Comprehensive and Progressive Trans-Pacific Partnership (IAC Report)

Lord Fox Excerpts

Tuesday 19th March 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a great and unexpected pleasure to follow the noble and learned Lord, Lord Goldsmith, whose points I very much reinforce from these Benches. This has been a great debate, with some excellent speeches. The noble Baroness, Lady Hayter, should once again be congratulated on stepping back up to the plate and giving an excellent summary of the committee’s report.

The noble Viscount, Lord Trenchard, entreated us to be more enthusiastic. Happily, the overall average level of enthusiasm was raised massively by the noble Baroness, Lady Lawlor, which leaves me to be my normal self.

I am a member of this committee, as were several of today’s speakers, so it is not sensible for me to reiterate the entire debate. I will focus on a few points. As we heard, the committee broadly welcomes the accession of the UK to the CPTPP and any additional economic benefits that might result from new market access to Malaysia and Brunei. However, the committee also acknowledges the limited economic gains suggested by current projections, and indeed by the Government’s own impact assessment.

There are opportunities for UK manufacturers, but, equally, member countries that are geographically closer to each other might find it easier to develop those integrated supply chains that the noble Lord, Lord Udny-Lister, hinted at. When I talk to businesses, I certainly find that they absolutely prefer closer customers when making and exporting things. Clearly, when a market is 60 miles away, it is a heck of a lot easier than when it is several thousand miles away.

I have a couple of specific points. I should note that I am vice-chair of the All-Party Parliamentary Motor Group. The noble Viscount, Lord Trenchard, mentioned the automotive industry. The industry has welcomed the side letter signed with Malaysia, which essentially allows for 25% reciprocal regional content for products under a particular heading. That means there is a very high chance that content from these products, particularly engines or batteries, will originate from somewhere else—probably China. This is applicable in both directions between Malaysia and the UK, but it is something that your Lordships and the Government should keep an eye on. I suggest that there are other issues, such as non-tariff issues, around those particular products coming from somewhere outside, including future carbon border regulations and existing issues such as environmental impact and forced labour. A door has been opened and we should police that door quite carefully.

The committee was concerned about Northern Ireland’s direct trade with CPTPP countries, taking the view that it is likely to face restrictions that will not affect the rest of the United Kingdom. Therefore, as a committee, we have requested further information on the Government’s view of what they expect those restrictions to be and ways in which they may be avoided.

The committee welcomes the CPTPP’s provisions on services, while acknowledging that the benefits may be even more limited than the Government have suggested. In particular, it notes the lack of provision on the mutual recognition of professional qualifications, which is a key issue on services, as the noble Baroness, Lady Lawlor, mentioned.

It remains to be seen whether the Government’s intended trade benefits will materialise, and here the noble Lord, Lord Marland, hit the nail on the head. The future development of this treaty will be key to how much benefit the United Kingdom can have. Going forward, we should focus on digital services, professional services, and environmental goods and services, because these are the things from which we can benefit. I too join in asking the Government for their analysis of how committed the other partners are to making these substantive changes to the treaty, and how they will go about driving those changes which would so benefit the upside of this treaty.

The committee welcomes the provisions of the accession protocol which avoid threatening the European Patent Convention. It was very important that this was done; it was good work, and it remains an important part.

It also welcomes the report from the Trade and Agriculture Commission and the joint statement on the environment. These respectively state that UK food and drink rules, as well as environmental protections, do not have to change as a result of CPTPP accession. However, the committee notes the concerns raised by witnesses regarding the UK import of palm oil.

Building on a point made by the noble Baronesses, Lady Hayter and Lady Bennett, I draw attention to the evidence of LSE assistant professor of law, Dr Leonelli, who argued that the CPTPP chapter on sanitary and phytosanitary—SPS—measures could see UK regulators pressured into recognising other countries’ less stringent food safety standards, or other SPS standards, as equivalent to our own. This is a point that has been made. Unlike the UK’s trade arrangements with Australia and New Zealand, the CPTPP’s arrangement does not specify that the final judgment on SPS equivalence rests with the importing party. Instead, further state-to-state dispute settlement does not apply to the SPS chapters with Australia and New Zealand but does apply to the CPTPP. Again, this raises the point about how the Government intend to address the potential risk of equivalence provisions leading to regulatory chill, as we have heard. It would really help our understanding of that to know the Government’s approach to ISDS, which appears to flip and flop depending on which trade deal is being negotiated.

The committee raised the importance of workers’ terms and conditions and called on the Government to monitor closely the employment practices of our CPTPP partners and to be prepared to act should they identify issues. Can the Minister please confirm that this will indeed be done?

How will this best benefit UK plc? Our evidence suggests that the Government do not currently have an adequate plan for promoting CPTPP opportunities. We heard from a number of your Lordships concerns about the extent to which businesses in general and SMEs in particular will take advantage of what the treaty has to offer. The report sets out many recommendations as to how the Minister’s department should go about helping business, especially SMEs, to tap into the potential that there is. I believe that the Minister has taken note of this, and it will be important for him to suggest that he did.

I am very pleased that the Minister is here today. As I have suggested, he sometimes takes the hyperbolic end of the enthusiasm scale, so I entreat him to adopt—which I think he will—a realistic approach to the treaty. Even if UK business is effectively activated and increases its trading with CPTPP partners, the actual economic effect on UK GDP is vanishingly small, as we heard from many, including the noble Baroness, Lady Hayter. We know that the Pacific bloc has been growing quickly and faster than other blocs; I agree with my noble friend Lord Purvis that that is most likely on the back of Chinese growth, so we will see what happens going forward. But we also know that we all expect—as do the Government—to have a very tiny share of that growth. We will have only a tiny proportion of what has already been lost by leaving the EU’s huge single market. It is close to two orders of magnitude smaller: 1% of what we have lost.

In truth, if joining the CPTPP is anything, it could be seen as a statement of intent, rather than an actual deal that creates significant trade. What is that statement? A phrase that has come up on a number of occasions and is laced throughout government comments is “a tilt to the Pacific”. What does that mean? There is little supporting material beyond that soundbite to help us to understand the consequences of that tilt and whether it is beneficial to the United Kingdom. It has been said that there is potential for the CPTPP to be a forum for engagement with partners in the Indo-Pacific—despite its primary function being a free trade agreement with no secretariat and little structure. If that is the case, how will that work? Would not something such as the RCEP be a better version of that?

The integrated review and the integrated review refresh are no help, as they lack any detail on how the Government intend to utilise the CPTPP in a geostrategic manner. Therefore, the committee asks for further detail on how the Government expect membership of the CPTPP to contribute to the delivery of their geopolitical strategic aims for the region. I add: what are those aims? Several of your Lordships, particularly the noble Lord, Lord Udny-Lister, have mentioned the accession of new countries to the group. On the issue of China, to date, Ministers have ducked and dived to avoid answering questions on the Government’s position. At some point soon, it will be time for the Government to spell out their approach to the accession of other countries, including China and Taiwan, which my noble friend mentioned, and to confirm a role for Parliament in any negotiations for new countries to accede to the treaty.

Perhaps one question that the Minister can tackle, without breaching others, is whether it is the department’s understanding that the current applicants may be tackled in any order, irrespective of the order in which they lodged their application to join, or whether there is a first-in, first-considered understanding with partners. For Parliament, the Government should at least offer the same process of consultation that they would for a new, stand-alone FTA partner—that is a CraG-related process.

Overall, as we have heard, the committee reiterates the need for the Government to publish a trade policy that sets out defined priorities in areas of benefit to the UK. The UK needs to have a coherently formulated trade and investment policy that is recognised as an integral part of a wider industrial and trade strategy focused on competitiveness and productivity. That wider policy must shape trade policy, as the two work together.

