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.

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.

Registered Office Address (Rectification of Register) Regulations 2024

Lord Fox Excerpts

Monday 19th February 2024 Grand Committee

[Lord Sikka (Lab)]

My Lords, it is pleasure to follow the insights of the noble Lord, Lord Vaux. I will speak to the second SI, the Limited Liability Partnerships (Application of Company Law) Regulations 2024. I broadly welcome the thrust of the proposals but I have a number of questions; I hope that the Minister will be able to answer them.

First, the words “company law” appear in the statutory instrument, obviously, but can the Minister tell the Committee whether there is in the UK any central enforcer of company law—or for LLPs, for that matter? I have not been able to find one in all these years, so it would be helpful to know where the buck stops. Who, in the final analysis, is responsible for regulating these entities? This matters, especially when companies and LLPs engage in unlawful practices such as paying dividends without sufficient distributable reserves—something that damages the interests of creditors, including pension schemes with a deficit.

Let me go back a little while, because I have always been interested in this topic. In a Written Question on 14 September 2017, Kelvin Hopkins, the then Member of Parliament for Luton North, asked the Business Secretary

“what checks his Department carries out to ensure that dividends paid by companies do not exceed their distributable reserves”.

This was the reply, on 12 October 2017:

“The Department is not responsible for carrying out checks on dividends paid by companies to ensure that they do not exceed their distributable reserves”.


That is still the position. Nothing has changed. We still do not know who is responsible for looking at these things.

In recent years, companies such as Domino’s, Dunelm, Games Workshop and Hargreaves Lansdown have admitted to paying dividends that were, strictly speaking, unlawful; after a while, they noticed that they were unlawful. They therefore paid illegal dividends but, in the absence of an independent enforcer of company law, no one really examines such instances. The Business Department has long washed its hands of such matters. I hope that the Minister can tell us where the buck stops and which external agency is responsible for enforcing both company law and LLP law. That is my first question.

Secondly, LLP and company financial statements are prepared in accordance with what are sometimes called generally accepted accounting principles—or GAAP, although there are many variations on that—and are promulgated by the Financial Reporting Council in the form of accounting standards. They have an important bearing on whatever counts as an asset, a liability, income, an expense, wages, a tax, liquidity, accountability and much more. Ultimately, the rules or standards have a bearing on the distribution of income, wealth and risks.

In a democratic society, only Parliament has the social mandate to adjudicate on competing claims concerning the distribution of income and wealth. However, that authority has been subverted by the Government, and none of the accounting standards issued by the Financial Reporting Council is ever debated in Parliament. Why is that? Why has Parliament’s authority been subverted? I hope that the Minister can explain why the Government do not bring accounting standards to Parliament for approval because they affect the distribution of income and wealth and form the basis of taxation.

Thirdly, through the FRC, committees dominated by partners of LLPs make their own accounting and disclosure rules. They operate through a private company, which is named CCAB Ltd and is dominated by the accountancy bodies. No one in the Government has ever suggested that the hungry should set food standards, the homeless should set housing standards or the poor should set the minimum wage, but the partners of LLPs are allowed to make their own accounting rules without any kind of parliamentary oversight.

If noble Lords look at LLPs’ accounts, they will see that these LLP partners do not like transparency. For example, LLPs are not required to disclose their partners’ share of profits, which is the nearest equivalent to director remuneration in limited liability companies. We do not know their exact share of the profit, even though they may be enjoying government or other public contracts. