have incredibly complex systems that organise payments across borders, time zones and legal frameworks. It is not outside the realm of possibility that a business such as Amazon, for example, has some teething problems and fails to accurately report payment practices and performance within the UK.

The result would be that the commissioner, based on a failure to report practices within the United Kingdom, would have the power to fine Amazon based on its global turnover. That would equate to more than £700 million for a potential technological error or delay. I do not think that power reflects the duty that we are dealing with.

Lastly, there is the question of incentives. The Office of the Small Business Commissioner justifiably prides itself on saving more money for small businesses than it costs the taxpayer. If value for money is the justification for the office’s existence, its incentive is to use its powers to raise money in order to continue its operation. I am not accusing the SBC of this; I am simply reflecting on the perverse incentives that occur when an arm of government relies on action to justify its continued existence. I do not think, given these natural incentives exist, that we should give any arm of the state the power to tax multinational businesses based on their global turnover for actions within the United Kingdom. We should especially reflect on this when we are not even discussing payment practices; we are discussing the reporting of payment practices.

Given that this amendment has the support of the majority of the House, we will not oppose it, but I would like to place on record my, and indeed His Majesty’s loyal Opposition’s, concern about this measure. It would go some way to allaying my worries if the Minister could outline how many times a fine has been given under the existing Section 3, but I am still concerned that this is a disproportionate step that places far too much power in the hands of an ultimately unaccountable body. I look forward to the Minister’s response.

--- Later in debate ---

Moved by

[Lord Fox]

31: Clause 24, page 38, line 2, leave out “in the United Kingdom”
Member’s explanatory statement
This amendment mirrors my amendment of clause 24, page 37, line 42.

--- Later in debate ---

Moved by

[Lord Fox]

43: Schedule 3, page 58, line 3, leave out “in the United Kingdom”
Member’s explanatory statement
This amendment concerns financial penalties that may be imposed by the Small Business Commissioner in relation to poor payment practices. This amendment has the result that the penalties need not be linked to turnover in the United Kingdom.

Speciality Steel UK

Lord Fox Excerpts

Tuesday 15th September 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the Minister for the Statement. I should say at the outset that, above all, our thoughts are with the more than 1,300 employees of Speciality Steel UK and their families, who once again face considerable uncertainty about their future.

However, I am afraid that this announcement appears to be a sign of things to come under this Government. When Parliament was recalled last year to pass the Steel Industry (Special Measures) Act, we were told that these extraordinary powers were required to deal with the immediate crisis at British Steel. When the Government returned with their nationalisation legislation earlier this year, Ministers again presented it a targeted, last-resort response to the situation at British Steel. British Steel has since been nationalised, yet the Government have still failed to secure the private investment needed for its long-term future.

Now, only two months later, we have another steel company moving towards public ownership after the proposed sale to Blastr fell through. Why did that deal fall through? Yesterday the Guardian quoted a Blastr spokesman as saying:

“We have a fully-funded proposal—at no cost to the British taxpayer—that is ready to complete within 12 weeks”.


Surely the bigger question is: why does the private sector increasingly find it so difficult to invest in British steel companies? Surely part of the answer is that successive decisions by this Government have made Britain, and particularly energy-intensive industries such as steel, simply too expensive in which to operate. Our industrial electricity prices remain among the highest in the developed world, around four times those faced by manufacturers in the United States. Then there are the additional employment costs. The Government’s own latest assessment puts the direct annual cost to business of the Employment Rights Act at around £1 billion. During the passage of that legislation, businesses repeatedly warned Ministers about its cumulative impact on investment and recruitment.

During the passage of the Steel Industry (Nationalisation) Bill, we on these Benches gave Ministers opportunities to address some of these underlying problems. We sought greater discipline over regulation and reporting, proper scrutiny of taxpayer liabilities, and action on the cumulative burden of carbon and energy policy. Instead, from 1 January next year the Government will introduce the UK carbon border adjustment mechanism. Their own figures forecast that the CBAM will raise £140 million in 2027-28, £180 million the following year and £175 million in 2029-30. Those costs ultimately fall on imported steel, aluminium, cement and other materials used throughout British manufacturing supply chains.

At the same time, domestic steel-makers remain exposed to the UK emissions trading scheme and the Government are now negotiating to link that scheme more closely with the EU’s ETS. We also understand that the Government wish to participate in the EU internal electricity market. The negotiating framework envisages dynamic alignment with relevant EU electricity rules and an indicative UK renewable energy target comparable to that of the European Union. That will only add more costs.

The new Secretary of State for Energy Security and Net Zero has spoken of the need for greater realism in our progress to net zero. Can the Minister therefore tell the House whether that realism will translate into a material change in energy policy for energy-intensive industries? What specific action will the Government now take to bring industrial energy prices materially closer to those faced by our major international competitors?

The Business Secretary told the other place yesterday that public acquisition could require approximately £350 million, including the acquisition itself and working capital over a period of one to three years. The taxpayer is already supporting Speciality Steel UK to the tune of a reported £3.5 million a month in salaries while production remains largely dormant. Can the Minister therefore tell the House the Government’s current estimate of the total taxpayer exposure? How much has already been spent? How much working capital do the Government expect to provide? Will Ministers publish a clear timetable setting out the expected costs over the next three financial years? What is the exit strategy?

Yesterday, the Business Secretary said that his ideal remains for the company

“to be run in the private sector”—[Official Report, Commons, 14/9/26; col. 1441.]

—and that he is “keen” to see it return to private ownership. If that is the objective, will the Government commit to publishing measurable conditions for doing so, as well as to regular assessments of opportunities for private investment and a clear process for returning Speciality Steel UK to private ownership?

Public ownership does not in itself give workers long-term certainty. A competitive business, sustained investment and customers who want to buy steel domestically give workers long-term certainty. That matters particularly when the Government tell other sectors that there is no money available. Only yesterday, the Government were defending their refusal to reduce VAT for our struggling hospitality sector on the grounds of the cost to the Exchequer, yet when another nationalisation is proposed, hundreds of millions of pounds of taxpayer exposure apparently becomes possible. We cannot return to a model in which the Government continually absorb the losses of industries that their own policies have helped to make uncompetitive.

The Minister will know the history as well as anyone in this House: Britain tried widespread state ownership of major industries before. By the 1970s, taxpayers were repeatedly required to support loss-making nationalised industries, while investment, productivity and competitiveness suffered. That experiment ended at the IMF, and, looking at gilt yields today, that is again where the markets think we are headed. We do not want to see that history repeated. Will the Government recognise that nationalisation is not an industrial strategy? Will they instead set out a serious plan to slash industrial electricity prices, reduce the costs of unnecessary regulation, make Britain internationally competitive again, and create the conditions in which private investors want to invest in British Steel?

[Lord Fox (LD)]

My Lords, I congratulate the Minister on his new role, which is fast becoming that of a steel baron. As I said from these Benches during the passage of the nationalisation Bill—which, as the noble Lord, Lord Sharpe, pointed out, focused on British Steel—Liberal Democrats recognise that national security, energy security and food security are all intertwined, and that steel is critical to our renewable sector, defence and national infrastructure.

In one sense, yesterday’s announcement adds yet another complication to the Government’s attempts to ensure that the UK has a viable and strategic steel industry. In another, it was perhaps inevitable, and gives the Government a chance to consider two sides of the steel industry at the same time.

My first focus is on the timeline and how the Speciality Steel UK part fits with other activities. In the Commons, in answer to the question from my honourable friend Daisy Cooper MP, the Secretary of State said that he expects the process for Speciality Steel UK to take between four and six months. Can the Minister update your Lordships’ House as to the timeline for British Steel and the valuation process that is under way? Can he tell us whether there is any crossover between the two or whether they are discrete processes? The Secretary of State set out the different scale of the task to rejuvenate British Steel—in fact, he implied that any involvement of the private sector would be at some time in the future. Can the Minister confirm the Government’s thinking around private sector involvement in British Steel and how it would affect attempts to get private sector involvement in Speciality Steel UK? Can he also confirm the scale of investment that Speciality Steel UK will need to make it an attractive investment for the private sector?

Additionally, how does all this affect Tata Steel in Wales? The Secretary of State said that he hopes British Steel will follow Tata and install electric arc technology. How does Tata, which despite government support is investing a great deal of its own money into electric arc, compete with a government-funded competitor —competing for raw material at the very least, but also markets?

Moneywise, in the Commons, the Secretary of State said that the cost of nationalising Speciality Steel UK will be met from existing budgets. He went on to remind the House of the huge sums involved, but it is quite clear that this pot is emptying fast. Can the Minister undertake to bring detailed costings to this House, covering valuations of both this asset and the British Steel asset, as soon as they are available?

Daisy Cooper MP also raised in the Commons the issue of Europe. The steel sector generally, and tariffs and carbon border taxes specifically, all hinge on our relationship with the European Union. Can the Minister agree that having a much closer relationship with the EU could make many of these issues much easier to deal with and iron out? Can he tell us when the Government will be making substantive moves to achieve this closer relationship?

As the Statement observes, the Government of the noble Lord, Lord Sharpe, created the legacy that this Government inherited. Central to this legacy have been the structurally sky-high costs faced by this and other manufacturing industries. I know the Minister is new to his role, but I am sure that energy was one of the first things he was asked about when he took over. The Government have made some efforts to help some high energy users, but these bypass most manufacturers and, for those they affect, reductions are being cancelled out by other measures in the opposite direction happening at the same time. Can the Minister confirm and agree with me that, without new measures which substantially cut energy costs so that they are much closer to global competitors, it really does not matter who owns the steel industry because with costs like this the sector will always struggle to flourish?

I close by recognising the people working in the industry and their importance. They are vital; the UK needs their skills, and indeed needs many who have left the industry to come back. But these people need to know they have a future and that their industry has a future. The Government have made first steps in this, but there is a great deal to do. We on these Benches will support the Government where we can, to help pick up momentum and get this industry back on its feet.

[The Minister of State, Department for Business, Innovation, Science and Trade (Lord Sarwar) (Lab)]

My Lords, I am grateful for the contributions and serious consideration that the House has given to the future of Speciality Steel UK. I will come on to address some of the specific questions that both noble Lords have rightfully asked, but first I thank both noble Lords for mentioning the workforce and echo what they said. For the workforce, it is a time of particular anxiety. It is important that they know that, regardless of party politics, this House and the other place stand fully behind the fantastic workforce.

Before I get on to some of the detailed answers, it is important to clarify some of the facts on where we are and what the Secretary of State outlined yesterday. This is an important matter for the employees of the business, the communities surrounding its sites and the United Kingdom’s wider industrial capability. I therefore welcome the opportunity to clarify the Government’s position, explain the decision we have taken and set out the next steps.

Speciality Steel UK entered liquidation in August 2025. Since then, the independent court-appointed official receiver has been responsible for managing the liquidation process. A question was asked about how much that has cost to date. We have supported the official receiver with around £148 million to date, supporting staff and safety at the individual site. That funding has allowed the receiver to carry out his statutory duties. It has included maintenance of the site, as I said, and conducting a sale process for the business and its assets.

For more than 12 months, the Government have worked to facilitate a private sector solution, and the noble Lord is right to say that a private sector solution remains the first preference. As part of that process, the official receiver engaged with a number of parties interested in acquiring the business and its assets, and the party granted preferential bidder status by the official receiver subsequently sought government support in connection with its proposed acquisition of Speciality Steel. We engaged extensively with the bidder and its advisers, and considered the request in detail. To clarify, it was requesting upfront financial commitment from the Government. Following the work we did, we concluded we could not provide the support on the terms proposed.

This decision was not taken lightly. The Government carefully examined the proposal and explored whether an arrangement could be reached that would provide a sustainable basis for the future of the business, while offering appropriate protection for public money. Despite that extensive engagement, material concerns remained regarding the evidence supporting the proposed support package and the protections available for taxpayers.

I want to be really clear, because this is important: we are talking specifically about the financial support that was requested. That should not be interpreted as a wider judgment on the bidder itself or its other business activities, either here or elsewhere. Our responsibility was to assess the proposal before us, including whether it provided a suitably robust basis for intervention and the appropriate safeguards. Having considered those matters, we could not support the proposal on the terms put forward. However, that conclusion does not diminish the significance of Speciality Steel UK. The business occupies a unique place in the United Kingdom steel ecosystem. Its specialist capabilities have potential applications in advanced manufacturing, aerospace and defence. Therefore, it is of strategic importance. That is why the Government remain committed to the sites, the workforces, the local communities and the local economies that are impacted.

We believe, therefore, that the viable future options should be assessed properly before the range of possibilities is permanently narrowed. For that reason, the Government will engage with the official receiver’s sale process and develop a proposal for the public acquisition of Speciality Steel UK. Any engagement will respect the independence of the official receiver and its statutory responsibilities.

Developing a proposal does not remove the need for proper processes to be followed, nor does it prejudge the outcome of the work under way. The purpose of developing an acquisition proposal is to preserve control of the sites and maintain every option available while decisions are taken about their longer-term future.

Let me stress that public acquisition is not the endpoint and it is not the first preference. It would not in itself determine the permanent future of the business, its operations or its sites; rather, it would create the space required for detailed assessment of the available options. These include a sustainable future for Speciality Steel UK as a speciality steel-maker supporting advanced manufacturing sectors, the regeneration of the sites or a combination of the two. This Government will remain focused on engaging closely with the employees, the trade unions, the local communities, elected representatives, the mayor, industry experts and other interested parties. Again, I open that offer to noble Lords on all sides of the House too.

I recognise that noble Lords will want and expect proper safeguards for public money. They have that firm commitment from me and from the Secretary of State. All options carry significant costs—there is no point in pretending otherwise. The risks exist and significant costs exist. That includes the risk of immediate closure. We will develop our estimates as the work progresses. Again, I am happy to share those assessments as much as possible with noble Lords on all sides of the House.

I also recognise the desire for certainty, particularly among employees and their families. It would not be responsible to pre-empt the detailed assessment or suggest that decisions have already been taken where they have not, but equally it is important that potentially viable options are not lost by default. I believe the approach that the Government have set out yesterday and today strikes that right balance of giving reassurance to the workforce, of keeping every option on the table and making sure we have the back-up of a public acquisition option. That is the right and responsible course to take.

There were some specific questions that I have not addressed. I have already talked about the private sector preference being the first one. Secondly, we should accept that there is a global challenge around steel, not just a UK challenge. Thirdly, I recognise the challenge set out by both noble Lords that we have to drive down the cost of living and the cost of doing business as it relates to energy. That is of course of huge significance for us if we are going to make sure we protect our steel industry and other industries that are energy intensive. These are all considerations that are being made in advance of the Budget.

I noted that many questions from the noble Lord, Lord Sharpe, related to the Budget process. I imagine those are questions we will come back to as we get closer to, and arrive at, that Budget point. I also noted that he spoke about history and not repeating the mistakes of the past. All I would say is that he was very selective about which part of history he chose and which bits we do not want to repeat. There are other parts of our history that we do not want to repeat, and we need to learn lessons from them.

The noble Lord from the Liberal Democrats asked questions around finding longer-term private sector solutions. We will find those solutions only if we make the steel industry sustainable, if we get the energy crisis right, if we address the challenges around the broader cost of production, if we deliver the orders that are required for there to be manageable order books and a functioning business and if we back it up with the appropriate skills. The steel strategy is ambitious, but it is also deliverable, and we all have work to do to make sure that happens.

Let me repeat that I commit to work with noble Lords on all sides to make sure they are fully apprised of the situation as it develops. There is one final and slightly broader point about our relationship with the European Union, some of which will come from the UK-EU summit that we continue to work towards. There is also a wider lesson around the defensive and protection measures that the UK and the EU are grappling with in relation to their steel industries. The more the relevant Ministers and Governments across the continent work in lockstep on many of the same issues we are confronting together, the better it will be for our industry here in the UK and for steel industries across Europe.

Trade Unions (Permissible Means of Voting) and Employment Rights (Unfair Dismissal) (Amendment) Order 2026

Lord Fox Excerpts

Wednesday 22nd July 2026 Lords Chamber

[Lord Fox (LD)]

My Lords, today has been “Frank Sinatra day”—regrets, there have been a few—and we are thankful to the noble Lord, Lord Sharpe, for this last one; it is the last but by no means least. It seemed a short time ago that we were discussing the issues raised by this order in the Employment Rights Act 2025, but when I look at the calendar, I see that it was nearly a year ago—I guess it still looms large in my life. To an extent, this debate is something of a rerun of what we discussed then.

In that spirit, I reiterate that the Liberal Democrats believe that free association is a fundamental right, and that of course includes the workplace. Employees should be free to join, or not to join, a trade union, and they should not face penalties either way. To participate in a union and to associate freely, there needs to be votes from time to time. The Government’s urge to update the process of voting is entirely sensible and one that we support.

As we have heard, this order extends the possible ways of voting. As I expected and as we have heard, some noble Lords have set out concerns about coercion. I fail to see how changing the voting system would change the level of coercion. The examples that the noble Lord, Lord Frost, used, whether rightly or wrongly, have happened when there was no electronic voting; that has nothing to do with the issue of coercion. As I understand it, if there is coercion—I am sure that in some cases there is coercion, as in every form of life—there is an Act in place to deal with that. The Employment Relations Act 2004 already contains the necessary legal requirements to guarantee that ballots are cast in secret and free from intimidation. That is a starting point.

The noble Lord, Lord Sharpe, came up with a rather long list of potential disasters that could befall an electronic vote. Perhaps his regular experience with Tory party leadership online elections has made him suspicious or sensitised him to this issue. In this case, his list of concerns for union votes fails to recognise the provisions in the order for any union to consider a number of important safeguards: ballot security and secrecy—that was kind of what he was talking about—risks associated with each voting method; members’ preferences; accessibility; and equal opportunities to vote. Those are the issues we have discussed today. To be honest, I think that debunks a lot of what the noble Lord spoke about.

I also refer him to the “Monitoring and Review” section of the draft Explanatory Memorandum, which sets out some of the safeguards. Paragraph 10.2 states:

“Monitoring of the use and effects of non-postal balloting will also contribute to the Government’s wider consideration of participation”.


As we heard from the noble Baroness, Lady O’Grady, the issue around the 50% turnout—which the noble Lord, Lord Sharpe, brought out—is dependent on the Government laying a report on the process of electronic balloting. Paragraph 10.1 mentions

“monitoring this legislation … through ongoing engagement with key stakeholders and existing … oversight mechanisms”.

The noble Lord seemed to imply that this has just been cast into the workplace and there is no regime for covering it; I do not accept that, and it is wrong.

In sum, the concerns of the noble Lord, Lord Sharpe, were raised at an earlier time, and I believe that some of the measures in this order have come, as I recall, as a result of some of his interventions during that earlier debate—it is both a long time ago and yesterday. I leave this with your Lordships: I am sure the noble Lord, Lord Sharpe, has a few regrets, but I do not think he needs to regret this order.

Commercial Payments Bill [HL]

Lord Fox Excerpts

Committee stage
Tuesday 21st July 2026 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to start this Committee on the Commercial Payments Bill. In doing so, I declare my relevant technology interests as adviser to the Crown Estate and Simmons & Simmons LLP, and as non-executive director of the Avalanche Foundation and Avalanche (BVI) Inc. The Bill is incredibly significant, particularly for a small business or microbusiness which has found itself for far too long on the wrong end of late payments.