In conclusion, I return to the phrase, “a tilt to the Pacific”. Fellow members of the committee will recall that I have a problem—quite a big problem—with it. We all know that a tilt—or, indeed, “a pivot”, which is used interchangeably—is a zero-sum game. Any tilt towards something is accompanied by a tilt away from something else. In geostrategy terms, is that really the message that the Government intend to communicate? If it is, and if the CPTPP is indeed a tilt towards the Pacific, can the Minister explain which regions and countries we are tilting away from and why?

--- Later in debate ---

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

I thank all noble Lords for the extraordinary, high-quality debate that we have enjoyed today. I hope people at home are watching this discussion, because it is great proof of the value of this House and its contributions.

[Lord Fox (LD)]

They are crowded around their television sets.

[Lord Johnson of Lainston (Con)]

They are hopefully crowded around their iPads; the noble Lord should know that we have updated from the old-fashioned wireless—which, of course, we have in my household.

I want to say thank you, genuinely, to the noble Baroness, Lady Hayter, and the noble and learned Lord, Lord Goldsmith. I thank the International Agreements Committee for its report. I have a draft set of responses to the report, which will be formulated appropriately and given to the noble Lords as soon as possible. It really was excellent, and I think all the points that the Government have been challenged on are worthy of a response. I am extremely grateful for the mature approach the report took to the value of this trade deal and seeing the optimistic benefits of the CPTPP, within the reasonable framework that we will operate to.

It is possible that noble Lords may hear cheering if they listen carefully, because a few moments ago the Bill was passed in the House of Commons. I am sure we all feel the ripple—the Mexican wave, which is appropriate as it is a CPTPP member—coming down the Corridor to us. Before I go further and answer many noble Lords’ points, I refer Members to my register of interest. I do not believe there are specific conflicts, but I do have interests in CPTPP countries.

I have tried to group the comments made in this important debate and so, if I may, I will go through them. I will try to refer specifically to noble Lords themselves. I will highlight a few individuals, particularly the noble Baroness, Lady Lawlor. I congratulate her for giving a succinct and powerful description of the benefits of free trade, which often we forget. It is right that, in a scrutiny environment such as this House, we look at the problems, issues or challenges that might present themselves with a piece of legislation or a new treaty. To have the truly positive case for free trade made so clearly and powerfully is something that I welcome, and I am very grateful to the noble Baroness for that.

I am very grateful to the noble Viscount, Lord Trenchard, for his words. Again, he has been a passenger on the free trade express over the last year and a half since I have taken this position. I am extremely grateful for his advice and expert opinion on Japan, and the very positive case that Japan makes in terms of our trade relationship with the CPTPP and the associated benefits we have, both through having a trade agreement and an association with it through this process.

I thank the noble Lord, Lord Marland, for his very generous comments about our joint efforts to spread the benefits of UK trade around the world. If anyone has the most air miles on these red Benches, it must be a close competition between the noble Lords, Lord Purvis and Lord Marland. Both noble Lords are doing such important work, whether in spreading democracy and helping complex situations be resolved, or in pushing the Commonwealth. While this is not a debate about the Commonwealth, it is important to note how many countries that make up CPTPP are Commonwealth members. It is absolutely right that we should use this as further leverage to work with our Commonwealth peers. I will certainly take to my colleagues in the Foreign, Commonwealth and Development Office the comments made by the noble Lord, Lord Marland.

I am always grateful to the noble Lord, Lord Kerr, for his comments as to how we can better manage our trade process. If I may, I will just draw his attention, as someone so distinguished and who lauded the EU’s FTA negotiation process, to the fact that I do not think the EU has done a trade deal in my political lifetime. The most recent one was after a culmination of 17 years of negotiation, and the current ones are all live after many years. We have managed to close this deal in an extremely effective time period.

I turn to the process of CRaG which has been well raised by noble Lords. We made a clear commitment under the Grimstone convention that, if there was time, we would have a debate, and this is exactly what we are doing today. My colleagues and I have made ourselves totally and freely available to engage on every issue. Officials have been extremely open in responding to questions and challenges and I am glad to see some of them here today. I am particular aware of issues, such as SPS protection which was raised by the noble Baroness, Lady McIntosh, or agriculture, raised by the noble Lord, Lord McNicol, as well as points made by other speakers on the Front Bench from all parties. I think we have exceeded expectations in the work we have done in order to project that necessary element of debate.

I am not trying to avoid the point, but it is not for me to comment on the activities of the other place. I will leave that to them. It is right to be very comfortable in knowing that any new accession will be equally bound by the CRaG process. This is extremely important. It would be completely unreasonable if that were not the case. The Government have committed to that and I am very comfortable in making a further Front Bench commitment to it.

It is worth touching on some of the sub-issues that have come up in this debate. The noble Lord, Lord Fox, wisely raised SPS measures, and comments were made about ISDS. I believe we had a discussion earlier in this Chamber about the brevity of speeches and the importance of avoiding repetition, but I am going to have to repeat myself, if I may, and test the patience of noble Lords. There is no derogation. It says so in Hansard. It has been in Hansard before. There should be a collected, bound edition of my repeated statements in Hansard about free trade agreements that do not derogate from the security of our sanitary and phytosanitary provisions. It is very important to be comfortable about this. Hormone- injected beef, chlorinated chicken or dangerous pesticides which are banned here are not allowed into the UK on account of the FTA. This is a matter under our own control. It is important that consumers hear this.

When I talk to people about free trade deals, a lot of them worry that, somehow, this will result in a tidal wave of deadly products. The noble Baroness, Lady Bennett, referred to the UK becoming a dumping ground for dangerous products. Any decision to allow so-called dangerous products into the UK is a matter for the UK Border Agency, the food safety authorities and the Government. If that is the case, it has nothing to do with this FTA, which is important in the sense that it changes our position on tariffs and how we trade with each of the different countries. I just want to reassure noble Lords and the public that nothing will change.

Digital Markets, Competition and Consumers Bill

Lord Fox Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, Amendment 60 is in my name. I was expecting to be ploughing a rather lonely furrow on this amendment, so I welcome the enthusiasm of the noble Baroness, Lady Kidron, particularly as it is based on such relevant experience and came with such authority. I thank her for that.

The Minister has been very open in our discussions on these issues, which focus on two areas: interoperability and standards, which are, of course, inextricably linked. One critical area to be clarified is the importance of vertical and horizontal interoperability and the fact that each requires different responses. Clause 20 covers vertical interoperability; for example, the promotion of the use of platforms as neutral distribution channels to market for all kinds of apps. The Bill does not explicitly include interoperability between an app and a platform that operates as a distributor and, in a network sense, among websites that compete with each other and with the platforms. This is horizontal interoperability.

The department’s view is that Clause 12 is wide enough to catch all of this. The Minister said in Committee that it is the department’s contention that defining interoperability is unnecessary because it considers it to be a “commonly understood technical term”. That is welcome, but it relies on a level of interpretation and inference by the DMU because the department’s interpretation is not clear by the letter of the Bill. As such, it would be helpful if the Minister could confirm the explicit inclusion of horizontal interoperability between websites in promoting competition. Will he please confirm that Clause 20(3)(e) will not limit conduct requirements to promote interoperability with a platform only, and set out how the Bill permits the DMU to consider requirements relating to interoperability in a range of contexts, including web browsers, apps, operating systems and websites?

As far as standards are concerned, I think we agree that there is a need for open and non-discriminatory international standards to support interoperability and promote the competition at which the Bill is so firmly targeted. That this is important is illustrated by the fact that Apple recently publicly threatened to block access to the open web from its devices. For there to be competition, the open web needs to interoperate with Apple and Google browsers. This is quite a serious point. This activity is controlled via W3C standards.

The amendment I have tabled is designed to be helpful. It ensures simply that the DMU understands its role in seeking to ensure that international standards bodies are promoting interoperability, both vertically and horizontally, and hence promoting competition. Given the central importance of standards to competition, my aim is to emphasise that this is not an add-on for the DMU but a core activity. I thought the Minister might be able to accept this amendment, but if he feels unwilling to do so, I feel sure that if he could put on record this important role for the DMU, it will be an important step forward, and I look forward to his response.

[Lord Leong (Lab)]

My Lords, it has been illuminating to listen to the varied and valuable contributions from all noble Lords who have spoken in this debate. I thank all those who have risen to speak. As may be expected, a broad range of knowledge, differing views and important concerns has been shared and expressed. The noble Lord, Lord Clement-Jones, referred to Apple’s dominance and it not being prepared to comply with any digital legislation. This should make us mindful of what big tech is getting up to. One thing is very clear: there is a strong consensus in the House that legislation is needed to catch up with, and indeed anticipate, the rapidly changing digital landscape which even the most technophobic among us can no longer afford to ignore.

I shall speak specifically to Amendments 14, 15, 23 and 24 in the name of my noble friend Lady Jones of Whitchurch. I thank the noble Baronesses, Lady Harding and Lady Kidron, and the noble Lord, Lord Clement-Jones, for adding their names. The principle behind Amendments 14 and 15 is to ensure that the Competition and Markets Authority can tackle anti-competitive conduct in a non-designated activity, provided that the anti-competitive conduct is related to a designated activity. These amendments do not seek to hamper digital innovation but rather to create a pro-competition market in which consumer interests are safeguarded.

Brexit: Benefits to Economy and Society

Lord Fox Excerpts

Wednesday 6th March 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

As I said, in the last five years we have obviously had Brexit, but also there has been Covid, massive disruption to the supply chain in China and massive contraction in manufacturing around the world. We have Ukraine, energy prices; it has been an extraordinarily difficult period of contraction in all global economies, whether in Germany, France, Australia or the USA. Our economy is now set fair to grow fast. Like my colleague Minister Hands in the other place, I will be working very closely with individual EU countries. We are signing co-operation deals on financial services, we have resumed participation in the North Seas Energy Cooperation, the UK has rejoined Horizon Europe and Copernicus, and we have agreed to extend zero-tariff trade on electric vehicles. There is a whole list of co-operations with the EU that we continue to push through.

[Lord Fox (LD)]

My Lords, the Minister, in answering my noble friend, dismissed the role of geography. If you are exporting goods, geography is very important; it is much easier and cheaper to sell to your nearest customers than half way across the world. Here is another list, that the Minister could perhaps consider, of issues that I hear about from people selling goods and the friction they encounter: customs declarations; safety and security certificates; evidence of origin of goods; VAT requirements; health certificates; and chemical certificates. Here is the friction that our people and manufacturers are facing every day. Will the Minister admit this is an issue and will he undertake to try to do something about it?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. Yes, this is an issue, and it relates to 24% of our pie chart of exports; that is, our manufactured goods exported to the EU. Some 41% of our exports go to the EU 27 today, and it is 49% if you make it the Europe 34, so this idea that we do not trade with Europe any more, when half of our exports go there, is simply not the case. On the matter of friction on trade, we are making massive strides with the single trade window, the Electronic Trade Documents Act, the new border target operating model, and the ecosystem of trust. We are moving into a new digital world where goods will move much faster, and we recently had a situation where we sent a batch of valves from Burnley to Singapore without any paperwork, thanks to the Electronic Trade Documents Act.

Post Office Horizon: Compensation and Legislation

Lord Fox Excerpts

Tuesday 27th February 2024 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, victims of the Fujitsu Horizon scandal have lacked justice for more than 20 years now. Lives and livelihoods were taken away, victims were told that it was only them and were not believed, and little progress has been seen until recently. Better late than never is little consolation, especially when, in numerous cases, the victims are no longer with us. Nonetheless, the Government’s progression of the legislation to rightly exonerate those wrongly convicted is welcome and I commend the work that has been done to get us here. I also appreciate the regularity with which the House has been updated, and the Minister has come here to answer our questions. The legal work needed to make this legislation happen will require cross-party work and support, so I urge the Government to continue in the manner that has brought us here.

I turn to the Statement. What further details can we expect on the legislation being tabled, and when? Do the Government have a timeline for the exoneration to be fulfilled and for full compensation to be delivered to all those who deserve it?

Our legal system played a huge part in this scandal. Time and again, the courts believed the Fujitsu computer rather than the individual sub-postmasters and sub-postmistresses. As my noble friend Lord Browne of Ladyton has asked on many occasions—and I am sure he will again today—when will His Majesty’s Government look at overturning the premise that it is for the individual to prove that the computer was wrong rather than the opposite?

Many postmasters and postmistresses have waited far too long for redress. As we all know, justice delayed is justice denied. Dealing with that point, will the Minister tell us whether there will be an opportunity within the legislation for the 66 postmasters who have died, and the four who have committed suicide, to have their convictions overturned and quashed? Surely it is only fair for their families to also have justice and closure.

Looking at the reach of the legislation, is there a specific reason why it does not cover Northern Ireland? As we know, the Northern Ireland Justice Minister has said that she supports the Government’s line of approach, calling it the fastest and most equitable legislative solution. Would it not make sense to apply it directly across Northern Ireland? On a similar note, would the Minister update your Lordships’ House on conversations that the Government have had with their Scottish counterparts regarding overturning convictions that took place under the Scottish jurisdiction?

I would also be keen to hear whether any prosecutions were made using data from the precursor to Horizon, Capture? Did any sub-postmasters or sub-postmistresses lose money due to Capture failings? If so, surely these should also be included in the scope of the legislation.

I turn to the legal ramifications. The Statement makes it clear that a precedent will not be set for the future regarding the relationship between the judiciary and the legislature, but that is easier said than done. In future, what is to stop this case being treated as a precedent where Parliament can pass law to overturn judicial decisions?

In the case of other similar scandals, would not the Government consider taking a similar approach, especially as some people are asking whether we consider that this example could be relevant in other historic or other worthy causes? I would be particularly keen to hear what specific safeguards the Government are putting in place to protect this stance, and what advice they have received to provide them with the appropriate assurances regarding their approach.

On a slightly separate note, the Government have now confirmed with the Post Office that no investigators involved in this horrendous scandal remain working for the Post Office. This is progress, but can the Minister provide us with an update on progress not on the Wyn Williams statutory inquiry but on the Government’s own investigations?

Finally, last Monday the Business Secretary told the other place that

“while Mr Staunton was in post, a formal investigation was launched into allegations made regarding his conduct, including serious matters such as bullying”.—[Official Report, Commons, 19/2/24; col. 474.]

Today, Mr Staunton told the Commons Business and Trade Select Committee that it was Nick Read, not him, who was the subject of the misconduct inquiry. Can the Minister confirm that that is correct and, if so, where it leaves the Secretary of State?

[Lord Fox (LD)]

My Lords, I thank the Minister for allowing this Statement to be debated in your Lordships’ House. We welcome its direction of travel.

Everything that could be said about the horror and unfairness of this scandal has been said, but we need to remind ourselves, as the noble Lord did, of the crushed human lives that sit beneath this issue. The move to quash these wrongful convictions at the point of the forthcoming Act’s commencement without the need for people to apply to have their convictions overturned is welcome, and the fact that it is being designed to reduce or eliminate the bureaucratic application process is promising. But clearly we need to understand it.

To qualify for this, as I understand it, there is an understandable list of criteria that have to be met, including the offence, the contract that people had, the timings, their exposure to Horizon, technology and other things. Here I have concerns. Can the Minister confirm that it will not be Post Office Ltd that will be sifting through who qualifies to have their conviction overturned? Experience has shown that it cannot be trusted; it has neither the good faith nor the processes to do this effectively and efficiently. But even if it is removed from this part of the process, it is Post Office Ltd that owns and controls most of the documentation and information that is needed to decide who qualifies for exoneration. As such, the upcoming legislation must include a duty on POL to provide documentation within a timeframe, with sanctions if they do not.