In many ways, my Amendments 1 and 9 in this group go to the very essence of the Bill. There is much that is significant in the Bill but, largely, all of it is subsequent to that fundamental point around the 60-day and 30-day payment periods. Everything else in the Bill is largely supportive of that reality, so this first group of amendments addresses the fact that it is critically important that the Bill is absolutely precise as to when the clock starts and ends. As the Bill is currently drafted, it is not only entirely possible but an actuality for thousands of businesses that they will be told that they will receive 60-day payment terms, when in reality the payment may not arrive within 60 days, 80 days, 100 days or up to 120 days. That will still be possible if the Bill remains in its current form. There needs to be greater precision about the start point and end point of that clock.

Amendment 1 in my name addresses that start point and suggests that the purchaser has to give clarity to the supplier about how they are to give notice. This is critical because at the moment time can disappear, with an invoice or other notice being given by the supplier in good faith only for them to find themselves bounced around that often larger business—this is not necessarily because it is gaming, although sometimes that is certainly the case, but because of its multidepartmental and multipoint nature—until that 60-day clock starts. Amendment 1 addresses this and would sharpen up how that notice period has to begin. If clarity is not provided, the amendment would give clarity in that the notice can be deemed to have been given by the provider of the product by means of a recognised document that anybody in business would recognise—the obvious one being an invoice.

Similarly, Amendment 9 goes to the issue of verification. It would stop, as a consequence of the Bill, verification being used to expand or extend terms other than what the Bill seeks to achieve. Together, the amendments look at the start point of the clock and would give the precision required to stop days going by before day one is triggered. We will come to amendments in later groups about effective precision around ending the clock, but these amendments, particularly Amendment 1, would give the precision required for all involved to know that day one means day one. I look forward to the debate and the Minister’s response. I beg to move.

[Lord Fox (LD)]

My Lords, I will speak to Amendment 10 in my name. Before that, I commend the noble Lord, Lord Holmes, on Amendments 1 and 9. These seem to be eminently sensible suggestions. I wonder whether, if the Small Business Commissioner makes very clear their view on when the clock starts ticking, that would make it very clear should any dispute become necessary. At the very least, there needs to be clarity from the Small Business Commissioner if these amendments are not accepted.

I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Leigh, for their support of Amendment 10. The intention of the amendment is clear. Increasingly, economic activity is switching from familiar structures and supply chains to one where businesses market their goods and services via third-party marketplaces and intermediaries, and where the subsequent payment goes back through those intermediaries. The amendment would bring such marketplaces and intermediaries into the context of the Bill by providing that payment is not treated as made to a supplier until the supplier actually receives the money, by requiring any intermediary that collects on a supplier’s behalf to pay it within seven days, regardless of how the intermediary is legally categorised.

I think this is a fair change, though I am sure that there will be resistance from the sector. The focus may well be on the time needed by the intermediary to make the payment to the vendor. A distinction may have to be made between when an intermediary has control of the goods in a warehouse and when it is purely acting as an agent. I am happy to have a discussion and debate about this, and there may be ways in which this can be dealt with. However, it would be very remiss for the legislation to leave your Lordships’ House without any provision, either primary or secondary, for the Small Business Commissioner to have or take the power to bring intermediaries into the remit of the Bill.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lord Holmes of Richmond for introducing this debate. I welcome all noble Lords back for what will, I am sure, be a productive Committee stage.

I shall begin with Amendment 1. I understand the principle behind my noble friend’s approach. The Bill performs a balancing act, relatively successfully, between good payment practice and regulation. In achieving the former, we have to be careful not to overstep into the latter. It is my interpretation that new Section 2B, to be inserted by Clause 1, already succeeds in ensuring that both parties to a contract are made aware of the payment terms in the four cases that are accounted for. For that reason, I am hesitant to support requiring the purchaser to give instruction on how a payment notice should be given. However, like the noble Lord, Lord Fox, I ask the Minister first to outline what the Government regard as best practice for issuing notices under the Bill, which may very well include the Small Business Commissioner making it extremely clear what they think are the right best practice terms for issuing these notices.

I am much more supportive of my noble friend’s Amendment 9, which would prohibit the increasing of a verification period after the day on which the Bill is passed. The Bill is about increasing payment efficiency; ensuring that the verification of a payment does not take longer than was previously necessary is obviously a core part of achieving that.

Alongside my noble friends Lord Hunt of Wirral and Lord Leigh of Hurley, I have added my name to Amendment 10 in the name of the noble Lord, Lord Fox. It is eminently sensible that an intermediary should not be used to delay or circumvent payment terms; in other words, an intermediary should be used as an intermediary. Ensuring that payments go through third parties swiftly and efficiently, and that the payment is not treated as complete until it reaches its final destination, is surely the key to improving payment practice. I hope that the Minister will agree in his response.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I will begin by picking up where I left off in group 1, by briefly touching upon Amendment 7 in the name of my noble friend Lord Holmes of Richmond. Just as we should not define a payment as complete until it has passed through an intermediary and reached its final recipient, nor should it be considered complete until the supplier has received all owed funds. I therefore support my noble friend’s amendment.

I completely understand the strength of the arguments that were made just now by the noble Baroness, Lady Bowles of Berkhamsted, on her Amendment 52. In particular, she raised a very interesting point about the likely deterrent effect on small businesses bidding for some of these longer-duration contracts. I suspect that more work needs to be done on that very subject to find out exactly what the scale of the problem might be. For now, while we think we should, of course, pay due regard to the ability of small businesses to make payments, we do not think they should come at the expense of other businesses receiving them. Making payments, of course, may create cash-flow issues, but exactly the same can be said about not receiving them or receiving them in instalments, as this amendment suggests. We therefore prefer the blanket payment period regardless of business size, as the Bill already suggests, while also acknowledging, as I have said, that we should be looking into this in more detail.

Moving on to the actual length of payment periods, I suspect that the argument for shorter payment periods will continue to rear its head through the passage of the Bill. I will therefore begin by making His Majesty’s Opposition’s position clear. We would like to see a move to shorter terms but, given the fact that businesses have been told that a 60-day limit will be implemented and have begun to prepare for that, that is what we plan to support. For that reason, I cannot support my noble friend’s Amendment 2. Although a shorter payment term is desirable, it would currently be too much of a jump to reduce this to 30 days immediately. The impact assessment suggests that the difference between SMEs using 60-day and 45-day payment terms is roughly 360,000 businesses. I suspect that this number would be significantly larger for those using 30-day terms. These businesses need time to transition, which is why I support the principle behind Amendment 11 from the noble Lord, Lord Fox, which would require the transition to a 45-day term over a five-year period.

We can debate the exact number of days and the length of the transition period, but I expect that we all want this to move in the same direction. For that reason, I hope the Minister can commit to, at a minimum, reviewing the length of private sector payment terms over a set number of years.

Amendments 3, 5 and 25 in my name all probe the same point. What is the status of a payment that is delayed past the maximum threshold, not due to a fault of the purchaser? My amendments offer two examples. First, it is not uncommon for businesses to make their payment runs at the end of the month. These are often then processed over the next few working days, meaning that they are received several days after month end. This is a scenario that Amendments 3 and 5 account for. We do not want to see the payment terms increased, but we also do not want businesses sacrificing efficiency and shunning payment runs because there is a chance that banks will be slow in processing them and the purchaser will be charged interest. Can the Minister confirm that interest will not apply in such cases? Amendment 25 offers another example: that of delays due to public holidays. Can the Minister also assure the Committee that such delays pushing payments over the 30 or 60-day period will not be subject to statutory interest?

Amendments 4 and 8 are also in my name and those of my noble friends Lord Hunt of Wirral and Lord Leigh of Hurley. They seek to probe the status of nationalised bodies simply to seek clarification as to which entity status they will fall under—private or public bodies. Given the pertinence of British Steel, and potentially now Thames Water and whichever other companies the new Prime Minister takes a disliking to, I hope the Minister can provide an answer at the Dispatch Box today.

Speaking of Thames Water, Amendments 42, 43 and 100 raise an issue regarding businesses placed under special administration regimes and similar statutory moratoria. I very much thank the Lanes Group for highlighting this for us. Supply made after a special administrator’s appointment is ordinarily payable as an expense, but no provision currently requires payment within any defined period. Suppliers to SA regimes cannot terminate for the insolvency and cannot make continued supply conditional on payment of arrears, so it is unclear whether the payment terms in the Bill survive such a moratorium. Amendment 42 would ensure that such provisions continue past entering administration.

Amendment 43 is based on much the same premise: suppliers cannot make continued supply conditional on the payment of arrears, and payment protection under the Insolvency Act 1986 applies only prospectively. This amendment would ensure that the receivable’s ability to withdraw supply is once again protected. The sums owed would be restricted to undisputed sums and could be subject to caps and eligibility limits set by regulations.

Amendment 100 would require a review of this process as a whole. It is apt, when we have been considering the nationalisation of certain companies and will soon be considering placing others under special administration, that there should be a review of how associated businesses are impacted by these measures and how the system operates as a whole. I hope the Minister agrees that now is a good time to undertake such a review.

Finally, Amendment 51 would prevent a party to a contract forcing another party to use payment methods other than those that are contractually specified. My noble friend Lord Leigh of Hurley has done much to highlight this, but we do not want to see smaller businesses bullied into using cryptocurrency—the example that my noble friend gave—just because it suits a larger business partner. I hope the Minister will agree with this and the many other points raised.

[Lord Fox (LD)]

Your Lordships have shown a degree of creativity on this group. We have talked about end-of-month processing, public holidays and the effect on privatisation, nationalisation or special administration, and we have just heard about crypto payments. Of those four, I ask that the Minister focuses first on the special administration point made by the noble Lords, Lord Leigh and Lord Sharpe. I think we will be moving into that very quickly, so I urge some action. The two issues that we have talked about more are the maximum time and stage payments.

When I was in my first proper job, I was sent to the national oil company of a very hot foreign country to try to get paid. At that time, the days receivable was 645—and I failed. In that context, a 60-day maximum looks like a step forward. But, on the point that my noble friend Lady Bowles made, if it actually sticks to 60 days, small companies would really be subsidising the free cash or cash flow of their customers. That is why Amendment 52 seeks to put on statute a way of materially helping small businesses where cash flow is an existential concern. My noble friend set that out with her usual precision, and we look forward to the Minister’s response.

On the 60-day limit, I thank the noble Lord, Lord Sharpe, for his encouragement of my Amendment 11. What I have tried to do with that is to square the circle. As the noble Lord set out, businesses are set up for a 60-day limit at the moment; however, much of the consultation process proposed a 45-day limit, which goes much further than 60 days. We have heard various arguments in either direction. My Amendment 11 is a way of pointing to a direction of travel and putting down a marker. I am very happy to discuss different ways of doing that. It would require the Secretary of State, within five years, either to lay draft legislation reducing the maximum period from 60 to 45 days or to explain to Parliament why it is not 45 days. That would make it very clear to business and all sides of the supply chain where this is headed. Some of the technology about which the noble Lord, Lord Holmes, talked very eloquently will then be in place, and rapid payments will be available. So I think there are some important bones for the Minister to pick through in this group.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions and amendments in this group. The Government share the objective of fair payment rules and are committed to ensuring that businesses, especially SMEs, are paid promptly. The 60-day period was set following extensive consultation with industry, with more than 850 responses across all sectors and business sizes. The Government consider the 60-day cap to be a balanced and proportionate approach.

As I mentioned at Second Reading, there is no reason why businesses cannot pay before 60 days and I think most do. I am sure that noble Lords here who have businesses pay much earlier than 30 days; the Department for Business and Trade—now called the Department for Business, Innovation, Science and Trade—pays 99% of its bills within 30 days. We are trying to encourage behavioural and cultural change, and 60 days is a maximum. I am sure that most businesses pay within that period.

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[Lord Leong (Lab)]

My Lords, I will now introduce government amendments in my name. Turning first to the amendments to the Procurement Act 2023, I hope noble Lords across the Chamber will agree that the Government and the wider public sector must set a good standard for good payment practice. If we expect businesses to pay promptly and fairly, public authorities must lead by example. The Government’s clear policy is that, in contracts where a public authority is a purchaser, payment terms should not exceed 30 days. That is already reflected in Cabinet Office guidance, but the current wording of the Procurement Act 2023 could allow an invoice to provide for a later date for payment. This could enable contracting authorities to agree a due date that results in a payment term longer than the 30 days intended by the Bill. While we do not believe that this is happening in practice, these amendments bring the Procurement Act 2023 more into line with the Bill and require payments made by public authorities to be made within 30 days of the receipt of an invoice by them. These amendments also ensure that all those subcontracting within public procurement supply chains, including regulated below-threshold contracts and related subcontracts, are subject to the same 30-day payment terms. The amendments also make minor consequential changes to other provisions of the Bill for the purposes of consistency and clarity.

These amendments also provide specific provisions within the Procurement Act 2023 for public construction contracts. As noble Lords are aware, the Bill already aligns late payment policy, including maximum payment terms, with the construction industry’s established statutory payment regime and specific terminology under Part 2 of the Housing Grants, Construction and Regeneration Act 1996, which I shall now refer to as the construction Act. It is therefore appropriate to also align public construction contracts to ensure consistency between the legislative regimes of the construction Act, the Procurement Act and the Bill. Corresponding amendments are also made to the Construction Contracts (Northern Ireland) Order 1997.

Construction contracts subject to the Procurement Act payment terms have an implied maximum payment term of 30 days. However, currently, there is no explicit reference to the payment notice system or payment triggers for construction contracts under the construction Act within this legislation. It is therefore currently unclear on the trigger points for the maximum payment terms and on how implied payment terms from the Procurement Act interact with the scheme for construction contracts. The intended amendments will set this maximum payment term at 30 days from the due date to the final date for payment. In the rare occurrence that the payment term is not provided or a contract term allows for a payment later than the permitted period, the maximum implied period of 30 days would apply. This will provide clarity for construction contracting parties in relation to payment terms within construction contracts or subcontracts that are subject to the Procurement Act and ensure maximum payment terms of 30 days for construction contracts where a public authority is the client.

Finally, I turn to the five amendments concerning provisions relating to the Small Business Commissioner. All five are minor and technical amendments that clarify drafting and ensure consistency of approach. The amendments support the legislation’s overall objective, which is to provide a clear, practical and enforceable regime that strengthens payment discipline, improves suppliers’ confidence and ensures that smaller businesses are not left to bear the cost of poor payment practices.

Taken together, these government amendments do three things: they reinforce the 30-day standard for public contracts, provide clarity for public construction contracts, and ensure that the Small Business Commissioner provisions work as intended. They are therefore targeted, practical and consistent with the central purpose of the Bill. I beg to move.

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Leong, for his clear exposition of his collection of amendments. This might seem like a lot of government amendments to those who are not veterans of the previous Parliament, but I remember when the noble Lord, Lord True, brought 250 amendments on the first day in Committee on the Procurement Bill, so this rather pales into insignificance. However, it begs the question: at what point did it dawn on the Government that they needed to align across the legislative process? That strikes me as something that should have been in the original document. I am glad that we have caught it, but it seems to be a problem that we did not get it in there earlier. It all seems sensible, as far as I can see. I had to go back over the horrors of the Procurement Bill and reread bits of it, so reliving those moments all over again, but from our perspective, this seems to be okay.

On Amendment 77, I offer my support for the legislative back-up for the Small Business Commissioner to exercise the right to recover costs. I would have hoped that this was there anyway, but it is good to have the legislative back-up. Similarly, Amendment 82 will enable the Government to leverage the practical experience of the Small Business Commissioner. I would have hoped that the Government would have been leveraging the experience of the SBC, but again, this dots an “i” and crosses a “t”. From these Benches, we are happy to accept the Government’s amendments.

[Lord Sharpe of Epsom (Con)]

My Lords, I am also grateful to the Minister for his comprehensive explanation. I am pleased that this tidying-up exercise, if you will, around existing legislation is happening, because that forms the basis of all the amendments in the group that we are about to debate, which are all mine, which I am now very confident the Minister will accept.

I have two brief questions. New Section 68B, to be inserted by Amendment 41, provides for an appropriate authority to make regulations altering the maximum payment term. It would be useful to know why the Government believe that power to be necessary and in which circumstances they might use that power.

I have further questions about Amendment 102, which permits the Chancellor of the Duchy of Lancaster to make consequential amendments by regulations, as well as the Secretary of State. For what purpose have the Government made that amendment? Why does the Cabinet Office need to be able to make such amendments? Is it not sufficient for the Secretary of State at the department for business and whatever else it is called these days to make such regulations? I will be grateful to the Minister for answers.

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[Lord Fox (LD)]

I ask the Minister to go back and have another look at the point made by the noble Lord, Lord Lansley, because there are vague stirrings in the back of my mind that there is a point there. It might be worth finding out why it was put in in the first place.

[Lord Leong (Lab)]

I will do that.

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[Lord Holmes of Richmond (Con)]

My Lords, I support my noble friend Lord Sharpe, having signed all the amendments in his name. There are two key principles at stake here, as he eloquently set out: first, not to introduce yet another definition and, secondly, to take the opportunity to bring some clarity, consistency and coherence of definition. This would not just be beneficial for this Bill but have benefits far beyond it. As he rightly set out, this Bill may not be the place for that second objective. It is obviously the place for the first but, if it is not the place for the second, it would certainly seem to provide the right level of focus and spotlight to enable the department to look at this and bring forward plans to have definitions and classifications that are clear and consistent but also provide what anybody in whatever size of business they are involved with needs. So those definitions are useful.

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Sharpe, brought up a number of important issues, but I do not think he brought up any viable solutions. He spoke at the beginning about the proliferation of definitions, then sought to add to that proliferation with some new definitions.

He is right that some level of consistency should be required. For the purposes of this Bill, that consistency has to come from the purchasing Act 2023, unless that is not available. However, the point made by the noble Lord, Lord Holmes, is that there should be a more concerted effort in another place to get meaningful definitions of business sizes. The noble Lord, Lord Sharpe, made a point on the ease of determining those definitions. As the noble Lord, Lord Leong, will know, I am always keen to have a look at Companies House and see how it is doing. It has an important role in a number of different areas; this is just one. A progress report on Companies House when we get back would not be amiss.

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[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my friend, the noble and learned Lord, Lord Thomas, and the excellent and eloquent way in which he introduced his amendment, which I was delighted to sign. As he rightly pointed out, this could be seen as the absolute premier DBIST amendment. It goes to the heart of what the department is. It has business and innovation at its very heart, and it would make complete sense for the department to pass it before Ministers have even changed the stationery in their various departmental boxes.

It was a pleasure to serve under the chairmanship of the noble and learned Lord as he chaired the Special Public Bill Committee on the then Electronic Trade Documents Bill. I variously described the Bill as

“the most important Bill that no one has ever heard of”.—[Official Report, 19/7/23; col. 2326.]

and the blockchain Bill that rightly never mentions blockchain. It was perfect in its two-page shortness—perfect, in that it never mentioned any specific technology. It merely set out criteria that any technology would have to meet to perfect an electronic trade document. When we talk about electronic trade documents, we are talking about economic, environmental and social benefits and, for the purposes of this Bill, payments efficiency and payments benefits.

The ability to combine everything in an electronic digital format is possible only because of the criteria that blockchain and distributed ledger technology allows to have a possessory document—that is, if you hold the document, you hold the goods. Only through those technologies is it possible to thus have those possessory documents in electronic form. This would be good for payment but it would also be good for UK trade. There is currently a huge trade finance deficit painfully suffered by many businesses already involved in trade but, perhaps even more significantly, by all those tens of thousands of businesses that currently do not trade internationally but could. The provisions in this amendment really highlight that opportunity.