There is an overall communications issue that needs to be engaged with around those victims—what is happening to them, and how is the process going forward? If people who believe that they should be on the exoneration list are not on it, we need to know what the appeals process for them will be.

Of course, once their convictions are quashed, then we move into the compensation zone. Minister Hollinrake agreed yesterday that compensation has been delivered too slowly—I think we can all agree with that. We welcome the Minister’s comments about attempts to speed up payments, but it is clear that having three separate schemes and five different classes of victims has been a nightmare for those victims when it comes to getting through the system, and they have not been helped by Post Office Ltd—quite the opposite.

The chair of the Horizon Compensation Advisory Board, Professor Chris Hodges, speaking on the radio today made it clear that in his view POL should be completely removed from the role of processing and setting compensation payments. We agree, so can the Minister confirm that that is the Government’s intention? Of course, as the noble Lord said, this announcement covers only England and Wales, so we need to know intentions in respect of the two remaining countries. As the noble Lord asked, what is happening in Scotland and Northern Ireland? We understand the issues around devolved authorities, but what is the timing going to be and when could we see it?

There is also the issue of those who have been convicted in relation to the Capture system. Kevan Jones MP has been very clear on this, and we would like to know where that is going to go and how fast it is going to move, as with people who paid back sums to avoid the scandal that the Post Office was hanging over their heads. How will they move into the compensation zone? It is still not clear.

When will the legislation happen? The Minister talks about a July Royal Assent, which was my understanding. Given the sell-by date of this Parliament, that is running things a little fine. If possible, we need to move much faster.

As the noble Lord said, this legislation is unprecedented, and we will need time to get into the detail of what the Government are proposing. Your Lordships’ House needs time properly to assess both the effectiveness of the legislation and its constitutional implications. That is not to hold it up, but it is to do our job properly. Can the Minister tell your Lordships’ House when it will be tabled in the Commons and when we are likely to see it here? We need time for proper scrutiny, but let us get on with it. Victims are dying, victims are in financial need and victims need closure.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

I thank all noble Lords for participating in all these debates and of course my two opposite numbers for their comments in their opening statements. Without me going through a great grandstanding point, it is better if I address each individual point, because that will allow me to clarify the situation as it stands.

I share the sentiments expressed by the noble Lord, Lord McNicol, about the cross-party support: we have all come together to ensure that these people are properly compensated, and we have come up with an extremely bold and unique mechanism for exonerating those who were wrongfully convicted. I am very grateful to my colleagues, and I think I speak on behalf of my noble friend Lord Offord in this House and Minister Hollinrake, who has done an exceptional amount to progress this entire process. I take this opportunity to pay tribute to him.

The further details of what needs to be worked out following the quashing of convictions Bill that we hope to introduce as soon as possible cover a range of issues, some of which have been raised today. The details of eligibility are certainly something that we need to ensure we get right. The noble Lord, Lord Fox, raised the principle of linking the appeals process to people who feel they should be on this list but are not included. I can say that it will be the Government who, in effect, compile the list of people who are eligible, according to the criteria. We set out the criteria very clearly in the Written Statement yesterday and they seem to me entirely logical. Clearly, you have to have been prosecuted by a certain prosecutor, such as the Post Office or the Crown Prosecution Service; you clearly have to have worked for the Post Office between certain dates; and I believe the evidence has to be linked to the Horizon scandal and to certain specific crimes, such as theft or fraud. I have looked carefully through the list, and it seems to cover key areas that we are trying to cover. However, there may be individuals who feel that they should be eligible for their convictions to be quashed but who may not necessarily fulfil the specific and very narrow criteria, so these are the sorts of details that I believe we will have to work on. We look forward to developing those as the time comes.

The principle around the devolved nations was raised and is very relevant. As noble Lords will understand, they are different legal systems, certainly in Scotland. I know that my colleague, Minister Hollinrake, met his counterparts yesterday, or over the last few days certainly, to progress what we believe will be a logical replication of this concept. I am not aware of any decision on the part of the devolved nations to change the principles that are operating, but of course it is up to them. We very much hope that they will follow our suit.

I agree that the situation of the postmasters who were convicted and have since passed away is indeed terrible, but the convictions will be quashed automatically through the Bill and by the sheer nature of the individuals’ eligibility. This is not the same as applying for compensation; postmasters will not have to apply to have their conviction quashed. The whole point about this sweeping Bill and why it requires, as both noble Lords have said, considerable scrutiny is that all convictions will be quashed en masse at the moment it becomes an Act. That is an important point; the families of anyone who is deceased will know that their conviction has been quashed and they will have that relief.

I agree that the entire tone regarding the speed of compensation has changed dramatically over the past two and a half years. I am very grateful to Minister Hollinrake for the work he has done to ensure, most importantly, that interim payments can be made before final payments. He recently increased the payments for those who have been convicted to £400,000, which gives people the immediate payment they need before they decide to take the next step. There are also substantially increased fixed offers; the record so far is quite significant: 78% of claims have now been paid and there is a clear focus on ensuring that all offers are fully completed within 40 working days in 90% of cases for the GLO scheme.

The comment was rightly made about the number of different compensation schemes. As a Minister answering questions on this, I want to get the facts right. It is clear that there are many different pools and mechanisms for making sure that people are fully compensated. There is a great historical tale as well, which further complicates things. The Government are very aware of this; we have been doing a huge amount to make sure that people have interim payments, that there is no playing with the detail when it comes to compensating them, and that we are forward-footed in assisting postmasters in making claims. We are reviewing how the payments processing is operated, particularly in those cases operated by the Post Office. As I said in Questions, this is not a decision to be taken by me, but it is obvious that all these points remain under constant review. We want people to be compensated; the Government have allocated an enormous amount of money to ensure that they are so that there is no discussion about quantum and people can be properly compensated. As soon as the Bill goes through, I would expect a significant number of new compensation claims to be made. To claim their compensation, people will have to sign a form saying that they are eligible and have not broken the law, which is a sensible measure to take.

Finally, this is a significant and wholly unprecedented move. I am grateful to be joined by my noble and learned friend Lord Bellamy, who is a greater legal expert than me and is keen to make sure that his wise counsel is included in this process. This House will have the opportunity to debate in detail this unprecedented and unique situation. However, it is absolutely the right thing to do, given the historic tale, the sheer quantum and the clarity around the falseness of these convictions in so many cases. I hope that all noble Lords will agree and support the Government in executing this crucial move.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank my noble friend for raising that point. I think it has been widely publicised that Fujitsu has apologised for its role in this —as one would expect and hope—but has also accepted a moral responsibility. It has also suggested that it will look to see how it will participate in this process and my colleague Mr Hollinrake has been very clear that this overall envelope of compensation to postmasters is not to be borne solely by the Government. Clearly, there is an ongoing inquiry. This is an extremely complicated process to comment on at this stage but the tone of what my noble friend is suggesting chimes completely with the Government’s view.

[Lord Fox (LD)]

To build on the question from the noble Lord, Lord Foulkes, in his reply the Minister talked about the remuneration of the executive team, but actually the sharp end of the Post Office is the people working behind the counters—who we all see when we are getting service from the Post Office. This can be nothing but a demoralising series of news for those people. Their morale within that business is really important, as they work for a company that has been so vilified publicly and hauled through the mud. Does the Minister think that the executive team, the evidence of which we saw today, is the team that can rebuild the morale and the spirit within the Post Office, which will be needed to deliver the sort of turnaround that the Minister was talking about?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord, Lord Fox, for those comments. I should say that the Government have full confidence in the CEO and in the board whom we have appointed over the last two to three years. I am told they are extremely grateful for the services of the government representative and the UKGI representative. There are two postmasters, who I think are elected to the board, so it is a diverse board that represents the interests of the Post Office. Its members are not tarnished, as it were, by previous activities, and they have been doing a good job in responding to what can be described only as a crisis.

I echo the noble Lord’s points. The Post Office personnel are the absolute core of the business, of many communities and of this country, and it is agonising to see them put through so much distress. I agree with the comment made, I think by a colleague of mine, that in some respects the sheer greatness of our Post Office staff around the country has been magnified by this event, and I am sure that more of us will use our local services when we get the opportunity. This has also drawn a lot of attention to the needs of the postal service around the country, the conditions that its employees work in and the opportunity to improve them, with more recruitment and more people entering the Post Office service. I totally support the noble Lord’s aim; it is a magnificent organisation in its principal core ambitions of delivering great service to communities. The people who work there should be celebrated, and we certainly do that.

Economic Crime and Corporate Transparency Act 2023 (Consequential, Supplementary and Incidental Provisions) Regulations 2024

Lord Fox Excerpts

Monday 26th February 2024 Grand Committee

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, it is a pleasure to see the same team back again. We have covered late payments of paternity leave and now we are on economic crime; I hope that they are not linked. I believe these are to be consequential, which in plain English means inconsequential. I hope that we can cover this quite smoothly but of course, as always, I am very open to hearing noble Lords’ views on how we can improve our legislation to reduce economic crime in this country and get Companies House to work more effectively. At the risk of being slightly repetitive, I urge noble Lords to look at my interests in the register.

These regulations were laid before the House on 30 January under the Economic Crime and Corporate Transparency Act 2023, which I will refer to as the 2023 Act. This Act makes changes to the Companies Act 2006, which, among other things, reforms the role and powers of the Registrar of Companies.

Last week, I brought forward the first four affirmative statutory instruments to begin the long-awaited process of enabling the registrar to become a proactive gatekeeper of company information. Those regulations and the powers in the 2023 Act equip the registrar with the ability to compel answers about suspicious information, remove or change information on the UK company register, as well as analyse and disclose data available to her to law enforcement agents. I am pleased to say that, by next week, the registrar will be able to begin using her new powers. This will be an important step in improving the integrity of the company register for investors and businesses alike and will help in the fight against economic crime.

This statutory instrument will make minor consequential amendments to the Companies Act 2006 and the Economic Crime (Transparency and Enforcement) Act 2022. It also introduces changes to eight pieces of secondary legislation. The changes are very technical in nature but are designed to ensure that the reforms apply coherently and the registrar’s new powers are exercised effectively.

The key purpose of this statutory instrument is to ensure that the changes introduced into the Companies Act 2006 will extend, where possible, to law governing other business entities registered in the UK. It also lifts restrictions on the use and disclosure of certain data by the registrar and allows her to share it more widely, especially with public authorities for purposes connected with the exercise of these functions. The changes are necessary to ensure consistency across the statute book pertaining to business entities, as well as to provide clarity and accessibility to users of legislation.

Although this statutory instrument does not make any policy changes, these regulations are an important effort to ensure that the registrar’s objectives and powers are applied consistently to all business activities registered at Companies House. I am sure that noble Lords have read some of the background notes but these are grandfathered in European companies, called Societas, and various other types of companies; I will be happy to write to noble Lords in greater detail but we are comfortable in wanting to make sure that we have not let any peculiar formation through the net.

Looking ahead, there will be greater opportunities to consider the more substantial parts of the reforms. My department will continue to bring forward further statutory instruments to implement the reforms to Companies House fully. These instruments will strengthen the role and powers of the registrar, help tackle economic crime and make the company register one of the most trusted in the world. I beg to move.

[Lord Fox (LD)]

Those are laudable aim, Minister. Those of us who laboured long and hard into the night on the then Economic Crime and Corporate Transparency Bill welcome the arrival of this statutory instrument. When we considered the other ones last week, I asked when the commencement statutory instrument was due. I think that this is what I was asking for, so that is good news.

I have nothing to add. As I say, we debated long and hard on the Bill, now the Act. The proof of the pudding will be in Companies House and how it gets motoring on its new mission. I know that the Minister and the department know this; anything that we can do together to help it get there is to the benefit of all of us. We wish this statutory instrument godspeed and we wait hopefully for the other 50-something that will come hard on its heels.

[Lord Leong (Lab)]

My Lords, as stated earlier, I declare my interest as a director of several companies, as set out in the register. I thank the Minister for clearly setting out this set of regulations. I agree with the noble Lord, Lord Fox: we on these Benches are content to support this set of technical regulations and have nothing further to add.

Life Sciences Businesses

Lord Fox Excerpts

Monday 26th February 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

The noble Lord is absolutely right to raise this as a core issue. I am quite frustrated myself at some of our planning points, which certainly delay the building of these essential facilities. I am glad that life sciences wet lab space has been coming on stream in significant quantities, not least recently in Canary Wharf, which I hope he will join me in celebrating. However, there is more to be done; I totally agree with the noble Lord.

[Lord Fox (LD)]

My Lords, the Office for Life Sciences reports to the DHSC and the DSIT. The Office for Investment is a joint No. 10 and Department for Business and Trade unit. I spoke to a major biotech investor in this country, which said that the lack of communication between these two organisations is hampering its progress in building new biotech capacity in this country. Does the Minister agree that these two organisations ought to work closely together? There ought to be an explicit link, so that when companies are trying to scale up and invest in this country there is a proper joined-up approach.

Reporting on Payment Practices and Performance (Amendment) Regulations 2024

Lord Fox Excerpts

Monday 26th February 2024 Grand Committee

[Lord Aberdare (CB)]

My Lords, I welcome these regulations, although I would have liked them to go even further. Prompt payment, as the Minister said, is vital to smaller construction firms, particularly at present, when a recent report from the Begbies Traynor Group found that the construction sector had the highest number of at-risk businesses in the UK, more so than any other industry. That is 83,000 firms in significant financial distress. Late payment and retentions are key issues exacerbating these problems for small construction firms, as larger companies higher up the supply chain seek to hold cash in their accounts for as long as possible, thereby adding to the challenges for smaller firms of inflation and increased costs of materials, energy and other necessities. Borrowing is often no longer an option for many SMEs. Therefore these regulations, requiring greater transparency of payment reporting, represent a step forward in keeping larger companies accountable and reinforcing the Government’s efforts to support SMEs by establishing prompt payment as the norm, not the exception.

The requirement to report on invoices both paid and unpaid by value, not just by volume, is particularly welcome. Even if the number of invoices paid within the time specified—30 days, 60 days or more than 60 days—represents a high percentage of all invoices, the total percentage value of those invoices may be significantly lower, because lower-value invoices tend to be paid more quickly. The requirement for senior management to sign off on the figures reported is also a laudable step forward.

However, there are some disappointing omissions from the regulations. The Government’s consultation response last November promised to introduce “reporting on retention payments”—that is, the withholding of a proportion of payments due to subcontractors for work they have completed—for businesses in the construction sector. Perhaps the Minister can tell us something about when and how this will happen, even if it may be too much to hope that he might give an indication of how the Government might move towards ending the pernicious practice of retentions altogether. It is high time that happened, after so many years of government consultations and considerations but no conclusions.

The consultation response also promised more active and visible enforcement of payment practice reporting requirements, but there is no reference to this in the regulations before us today. Reporting by itself will not solve prompt payment issues, so how will it be backed up by the enforcement measures promised by the Government? What will happen if a supplier to a government construction project reports consistent lateness in paying its supply chain, especially for higher-value invoices? Can the Minister say something about how and when this enforcement commitment will be met, including the plans for implementing changes to the role of the Small Business Commissioner to broaden its powers and increase its effectiveness in supporting small businesses?