As the amendment so clearly sets out, international trade should be within the purview of this Bill and, in many ways, this lays the groundwork for many of the technology amendments which we will come to later this evening. It makes the point about what is possible today without insisting that it has to be used and come into force on the date the statute comes into force. By being in the statute, with the time period as set out in the amendment, it states the case clearly. It provides the time for adoption but really speaks to the possibility and, largely, the economic opportunities for all those businesses, particularly small and micro-businesses, which could avail themselves of all the benefits of international trade.

[Lord Fox (LD)]

My Lords, very briefly, this would seem to be the perfect amendment for the Minister to accept. As pointed out, it signals an innovative forward direction for the new department, it utilises complex legislation that has already happened, it does not cost anything, and nothing will happen for two years—perfect.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the noble and learned Lord, Lord Thomas of Cwmgiedd, for introducing his amendment. I cannot really improve on what has already been said, except to say that this issue has been raised with His Majesty’s Opposition in the run-up to this Committee stage. It is right that, should technology permit it, import and export trade contracts should be treated the same as domestic documents. That may not be feasible now, but the noble and learned Lord’s amendment provides what seems to me a reasonable timeline to get to that point.

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[The Deputy Chairman of Committees (Viscount Colville of Culross) (CB)]

After Clause 8, I call the noble Lord, Lord Fox, to move Amendment 37.

[Lord Fox (LD)]

My Lords, Amendment 37 is in my name. This amendment would confirm on the face of the Bill that the Act does not apply to contracts principally for the licence or assignment of copyright—

[The Deputy Chairman of Committees (Viscount Colville of Culross) (CB)]

With apologies to the Committee and the noble Lord, Lord Fox, I omitted to have Clause 8 agreed. The Question is that Clause 8 stand part of the Bill.

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Moved by

[Lord Fox]

37: After Clause 8, insert the following new Clause—
“Agreements relating to copyright and other intellectual propertyAfter section 15A of the CPILPA 1998 insert—“15B Agreements relating to copyright etc.(1) The provisions in Part 1A, Part 1B, section 4, section 6A, section 11A and section 15A do not apply to a contract that is, or is principally, for—(a) the licence or assignment of, or(b) the grant of any other right in or in relation to,copyright or rights in performances.(2) Subsection (1) applies whether or not the work or other subject-matter to which the rights relate is in existence when the contract is entered into, and accordingly applies to a contract under which the supplier is to create, write or otherwise produce that work or subject-matter. (3) A contract is not prevented from falling within subsection (1) by reason only that it also requires the supplier to do one or more things in connection with the work or other subject-matter, including to deliver, check, edit or revise it, to review proofs, to engage in relation to its design or packaging, or to undertake promotional or similar activities.(4) Accordingly, no royalty, advance on royalties, residual or other payment under a contract within subsection (1) is a relevant payment or a qualifying debt for the purposes of this Act.(5) In this section “rights in performances” has the same meaning as in Part 2 of the Copyright, Designs and Patents Act 1988.””Member’s explanatory statement
This amendment would confirm on the face of the Act that the Act does not apply to contracts principally for the licence or assignment of copyright or rights in performances, so that royalties, advances and residuals under publishing, music, screen and similar agreements fall outside the late payment regime.

[Lord Fox (LD)]

Fortunately, this is a short speech so I can lengthen it by repeating that.

This amendment would confirm on the face of the Bill

“that the Act does not apply to contracts principally for the licence or assignment of copyright or rights in performances, so that royalties, advances and residuals under publishing, music, screen and similar agreements fall outside the late payment regime”

as envisioned by the Bill. Noble Lords will not be surprised to learn that this amendment has been supported by Creative UK, PRS for Music, which is UK Music, and the Publishers Association. It would insert a new clause after Clause 8—which we have now agreed—and seeks to make a clear distinction between contractual remuneration and royalties.

I know that the Minister has been in discussion with the publishing industry and that, given his business background, he is clear on this issue. However, I do not think the Bill is as clear as the Minister is on this, so it would be very helpful for him to set out in detail these distinctions, effectively putting royalties outside the scope of the Bill. I would prefer an agreed amendment to come forward on Report but, at the very least, some clear Pepper v Hart-style assurances need to be made from the Dispatch Box. I beg to move.

[Lord Hunt of Wirral (Con)]

My Lords, we are all very grateful to the noble Lord, Lord Fox, for tabling Amendment 37, which seeks clarity on this important issue. As he explained, this amendment would confirm in the Bill that the Act-to-be

“does not apply to contracts principally for the licence or assignment of copyright or rights in performances, so that royalties, advances and residuals under publishing, music, screen and similar agreements fall outside the late payment regime”.

But it also opens the debate to raise some interesting questions on whether the Bill should be sector-indiscriminate or whether there are certain industries for which regulations regarding late payment must be more bespoke. There may be strong reasons for stipulating that publishing, music and screen agreements fall outside the late payment regime. We look forward to hearing the Minister outline the Government’s position on that specific question.

However, if that is the case, noble Lords must ask two questions: first, whether these reasons could equally apply to other industries that should therefore also be exempted; and, secondly, whether there exist other distinct but legitimate reasons for different industries to be exempted. Even if there are good reasons for exempting certain industries, we must be wary of opening the floodgates such that this late payment regulation loses its practical force. Again, we all look forward to hearing the Minister detail the Government’s stance on this important issue.

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[Lord Leong (Lab)]

As far as the Bill is concerned, we are not providing any particular exemption to any particular sector. As far as intellectual property law is concerned, there were concerns from the various trade organisations that the Bill may also include the licensing of copyright. That is not the case, because that has been decided by case law under the earlier legislation I mentioned. If a contract says that someone has been contracted to write a particular book, novel or whatever, then that falls within scope of the Bill, but copyright contracts do not.

[Lord Fox (LD)]

My Lords, I should have said that my wife is a published author, so I have some family interest in this. Following the Minister’s last statement, I am still not clear on this. As the Minister knows, a classic book contract often involves an advance followed by royalties. The advance is sometimes an actual payment, or it is an advance against royalties. It is not clear which of those three conditions fit into the Bill and which do not. I do not know whether it is in order for the Minister to answer that question now, or whether he will have to come back.

[Lord Leong (Lab)]

I will quickly answer that. If the contract is for a book, and, as part of the contract, the creator is advanced a sum of money with an additional royalty arrangement, then the contract for that sum of money is covered within the scope of the Bill. The payment of copyright is outside the scope of the Bill.

[Lord Fox (LD)]

That is clearer. I will climb through the words we have exchanged as a result of this debate and see whether any comeback is required on Report. Pending that, I beg leave to withdraw the amendment.

Amendment 37 withdrawn.

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[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lord Lansley for speaking in this debate and introducing his amendments. Banning retention payments is one of the key changes that this Bill will introduce, but it is also one of the most contested, so I will begin by outlining our general position on these Benches.

We do not in principle oppose this step by the Government. To outline the scale of this issue, which I am sure the Minister will reiterate: 65% of retentions are not released on time and 20% are never recovered. Estimates of retentions lost due to insolvencies range from £0.25 billion to over £1 billion, and one need only look at the scale of the Carillion collapse to see that this is unsustainable. But, past the losses, retentions have been used for means other than what they were intended for. They are now widely used to retain cash flow and, in doing so, they transfer risk and reduce the margins of smaller subcontractors. So change is evidently needed.

While we therefore support the Government, we still must not lose sight of the intended use of retentions. They are supposed to act as insurance against defective work. If they are to be scrapped, we think that something must replace them. As my noble friend Lord Lansley argued persuasively, they provide qualitative assurance. I appreciate that the Government are discussing this with industry and that that they expect the market to find a suitable alternative, but some clarity about what they have in mind would be helpful.

Amendments 46 and 49, in my name and that of my noble friend Lord Hunt, seek to probe two potential alternatives: escrow and staging payments. Most importantly, the Government’s consultation on retention suggested a ban or something very similar to an escrow-type arrangement. Given that they went with the former, can the Minister confirm today at the Dispatch Box that escrows will not be banned by the backdoor?

Amendment 47, also in my name and that of my noble friend Lord Hunt, seeks to probe what the Government are doing to speed up their own transition away from retention payments. Public contracts make up roughly one-third of withheld retention payments, so it is only right that the Government lead from the front and demonstrate that they are driving this change.

Amendment 50 would exempt resident-run and resident-owned property companies from the ban on retention payments. I hope the Minister can confirm that this is already the case, but it is worth reiterating that residents should not fall under this ban on specific construction contracts.

I understand the principle behind the amendments in the name of my noble friend Lord Lansley. On Amendment 44, I will, however, make the same argument my noble friend made earlier about exempting SMEs from payment terms. Just because a small business is more vulnerable to retention payments, it does not follow that there is no risk involved for other businesses. We are therefore not in favour of specific commercial exemptions.

I am sympathetic to Amendment 48, but I would like to hear what the Minister has to say regarding alternatives before we consider watered-down forms of amendments. I hope that he will confirm in his reply that serious alternatives are being considered and that they are sufficient.

[Lord Fox (LD)]

My Lords, the Minister has said in the past that there may be other means to ensure the necessary delivery of projects without retention, and this group is designed to probe those other means. I am grateful to the noble Lord, Lord Sharpe, who set out the reasons why we too support the need for change, and to the noble Lord, Lord Lansley, who points out the need for ensuring quality of delivery. It is a difficult conundrum that faces the Minister.

Amendment 46, from the noble Lords, Lord Hunt, Lord Sharpe and Lord Holmes, sets out the possibility of escrow and whether that remains legal. I would add bonds and insurance solutions, which may be solutions to a similar delivery problem, or the nature of certification, which is the point that the noble Lord, Lord Lansley, made. Either way, there is an issue around staging payments, which we see in Amendment 49 and discussed in a different vein in Amendment 52 from my noble friend. There comes a point when we have to ask: when is a staging payment a retention and when is it not? We start to have this grey area.

The Minister has a difficult job, but it is an important part of the Bill to get that right. Like other noble Lords, we are available to have those discussions, but, when we get to Report, there needs to be a way of squaring the issue of the abuse of retention with the need for delivery.

[Lord Leong (Lab)]

My Lords, I thank the three noble Lords for their amendments in this group and for their contributions.

Taking Amendment 46 first, I reassure the noble Lords, Lord Sharpe and Lord Hunt, that the Bill does not prevent parties in any sector, including construction, making use of payment arrangements through third-party providers. A business may use a bank, payment agent or escrow account or provider to facilitate the transfer of funds from one party to another. Such arrangements can, in some circumstances, support better cash flow management, provide greater transparency and give parties additional confidence in how funds are handled. Nothing in the Bill is intended to prevent the use of those legitimate payment mechanisms. Therefore, Amendment 46 is unnecessary, but I shall make a further point, if I may.

As drafted, this amendment risks unintentionally undermining the policy intent behind the proposed ban on retentions. Its practical effect could be to preserve the option of still using retention clauses, provided that the retained sums are held by third parties. That would run counter to the Bill’s purpose. Retentions have been used in the construction sector for well over a century, but the evidence from consultation, research and engagement with businesses is clear: retentions are neither an effective way to prevent defects or to remedy poor-quality work. In practice, retentions often reduce cash flow for contractors and subcontractors, increase financial risks across the supply chain, and leave businesses exposed to late and non-payment or to the loss of retained sums through insolvency. The Government’s view is that the industry must now move beyond reliance on retentions. Therefore, we are not proposing any exceptions to the ban, nor do we want to permit retention practices to continue in another form.

I recognise the intent behind Amendment 47. The public sector is a major construction client and there is a strong case for it to lead by example. Phasing out retentions in public construction contracts will send a powerful signal, help establish new standards and support a fairer payment environment for smaller businesses. The Government recognise that the public sector has an important leadership role, but we must also recognise the practical realities that construction clients face, whether public or private.

The Bill reflects typical project durations, existing contractual arrangements and the time required for businesses to adjust their commercial models. During the transition period, the Government will work with industry through the Construction Leadership Council and with clients across the public and private sectors, the financial services sector and the supply chain. The purpose of that work will be to improve quality, reduce the level of defects, and help the market to develop alternative forms of surety for clients and the supply chain, whether it is performance bonds or other forms of financial instruments. That is the right way to achieve lasting reform. It gives the sector a clear end point and a realistic path to get there.

I thank the noble Lord, Lord Lansley, for Amendments 44, 45 and 48, and for his constructive engagement with the Bill. I fully understand the concern underlying these amendments. Everyone in your Lordships’ House wants construction work delivered to a high standard. Everyone agrees that defects should be remedied by the party responsible for them. The question is not whether quality matters—it clearly does—but whether cash retentions are the appropriate way to secure that outcome. The Government’s answer is clear: they are not. These amendments would create wide-ranging exemptions from the Bill’s retention provisions. Their practical effect would be to remove or significantly reduce the protection that the Bill is intended to provide for many businesses in the construction supply chain. That would be a serious step backwards. It is designed to protect cash flow, reduce exposure to insolvency risks and end the long-standing practice of withholding money already earned.

If these exemptions are accepted, many of the risks that the Bill aims to address would remain. Businesses would still experience reduced cash flow, retained sums would still be vulnerable to late release, non-payment and loss through insolvency, and clients would still have to incentivise to preserve mechanisms that reduce payments to suppliers rather than adopt better ways of managing quality and defects. That would undermine one of the Bill’s central purposes. If we create broad exemptions now, we risk preserving the very practices that have held us back for so long.

It is important to recall the evidence from the 2018 consultation conducted by the previous Government. Contractors reported significant difficulties in obtaining the release of the second half of the retention at the end of the defects period. The final retention payment was often used as leverage in negotiations over the final amount. That experience demonstrates why seemingly limited retention arrangements can become a source of real commercial pressure. There is also the possibility that if exemptions are introduced, clients might try to extend defects periods beyond the usual 12 to 24 months seen in construction contracts, which could extend the timeframe for withholding funds.

The Government fully accept that quality and defects must be addressed. However, the answer is not to continue withholding cash from supply chains but to improve quality, reduce the incidence of defects, and develop fairer and more effective alternatives to retentions. That is the work we intend to take forward with industry throughout the transition period. The Government’s approach therefore strikes the right balance. It offers a clear incentive for essential reforms, it protects smaller businesses from the cash flow and insolvency risks linked to retentions, and it gives the industry time to adapt to a significant and necessary change.

In relation to Amendment 49, I reassure noble Lords that no provision in the Bill will change the ability of construction clients and firms to agree either staged or interim payments under construction contracts. Therefore, this amendment is unnecessary.

We understand the intention behind Amendment 50, that resident-owned firms undertaking essential remediation work can ensure that the work done is of high quality, but we do not believe that retention ensures this. As Dame Judith Hackitt has noted, the practice is ineffective and undermines the effectiveness of the supply chain, which is why alternatives are required.

Let me respond to the question from the noble Lord, Lord Lansley, on the new homes ombudsman scheme and the code of practice. The Government have already stated their intention to bring forward a statutory new homes ombudsman scheme. Requirements are being developed and the Ministry of Housing, Communities and Local Government may undertake market engagement to assist in further developing this. This would be done transparently via government portals.

With that, I ask that the amendment be withdrawn.

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[Lord Hunt of Wirral (Con)]

My Lords, we now move to a very important part of the Bill, namely Part 2, on the Small Business Commissioner. I praise all those involved in the build-up to the Enterprise Act 2016. After a lengthy period of consultation, in which I was privileged to participate, the Conservative Government set up the role of the Small Business Commissioner. Its purpose was to tackle overdue payments and unfavourable payment practices. So it is a pleasure to open this debate by moving Amendment 55 and speaking to the others in this group in my name and that of my noble friend, because we now seek to expand the role of the Small Business Commissioner. I am pleased to start by saying that His Majesty’s Opposition support these changes. Our many amendments to this group are simply to clarify or build on the Government’s already solid proposals.

Amendments 55 to 57 probe the reasoning behind limiting the scope of the commissioner’s powers to disputes between small and larger businesses. I understand the argument that small businesses or consumers are more likely to be bankrupted by dispute proceedings, but the same cannot be said of small businesses on the receiving end of poor payment practices. I wonder whether the Minister can outline the rationale for expanding the commissioner’s powers to include these size-adjacent disputes.

Amendments 64 and 65 probe what additional grounds may be included in the reasons for declining to adjudicate disputes and which additional disputes may be exempted from adjudication. These powers have the potential to be used both widely and arbitrarily, which is why we have tabled Amendment 72, which would require both Houses of Parliament to approve any new regulations. In general, if the Minister could anticipate what these powers might be used for, I think we would all find that extremely helpful.

Similarly, Amendment 62 from my noble friend Lord Leigh of Hurley would require a reason to be given for declining to adjudicate a dispute. I think this is a courteous, low-cost measure that would do much to increase the transparency of the commissioner’s office.

Amendment 71 in my name and Amendment 59 in the name of the noble Lord, Lord Fox, aim to set a timeline for resolving disputes. I am conscious that the cases brought to the commissioner may differ greatly, both in scope and resolution and in the amount of time required. As such, I am aware that any timeline could create a bottleneck. That being said, I believe that some expectation should be placed on the commissioner’s office to resolve disputes in a timely manner. So, if the Minister cannot agree with either of these terms, I hope he will be able at least to suggest another solution in his response.

I also consider Amendment 75, tabled by my noble friend Lord Leigh, to be very important. Currently, under the Bill, a larger business may be investigated should it persistently engage in poor payment practices, with “persistently” being defined as an equally vague “sufficient” number of times. Businesses deserve to know what this means, if for no other reason than so that they can avoid it. Discretion should not be introduced where it does not need to be, so I hope the Minister can put a number on what exactly constitutes “persistently”.

However, these amendments are ultimately fruitless if they are not taken in conjunction with Amendments 69 and 93. The amendments in this group aim to increase the efficiency and transparency of the Small Business Commissioner’s office, which is now rightly having its powers greatly expanded—though the funds and resources the office will receive to carry them out remain very vague and opaque, so we seek more clarity from the Minister. Last year, the Small Business Commissioner had a net operating expenditure of just under £1.1 million. It was not allowed to hire permanent staff members and handled a total of 591 inquiries—not disputes.

It is not good enough for the Minister to say that extra resources will still be available, as he did at Second Reading, but not to give any further details. The time has come when we need to have a very clear steer on exactly what this budget will include and amount to. This is a root and branch reform that will not just completely change the nature of the commissioner’s office but have ramifications for businesses up and down the country. It must have a clear funding plan laid out. That is why we support Amendment 93 from the noble Lord, Lord Fox. It would ensure that the commissioner’s new functions would not be commenced until a funding plan has been laid before and debated by Parliament. This is the bare minimum, surely, for a reform of this kind.

Both the commissioner’s office and the businesses that will rely on it need to know that they will be adequately provided for. One cannot instil institutional trust in a reform if it appears that it is being underfunded. I hope the Minister can now commit to a funding plan. If there is no clear plan, neither I nor the noble Lord, Lord Fox, will be satisfied and we will return to the matter on Report. The Minister has a real opportunity now to answer all these questions; let us get ahead with this very important reform. I beg to move.

[Lord Fox (LD)]

My Lords, it is a real pleasure to follow the noble Lord, Lord Hunt, given his continued involvement with the Small Business Commissioner. There are a lot of amendments in this group. In order not to overstay my welcome, I will not speak to his amendments—but I am broadly in agreement with everything he has just said.