I welcome the regulations as far as they go, but I look forward to hearing from the Minister how the Government plan to finish the job by introducing further regulations, hopefully quite soon, to ensure that reporting requirements are actually monitored and enforced and, above all, to begin finally to deal with the far too long-standing bane, blight, canker, plague, scourge—or whatever other synonym one may choose—of retentions.

[Lord Fox (LD)]

My Lords, we, too, welcome this statutory instrument in as far as it goes. When I saw that my friend the noble Lord, Lord Aberdare, was speaking, I knew that my speech would get shorter, because he has already covered much of the ground that I wanted to talk about. Late payment is just about the number one issue facing SMEs. If you listen to the organisations that represent them, it is the issue they always come back to. It will not be solved merely by transparency; we know that is the case. We have some transparency, but we are not getting solutions.

There is a culture in certain sectors. As the noble Lord, Lord Aberdare, just set out, some sectors are worse than others. SMEs rely on a small number of large customers. The Minister said that publishing information would help SMEs to make informed decisions about whom they would work with. However, in many cases SMEs do not have the luxury of a decision about whether to sell their product or service to one company or another. That is the market and those are the businesses that operate; if there is a culture of late payment or retention in that business and, if those SMEs want to continue to trade, they have no choice about with whom they will trade. There is very little jeopardy for those companies that continue to practise late payment. That is the point the noble Lord made about enforcement.

I will make one other point about the building sector. Although it is a somewhat dated example, we can go back to 2018 and the Sandwell hospital project, which was managed and run by a company called Carillion. When that company went bust, it was very clear that its entire cash flow was managed through the late payment and retention of its contractors and subcontractors. The transparency situation has not appreciably changed since then.

A big issue that has to change is the Government’s view to their management of public procurement. The issue of late payment came up a number of times when we considered the public procurement Bill. Can the Minister ask his department what it can do, using the new Procurement Act, to help bolster enforcement on these issues? From our point of view, we would make it compulsory to sign up to a prompt payment code then seek ways to enforce it. Without that, the small improvement of this statutory instrument will continue to leave many of our small and medium-sized businesses in a position where their cash flow is used for the benefit of their customers’ cash flow.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have spoken. I declare my interests, as set out in the register, as a director of several businesses and companies. I thank the Minister for setting out the regulations and welcome the Government’s campaign, declaring 2024 as the year of the SME.

I have advocated for provisions such as those provided by this instrument since long before I became a Member of your Lordships’ House. As a businessperson, I welcomed the original instrument’s introduction in 2017, and support the extended sunset clause and the expanded reporting requirements contained in this legislation.

As noble Lords have said, for too long and far too often, SMEs that have supplied goods and services to larger companies and public sector organisations have not been properly respected regarding payment terms. A relatively small amount of money for a large organisation can be, for many SMEs, a question of whether wages or rents are paid on time. It is stressful enough running a business, and late payments from large customers, whether through inefficient systems or the deliberate withholding of payments, are an all too common factor. Late payments can lead to additional borrowing costs for SMEs. Further, some SMEs may be reluctant to chase late payments for fear of jeopardising the business relationship. When payments have to be chased, good will, time and energy are unnecessarily wasted on both sides.

In tough economic times, as costs rise and margins are squeezed, SMEs are particularly vulnerable to cash-flow problems. Yet, in 2022, SMEs were owed an average of £22,000 in late payments. This has massive negative impacts on reinvestment, liquidity and market operation.

We know that we have a serious productivity problem in our economy. We can also agree that SMEs are the lifeblood of a healthy economy. So I am unsurprised that a consultation on these regulations last year strongly supported their extension and expansion. The expansion requires companies to publish additional information on both the proportion of disputed invoices resulting in payments exceeding the agreed times and the value of invoices paid late, in addition to the number of such invoices—an important improvement, in my view. It also requires companies to report on the percentage of invoices paid before 30 days, within between 31 and 60 days, and after 61 days or longer.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank the noble Lord, Lord Aberdare, for those points. The timeline is genuinely as soon as possible. We felt it was more important, given the timing of the cliff edge and the sunset around this legislation, to make sure that we extended that to 2031. I am aware, without speaking on behalf of my ministerial colleagues, that retention payments and issues around construction are absolutely on top of the priority hopper, so I hope the noble Lord will be satisfied with that.

[Lord Fox (LD)]

My Lords, finally—I am not to be outdone—the Minister sets a lot of store on the public embarrassment issue. I come back to the balance of jeopardy: the Minister is a businessman of the world and he knows that, if you have a publicly listed company, it can make sure it reaches its numbers by the end of the year by extending its outgoings into the following year—it happens all the time. Which is more embarrassing to the board, not meeting its financial projections to the Stock Exchange or having a rather dirty note in its annual report 12 months later?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for the direction of his question. I do not necessarily think that I can answer it specifically. It would be unfair to deviate away from the main thrust of what we have been discussing today: a very sound extension of the right type of legislation for gathering information and including new areas within which to gather information, such as on value, to ensure that the supply chain funding and the data from companies using that system are not distorted. This is sensible, frankly, and has the support of everyone here.

However, the Committee is absolutely right to put pressure on the Government regarding potential payments around the construction industry and, importantly, the Small Business Commissioner. The plan is that the commissioner will be given significantly more powers—and not simply to publish the league tables, which I agree with the noble Lord is soft power. As I understand it, we are looking at opportunities to give the Small Business Commissioner, or whatever office it evolves into, real teeth when it comes to ensuring that companies are fulfilling their obligations.

There is more work to be done. This is a quite a new concept for the UK economy. We are looking at legislation that is just under 10 years old whereas, previously, we did not have any such legislative structures.

Paternity Leave (Amendment) Regulations 2024

Lord Fox Excerpts

Monday 26th February 2024 Grand Committee

Given all that, I beg to move this statutory instrument.

[Lord Fox (LD)]

My Lords, I thank the Minister for his presentation, which was very clear, and I welcome the movements that this statutory instrument represents. It is important to add more flexibility, to do things such as reducing notice, and to extend the period by which this leave can be used. The Minister is correct: the ability for fathers to spend time with their babies at this early stage is an extremely vital part of improving the level of parenting going forward.

However, we have to be a bit realistic, in that we have an economy that is gradually moving towards an informal employment model, whether it is gig economy or zero hours, which means that an increasing number of people are missed out by this sort of measure. Then, of course, we have straightforward self-employed people, who are not part of this, and people who have not been working for long enough for their business. That starts to leave out a large number of people. I cannot give the exact number, but at least a quarter of fathers are not eligible because of those issues; it is probably more because the gig economy is increasing. I urge the Minister and the Government to consult with all of us about ways those fathers can be brought into the system, because at the moment there is a danger that they will slip through the net.

We will be going into the election with a manifesto commitment to an increase in the amount of paternity leave that is available and in the level of flexibility. I am sure that His Majesty’s loyal Opposition will say something similar in a minute, perhaps with more specificity. However, I will make a special mention of those businesses that go beyond the law. Many businesses go way past the legal minimum, and one way of moving this forward is for the Government to recognise, praise and celebrate businesses that do far more than the current legal limit. They recognise that the fathers in their business benefit, not just as fathers but as employees. I think the Government and all of us can spend time celebrating that.

[Lord McNicol of West Kilbride (Lab)]

My Lords, like the noble Lord, Lord Fox, I welcome this SI, as far as it goes. As he said, it is welcome, but this is not groundbreaking; we are talking about small moves in timescale, the length of leave, when it can be taken and the number of opportunities to take it. On the previous SI, we were all declaring our interests. My interest in paternity leave finished 21 years ago, when my youngest child passed his first birthday, but I declare my interest in a number of businesses that I advise, all of which treat their employees at a better and higher level than the legal minimum that this sets—and I shall come back to that.

The SI, Explanatory Memorandum, impact assessment and the Minister’s introduction are all very clear. As I said at the start, this is welcome, but I have a few questions to raise. If the Minister cannot answer them, I am more than happy for him to write to me and place a record of that letter in the Library with answers to some of the specifics—but we support this SI going through.

To work through the regulations, one thing that I was not clear about is the territorial application, which is England and Wales and Scotland. Why does it not also cover Northern Ireland? I was interested in that.

Let us look at flexibility. When I did take paternity leave—Jeez, 23 or 24 years ago—my employer at the time, GMB trade union, offered two weeks, which could be taken within the first year, but there was no period that you had to take. These regs will cover two one-week blocks. Twenty-four years ago, I was able to take the first week, then my wife and I decided that I would take every Friday for the next five weeks, because she had help and support earlier in the week, and Fridays were the time that I could take to spend time with our child and allow her some respite. That flexibility of having one day a week for the next five weeks was a different way of taking it, but that is not covered by the regulations. So, just to take the point from the noble Lord, Lord Fox, a bit further, did the department look at widening that flexibility so that it could be taken as individual days?

I fully welcome it being within the first year, and the notice period is also more than welcome. The Minister noted that the first consultation was post the general election following a manifesto commitment in 2019. We are now in 2024, so I am wondering why it took so long to get here, because this is a positive move. The impact assessment, again, is spot on and covers all the right issues.

I am looking at flexibility for a reason. If we look at page 9 of the impact assessment, it looks at the take-up assumptions. Right now, we are on 74% for week one and 66% for week two. A large number of partners and fathers are not taking the second week, so this is about redressing that. However, the assumption is that the second week will move up to a central figure of 70%, which is an increase of only 4%. Even if we get to the high-end assumption of 74%, it is an increase of only 8%. Any increase is welcome, but is there more that the department can do to help general uptake on the first week? With these changes, there is no expectation that week one uptake would increase. Is there more that we could do on advertising and marketing to show and share the benefits of this? Looking at the finances of it, they are relatively small.

The Minister touched on the neonatal issue as well. I have a genuine question for information. Obviously, when there is a notice period, it is for four weeks. If you have a premature birth, or it is an adoption and things move quicker, that four-week period may be too much. The Minister touched on this but I did not quite get the detail of it. If there is a premature birth, what are the rules in terms of the partner or father being able to move quickly in order to take time off? I presume that many premature births end up in hospital but I am sure that support from the partner or father would be very willing. Can the Minister say anything on that?

The noble Lord, Lord Fox, touched on the gig economy so there is no need for me to repeat what he said.

With that, as the noble Lord, Lord Fox, said, we will come back to the manifesto in due course, but now is not the time to set out what our policy would be for the next election. We on these Benches support these regulations.

Post Office Governance and Horizon Compensation Schemes

Lord Fox Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, the Horizon scandal is widely accepted as one of the worst miscarriages of justice in British history. Given the magnitude and duration of the scandal, it is quite astonishing that it seems that every day we get more and more revelations. We get further from the truth and further from true justice for all those who have been victims of it.

Sunday’s allegations could not have been more serious, and the same applies for everything that has emerged since then, not least the memo that was unearthed last night showing Henry Staunton’s recording of a meeting with the then Permanent Secretary at BEIS, Sarah Munby, on 5 January 2023. In that, he was allegedly told to “hobble” into the election; not to

“rip off the band aid”

in terms of the Post Office’s finances; that

“politicians do not necessarily like to confront reality”;

and, finally, that

“now was not the time for dealing with long-term issues”.

This new evidence appears to endorse Mr Staunton’s claim made at the weekend. It is of the utmost importance that both the public and Parliament know the truth. Do the Government continue to deny that any of those conversations took place, as was stated categorically on numerous occasions throughout this week? Given the new evidence, will the Department for Business and Trade now commit to a Cabinet Office investigation into the serious and continued allegations that Mr Staunton has made?

Earlier this week, it was welcome that the Government agreed to publish copies of the letter from Sarah Munby to Henry Staunton on his appointment as chair of the Post Office in December 2022, but that does not go far enough. Given the Secretary of State’s own willingness now to place part of the record in the House Library, I ask once again what I asked on Monday, when we debated this—unfortunately, before the Statement had been made. Given the new evidence that has come to light, will the Government publish all correspondence and minutes of meetings between the relevant departments, UKGI and the Post Office, and put them all in the parliamentary Library?

Earlier this week, it was also suggested by the BBC that the Government knew that there was a cover-up in the Post Office eight years ago—in 2016—with Ministers having been told that an investigation was happening into how often and why cash accounts on the Horizon system had been tampered with remotely. Will the Minister comment any further on those claims about when that was known by the Government? How will the Government investigate those claims? Following that, will this matter also be handed over to Wyn Williams for full investigation? I am sure that we all agree that the secrecy must end, and that the full sunlight of public scrutiny should be brought to bear.

On the compensation itself, has the £1 billion figure referred to in the Statement already been allocated, and is it therefore ready to be paid to those who will receive it? Subsequently, if that is not the case, will the payments be specifically itemised and timelined within the next Budget?

Although Monday’s Statement and today’s repeat are rightly about the Post Office, people’s faith in government has already been damaged by scandals such as Hillsborough, infected blood, Bloody Sunday and Windrush. Victims of other scandals—especially the contaminated blood scandal—feel that they need to ask whether they have been the victims of deliberate inaction as well. Will the Government provide assurances that no such obstacles have been put in the way of any payments of this kind; and if so, how exactly do they explain the delays in so many cases?

The Post Office miscarriages of justice alone have shown the devastation that can occur when institutions are allowed to operate without oversight or are shrouded in secrecy, and I know the Minister shares everyone’s view on this. Throughout all this, we must not lose sight of the sub-postmasters and sub-postmistresses themselves, so I make no apology for returning to the issue of convictions and the overturning of them. Can the Minister update your Lordships’ House on the progress in this area? Have His Majesty’s Government set a timescale for delivering the legislation needed to quash the convictions?

Finally, the Minister often talks about compensation packages and money being paid in thousands, tens of thousands and hundreds of thousands of pounds to wrongly convicted—I would describe them as not just wrongly but malignly convicted—sub-postmasters and postmistresses. However, is he aware that the vast majority of Post Office payments for the specific issue of “damage to reputation and stress” are still generally only around the £5,000 mark?

Finally, again—I feel a bit like Columbo—there is a discrepancy between the Secretary of State’s speech in Hansard and the Statement. Would the Minister like to comment on it, and if not, will he write to me and place a letter in the Library? There is no mention in the Department of Business and Trade Statement of bullying by Mr Staunton, yet the Secretary of State says:

“I should also inform the House that while Mr Staunton was in post, a formal investigation was launched into allegations made regarding his conduct”—


we know that, but she goes further—

“including serious matters such as bullying”.—[Official Report, Commons, 19/2/24; col. 474.]

I am just a bit confused as to why it was in the Statement delivered in Parliament but not in the departmental Written Statement.

[Lord Fox (LD)]

My Lords, as we have heard, with every day that passes, more questions seem to come up.

In Parliament, the Secretary of State’s Statement was strident—I would say unusually strident—but no matter how loudly and aggressively she asserts her side of the issue, it will not go away without answers and evidence. I support fully the questions that the noble Lord, Lord McNicol, just asked—I will try to interrogate some other areas—but we need answers in order to support or otherwise the Secretary of State’s position. These are answers that the Government can give, not ones they can push into the Wyn Williams inquiry.

Minutes from a call on 27 January show that Kemi Badenoch said to Henry Staunton that she had received

“a briefing on the governance issues at the Post Office and that the complaints against”

Staunton

“are so serious that the government need to intervene”.

The Secretary of State said in Parliament that this included issues raised by other directors on the board. From whom did she receive the briefing on the governance in POL, and where are the notes on its contents? When were the directors’ issues first raised with the Secretary of State, and what form did these complaints take? Were they, for example, letters, emails, calls or meetings? Were any directors’ complaints submitted formally, and how many directors were involved in those submissions?