I have a number of amendments in this group. Amendment 59 would require payment disputes referred to the adjudication scheme to be resolved within 60 days, unless the Small Business Commissioner considers a longer period reasonable. The Bill creates a 60-day limit by which private organisations must pay back small businesses. However, although in the case of a dispute there is a time limit for the dispute to be raised, there is no time limit for the case to be resolved. This means that large companies could in effect raise a dispute and delay resolution, putting pressure on the SMEs to settle.

As can be seen from the amendment, it calls for the adjudicator to

“reach a decision determining a relevant payment dispute before the end of the period of 60 days beginning with the day on which the dispute is referred to adjudication under the scheme”.

To facilitate this, the adjudicator must

“compel parties to share relevant information with itself, if the sharing of such information is necessary for the fulfilment of the duty”.

However, where necessary, the commissioner may extend the period to resolve a particular issue, having regard to the complexity of a dispute and the conduct of the parties. The commissioner must set out reasons for any extension. This amendment addresses this, and it is an issue to which we attach quite a lot of importance.

As the noble Lord, Lord Hunt, just said, Amendment 71 looks at a 28-day limit. Separately, Amendment 79 in the name of the noble Lord, Lord Holmes, looks at 12 months for an investigation. That is a very long time, but I look forward to what he has to say.

--- Later in debate ---

I thank the noble Lord, Lord Fox, for tabling Amendments 88 to 91, which would amend the maximum penalty for breaching payment reporting requirements by providing for it to be calculated based on a company’s global turnover, as well as the turnover of any parent or subsidiary company, rather than the company’s UK turnover. I reassure him that our intention is for fines to be substantial, while also being proportionate and reasonable. Financial penalties should be linked to the UK economic activity of the qualifying company that is responsible for the breach, rather than that of overseas or other connected businesses that are not subject to the reporting requirements. Further details on how turnover will be determined will be set out in regulations following consultation. With that, I ask that the amendment be withdrawn.

[Lord Fox (LD)]

Before the Minister sits down, I found his answer on Amendment 91 a bit disappointing, given that we went through the debate on the Digital Markets, Competition and Consumers Act and came to a different conclusion. It is not clear to me why, in this circumstance, the Government go one way when, with that Act, we went the other way. A conversation needs to be had about that.

[Lord Leong (Lab)]

I would be happy to follow that up in a further conversation with the noble Lord. I take his point, but we also need to be mindful that there are so many different structures in which a company can operate—a subsidiary here, a domain for UK purposes and so on. Nevertheless, I agree that we need to be very clear about what constitutes a UK trading company and what revenue should be taken into account. I welcome additional engagement with him.

[Lord Fox (LD)]

I am sorry to labour the point, but that use of structures is exactly what my amendment seeks to avoid, because it is through those structures that clever companies with very good corporate lawyers can remove profit that has been generated in this country and attribute it to other subsidiaries that are not in this country and would therefore not be subject to the calculation for fines. That is why we made that decision for the digital markets Act and why I propose that we should do the same in this one.

[Lord Leong (Lab)]

As I said earlier, we need to have further conversations on that, which I would welcome.

[Lord Hunt of Wirral (Con)]

My Lords, I thank all noble Lords for taking part in what has been a very important debate. I am grateful to the Minister for his response. I warmly applaud what the noble Lord, Lord Fox, said about the critical need for clarity—as my noble friend Lord Holmes of Richmond emphasised, not just clarity but precision. We believe that these elements are essential, particularly on resources. It is all well and good passing legislation—ground-breaking legislation, to some extent—but, if there are no resources behind that change in legislative structures, the ultimate objective will not be achieved.

Speaking on behalf of all those who have spoken, I believe that it is the intention of all of us that the expanded Small Business Commissioner’s office should work as the Government intend it to work. The amendments in this group simply represent different views on how best to achieve this. I warmly applaud my noble friend Lord Leigh of Hurley, who always gives us the correct feedback from the world of business. He did so again just a few moments ago. His remarks about giving the cold shoulder have been proved with the effectiveness of the takeover code. We have to isolate—perhaps we have not had enough discussion about this—those companies that have poor payment practices and get through to them that, across all parties, we condemn such action, in particular when it has such a dramatic impact on small and medium-sized enterprises.

I understand that the amendments in the name of the noble Lord, Lord Fox, would include overseas turnover when calculating a company’s turnover. We need to discuss that further. We need to get UK tax law right.

[Lord Fox (LD)]

Simple—have a flat tax.

[Lord Hunt of Wirral (Con)]

Anyway, that is a debate for another occasion.

The Committee has made it clear that we support the prohibition of new regulations without what they might be used for being outlined or without them being approved by both Houses of Parliament. I have also set out our position on the timeline for the adjudication of disputes. It is an argument that I believe has some merit and would benefit from at least some guidance from the Minister, but I warmly applaud the consensus across the Committee that the question of funding must be answered before the Bill passes. As I outlined at the start of this debate, businesses must be able to trust the office for it to function as intended, and trust includes knowing that it has the means to deal with the disputes with which it has been tasked by this legislation. I understand that the Minister cannot commit today to a set amount or a timeline, but I hope that, over the summer, he and his officials will come to a solution on this issue—perhaps with the support of a rejuvenated Treasury.

I look forward to revisiting this debate. On behalf of all those who are interested, I accept the Minister’s offer of a meeting with the Small Business Commissioner and her team, which I think would greatly enhance our ability to understand some of the issues involved. In the meantime, I beg leave to withdraw my amendment.

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[Lord Thomas of Cwmgiedd (CB)]

I make one brief observation on Amendment 83. When one looks back at the last group of amendments and at this one, one sees that what is happening, in effect, is the creation of an entirely alternate system of dispute resolution—a new form of court or adjudication procedure. It is also apparent from the focus of the debate that this is not easy legislation to follow. I therefore think that, if one is to provide access to justice—that justice now being provided by the Small Business Commissioner—we must put the rights into ordinary language.

As experience showed in the 19th century, when the county courts were created—which had the same idea as all this—once you let lawyers in, you destroy them. It is imperative that lawyers do not become involved because it will destroy the system. It destroyed the county courts and it destroyed workmen’s compensation. Tribunals were created to get away from the lawyers. I will come back to this in a further amendment, but the key is to make procedure and law accessible without lawyers, or this system will not work.

[Lord Fox (LD)]

A lawyer steps up.

[Lord Leong (Lab)]

Declare yourself.

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[Lord Thomas of Cwmgiedd (CB)]

My Lords, I have one or two brief observations in support of the amendments, particularly Amendments 73 and 78 tabled by the noble Lord, Lord Holmes. First, it is critical that people are given an easy understanding of digital access to the system, but that is said in the context of the more important Amendment 78. I may have been slightly tendentious in what I said about getting lawyers out of the system, but we are likely to see much more being done in the system by artificial intelligence. At the moment, there is not a lot of public confidence in decisions on adjudication, on what are likely to be relatively simple things, being done by machine. However, that is coming. Worldwide—and I really mean worldwide—the courts are very concerned to look at the use of AI in being able to make decisions on a lot of areas.

But it is no use going down that route if there is not the public confidence, and that is why I think Amendment 78 is very important. Unless you are prepared to explain to the public what you are doing and how this is reliable, you will not get there. But I have absolutely no doubt that we are going that way. From looking at what is happening, a little bit in this country but much more elsewhere, we are into the route of AI being used to put arguments to the adjudicator, to respond to them and to distil the arguments into decision-making. It may be that this will produce the return to 1846—that is, the County Courts Act, which was meant to do what this Bill is trying to do now.

[Lord Fox (LD)]

My Lords, these amendments are very much of the style that I had expected, knowing that the noble Lord, Lord Holmes, was involved in the Bill, and he certainly made his arguments. To some extent I think there is a mixed thing here, with some of it mandating tools that the SBC could or should use. I do not think we need primary legislation to mandate that at all. I think the point that the noble and learned Lord made on Amendment 78 was slightly different from the one that the noble Lord, Lord Holmes, made. I may have misunderstood. But it is very important to know where AI is being used for decision-making and resolution. I think that was the point that the noble and learned Lord was making, and there I have complete agreement.

The use of distributed ledger is probably a very good idea. Do we need primary legislation to make or advise the SBC to use it? I am not sure. There is a mixed bag here, but the important element is that technology will change how the commissioner will approach her job and she needs to be financially and technically resourced in order to be able to address those changes and, I hope, to be one step ahead of them.

[Lord Hunt of Wirral (Con)]

We are all very grateful to my noble friend Lord Holmes of Richmond, not only for his amendments in this group but for his wise words. I also commend the noble and learned Lord, Lord Thomas of Cwmgiedd, and the noble Lord, Lord Fox, on their points.

Amendment 73 would require the Small Business Commissioner

“to provide a plain-language digital pathway into the SBC adjudication scheme, including an eligibility checker, interest calculator, and guided referral process”.

I believe there is a lot of common sense behind this amendment, and I suppose I declare an interest having been UK chair of the English-Speaking Union and global chair for a number of years. Placing a statutory duty on the commissioner to provide a digital service would ensure that small businesses could more easily get the essential and relevant information about the scheme. The inclusion of a plain language eligibility checker would mean that small businesses could determine whether they are entitled to refer a relevant payment dispute to the scheme. This would not only benefit the taxpayer, as time and expense will not have to be expended sifting through ineligible applications, but would also benefit small businesses that may otherwise have to spend money on legal fees and advice.

Amendment 78 would establish

“an algorithmic accountability framework for any AI or automated tool used by the Commissioner. It requires transparency, regular bias audits, human oversight, and a right of explanation for businesses selected for investigation”.

There is clear reasoning behind this amendment. If a business is put under investigation, it should be entitled, upon request, to understand the factors that led to the initial decision to investigate. Not only will this provide transparency and act as a safeguard against particular businesses being targeted, it will mean that businesses are able to reflect on their existing practices and amend them as necessary.

I turn to what my noble friend described as one of the most important amendments, Amendment 92, as well as Amendment 94. Amendment 92 would require the Secretary of State

“to commission an AI-assisted payment monitoring tool for the Small Business Commissioner”.

Amendment 94 would require the Secretary of State

“to establish an open, machine-readable register of payment practice reports”.

Both these amendments rest on the principles that technology and data, when used in a constructive way, can yield more effective and efficient outcomes. An AI-assisted payment monitoring tool could be used by the Small Business Commissioner to cross-reference data that companies are required to publish with other government databases to identify businesses whose reported payment performance is incompatible with other available financial and legal data. Such a tool would provide the commissioner with more accurate and robust data, which could be considered before the launching of a potential investigation.

Similarly, an open payment data register would enable analysis by sector, business size and payment performance over time. If this register were publicly accessible and machine readable, third parties would also have the ability to deploy their own large language models to gain insights into the sector, as well as potential businesses that must be referred for investigation. Crucially, by making the register public, large businesses may be further incentivised to ensure that they are complying with existing payment practices and regulations. I look forward to the Minister’s response on these matters.

Amendment 95 would require

“a pilot of distributed ledger technology for construction retention records during the transition period”,

while Amendment 96 would require

“post-quantum cryptographic standards for all digital infrastructure supporting the Commissioner’s functions”.

These are technical amendments which require careful consideration.

In the absence of a clear cyber strategy, which the Government have promised would be released—they have promised it again and again—it remains unclear how the digital infrastructure supporting the commissioner’s functions remains shielded from cyber threats. I hope that the Minister will be able to inform us all of when such a strategy will be published.

British Steel

Lord Fox Excerpts

Monday 20th July 2026 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, I am sure the noble Lord remembers that we discussed this at length during the passage of the Bill; I am sure he would not want me to reopen the debate. We are where we are with British Steel. I totally understand the need for transparency on costs, including carbon costs. As it stands, we will abide by our international obligations on CBAM; that stands as our policy and the noble Lord knows full well that that is the Government’s position. Having said that, any financial assistance to British Steel will be reported in the ordinary way. The Government will publish quarterly Written Ministerial Statements for at least the first year, giving contemporary information on the support provided. Ministers must also comply with Managing Public Money, Treasury controls and accounting officer duties. We will protect taxpayers while ensuring that British Steel has the stability needed to continue operating.

[Lord Fox (LD)]

My Lords, the Minister talked about transparency and I am pleased that we were able to insert those quarterly reports into the legislation. The Minister in the Commons, in answer to my colleague’s Urgent Question, spoke about the key step of appointing the chair and board of the new enterprise and their role in taking that business forward. When will those appointments be made? Until that happens, who will be accountable for corporate governance?

[Lord Leong (Lab)]

My Lords, British Steel is now a government-owned company with the Secretary of State as its sole shareholder.

[Lord Fox (LD)]

Who is the Secretary of State?

[Lord Leong (Lab)]

All will be revealed in due course. The noble Lord will know that we took control of British Steel on Thursday. As anyone will know, in any acquisition process there will be a nominal director who will be registered with Companies House until such time as a board of directors has been appointed. The Government are putting a new board in place that has commercial and industrial experience, which is very important: we need people with expertise running this. The priorities will be stabilising the operation, improving performance, protecting health and safety, developing a sustainable business plan, exploring private investment and ensuring that workers’ voices are central to the company’s future, including worker representation on the board.

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[Lord Leong (Lab)]

My Lords, I said in my previous answer that we will abide by the independent valuer’s final valuation.

[Lord Fox (LD)]

My Lords, the important part of my question was: when does the Minister think that this board will be appointed? Can he give us a window for when that will happen?

[Lord Leong (Lab)]

It will be when the new Secretary of State is appointed.

Steel Industry (Nationalisation) Bill

Lord Fox Excerpts

3rd reading
Monday 13th July 2026 Lords Chamber

[Lord Fox (LD)]

My Lords, I agree with the Minister that the Bill is an important element in securing the future of the vital steel industry. It is, of course, a first step. There is an awful lot to do.

The Bill leaves your Lordships’ House in a better state than when it arrived. For example, it is now mandatory for overall costs of nationalisation to be taken into consideration by the Secretary of State when assessing the public interest; environmental legacy costs must be fully assessed by the valuer; there will be parliamentary debates and quarterly Written Ministerial Statements; the management of a business that is nationalised will be quizzed by Select Committees, and the steel council will better represent steel users.

Those are all important steps, and many are improvements on parliamentary accountability, which was the mission that we on these Benches set ourselves at the beginning of this debate. I echo the Minister in saying that that could not have been achieved without co-operation and debate.

I thank the Minister, his team and the departmental team for their openness, availability and flexibility. I thank the Minister in the Commons too for the time that he spent. I thank the noble Lords, Lord Sharpe and Lord Hunt, who remained, as ever, amiable debate company as we wended our way through the Bill. Finally, I thank Ulysse Abbate in the Lib Dem Whips’ Office, whose support has been superb.

As I said, the Bill has been materially changed. I hope that the Commons accept our changes and we do not have to see the Bill here again. It is a first step. I wish the Minister well in taking the next steps.

[Lord Sentamu (CB)]

My Lords, I apologise to the noble Lords, Lord Fox, Lord Hunt and Lord Sharpe. Their amendments were to this Bill and not to the trains Bill. Nevertheless, the point stands. The attendance was no greater than when it was debated in Grand Committee. I apologise and sincerely hope that they realise that I was so involved with both Bills that, in my enthusiasm, I erred. I am sorry.

Unpaid Carers

Lord Fox Excerpts

Wednesday 8th July 2026 Lords Chamber

[Lord Leong (Lab)]

I hear what the noble Lord says about national insurance, but let me say this. There is a moral imperative on employers to play their part in supporting unpaid carers. There are fantastic employers up and down this country that are doing fantastic things to support carers. I shall give an example: Centrica estimates savings of £1.5 million last year in reduced absence costs alone, achieved through support measures for unpaid carers, with further savings on retention. So these measures result in improved retention, better productivity and reduced absence from work.

[Lord Fox (LD)]

My Lords, when I was piloting the Carer’s Leave Bill 2023 through your Lordships’ House, Centrica was one of the companies I spoke to. Centrica and other companies were already doing phenomenal work, but we all agreed that the Bill was the first step for unpaid carers. The Act has now been in force for just over two years, and data on take-up is sketchy. At best, the Minister’s department puts take-up at 29% of those eligible, but other data says just 10%. We do not have to wait for a consultation. The barriers have been researched by the Minister’s department. The first barrier is that it is unpaid by nature: that is what we hope to change. But the second is awareness, or lack of awareness, by people who might benefit. The third barrier is fear from employers. Can the Minister tell your Lordships’ House what the Government are doing in order to take away those two important barriers—for people getting what little benefit they have already—before his consultation finishes its work?

Steel Industry (Nationalisation) Bill

Lord Fox Excerpts

Report stage
Wednesday 8th July 2026 Lords Chamber

Moved by

[Lord Fox]

1: Clause 2, page 1, line 13, at end insert “and,
(b) has had regard to the impact of exercising that power on the public finances.”Member’s explanatory statement
This amendment would add a new condition that the Secretary of State must consider before exercising principal transfer powers.

[Lord Fox (LD)]

My Lords, in moving Amendment 1, I will speak to Amendments 7, 9 and 24 in my name.

In Committee, I noted the difficulty of phasing the exercise of the principal transfer powers and the need for scrutiny by Parliament—there is a dichotomy. At the heart of my concerns then was that Parliament would potentially be signing a blank cheque. On the other side, there may very well be a need to move swiftly in the event that a decision is made to nationalise a steel asset.

The first three amendments in my name in this group go some way to brokering this compromise. They offer two different routes of addressing the issue of the Secretary of State’s obligations regarding the financial cost of any intervention. Amendment 1 directs this attention to Clause 2 and inserts an obligation on the Secretary of State to take into account the impact on public finances before exercising the principal transfer. However, during Committee and subsequent discussions with the Minister, it became clear that the Government feel they have some legal reservations about any modification of Clause 2. Therefore, Amendments 7 and 9 seek a similar action but focus on Clauses 4 and 15 respectively instead.

Overall, of course, government decision-making relies on tests that must be conducted by accounting officers. I expect the Secretary of State would have the impact on public finances in his or her mind at all times, and I am sure there would be some Treasury Ministers leaning over that particular Secretary of State in the event that any decisions were made. However, by putting this responsibility in the Bill, it will be easier to hold the Secretary of State and the Government at the time to account on the value for money of any issue. In the event that the Minister feels constrained in accepting Amendment 1, I hope he will accept Amendments 7 and 9.

Amendment 24 addresses a different issue and returns to pension liabilities, which we debated in Committee. It is clear that, in the event the Government exercise the principal transfer power enabled by the Bill, the pensions of all ex and current workers of that asset become an important responsibility. This amendment is clear in its assertion that Parliament needs a view on these liabilities. If the Minister is unable to accept this amendment, I hope he will take the opportunity to clarify the Government’s approach to pensions from the Dispatch Box. I beg to move.

[Lord Redwood (Con)]

My Lords, I am grateful to the noble Lord, Lord Fox, for reminding us of the importance of contingent liabilities and the need for the Government to complete due diligence before any acquisition. He rightly says that in a hypothetical case—not British Steel Scunthorpe—it might be necessary to move quickly, and then there will have to be some trade-offs. But if we are talking about British Steel Scunthorpe, there is obviously no need to move quickly. The Government moved very quickly many months ago, and there can still be proper analysis. I would hope, indeed, that as Ministers and their chosen executives are now responsible for British Steel, while they do not own the assets, they would have done a lot of this very important preparatory work on discovering the contingent liabilities.

Where in Amendment 11, the contingent liabilities are mentioned by category, there is an omission which could be extremely important: liabilities to employees for past problems with safety and health, and—God forbid that this does not happen—for any liabilities that might follow now that the business is under the operation or control of Ministers and their chosen executives, if some safety or other health problem arose. Where people are running these very large, industrial businesses, with the obvious threats of a very powerful fire in the furnace and the dangers of extremely hot liquid steel being moved around, it is crucial that Ministers and their chosen executives have taken all the right decisions on making sure people have the right protective clothing, there are the right protocols, and there is an absolute segregation for the employees from the risks. There also needs to be an understanding of whether there have been any longer-term health risks from the atmosphere around the blast furnace or the intense heat of some working conditions.

If Ministers have not already done so, they need to take this very seriously. Whenever I was responsible for a big plant, my main nightmare was that something would go wrong on safety, and that would be unforgivable. I am not expecting the Government to give ground on these amendments, but it would reassure the House and the wider public if the Minister could tell us more about where they have got to, at least in general terms, with exposing the contingent liabilities on pensions, safety and employee health, as well as with the other financial matters mentioned clearly in these amendments.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, before turning to the amendments before us, I begin by placing on record my sincere thanks to the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for the constructive and collegiate way in which they have engaged throughout the passage of this Bill. We have not agreed on every point, but their contributions have been thoughtful, serious and rooted in a shared recognition of the importance of the UK steel industry. I am grateful for the time they have taken to meet with me to test the Government’s position and, for raising their concerns in such a fair and friendly spirit.

Responding to the points raised in this group, I will speak first to Amendments 7 and 9 in the name of the noble Lord, Lord Fox. Over the course of this Bill’s passage, I have had ongoing and constructive conversations with the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, about the cost of nationalisation and the importance of parliamentary scrutiny. The noble Lords and I agreed that the Government must consider the costs of any nationalisation before exercising the powers. As I have stated to this House previously, existing public spending governance controls provide for this, with cost and value-for-money considerations embedded in the Managing Public Money principles and the well-established process of accounting officer tests.

However, the noble Lords have sought a statutory requirement on the face of this Bill. Through our conversations, I have been persuaded by their arguments, and I am pleased to say that the Government will support the amendment of the noble Lord, Lord Fox, which requires the Secretary of State to consider costs before exercising the share or property transfer powers in Clauses 4 and 15. We hope the House will agree. Our agreement on this issue reflects the commitment of noble Lords to ensure that this Bill is as comprehensive and effective as possible. It is an excellent representation of this House’s ability to work collaboratively, and I thank the noble Lords, Lord Fox, Lord Sharpe and Lord Hunt, for their engagement on this issue.

The noble Lord, Lord Fox, has also put forward Amendment 1, which would require the Secretary of State to have regard to the public finances when considering exercising the principal transfer powers. Given that the purpose of this amendment is achieved through Amendments 7 and 9, I do not think this is necessary in addition.

The noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, have tabled Amendment 11, which would require the Government to provide a statement to Parliament outlining the value of contingent liabilities associated with a steel undertaking, and the steps taken to minimise taxpayer exposure to them, prior to an intervention. As I have set out previously, I have concerns about creating additional hurdles that must be cleared prior to the exercise of the transfer powers, given the likely need to act at pace. There is also a practical difficulty in publishing the details of a private company’s financial information prior to a nationalisation. None the less, the Government share the desire of the noble Lords to minimise the taxpayer’s exposure to liabilities as far as possible, and that will inform our decision-making. If a steel undertaking is nationalised, we would expect its annual report to include details of its liabilities, where relevant. We will discuss liabilities again in later groups today, and I look forward to that discussion. I hope that that helps to clarify the matter and provides the noble Lords and the rest of your Lordships’ House with sufficient reassurance.

Amendment 24, tabled by the noble Lord, Lord Fox, requires that where the Government have exercised the transfer powers, the independent valuer must prepare a written estimate of a steel undertaking’s pension liabilities and provide that to the Secretary of State, who should then publish the estimate before Parliament. Pension liabilities will of course differ for different companies. If the Government were to decide that it was in the public interest to nationalise British Steel, I reassure noble Lords that our understanding is that there would not be significant pension liabilities, as the company has a defined contribution scheme and so pensions would be funded from an existing pot. In cases where pension liabilities are relevant to the value of a steel undertaking that is subject to the powers under the Bill, the independent valuer should consider that as part of their assessment. None the less, publishing this in isolation would be unhelpful without the full context. The Government have already committed to publishing the outcome of any compensation scheme. Therefore, I do not consider this amendment necessary.

I hope I have been able to reassure noble Lords, even though there are amendments in this group that I do not support.

[Lord Fox (LD)]

My Lords, I thank noble Lords for their contributions to this debate. Before coming to the Minister’s words, I will pick up on the point made by the noble Lord, Lord Redwood, on health and safety. I turn his attention to Amendment 21, which returns to the issues of health and safety and environmental liabilities. Although his point does not need to be made again, the debate on that amendment is when the Minister can respond to it.

I thank the Minister for his response to Amendments 7 and 9; I believe that they will take scrutiny a step forward. His approach to accepting them is very heartening. It is therefore clear that, if we accept Amendments 7 and 9, we do not need Amendment 1.

On Amendment 24, I am reassured by the Minister’s comments on one particular steel asset. Although we do not expect it, in the event that the future Act is used for other assets, pensions may become an issue. Picking up on the point made by the noble Lord, Lord Wigley, particularly in Committee, there have been some missteps around employee pensions. It is very important that, whoever the Government of the day are, they do not make those missteps again and create the situation we have seen and on which the noble Lord commented.

On that basis, and in thanking the Minister for his acceptance of Amendments 7 and 9, I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

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[Lord Redwood (Con)]

My Lords, there will be an issue with the public interest case, if and when we get to the full nationalisation of British Steel at Scunthorpe. Many of us are unclear as to whether the Government’s aim is to find a medium-term or longer-term solution to the problem of how to keep the two existing blast furnaces running and keep a basic steel-making capability in the United Kingdom, or whether their policy aim is still—as with the previous Government and as is the case in south Wales—to move to closing the blast furnace and opening an electric arc furnace in a new plant, which may be on that land or somewhere else.

If it is the latter, it will be much more difficult to establish the public interest case for the complete nationalisation and transfer of the blast furnaces, because that will end in tragedy for the people working there, so it will no longer be the case that the main purpose is to keep the jobs. It will not resolve the issue of the electric arc furnace, because that will need separate grant aid and might even be better on a different site. We need to know more about the phasing. In the case of south Wales, the blast furnaces were closed before the electric arc furnace was available. If they did the same again at Scunthorpe, there could even be a period when the United Kingdom will not be making any steel at all on those two works, given the transition plan.

It would be very helpful if the Minister, who will have to take this policy on, gave us a little more on the Government’s thinking about the duration of the investment in the blast furnaces, and whatever information he has about the state of those plants and the ability to maintain continuous production there, and on the Government’s intention in their net-zero strategy, which implies that steel would have to be made in a different way.

[Lord Fox (LD)]

My Lords, because this is Report, I will not repeat my Committee speech. Briefly, Clause 2 is unchanged and Clauses 4 and 15 have been amended along the lines that the previous groups suggested and begin to bring the rigour at the start of this process. The request made by the noble Lord, Lord Hunt, for information after the fact, if it has to be brought forward, seems reasonable, but on that basis I do not support the amendments as they stand.

[Lord Leong (Lab)]

My Lords, I am grateful for the contributions to this debate. Noble Lords have highlighted that the public interest test in Clause 2 is a vital part of the Bill and I very much agree. It is important that we get it right. Noble Lords have tabled several amendments to this clause and we have had fruitful discussions on them at previous stages, but I am happy to return to them.

Amendment 2, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would limit the public interest factors that could be considered by the Secretary of State to those explicitly set out in statute in Clause 2. As I have set out previously, the Government agree that these are likely to be the most pertinent issues in relation to an intervention in the steel sector. We have sought to strike a balance in the Bill between minimising the scope as far as possible and ensuring that we can adapt to evolving circumstances. That is why we think it is necessary to retain some flexibility to consider other factors that may be relevant to a particular case, which may be difficult to anticipate.

Let me be clear that the legal test in this clause places particular emphasis on the factors that are explicitly set out. Where the Government seek to rely on other factors, they will need to be satisfied that those factors mean that an exercise of the powers is necessary in the public interest. I therefore do not consider the amendment necessary and respectfully ask that it be withdrawn.

Amendments 3 and 5, tabled by the noble Lords, Lord Sharpe and Lord Hunt, would create procedural steps that would need to be fulfilled before the transfer powers are exercised. Amendment 3 would require the Secretary of State to commission an independent assessment of whether the public interest test has been met and for that assessment to be met prior to using the powers. Amendment 5 would require the Secretary of State to provide details of the criteria used to demonstrate the public interest. Both are difficult to reconcile with the likely circumstances under which the powers could be exercised. The Government will likely need to act at pace to deliver an effective transfer. However, the Government will commit to publishing a Written Ministerial Statement following an exercise of the principal transfer powers, which would include details of how the public interest test has been met. I hope that provides some reassurance to the noble Lords, even if we cannot meet the full ambition of their amendments.

Finally, Amendment 4, also tabled by the noble Lords, Lord Sharpe and Lord Hunt, would require the Secretary of State to be satisfied that the exercise of the transfer powers would represent value for money for taxpayers. The Government are mindful of the potential costs that could be incurred in relation to the nationalisation of a steel company. This consideration is already taken into account in government decision-making under the usual public spending processes, as I have set out previously.

Additionally, as we discussed in the previous grouping, the Government are supportive of Amendments 7 and 9 from the noble Lord, Lord Fox, which would require the Secretary of State to consider costs prior to the exercise of the principal transfer of powers. These amendments go some way to addressing the concerns raised by the noble Lord Hunt, and I hope that will provide some reassurance.

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[Lord Redwood (Con)]

My Lords, two years is quite enough for these powers, and it is generous of my noble friend to suggest allowing another two-year extension. As I understand it, these steel matters are being considered under a £2.5 billion multiyear estimate, which was meant to be for the modernisation of the steel industry. When it was originally agreed, people had in mind that this was going to be grant aid for new electric arc furnaces and other such investments—not to pay continuous and high losses on an older technology plant that may not have the long future we would like.

To get into better order with the Treasury, the Government might want to have some self-imposed restraint on the duration of this. We have been led to believe that the rate of loss is at least £500 million a year on the two blast furnace activities that are currently under the Government’s control but not in their ownership. That would be a totally unacceptable continuing rate of loss and would eat into what should be modernisation money. That would mean they would get to the end of this Parliament with very little improvement to show.

[Lord Fox (LD)]

My Lords, I am in slight confusion that I hope the Minister can clear up. My understanding of Amendment 6A is that it offers a one-term renewal of two years, meaning a four-year total for any sunset clause. I might have misheard what the noble Lord, Lord Sharpe, said. I am assuming that is what Amendment 6A is seeking to achieve.

If we are reassured by the Government’s assurances on their intention, in a sense we do not need this—but it is certainly helpful to have it. If my reading of Amendment 6A is correct and it moves it four years as a maximum, it will move it into the next Parliament, where the Liberal Democrat Government will take a view.

[Lord Leong (Lab)]

My Lords, I am very grateful to all noble Lords for their contributions. I will respond to the point from the noble Lord, Lord Redwood, on financial assistance when we cover financial assistance in the sixth group.

I am grateful for the points raised regarding the sunset provisions in Clause 3. The noble Lords, Lord Sharpe and Lord Hunt, have tabled an amendment that would limit any extension of the sunset period to two years. I have had helpful discussions with them on this matter. Throughout debates on this Bill, we have emphasised that the Government are strongly minded to use the powers in the Bill to nationalise British Steel, subject to the public interest test, and do not currently see a need to use them for other steel undertakings. However, the steel sector faces challenges that can be beyond the control of government or companies themselves. It is important that we reserve the possibility of intervening in this way if it is needed in the public interest.

The amendment from the noble Lords, Lord Sharpe and Lord Hunt, strikes a good balance, allowing the Government to preserve the powers if absolutely needed while limiting any extensions of those powers to a limited period and subjecting them to an affirmative parliamentary debate. We recognise the need for this level of scrutiny, and it is appropriate that any extension be limited to a short period only. I am therefore pleased to lend my support to the noble Lord’s amendment.

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Moved by

[Lord Fox]

7: Clause 4, page 2, line 29, at end insert—
“(3A) When deciding whether to make share transfer regulations under this section in respect of a steel undertaking, the Secretary of State must consider the costs that the Secretary of State thinks are likely to be associated with the exercise of the power.” Member’s explanatory statement
This amendment would require the Secretary of State to consider the costs associated with making share transfer regulations under clause 4.

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[Lord Hunt of Wirral (Con)]

My Lords, I rise to speak to Amendments 8, 10, 12 to 14 and 40, standing in my name and that of my noble friend. I thank the Minister for working constructively with us on Amendments 12 and 13. It is vital that where the Bill confers regulation-making powers of real consequence, the default should be the affirmative procedure. Amendments 8 and 10 would apply that principle to the core transfer powers, regulations transferring securities, and regulations transferring property rights and liabilities. We understand the Minister’s argument that in exceptional cases powers may need to be exercised.

Turning to Amendment 40, I ask the Minister for a clear assurance that a thorough impact assessment will be brought before both Houses of Parliament after the various powers in the Bill have been used. Given the potential effect on taxpayers, workers, investment and the wider steel industry, they must assess whether these exceptional powers have delivered the outcomes claimed for them.

Finally, Amendment 14 would remove Clause 50. The Constitution Committee was clear that the broad power allowing the Secretary of State to modify the law in relation to a share or property transfer

“should either be removed or significantly tightened”.

That is a serious recommendation from an important committee of this House. The Government should either accept the committee’s recommendation or make much clearer in the Bill the limited circumstances in which such a power may be used. I look forward, therefore, to the Minister providing some assurance on Amendment 40 and on the Henry VIII powers. I beg to move.

[Lord Fox (LD)]

My Lords, I rise to speak to Amendments 15 and 16 in my name, but first I speak in support of Amendments 12 and 13 in the names of the noble Lords, Lord Sharpe and Lord Hunt, which I have co-signed. Importantly, these would add necessary additional parliamentary control over continuity obligations and property transfer regulations. We moved similar amendments in the Commons that failed to attract sufficient support there.

Regarding Amendment 10, the Minister has convinced me that the need to quickly transfer property rights transcends the necessity of moving to an affirmative form of approval from a negative regulation. That is why I have not co-signed Amendment 10.

I tabled Amendments 15 and 16 as it is important that Parliament must be kept informed once any nationalisation is effected. Amendment 15 would create a new clause causing there to be a report on principal transfer powers from the point at which those powers are exercised under the Act. It says that the Secretary of State must

“make a written statement to each House of Parliament setting out … the progress, and the operational and financial performance, of the steel undertaking in respect of which a transfer power has been exercised, and … the impact of this Act, including (so far as it is possible to assess) its effects on the steel industry in the United Kingdom, on employment and on the public finances”,

and that this duty

“continues until no steel undertaking remains in public ownership”.

I hope the Minister has something positive to say on this, which includes reflecting on how the communities and skills requirements are being met in whichever part of the UK is affected by any nationalisation and subsequent changes.

It is a shame that the noble Lord, Lord Empey, was not with us in Committee, because he would have participated in a debate on an amendment that was very similar to Amendment 15, which covers not only the territory of Northern Ireland but the whole of the United Kingdom. I feel that the noble Lord’s point is important, but if it is important for Northern Ireland then it is important for the rest of the UK. I think he will see that Amendment 15 seeks to bring that across our entire country.

Amendment 16 seeks to create a stakeholder advisory committee. I will not repeat my speech from Committee, but its aim is to have stronger input into the steel strategy from steel users. The Minister responded with news that the steel council may be augmented by additional new members. I hope he can elaborate some more on how the voice of steel users is reflected more effectively in order for the Government to avoid such issues as those that have been created by the steel tariffs.

[Lord Wigley (PC)]

My Lords, I draw attention to a part of Amendment 16. I am delighted to see that the noble Lord, Lord Fox, has included the words

“industries that rely on the supply of steel, including the defence sector”.

That is one of the themes that is running, perhaps in the undergrowth, behind much of the thinking on the Bill. We must have a steel industry that is capable of responding, and quickly, in an emergency to the needs of the defence industry. The model has to be developed with that in hand. That is why I very much welcome the fact that that is written in the amendment.

[Lord Elliott of Ballinamallard (UUP)]

My Lords, I support the amendment from my noble friend Lord Empey and will speak to the issue raised by the noble Lord, Lord Fox, in Amendment 15, which unfortunately does not cover the specific circumstances of Northern Ireland. I support Amendment 15, but my noble friend’s amendment goes further to, I hope, give protection to Northern Ireland.

The UK introduced a new steel trade measure on 1 July—

[Lord Fox (LD)]

I have a point of information. The Bill has nothing to do with steel tariffs. We have had several Statements on steel tariffs in your Lordships’ House, to which I do not think the noble Lord spoke. I am happy to debate the effect of nationalisation on the Northern Irish market and to dispute that issue. However, the issue of tariffs is not covered in this legislation.

[Lord Elliott of Ballinamallard (UUP)]

I recognise the noble Lord’s point about the tariffs, but the issue is that we need some protection, and my noble friend Lord Empey believes the only way to have that protection is through this amendment. There is no other mechanism for protection. We have had Statements and I have asked Written Questions, but the answers we have had are unsatisfactory. Why is it not reasonable to table an amendment to this legislation that could assist the processors and manufacturers in Northern Ireland?

Maybe the Minister will find another way of doing this. If he can then that would be extremely helpful to us, but we want to raise the issue and it is not beyond our reasoned power to do so. At the moment, there is no other way of doing that except through this legislation.

The tariffs are extremely important. We now have dual tariffs. We have not only EU tariffs, because we are part of the EU economic base, but UK tariffs. This is important in Northern Ireland, and we and our processors, fabricators and manufacturers will have to deal with it. It is unfair for the noble Lord to indicate that it is unreasonable for us to table this amendment—

[Lord Fox (LD)]

I am just confused, because the wording of Amendment 45 from the noble Lord, Lord Empey, asks for an impact assessment on the likely effects on Northern Ireland, and the wording of paragraph (b) of my proposed new clause in Amendment 15 asks for an impact assessment of the effects on the United Kingdom, which, of course, includes Northern Ireland. I wonder what Amendment 45 brings in addition that is not covered by Amendment 15. Thereafter, I will shut up.

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Moved by

[Lord Fox]

9: Clause 15, page 8, line 20, at end insert—
“(3A) When deciding whether to make property transfer regulations under this section in respect of a steel undertaking, the Secretary of State must consider the costs that the Secretary of State thinks are likely to be associated with the exercise of the power.” Member’s explanatory statement
This amendment would require the Secretary of State to consider the costs associated with making property transfer regulations under clause 15.

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[Lord Leong (Lab)]

My Lords, I am pleased to introduce a set of amendments that the Government have tabled. I hope that we have demonstrated throughout this Bill’s passage a willingness to listen to and engage with the concerns raised by your Lordships and to consider potential solutions. In tabling these amendments, we seek to address the concerns raised by the noble Lord, Lord Fox, regarding the discretionary nature of the appointment of an independent valuer. I previously noted that the Government intend to appoint a valuer whenever the principal powers in the Bill are exercised. We therefore consider the noble Lord’s suggestion to make this mandatory reasonable.