The Secretary of State’s public statements and comments conflate two issues. One is the possible disquiet as to Staunton’s progress on tackling governance within POL, and the other is an entirely separate accusation of bullying. Does the Minister agree that these two need to be properly separated? The conflation is adding to the confusion. As far as I can see, as yet, there is no documentation to support the bullying part of the Secretary of State’s response. The Secretary of State said that a “formal investigation” was under way into the complaint against Staunton. Who is leading this investigation and when was it started? Staunton says that he was not informed of this bullying complaint, so can the Minister confirm if, when and how Staunton was informed of this bullying complaint and whether he has yet to be contacted by an investigator?

Government, departmental and Post Office capacity is only so large. This very public and bitter argument is a major distraction. Given the huge quantity of energy that is being expelled on this dispute, all other activities suffer. Today, the Prime Minister declined to repeat the Secretary of State’s accusations, and if the Secretary of State misled Parliament, she clearly breached the Ministerial Code. Therefore, does the Minister agree that if we do not get a Cabinet Office inquiry, the Government’s ethics adviser should be asked to investigate this issue now?

Without publishing all the personal correspondence with the various intermediaries that link the Post Office with the Government, it cannot be established beyond any doubt who is telling the truth in this very public dispute. The problem for the Secretary of State and for the Government is that Mr Staunton’s central accusation has credibility. What we see is glacial progress in settling the Horizon victims’ cases. That was his central point. In one answer on Monday, the Minister outlined the bureaucratic appeal process open to those offered unacceptable settlements, and of course, these appeals slow things down considerably. Can the Minister at least acknowledge that this time-consuming and energy-sapping appeal process could largely be avoided if the original offers were at an acceptable level in the first place?

I have one final question. All pretence of an arm’s-length organisation has gone; the Government have the power to intervene and control. Will the Government step in and speed things up by making the process simpler, probably by collapsing the three schemes into one? Overall, will they ensure that the offers of compensation are realistic in the first place, so that all the sub-postmasters who have offers can accept them and move on?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

There is a lot to unpack there. I will take it in three pieces, if your Lordships do not mind. I will start with the Henry Staunton spat; then we will talk a little bit about the compensation; and then we can talk about the convictions, overturning them, and general progress on that matter.

On the dismissal of Henry Staunton and the following row that has ensued, as I said before, it is a shame that we are doing this in public because obviously, there are HR matters here. A senior director has been removed from his post, and due process needs to be delivered and his confidentiality respected.

However, I can shed light on this. This has been helped by further documents today being put in the public domain. In addition to the file note of the Secretary of State’s conversation with Henry Staunton at the weekend, we now have Mr Staunton’s file note to himself after his meeting in January 2023 with Sarah Munby and very helpful clarification from Sarah Munby of her recollection of what happened, with back-up notes. Accordingly, all the minutes are now at the disposal of the public and in the Library.

In summary, the row here is on two allegations that have been made by Mr Staunton—that he was sacked because someone had to “take the rap” and that he was instructed by a senior civil servant, the Permanent Secretary, to slow down the process of compensation and justice for postmasters. It is now absolutely clear from the correspondence and the notes published, and even from reading Mr Staunton’s own note, that the reason for his dismissal was not that he had to take the rap, but quite the opposite. He was in post for just 14 months—from December 2022—and was given three specific priorities by Sarah Munby. The first was to accelerate and expedite the compensation to the postmasters. Therefore, he was not there to take the rap. His dismissal, which was designed to be done in private but has now come out in public, was simply because there were governance issues around his chairmanship.

Interestingly, taking account of the various discussions that we have had in this House on this matter, noble Lords, especially on the other Benches, have been quite clear that they feel that there has obviously been a breakdown in governance and that the Government were not exercising their governance powers appropriately. That is what Sir Wyn Williams will look at in detail. We have a new board. Three new non-execs of a higher calibre were appointed in 2023. There are now two postmaster directors on the board. A senior independent director is required to be appointed and, most importantly, the government shareholder, UKGI, is represented on that board.

In addition, you can imagine the amount of public and departmental scrutiny that is happening. There are monthly meetings with post office executives. A lot of conversations are going on with Post Office management. Within those conversations, quite rightly, without naming names, non-exec directors and UKGI have raised concerns on the governance and chairmanship of the Post Office.

Under previous regimes, it would appear that, when concerns were raised on other matters, they were ignored. In this case, concerns have been raised and not ignored but taken into serious consideration. That demonstrates that we have a different sort of governance now in the Post Office. If I was coming at this from a private sector basis, as a shareholder, I would want to know what is going on inside the company. If non-exec directors came and told me there was a problem on the board, I would take that very seriously. That was then discussed between the Secretary of State and Henry Staunton and specific governance issues and concerns were raised by the board. As I said, the board is run by the chair. If the board is at odds and therefore not functioning properly, we must change the chair. It is as simple as that.

So, on the first point, that he was there to take the rap, the memos and meeting notes clearly show that he was dismissed because we had a governance issue.

[Lord Fox (LD)]

That is fascinating and helpful. Given that there is not a SID and that it was the chairman, what was the conduit of the director’s disquiet from the board to the Secretary of State? How did the Secretary of State learn these things?

[Lord Offord of Garvel (Con)]

As I said, we are in a situation now where dialogue quite rightly is happening—and minuted, as always—between officials and representatives of Post Office Ltd. The appointment of the senior independent director was one of the issues that the board were at odds over. The chairman wished to promote an internal candidate and the Department for Business and Trade wanted to bring in an external candidate—which was also the advice of the UK Government, the shareholder executive.

In this situation, when an investigation of why this was happening was brought to bear, that too was blocked by the chair. So there was a situation where the board was not working properly and we had to change the chair. It was as simple as that. The chair had to be changed to make sure the board worked properly. There was no concept of him being there to take the rap for the Horizon scandal.

He has made a second claim, and I advise noble Lords to read the notes carefully to understand this. The conflation going on here concerns the discussion with Sarah Munby in January. The chairman was appointed in December 2022. There was a discussion with the Permanent Secretary in January 2023. That was the first discussion after she wrote the letter saying “Here’s your three priorities”. It was the first meeting between the Permanent Secretary and the newly appointed chair, to say, “Right, you’ve been in post for a month, you’ve looked under the bonnet, what have you found?”

National Minimum Wage

Lord Fox Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that reminder. I think all of us in this place and the other place can be very proud of what has happened over the past 25 years on the minimum wage. This wage increase will benefit 3 million workers. Remember, we have 33 million people working in the UK, out of 66 million, so those in the bottom 10% are getting a 10% increase. That has a knock-on effect for further formulae. This is a big impact. If we look at the past eight years, since it came in in 2015, the national living wage has gone up by 60% versus inflation at 30%, so there has been a real increase in wages for those at the lower end of the wage scale.

[Lord Fox (LD)]

My Lords, I think the noble Lord, Lord Bird, would agree that there are too many working people who have to rely on the minimum wage in this country and that those at the bottom of the wage cycle are the ones who suffer most when there is low growth. A key statistic, if the Minister wants to trade statistics, is GDP per capita, which is falling. Our productivity is falling because there is insufficient investment in skills and capital machinery. The reason there is insufficient investment is because businesses do not have stability or confidence going forward. Does the Minister agree that this Government do not have a plan and are not providing the facility that can deliver the growth that will help the people the noble Lord, Lord Bird, is talking about?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that. We have record levels of employment in this country, with 33 million out of 66 million people working. Average public sector pay is £19 an hour and in the private sector it is £16. We are now taking the minimum wage up to £11.44. The noble Lord is quite right to indicate that if we want to ask businesses to invest more money, perhaps we should be asking them to invest in more productivity per employee rather than just more wage per employee, and perhaps more inclusion and diversity, along the lines of John Lewis and Timpson.