Amendment 17 will therefore make the required change by ensuring that any compensation scheme regulations must provide for the appointment of an independent valuer. The amendments that follow to Clause 54 make minor consequential changes clarifying that the valuer’s role is to carry out valuations for the purposes of the regulations, which is a critical step in determining any amounts of compensation. I hope that these amendments demonstrate the Government’s constructive approach and that noble Lords will support them.

Turning to Amendments 20, 21 and 23 from the noble Lord, Lord Fox, I am grateful to him for his engagement over the past few weeks on this and other points. These amendments would ensure that compensation scheme regulations must require the independent valuer to take into account environmental and health and safety liabilities when assessing the value of the relevant steel undertaking. I refer also to the points made by the noble Lord, Lord Redwood, earlier. I have said during the Bill’s passage that the Government will seek to address concerns from noble Lords as far as possible.

Many companies operating in heavy industries such as steel operate as normal with contingent liabilities. The precise cost associated with environmental liabilities would depend on many factors, including the extent to which land will be retained for future steel-making, kept safe or remediated for alternative light industrial use. None the less, we agree that the environmental and health and safety liabilities are likely to be an important part of any compensation determination and that this should be made clear in statute. I am therefore pleased to confirm that the Government will support these amendments, and I hope the House will support them too.

[Lord Fox (LD)]

My Lords, that was a very positive response from the Minister, and I thank him and his team for really listening to what we have been saying. Amendment 17 is an important step forward and I am pleased that he has tabled it. Amendment 21, as the Minister pointed out, makes something that might happen mandatory, taking on board fully the issues raised on another group by the noble Lord, Lord Redwood, and absolutely taking on board the issues I raised in Committee. I thank the Minister for his enthusiasm and look forward to this being added to the Bill.

[Lord Sharpe of Epsom (Con)]

My Lords, I echo my noble friend Lord Hunt’s comments on the previous group. I thank the Minister for his engagement, and the Minister and the noble Lord, Lord Fox, for their amendments in this group. Amendment 17 is very welcome. It ensures that compensation regulations must provide for valuations to be carried out by an independent valuer rather than leaving that as an optional feature of the scheme.

I also welcome the Government’s work with opposition parties to ensure that relevant liabilities are properly reflected in the valuation process. In particular, Amendment 21 ensures that environmental and health and safety liabilities must be taken into account, as my noble friend Lord Redwood powerfully articulated on an earlier group.

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Moved by

[Lord Fox]

20: Clause 54, page 35, line 16, after “(3)” insert “, (4)(b)”
Member’s explanatory statement
This amendment is consequential on Lord Fox’s amendments to clause 54(4).

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Moved by

[Lord Fox]

23: Clause 54, page 35, line 34, at beginning insert “may”
Member’s explanatory statement
This amendment is consequential on Lord Fox’s other amendment to clause 54(4).

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[Lord Sentamu (CB)]

My Lords, I want to simply question Amendment 31. In Clause 58(2), there are many different ways in which the Government can provide assistance, such as

“by way of grant, loan, guarantee or indemnity … by the acquisition of shares or any other interest in, or securities of, a body corporate, … by the acquisition of any undertaking or of any assets … pursuant to a contract, or … by incurring expenditure for the benefit of the person assisted”.

I am one who believes that we should plan for the future and make sure we do not spend above our means. However, it seems to me that, in a Bill of this nature, putting a tag of £2.5 billion by the end of 15 August 2029 is a restricting element and it does not give me confidence that we are actually interested in nationalising steel.

There are so many unknowns. During the debate when we were all summoned by the Prime Minister to rescue the steel industry in Scunthorpe, it was quite clear that the books were not very encouraging—but this is a national asset, so what do you do? It seems to me that to put that amount in the Bill is almost legislating for failure. If, for example, it is £2.6 billion, not £2.5 billion, what would happen? Would the whole thing collapse? Putting figures in the Bill is not good for legislators. We have got the Exchequer and all kinds of other people for that. Let us not try to conduct this Report as if we are the Treasury—we are not. I urge the noble Lord, having flagged it up, to nevertheless withdraw his amendment. I would find it difficult to support.

I remember being in Birmingham when Rover collapsed. BMW announced that it would build the Mini there but left the other plant. The Government were being asked for only £600 million to keep the plant. They were already in agreement with China to sustain it, but, because of the laws around government support for businesses from the EU, the Government found that they could not, and the plant went.

I always respect the noble Lords, Lord Hunt and Lord Sharpe, because of their wisdom. However, if they do not mind me telling them this, as a Cross-Bencher rather than one of those rarefied Lords spiritual, I think that they are losing a little of what I have always taken them for—just no.

[Lord Fox (LD)]

My Lords, I welcome the noble and right reverend Lord’s descent from the spiritual to the temporal, and indeed the financial. His contribution is appreciated. I also welcome all those who have not had the joy of participating in the steel Bill debate so far.

Before I speak to Amendment 31, I am going to speak to Amendments 34 and 37, which are in my name. I am happy to say that the Minister pulled the rug from under my feet with respect to Amendment 34 when he spoke to a previous group of amendments. Amendment 34 seeks to promote a role for Select Committees going forward. I am happy to say that the Minister has taken that suggestion on board to a large extent. It is important that Select Committees are able to get under the bonnet of this, to look at the nature and amount of financial assistance, the beneficiaries of that financial assistance, the purpose and the effect of that financial assistance, and the conditions of repayment. I am happy to say that the points the noble and right reverend Lord made about the nature of any support were covered by previous comments.

Amendment 37 would insist on a report to outline the impact of financial assistance provided under Clause 58, with a focus on the short-term and long-term investibility of any nationalised steel undertaking. In tabling this amendment, I hope the Minister can put on record again what he told us in Committee about the long-term aim of the Government regarding returning these public assets into private hands. It would help your Lordships if the Minister were able to repeat that.

On Amendment 31, the Liberal Democrats in the Commons tabled an amendment to cap financial assistance, but we are now dealing with a different Bill. The Government have accepted Amendments 7 and 9, where value for money is accepted as a criterion in the Bill. We have inserted rigorous quarterly reporting. The noble Lord, Lord Redwood, will remember from two groups back that that amendment has been accepted and we will have quarterly reporting. As we have just said, we have ensured a role for Select Committees in scrutinising any nationalised industry, and we have implemented mandatory valuation of contingency liabilities. That Bill is not the Bill we are talking about.

I am persuaded that flexibility is required. The noble Lord, Lord Hunt, put in a spirited performance and, at one point, was possibly auditioning for the role of Chancellor—when he talked about magic money trees, I thought he was pushing his name forward to become the next Chancellor of the Exchequer. But then, he seemed to very freely talk about spending £2.5 billion here and £2.5 billion there. My worry is that his £2.5 billion would become a target, rather than the limit. Given the controls that we have put into the Bill, we will not be supporting Amendment 31.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions, and I thank the noble and right reverend Lord, Lord Sentamu, for his support.

Amendment 32, in the names of the noble Lords, Lord Sharpe and Lord Hunt, would require that details of any proposed financial assistance under Clause 58 be provided to Parliament before the assistance can be granted. The noble Lord, Lord Fox, has raised the issue of parliamentary scrutiny in respect of this clause in Amendment 34, which would require detailed proposals to be put forward before Parliament for a 90-day period and allow the Select Committee to make recommendations which the Government must respond to before any assistance is forthcoming. I understand that these amendments address the concerns of all noble Lords about the potential to incur costs in relation to the powers in this Bill.

As I have noted previously, there is a framework of public-spending principles and governance, designed to ensure that public funds are well managed, and the Public Accounts Committee holds government to account in this respect. Where the Government use the powers in the Bill to transfer a steel undertaking into public ownership, costs may be incurred from day one and will need to be funded to maintain an ongoing operation. It is vital that a steel company that is running production continuously does not face disruption due to funding shortfalls. That is why these two amendments cannot be accepted by the Government, despite the good intentions behind them. As set out in Clause 59, we will provide annual reports to Parliament detailing the costs incurred under the financial assistance provided. A nationalised company will also need to publish an annual report and accounts, as the department does, so this information will be available in several places.

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I therefore hope that the Minister will consider very carefully what the right structure will be for a steel industry owned in whole or in part by the Government, because it is a strange money-go-round to charge too much for energy and then have to give it back by way of grant, showing losses in the business you own.

[Lord Fox (LD)]

My Lords, we debated CBAM and the ETS in Committee, so I will not add to that debate, but I will ask a question of the proposers which I did not ask then: how is a steel business affected differently by CBAM or the ETS, whether it is publicly or privately owned? The answer is that it is not. The Bill is about the potential public ownership of steel. We will have to have a debate about CBAM and the ETS. The Liberal Democrats often talk about energy prices but not in the context of this Bill, because it is about whether a steel entity is in public or private ownership, and frankly, the CBAM will affect them the same way, no matter where that ownership lies.

[Lord Leong (Lab)]

My Lords, I thank noble Lords for their contributions to this debate on the emissions trading scheme and the carbon border adjustment mechanism, which I will refer to as CBAM, and their impacts on the steel sector.

Notably, these amendments seek to exempt a publicly owned steel undertaking from both these environmental measures, thereby undermining the level playing field that the noble Lord mentioned in the previous group. At the outset, I emphasise the Government’s commitment to their industrial decarbonisation policies and to moving towards a green, decarbonised steel sector. Although I appreciate that there may be differing views on this issue, these amendments would completely undermine the Government’s objectives for these measures.

These commitments build on the statutory reporting requirement on financial assistance in Clause 59, the company’s annual report and accounts, and the quarterly Written Ministerial Statements, which I have already set out. Any nationalised steel undertaking would not be exempt from the corporate reporting requirements set out in the Companies Act 2006. That Act contains various reporting requirements, which vary depending on the size of the entity. Where relevant or material, our Written Ministerial Statements may refer to any wider contextual or regulatory impacts. In addition, as previously mentioned, the Secretary of State would have the ability, if needed, to request an interim report on a particular issue.

Amendment 41 seeks to exempt a publicly owned steel undertaking from CBAM. I understand the concern expressed by the noble Lord; however, I emphasise that CBAM’s purpose is to ensure that imported carbon-intensive goods face comparable carbon prices to those of domestically produced goods. It gives industry confidence to invest in the UK, knowing that its decarbonisation efforts will not be undermined. CBAM makes no exemptions for particular UK firms. Its intent is to target the problem of carbon leakage and ensure that highly traded, carbon-intensive goods from overseas, including steel, pay a comparable carbon price to that paid by UK manufacturers.

I understand the intention behind Amendment 42 and the desire to ensure that Parliament remains informed about the impact of carbon pricing policies on the steel sector. The Government are committed to supporting a competitive and sustainable steel industry while delivering our decarbonisation objectives. However, the UK emissions trading scheme and the carbon border adjustment mechanism are economywide policies designed to address carbon leakage and support the transition to net zero across industry as a whole, rather than for any particular company or ownership model.

The UK ETS Authority already keeps the operation of the scheme under review. The scheme contains statutory review mechanisms. The authority has committed to continued monitoring of both free allocation policy and the interaction between ETS and CBAM. The authority has also recently confirmed the extension of the UK ETS beyond 2030 and will continue to engage with industry and consult on future scheme design, ensuring that the impacts on affected sectors are properly considered. Given these existing review mechanisms, it is not necessary to create a separate statutory requirement for a particular transferred steel undertaking.

Amendment 43 seeks to exempt a publicly owned steel undertaking from the emissions trading scheme. I am sympathetic to the fact that this imposes a cost on activities that have significant emissions. However, as with Amendment 41, accepting Amendment 43 would grant preferential treatment based on ownership and undermine a level playing field across the industry. The transition to low-carbon steel must be fair, credible and consistent across all operators, whether publicly or privately owned. I emphasise that the ETS includes targeted protections for energy-intensive, trade-exposed industries, including steel. Further protections will be introduced through CBAM from 2027.

The Government remain firmly committed to both a competitive steel sector and our decarbonisation objectives. Exempting a publicly owned steel undertaking from ETS or CBAM would create an uneven playing field, weaken the integrity of these schemes and undermine efforts to tackle carbon leakage. Steel producers, regardless of ownership, should operate within the same fair and consistent framework. I hope that my comments reassure noble Lords.

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[Lord Sharpe of Epsom (Con)]

My Lords, when we debated this amendment in Committee, the Minister suggested that it was somehow about industrial relations. It is not. This amendment is about our national security. The Prime Minister himself has warned the House and the country that we may face aggression from Putin’s war machine against a NATO ally before the decade is out. Let that sink in. It is not “if” but a real and growing risk, on our watch, in this decade.

What is the Government’s answer when it comes to the very steel from which we forge our warships and our defences? Their answer, apparently, is that production could grind to a halt whenever a strike is called—no matter the stakes, no matter the moment, no matter who benefits from Britain’s weakness. This amendment does not abolish the right to strike. Let no one on the Benches opposite pretend otherwise. It says something far narrower and far more reasonable: that, where the Secretary of State has taken a steel undertaking into public ownership precisely because of its importance to the public interest, industrial action which threatens that public interest cannot simply proceed as though nothing were at stake. Where the risk is sufficient and where the ground for public ownership was the public interest itself, the Secretary of State may act to protect it.

We are told again and again that this Bill is about safeguarding a strategic national asset. Very well, we accept those arguments—but let us mean them. You cannot claim with one hand that steel production is too vital to be left to the market and with the other hand leave that same production exposed to disruption whenever it suits a dispute wholly unconnected to the nation’s defence. You cannot have it both ways.

If a strike stopped the plates and the girders needed for a Royal Navy hull at the very moment that the Prime Minister’s own warning came to pass, would the Government stand by, hands tied by statute, and watch it happen? If the answer is no, the Government should accept this amendment today rather than legislate the problem into existence and hope it never arrives.

In an earlier group, the Minister used as a defence how difficult the industry is and the massive external pressures that it faces. This is an issue that is within the Government’s potential control. They should accept this amendment. We on these Benches are not afraid to say what needs to be said. In an uncertain and dangerous world, national security must remain a priority. I urge the Government, in the interests of national security, to accept this amendment. I beg to move.

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Sharpe, raises a serious issue. There was a moment when I thought I had passed through the looking glass. Your Lordships on that side of the House were sitting on this side, and those Lordships who were here were sitting on that side of the House. The only thing that broke me from that reverie, far from it being the noble Lord, Lord Sharpe, at the Dispatch Box, was the noble Lord, Lord Callanan. He was proposing the Strikes (Minimum Service Levels) Act 2023, with which the Government of the day sought to do exactly as the noble Lord, Lord Sharpe, seeks with this amendment.

I ask the noble Lord, Lord Sharpe, how many times that Act was applied. How effective was it? The issue that he raises is important. Of course the security of the country is important, but this is not the way to ensure the security of our country. Having a proper partnership with the workers in the industry is the way in which you secure the security of this country.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions and the noble Lord, Lord Fox, for those words. As this is the last group of amendments, I thank all noble Lords for their constructive approach to the scrutiny of this Bill. In particular, I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, for taking the time to meet me over the last few weeks. The way in which we have been able to collaborative to refine and improve the Bill truly shows your Lordships’ House at its very best.

Amendment 44 is in the names of the noble Lords, Lord Sharpe and Lord Hunt. Before I speak to it, I state that the Government take national security seriously; it is a priority. The amendment seeks to prohibit or restrict industrial action where there is a sufficient risk to the public interest grounds on which the steel undertaking is brought into public ownership. I understand that the intent of this provision is to ensure that any publicly owned steel undertaking can operate effectively without delay.

However, this is not the appropriate means to achieve this goal. I emphasise the absolute importance of workers’ rights. The steel workforce is the backbone of this industry. This Government are committed to protecting their rights and working with the trade unions and the workforce to ensure that operations are as effective and secure as possible. Noble Lords will know that I was closely involved in the delivery of the Employment Rights Act. Workers’ rights is an issue that is close to my heart. While political differences remain, we are not in the business of counterproductive approaches to industrial relations. As part of delivering the Employment Rights Act, our plan to make work pay, we are continuing to consult with businesses, trade unions and civil society to make sure we get the detail right. Several consultations are still live, including on reforms to zero-hours and similar contracts. This amendment is neither necessary nor appropriate to ensure that a publicly owned steel undertaking can operate effectively.

I hope I have convinced noble Lords of the reasons why the Government cannot support this amendment. I therefore respectfully ask that it be withdrawn.

Register of Overseas Entities (Protection and Trusts) and Limited Liability Partnerships (Application of Company Law) (Amendment) Regulations 2026

Lord Fox Excerpts

Tuesday 30th June 2026 Grand Committee

[Lord Ashcombe (Con)]

My Lords, I welcome the opportunity to speak to these regulations, which form part of the ongoing work to strengthen and refine the register of overseas entities, a register introduced by the Conservative Government to bring greater transparency to overseas ownership of UK land and to protect our economy from illicit finance. The instrument before us makes targeted and practical improvements to ensure that the register continues to operate effectively, balancing transparency with the proper protection of personal and sensitive information. These are measured and proportionate adjustments that respond to operational experience and ensure that the system remains robust, fair and fit for purpose.

As the Minister has outlined, the purpose of the register is to increase transparency around the beneficial ownership of overseas entities that hold land in the United Kingdom and to strengthen the UK’s defence against illicit finance. The framework for the register, including the treatment of trust information, was designed to balance two important principles: first, transparency, to ensure that overseas ownership structures cannot be used to conceal criminal activity; and secondly, privacy and proportionality, particularly in relation to sensitive trust data and information involving minors.

Since the register came into force, operational experience has highlighted several areas where the legislation could be improved to ensure that the system functions as intended. These include: first, the requirement to provide the name of the trust when applying for trust information, which in some cases risked revealing personal or sensitive details; secondly, the rules governing access to trust information where minors are involved, which were found to be overly restrictive; and thirdly, the administrative burden placed on individuals seeking to remove their home address from the public register, even where Companies House could verify the information internally.

The regulations before the Grand Committee today are intended to address these practical issues. They refine the balance between transparency and privacy; ensure that sensitive information, particularly relating to children, is handled appropriately; and streamline processes where the register already has the means to verify information. Taken together, these amendments represent a continuation of the work begun when the register was created, strengthening its operation, improving its accuracy and ensuring that it remains a robust tool within the UK’s wider economic crime framework.

[Lord Fox (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Ashcombe, for the first time, I think. I welcome him to the wonderful world of economic crime. We are history-makers today, in that this is the first 11 am Tuesday session. It is a welcome change to the way in which we do business, making constructive use of the time we have. I look forward to lots of 11 am sessions going forward.

As both noble Lords have said, tackling economic crime and financial security are vital for the economy. I was one of the people who worked on the two economic crime Bills brought forward by the previous Administration. There was a collective effort by all parties in the House to try to deal with some of the most pernicious elements of the economic crime going on in our country.

As the Minister said, the register of overseas entities is an important step in improving beneficial ownership transparency, and we welcome any measures that make it work better in practice. As both speakers said, there are three elements to this statutory instrument. The first is to make trust information held on the register of overseas entities easier to access by removing the requirement to provide a trust name, as the Minister said, and allowing disclosure of non-minor information, even when a trust includes children. There was quite a lot of debate on this during the passage of the Bill, and this measure gets the balance right, I think, based on my rather sketchy memory of that debate.

The second element seeks to simplify the process, removing residential addresses from the public register. This is an important service for people who feel threatened or have an element of public life, but it will be important that Companies House applies the evidence properly and does not allow people to remove themselves from the register for non-real or suspicious reasons. At some point it would be useful to get a written response explaining what processes would be required to ensure that this streamlined process is not used by criminals or people seeking to hide their identity.

The third element is the temporary removal of the recently introduced LLP address-reporting requirement. The Minister said that it was prematurely introduced and that Companies House systems need to be upgraded in order to process this information. This causes some concern. The temporary removal of the LLP address-reporting requirement is worrying. The stated reason is that the systems are not yet ready, but it raises a broader question in my mind, which we referred to a lot during debates on the legislation, about the pace and resourcing of the change process going on in Companies House.

Identity verification for company directors became a legal requirement only in November 2025, and Lib Dem colleagues had previously raised concerns about the readiness and security of the One Login platform underpinning these checks. The Government have to set out a clear timetable, which I hope will binding, about when these LLP reporting requirements will be reinstated, and ensure that Companies House receives the investment and support it needs to deliver the reforms that Parliament has already passed.

During the various discussions on the two economic crime Bills, we had updates from Companies House on the transformation it would need to undergo to be able to take on the new responsibilities that the Bills, now Acts, were placing on its shoulders. It was clear that the organisation had a huge cultural change requirement. Of course, some increased resources were made available, but it is a bit concerning that this cultural change might have paused or stalled. Perhaps it is time for interested parties to have an update from Companies House, either in person or virtually, on both its general upgrading of capabilities and the progress of the One Login process.

More broadly, the register of overseas entities is only as effective as its enforcement. We Lib Dems have long called for properly funded enforcement agencies to hold financial criminals accountable—they have huge resources at their disposal—and for the UK to work hard to close further economic crime loopholes that allow corrupt money to flow through British property and company structures. We also reiterate our call—we would never miss the opportunity to do so—for British Overseas Territories to meet the same transparency standards as the UK mainland.

Steel Industry (Nationalisation) Bill

Lord Fox Excerpts

Committee stage
Monday 29th June 2026 Lords Chamber

[Lord Redwood (Con)]

My Lords, I fully support this amendment and hope that it will tease out from the Minister a little more about what the underlying purpose of the general legislation is, as I am not too enamoured of this becoming a fully nationalised industry with the ability to acquire all sorts of other steel interests.

I felt that the Government’s policy arose out of the circumstances of British Steel at Scunthorpe and the question of blast furnace-produced steel, where we are down to our last two blast furnaces. I did not think that the intention was to build an electric arc furnace set of businesses when progress has already been made in establishing these in the private sector and where there are plans in certain cases for government grant aid to achieve an electric arc steel additional business by that combination of subsidy assistance and private capital.

I hope that the Government will accept this quite substantial narrowing of such a broad piece of legislation, because there are many with general interests in steel whom we would not like to get caught up in this. I would also like clarification on whether there is any possibility that the Government might want to build a nationalised electric arc steel set of businesses. This would be an expensive and difficult proposition.

[Lord Fox (LD)]

My Lords, I thank the Minister, his team, the department and the two experts who came all the way from Coventry in 35-degree temperatures to educate the noble Lord, Lord Hampton, and me on the technology of steel. It has been very co-operative and I thank them.

I am slightly confused by how narrowing these words are: “of or including” versus “predominantly”. What is predominantly? Is it 60:40? Is it 55? I do not know. You have to look upon it with the body language of the Government. The Government have shown no tendency to go on a nationalisation rampage through all businesses that have ever touched a piece of steel. It is very clearly focused in one area, as the noble Lord, Lord Redwood, alluded to. Also, I remind noble Lords that there is a sunset clause in here which closes it after two years. So the talk of subsequent Governments does not have particular purchase and I am much more relaxed than the noble Lord, Lord Sharpe, on this.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, I thank all noble Lords for their constructive engagement in advance of Committee, and for all the amendments and valuable contributions that they will make during it.

Amendment 1 in the names of the noble Lords, Lord Sharpe and Lord Hunt, seeks to introduce a narrow definition of a “steel undertaking”. I fully understand the purpose of the amendment, but the Government have no desire for these powers to extend beyond what is necessary. They are exceptional powers for exceptional circumstances and should be exercised only where Parliament intends.

I respectfully suggest that the amendment would not provide greater certainty; instead, it risks introducing greater ambiguity into the Bill. The proposed test, that a business must be “predominantly” involved in steel, immediately raises difficult questions, as alluded to by the noble Lord, Lord Fox, on how “predominantly” is measured. Is it turnover, assets, employees, production, profit or some combination of these? The amendment provides no answer. That uncertainty would inevitably invite legal challenge, precisely when swift and decisive action may be required. Businesses with significant steel operations could argue that they fall outside the definition, because steel is not their primary activity. Equally, complex corporate structures could be organised to make the test easier to avoid altogether. In seeking to narrow the definition, the amendment risks creating loopholes that undermine the legislation’s very purpose. The Government’s drafting avoids these difficulties; it provides a clear and workable definition that gives legal certainty, while ensuring that powers are used only when genuinely needed to protect the public interest.

For those reasons, while I appreciate the spirit in which the amendment was tabled, I cannot agree that it improves the Bill. I know this is not what the noble Lords intended and I can accept that the current drafting is broad, but this definition follows closely that used in the Steel Industry (Special Measures) Act and it ensures that there can be no disputes about its meaning. In practice, we do not expect many companies to fall within the current definition, so the amendment would have minimal effect.

I will repeat the Government’s position expressed throughout the Bill’s passage so far: we are strongly minded to use the powers to acquire British Steel if it is in the public interest to do so, and we do not have any plans to acquire any other steel undertakings. It is therefore very unlikely that this would be used for any other company, let alone one that is engaged primarily in non-steel activity. I hope this helps clarify the matter and respectfully request that the amendment is withdrawn.

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I hope the Government will look favourably on the need for some financial reporting, maybe quarterly, and the need to have constructed a business plan for their own concerns and interests. They should be able to share at least the general outline of that plan with the wider public to give some reassurance that the intervention to date was well based and that any successful purchase of the assets or compensated acquisition of the assets from the current owner was also in the best interests and provided value for money.

[Lord Fox (LD)]

My Lords, one of the things that the briefing from the high value catapult team confirmed is the enormous difficulty there will be in creating a viable business from what His Majesty’s Government intend to take control of in Scunthorpe. There is the age of its blast furnace, the potential cost of any replacement of a blast furnace, the expense of conversion to an electric arc furnace—if that is what is intended—and the hugely competitive landscape of the global steel markets. These are just the headlines of the complexity, but the choices go beyond blast furnace or arc furnace.

If investment is found to install a new electric arc furnace, what will it produce? Will it aim to produce the full range of steels that we need—longs, flats, rebar—or will it specialise in particular steels that perhaps are more strategic and less easy to source? If it goes down the specialisation route, the UK will probably need access to much more direct reduced iron, or DRI. It is likely that this would have to be imported, and these would be very high CO₂ emission imports from most countries, because making our own DRI would need a whole new bit of kit which is very pricey. Choices and making the right calls will determine whether Scunthorpe has a long-term future and what that future looks like. It will determine whether it is indeed an investable prospect and whether it can attract the private sector.

When the Government begin—assuming this Bill becomes an Act—to use the terms of the Act to take ownership of this plant, that will change the focus of these choices. Of course, there will be a new board and management to run the plant, but the cost of the choices will rest with UK taxpayers, at least at first. We will be providing the capital. As we have heard, we have already made available £555 million in working capital, but clearly these sums could increase massively at scale. It is the scale of risk that the Government are taking on that is guiding my approach and our approach, because this Bill needs more scrutiny from Parliament at all levels. From these Benches, we will be pushing those buttons.

These three amendments start at least to open up that point around accountability. I am a bit intrigued because while I do not always agree with the noble Lord, Lord Hunt, he is normally internally consistent. However, the noble Lord started out by saying there should be no expansion of the terms of Clause 2 and then put forward two pretty reasonable ones about growth and expanding the economy. I have one that I think the noble Lord, Lord Redwood, would agree with, which is cost. We should have a clear understanding of the cost before the public interest test. I completely disagree with Amendment 2 because there needs to be a broader discussion around “public interest”. We need to understand the numbers around it, otherwise we do not know whether it is interesting to the public. I do not agree with Amendment 2. I have some sympathy with the other two amendments, and I am sure we will talk more about public interest tests as we deal with other groups.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Hunt, Lord Redwood and Lord Fox, and the noble and right reverend Lord, Lord Sentamu, for their contributions to this group. There are several amendments to the articulation of the public interest test in Clause 2. This is a key clause in the Bill; it is a necessary safeguard to ensure that the powers are used proportionately in response to a clear need.

Amendment 2 would limit the public interest factors that the Secretary of State may consider to those set out in the Bill. The Government agree that the three factors of national security, critical national infrastructure and support for the economy are likely to be the most relevant to the steel sector. Accordingly, the current approach ensures that they are given particular weight when assessing whether to pursue an intervention. However, circumstances may arise in which a case for intervention may not be clearly made on the basis of these three factors, yet it would clearly be in the public interest to take action. It is therefore pragmatic to build some flexibility into the Bill to address this issue.

I turn to Amendment 3. It has been suggested that the third public interest factor should refer specifically to

“economic growth and international competitiveness”,

rather than “supporting the economy”. With respect, this is a distinction without a meaningful difference. It is largely a matter of drafting rather than substance. The phrase “supporting the economy” is deliberately broad. It clearly encompasses economic growth and international competitiveness but also recognises that the economy is more than growth figures alone. It includes strengthening economic resilience, protecting strategically important industries, supporting employment, safeguarding supply chains, encouraging investment and ensuring the long-term productive capacity of the United Kingdom. By contrast, narrowing the text to

“economic growth and international competitiveness”

could unintentionally exclude other legitimate public interest considerations that any responsible Government should be able to take into account.

There may be circumstances where intervention is necessary to preserve critical industrial capability or economic resilience, even where the immediate effect on growth or competitiveness is less direct. The Government’s intention is to provide Ministers with a sufficiently broad framework to consider the full range of economic factors that may arise. The existing wording achieves precisely that: it is flexible, comprehensive and future-proofed, while fully capturing the objectives that the amendment seeks to emphasise. For those reasons, I do not believe that the amendment would improve the Bill. The Government believe that protecting our sovereign capability in what is a foundational sector for the economy will help to underpin our resilience and leave us less exposed to volatile international trading conditions. The Government therefore cannot support the amendment.

I turn to the amendments tabled by the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, and by the noble Lord, Lord Fox. In different ways, all three noble Lords seek to require the Secretary of State to consider value for money or the impact on the public finances before exercising the principal transfer powers.

[Lord Fox (LD)]

My amendment?

[Lord Leong (Lab)]

I am referring to the noble Lord’s later amendment.

I fully agree with the principle that taxpayers’ money must be spent wisely. Any decision to bring a steel undertaking into public ownership would be among the most significant interventions that a Government could make. Such a decision should never be taken lightly, and it would not be. However, these amendments seek to place into statute an obligation that already exists as a fundamental principle of government. Every significant spending decision is subject to the rigorous disciplines of managing public money—as stated by the noble Lord, Lord Hunt—Treasury approval where appropriate, and the established accounting officer framework. Ministers are already required to demonstrate that public money is being used properly, proportionately and with due regard to value for money.

The question, therefore, is not whether value for money should be considered—it absolutely should—but whether it is necessary to restate an existing, well-established constitutional obligation in the Bill. I do not believe it is. Doing so would add no new safeguard, create no new accountability and impose no duty that does not already exist. More importantly, this legislation is intended to ensure that, where a vital national interest is at stake, the Government can act decisively. Decisions of this nature will always involve weighing immediate fiscal costs against the far greater economic and strategic costs of inaction. The loss of sovereign steel-making capability, thousands of skilled jobs and critical supply chains, and industrial resilience could ultimately impose a far greater burden on the taxpayer than timely intervention would. The Government will continue to ensure that every decision made under the Bill is subject to the highest standards of financial discipline and accountability. Those safeguards already exist; they are robust and will continue to apply.

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[Lord Wigley (PC)]

My Lords, I beg to move Amendment 4 standing in my name and to speak to Amendment 36, which is also in my name and which is grouped with it—as is Amendment 29 in the name of the noble lord, Lord Fox, and Amendments 30, 31, 43, 44 and 46 in the names of the noble Lords, Lord Sharpe and Lord Hunt.

I quote Amendment 4, just to bring it to everyone's mind. It would add, at the end of line 20 on page 1, a new subsection:

“(d) supporting the local economy of any steel-making location which may be adversely affected by this Act”.

I would have thought that those words would commend themselves very much to this House. All these amendments have to do with the impact of the Bill when enacted—an impact which may be so significant to various aspects of the economy, and indeed on the communities which may benefit or may suffer directly or indirectly from this legislation. I shall look forward to hearing the Opposition Front Bench when they speak, particularly on Amendment 43, on the possible impact of this Bill when enacted on inward investment—a subject close to my heart, as the noble Lord, Lord Hunt, will recall, from prior incarnations. But I digress. Amendment 4 in my name would specifically impose a duty on the Secretary of State, in relation to his responsibilities regarding the public interest, to broaden that responsibility to include, via the proposed new subsection (d),

“supporting the local economy of any steel-making location which may be adversely affected by this Act”.


I have deliberately drawn this new subsection widely and not confined it to Wales, as I know from our experiences in Wales how badly steel-making communities across these islands can be hit when steel-making is ended or run down, wherever those communities may be located. I saw this with my own eyes when I was living in Merthyr Tydfil in the 1970s, at the time of the rundown of the steel manufacturing in nearby Ebbw Vale. The economic decline of the Blaenau Gwent area has been staggering, as the noble Lord, Lord Murphy, mentioned in the Second Reading debate of this Bill. It is now amongst the poorest areas, economically speaking, not only in Wales but throughout Britain. Decisions arising from the operation of this Bill, when enacted, could have far-reaching consequences for communities that have depended on steel in the past, and which may be facing dire consequences of specific and deliberate action undertaken by the Government through this Act. A duty surely lies on us to help safeguard those communities.

There will inevitably be winners and losers as a result of actions taken under this legislation. Hard-working, skilled industrial communities may be undermined through no fault of their own. Indeed, the decisions taken by the UK Government may be, in some regards, for the good of the industrial base of these islands, but do not tell me that, to an unemployed skilled steel-worker in Margam or Shotton or Llanwern—or, for that matter, in Teesside or Sheffield or Doncaster—this does not matter. If the actions of the Government in consolidating steel-making in a limited number of locations has that knock-on effect, then the Government surely have a responsibility to support those local economies hard hit. I cannot believe that a Labour Government will not readily acknowledge this. I invite them to accept Amendment 4 or at least to undertake to return with their own amendment on Report to secure the objectives I have outlined.

Amendment 36 in my name is also in this group. It would provide a vehicle, via Clause 58, whereby the financial aid outlined in Amendment 4 could be channelled through local authorities in steel-making areas hard hit by this Bill so that they were compensated for the adverse effects on local communities arising from the exercise of the powers in the Bill relating to steel-making in their area. As I stated at Second Reading, I support the objectives of this Bill but, with all the good will in the world, there will inevitably be losers as well as winners. As such far-reaching changes will be triggered by Act of Parliament, surely it behoves Parliament to safeguard those who may be adversely hit as a direct consequence. I beg to move.

[Lord Fox (LD)]

My Lords, this is a mixed bag of amendments. I will speak primarily to Amendment 29 in my name but also to some of the others.

Amendment 29 highlights the potentially distorting effects that CBAM—the carbon border adjustment mechanism—would have on various elements of the steel industry, from supplier to steel user. On the one hand, if applied fairly, CBAM could and should deal with the currently distorting global steel market, whereby Chinese steel, with a high carbon investment, is competing unfairly with greener steel in Europe and the United Kingdom. So far, so good, but the effects of CBAM on other steel users and manufacturers could, if applied wrongly, be very detrimental. That is why the international picture, particularly our future agreement with the EU, will be so important in ensuring that manufacturers do not have one hand tied behind their back.

The way that CBAM interacts with tariffs, which has not been discussed terribly much, is important and issues around energy costs have been put in this group, but in truth CBAM, the EU and energy costs fall outside—or at least at the very edges of—the scope of this Bill. However, Amendments 4 and 36 in the name of the noble Lord, Lord Wigley, and Amendment 44 from the noble Lords, Lord Sharpe and Lord Hunt, are front and centre within it. Tata, for example, is making considerable investments on its own account and should not be disadvantaged by any publicly owned business. Similarly, the communities in which the industry is located are vital and must be a key part of decision-making.

The nature of the amendments in this group is almost a snapshot, whereas in reality it will be a long-term issue. That is why, later in Committee, I have proposed a stakeholder advisory committee in Amendment 22 and an explicit role for Select Committees in Amendment 38. This will be an ongoing issue and we will need ongoing parliamentary review of it. While I support elements of this group and the intentions within it, I think the heavy work will be done in a different way going forward.

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[Lord Redwood (Con)]

I am very glad that my noble friend raised the issue of an impact assessment, because if the Government press ahead with the acquisition of British Steel under the legislation, that could be the first opportunity we have for a realistic impact assessment. Yet, the taxpayer has been responsible for the losses in working capital and investment funds for over a year now, with the lack of clear reporting that we have commented on before.

We have an impact assessment for this piece of legislation. Understandably, it says that there are not any costs or benefits to report, because there is not a transaction. These are enabling powers, which would enable the Government to undertake and complete a transaction. But it would only be at that point that officials tasked with the difficult question “What is the impact?” would be able to come up with some numbers, because we would then presumably have some visibility on the cost of acquisition, if any, the operating costs and working capital costs that will go forward. That would be very helpful, in connection with the difficult investment at Scunthorpe, where, as we heard earlier, the NAO reported that there has already probably been £642 million of taxpayer expenditure up to the current month, with a very high run rate going forwards. So, I hope that the Government will offer us reassurance—if not a new clause in the Bill—to say that there will have to be a proper and timely impact assessment.

That, too, would clearly require proper due diligence, which I trust has been under way, now that the Government are responsible for the business. We would need to know that there had been a proper study of Anne and Bess, the two blast furnaces, which were either built or last substantially modified in the early 1950s. These are ageing assets. They have had deep maintenance in this century, but we would need a condition statement on that, so that the Government are reassured that however long they think they can run these blast furnaces for is feasible in terms of the condition of the plant. In order to sustain the employment for the next month, year or whatever it may be, we would need to know that there will not be major maintenance required or no question of having to cool the furnaces down, because that is a dangerous and expensive process and would raise issues about how easy it would be to spend enough money to reinstate these particular assets.

Of course, it would also require proper reporting to the Government—not supplying all the detail to us, but proper reporting on market prospects and how the steel product produced at Scunthorpe is perceived, and what the market opportunities, in general terms, might be and other supporting documents. It will require a serious impact statement, for the benefit of democratic accountability. More importantly, that would prove that the Government have done their homework, because the Government should not be taking on a plant like this unless they have a condition report, a marketing report, a proper cost examination and so forth, which I and my noble friends have been referring to.

[Lord Fox (LD)]

My Lords, I do not want to be the bringer of bad news to the noble Lord, Lord Redwood, but I suspect that it is pretty clear that the condition of the blast furnaces is poor and whatever happens, either to reinstate them to the level that would take them forward or to invest in electric arc, will take a lot of money. That is the point that we are focusing in on, and that is why we are focusing in on the public interest test. We have not yet gotten past Clause 2 yet, because this is the crunch.

I have a group of amendments in the next group, so I will reserve almost everything I have to say. The noble Lord, Lord Hunt, has already disobeyed his Amendment 2, because we are seeking to broaden the scope of the public interest test. With respect to the noble and right reverend Lord, Lord Sentamu, there is such a number of issues that have to be addressed within the particular field of potential investment that the public interest really requires focus. I will leave it at that for this group and then come back to these in the next group.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Redwood, Lord Fox and Lord Hunt, for their contributions.

The noble Lords, Lord Hunt and Lord Sharpe, tabled Amendments 5, 6, and 42 to provide for an independent person to assess the public interest. Further amendments tabled by the noble Lords would require the Government to publish both the criteria used to assess the public interest and their assessment on how those criteria are met, before exercising the principal transfer power. Amendment 42 would require an impact assessment to be published before any intervention or the exercise of any power under the Bill. As these amendments deal with similar issues, I will address them together.

I start by saying that I understand and sympathise with the desire for the greatest parliamentary and stakeholder scrutiny of a decision to intervene under the powers in the Bill. Stakeholder engagement is a key part of the Government’s policy approach to the sector, with Ministers regularly meeting key industry groups and representatives through the steel council and other forums. The Government have published an impact assessment alongside the Bill, explaining how the public interest test will be considered. A further impact assessment will be published alongside any secondary legislation exercising the transfer of power.

The framework for decisions to intervene will stem from what has been included in Clause 2, with regard to the three public interest factors. There is no attempt on our part to obfuscate or hide the criteria that will be applied in practice. The Government will not only consider whether a steel undertaking is engaged in activity that serves the public interest; they will also consider whether the activity is at risk of not receiving government intervention.

The Government cannot support these amendments as each would create additional hurdles and process pre-intervention. In the kinds of situations that the Bill envisages, speed will be crucial. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty.

None the less, I am aware that there are strongly held concerns about this issue, and I can confirm that the Government will consider options for Parliament to scrutinise decisions taken either at the time of or after the exercise of the transfer of powers ahead of Report stage. I hope that this offers some reassurance to noble Lords, and I look forward to continuing further conversations with the noble Lord, Lord Fox, ahead of Report. With that, I ask that the amendment be withdrawn.

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Moved by

[Lord Fox]

7: Clause 2, page 1, line 20, at end insert—
“(2A) The Secretary of State may not exercise a principal transfer power unless they have laid a statement before both Houses of Parliament explaining their reasons for concluding that it is necessary to exercise the power in the public interest.”Member's explanatory statement
This amendment would require the Secretary of State to lay a statement before Parliament explaining their reasons for concluding that it is necessary to exercise a principal transfer power in the national interest, before exercising that power.

[Lord Fox (LD)]

My Lords, I shall speak also to Amendments 10 and 11 in my name.

Agreement appears to have broken out. The noble Lord, Lord Hunt, the Minister and I all agree that the wording of Clause 2 is central to how we move forward. I always suspected that the public interest test element would be the hardest bit to resolve in this Bill. We are beginning to see that this might be true.

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[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Fox and Lord Sharpe, for their contributions. I also thank the noble Lord, Lord Fox, for his constructive engagement over the past few weeks. I understand that he is trying to support the steel sector and the Bill while ensuring value for money, which is the Government’s objective as well.

Amendment 10 would require the Secretary of State to take into account the impact on the public finances when applying the public interest test. Of course, any decision to nationalise a steel undertaking should not be taken lightly, given the significant costs that could be incurred. However, the principle of securing value for money for the taxpayer is already well established and embedded in government decision-making, as I said on an earlier group. Any decision to exercise the powers in the Bill is subject to the usual Managing Public Money governance and the framework of accounting officer checks, which includes consideration of the impact on the public finances. I therefore respectfully suggest that incorporating the amendment into statute would not serve any particular purpose, but we are mindful of ensuring that costs associated with the Bill are well managed.

The noble Lord, Lord Fox, also proposes, in Amendment 11, that the Secretary of State should take into account the short-term and long-term investability of a steel undertaking when considering whether to intervene in the public interest. I understand the sentiment behind the amendment, but I do not think that investability should directly inform the public interest test.

If a steel undertaking is an investible prospect in the short term, it is unlikely that there would be a case for government intervention, as the need could be met by the private sector. The intention behind the Bill is not to crowd out private investment but to act where private ownership has failed. Whether a steel undertaking is investible in the longer term is highly speculative, so I do not think it would be particularly helpful for it to form part of the statutory framework for the decision. By intervening, the Government would hope to turn a steel undertaking that is not investible into something that may become investible. To the extent that this is what the noble Lord hopes to achieve, we share his ambition, but I do not think that the amendment is workable.

Amendment 7 would prevent the Secretary of State exercising the principal transfer powers until a statement explaining how the public interest test is met has been provided to Parliament. I am sympathetic to the desire for greater parliamentary and stakeholder scrutiny of any decision to intervene under the powers in the Bill.

As I said previously, the Government have published an impact assessment alongside the Bill, explaining how the public interest test will be considered. Any further impact assessment would be published alongside any secondary legislation exercising the transfer powers. The framework for the decision to intervene will stem from the three public interest factors included in Clause 2. The Government will consider not only whether a steel undertaking is engaged in activity that serves the public interest but whether that activity is at risk without government intervention.

The Government cannot support this amendment, as it would create additional hurdles and processes pre-intervention. In the kinds of situations that the Bill envisages, speed will be crucial, as I said previously. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty; I take note of what noble Lords said about speed. None the less, I am aware that there are strongly held concerns about this issue and I confirm that, ahead of Report, the Government will consider options for Parliament to scrutinise decisions taken either at the time of or after the exercise of the transfer powers. I hope that this of some reassurance to the noble Lord and ask that his amendment be withdrawn.

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Sharpe, for his support for these amendments and I was pleased to hear the closing part of the Minister’s statement. We all want the costs of any nationalisation to be well managed; we are looking for those costs to be well understood in advance of any commitment by the Government on behalf of the people of this country. We look forward to those discussions and I beg leave to withdraw Amendment 7.

Amendment 7 withdrawn.

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[Lord Wigley (PC)]

My Lords, the amendment proposes inserting a new subsection (2A), which provides that:

“In assessing the ‘public interest’”—


which is the whole dimension underpinning the Bill—

“in regard to the exercise of transfer powers relating to a steel undertaking located in Wales, the Secretary of State must consult the First Minister of Wales before exercising such principal transfer powers”.

This is surely basic common sense, since many, if not most, of the responsibilities impacted by such transfers in Wales rest with Senedd Cymru. These powers include economic development, town and country planning, roads, education and training, and the environment. Each one of these may, and almost certainly will, be impacted by the consequences of transfer decisions.

To those who argue that responsibility to co-operate already exists, I say that, if that responsibility is spelled out in the Bill, it would trigger an earlier and more thorough approach. Otherwise, it would be so easy to treat such dialogue and mutual action as an afterthought when it should be a cast-iron statutory requirement.

This brings me to the associated Amendment 19. Clause 50 provides powers to the Secretary of State

“to modify law in connection with … property transfers”.

Clause 50(3) is very serious as it provides for retrospective legislation. This should always trigger alarm bells, in whatever context it arises. As many of the legislative responsibilities that might be impacted by this are fully devolved to Senedd Cymru, any such regulations must be made only with the prior agreement of Senedd Cymru. This must be included in the Bill, otherwise it would be open to a Pandora’s box of utter chaos.

Amendment 19 specifically provides a route to avoid such consequences by requiring the prior agreement of Senedd Cymru to any such regulations that involve devolved powers. Including this in the Bill would avoid misunderstanding and unhelpful polarisation, so I beg to move Amendment 9 and would like to hear the Minister’s response to both it and Amendment 19.

[Lord Fox (LD)]

I will be very brief and speak with some support for the noble Lord, Lord Wigley. As far as I can tell, the Bill does not require legislative consent from either Cardiff or Edinburgh. Perhaps the Minister could confirm that. If it does not, the principle set out by the noble Lord, for both Wales and Scotland—I know that there may be industrial differences, but the two things apply—would be very important. I look forward to hearing what the Minister says in that regard.

[Lord Hunt of Wirral (Con)]

My Lords, I very much echo what the noble Lord, Lord Fox, has just said, and I thank the noble Lord, Lord Wigley, for his amendments, which raise very important points. There are considerable concerns about what is happening at steel plants in Wales and the consequences for the workers, their families and the much wider community. It is right that, where these powers may affect a Welsh steel undertaking or devolved responsibilities, Wales should be properly involved. I urge the Minister to respond positively to the concerns so rightly raised by the noble Lord.

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[Lord Sharpe of Epsom (Con)]

My Lords, I hope that this outbreak of agreement means that the Government will accept my Amendment 12. The Government have repeatedly spoken of a long-term plan for steel—securing private investment, increasing domestic production, safeguarding jobs and creating a viable future for the industry. Against that background, Clause 3 comes as something of a surprise. Earlier, the noble Lord, Lord Fox, indicated that he was somewhat reassured by its presence, but I suspect that its actual terms have escaped his usual vulpine scrutiny. A sunset clause is intended to place a clear limit on exceptional powers, but the Bill allows the Secretary of State to substitute, by regulations, a different period for the two-year limit.

Subsection (4) makes it clear that this can be done more than once. Therefore, in practice, the powers could be extended again and again, which gives no reassurance at all. Two years could become five years, 10 years or longer. That is not a meaningful sunset clause; it is a potentially perpetual sunset clause. It is an indefinitely renewable power.

What does that say about the Government’s confidence in their own ability to secure a viable private sector-led future for British Steel? If Ministers genuinely expect these powers to be exceptional and temporary, why do they require the ability to extend them without any stated final limit? This goes directly to the concerns raised throughout our debates—the risk of open-ended liabilities for taxpayers, uncertainty for investors and a lack of clarity about the Government’s intended endpoint.

The Constitution Committee of your Lordships’ House has considered this point and has been unequivocal. It said:

“The use of delegated powers to bypass sunset clauses undermines their purpose, and sets an unusual and unwelcome precedent”.


It recommended either that the final period of extension be set out in the Bill or that there should be a statutory time limit each time the power is used. This would not prevent the Government seeking additional time when there is a compelling case, but it would require Ministers to return to Parliament with a clear final boundary rather than retaining power capable of perpetual renewal.

Will the Minister accept the Constitution Committee’s recommendations and bring forward amendments before Report? Will the Government set a final limit on these powers and demonstrate that they have genuine confidence in securing a thriving, investible and private sector-led future for British Steel? I beg to move.

[Lord Fox (LD)]

My Lords, I see the point that the noble Lord, Lord Sharpe, has made, and I commend him for getting past this amendment before 9.21 pm, which is of course sunset.

[Lord Leong (Lab)]

I thank the noble Lord, Lord Sharpe, for his contribution. I note the Constitution Committee’s comments on this clause in its recently published report on the Bill. The inclusion of the sunset provision demonstrates the Government’s commitment to ensuring that powers remain on the statute book for as long as necessary to serve their purpose. Ultimately, we want to see the domestic steel sector return to a more sustainable and stable state in which government intervention is unnecessary.

As we have said, we do not currently see another use case beyond the possibility of British Steel. Therefore, we hope that noble Lords get their wish and there is no need to extend the sunset period. However, the current geopolitical landscape creates a volatile backdrop for this sector, making it difficult to anticipate what may transpire in the coming months and years. We have therefore built in some flexibility to extend or shorten the two-year sunset timetable if circumstances change. We consider this a reasonable precaution to take.

The drafting ensures that there will be full parliamentary scrutiny of any change to the sunset period through the affirmative procedure, meaning that parliamentarians will be able to test and debate any regulations brought by the Government to extend the sunset period. We anticipate needing to use this extension power only in extenuating circumstances. I therefore request that the amendment be withdrawn.

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Amendment 18 concerns enforcement. Clause 45 permits regulations on the enforcement of obligations under share or property transfer regulations. The regulations may confer jurisdiction on a court or tribunal. Again, the Government say that this is necessary to ensure that obligations can be enforced from the moment of transfer, but the fact that enforcement may involve courts or tribunals makes scrutiny more important, not less, and therefore it should be subject to the affirmative procedure. I beg to move.

[Lord Fox (LD)]

My Lords, I have to say I was a bit grumpy when the Conservative Party tabled these amendments that we had tabled in the Commons, but in retrospect I am very pleased. No joking—that was a tour de force from the noble Lord, Lord Hunt. This is his specialist area, and that was his best speech on Henry VIII that I have heard. All the points were points that I would have made except that I am not good enough to have made them, so in that respect I am glad that he was the person proposing this, rather than I. The only thing that stops the noble Lord from being risen to the pantheon is that, having won affirmative powers, he and his colleagues never actually exercise them through fatal Motions. Frankly, that is the only flaw in what we have just heard.

I countersigned Amendments 13 to 15 and 18 but my pen ran out when we got to Clause 50 stand part. All the points that the noble Lord made are valid. I hope the Government are able to take on board both what he said and what your Lordships’ committees have said about the shortcomings in this draft.

[Lord Leong (Lab)]

My Lords, before I turn to the amendments in this group, I thank the members of the Select Committee on the Constitution for their report on the Bill, which relates to this grouping. The report recommended that in Clause 47 the provisions for dispute settlement should be set out more fully in the Bill. The approach to drafting here is in line with existing precedent under the Banking Act 2009 and reflects the approach taken for similar powers, such as enforcement powers. We think it is appropriate to provide for dispute settlement on a case-by-case basis through regulations.

Noble Lords have tabled a number of amendments relating to parliamentary scrutiny of and procedure on the transfer regulations. In particular, the noble Lords, Lord Sharpe and Lord Hunt, have tabled amendments which would change the parliamentary procedure for the principal share and property transfer powers, continuity obligations and enforcement powers from negative to affirmative. I understand the concern expressed by the noble Lords. From the outset, I reassure all noble Lords that the Government take parliamentary scrutiny extremely seriously. For that reason, we have ensured that a number of substantial powers in the Bill, such as the compensation and tax powers, are subject to the affirmative procedure. However, the Government consider that changes to the procedure for transferring powers would adversely affect the Government’s ability to effect a smooth transfer where necessary in the public interest.

Steel is fundamental to the UK’s industrial base and our national resilience, making it critical to secure supply. Any delays, especially in a non-consensual transfer, would prevent the transfer from taking place, particularly if the transferer was unco-operative. I draw noble Lords’ attention to the recently published report from the Delegated Powers and Regulatory Reform Committee, which did not raise any cause for concern about these powers, including the level of parliamentary scrutiny attached.

To set out the necessity for the negative procedure for these powers, I will discuss them in turn. I will address Amendments 13 and 14 together as they seek to amend the procedures for the share and property transfer powers respectively. It is important that the principal transfer powers can be exercised with speed and operational and legal certainty. The Government expect that, if these powers were exercised, it would be in a fast-moving, commercially sensitive situation. The affirmative procedure would introduce a substantial delay, creating a vacuum in ownership. Such uncertainty would significantly affect the business, particularly the supply chains and third-party contracts.

Amendment 15 seeks to amend the procedure for continuity obligations. The continuity obligations in the Bill are essential to ensure that the company continues to operate as normal following the transfer, minimising disruption and maintaining operations at the steel undertaking. This is achieved by imposing obligations on residual steel undertakings and their group companies to ensure that all services and facilities required by the transferred business continue to operate as normal. Any changes to the procedure would affect the effectiveness of the transfer. The Government’s primary objective with this provision is to ensure a smooth transfer of ownership. As I have set out, it is imperative that there be no delay to any transfer of a steel undertaking into public ownership.

Amendment 18, in the name of the noble Lord, Lord Sharpe, aims to amend the procedure for enforcement regulation. Clause 45 gives the Secretary of State the power to make provision in regulations for the enforcement of obligations under the share and property transfer regulations. As with the other amendments, if the Government consider it necessary to enforce obligations, they must do so at pace. Any delay in using these powers risks interrupting the transfer process and reducing its effectiveness.

For those reasons, the Government do not consider these amendments necessary. However, I have reflected on the argument made by the noble Lord, Lord Hunt. While it is critical that the Government are able to preserve their ability to enforce as necessary, there is a reasonable rationale for further parliamentary scrutiny. I cannot accept this amendment but I will consider this issue further, ahead of Report.

The noble Lords, Lord Sharpe and Lord Hunt, have given notice indicating their intention to oppose Clause 50 standing part of the Bill. That would remove the modification power in Clause 50. This power is not taken lightly, but it is a necessary measure to ensure that the transfer powers under the Bill can be used effectively. The clause has precedent because the same power was used in the Banking Act 2009 to resolve complex companies in the financial sector. Given that the transfer powers would be used only in circumstances where a public interest test was met, it is crucial that the Government have the necessary tools to ensure that any such transfers can be implemented effectively to deliver the intended outcome.

The powers in Part 1 of the Bill interact with commercial, company and insolvency law. This is the law that normally governs the consensual acquisition of companies or of their businesses. The legislative environment is therefore varied and complex and, because general legislation was not designed with compulsory transfers in mind, as the Bill envisages, there will be some tension between applying the Bill’s powers to a steel undertaking and the highly complex private law that it will inevitably cut across. The clause therefore provides a necessary power to modify other laws that may ordinarily interact with a transaction of this nature in order to integrate the Bill’s powers into the existing legislative and commercial landscape.

The use of the modification power is limited to the purpose of enabling the transfer powers to be used effectively. It is not a general power to amend legislation; it is targeted and limited. It cannot be used in isolation from the use of powers in respect of a particular steel undertaking to amend or disapply laws, and it cannot be used to amend the Bill—or Act—itself. In the absence of these powers, there is a real and significant risk that the Secretary of State could not fully and effectively implement a transfer. This could result in an ineffective or incomplete transfer to public ownership, affecting a company’s ability to continue operation. If a smooth transfer is not achieved, the public interest aims could be undermined.

I turn to the potential retrospective effect of the power. The Bill permits it to be applied retrospectively but does not require it. Preserving the possibility of applying this power retrospectively anticipates circumstances in which the transfer powers may need to be exercised at pace and in which there may be limits on the ability to conduct the level of due diligence necessary to support acquisition. Similarly, it may not be possible to identify all legislative interactions in the transfer scenario before making a transfer. This may mean that any secondary legislation made under the transfer powers may not fully affect the transfer that was intended. In such circumstances, it would be necessary to address this through the modification power, with the modification backdated to the time of transfer. The use of the power will be subject to the affirmative procedure unless there are particular circumstances that justify the Secretary of State proceeding on an affirmative basis, likely due to time pressures.

I hope that I have provided some clarity on the need to include the provision, and its retrospective effect. For these reasons, I respectfully ask that the amendment be withdrawn.

[Lord Fox (LD)]

On a number of occasions, the Minister has painted a picture of a breathless process, where all the organs of government have to operate at breakneck speed. Taking the Government at face value, we are talking largely about a particular asset that we have been talking about for around 15 months, since the discussion at Easter last year. At some point, perhaps not at the Dispatch Box but when we are having our meetings, the Minister will explain why there is this predisposition to putting everything in place to have things moving at the speed of light when, in reality, they have been moving relatively slowly.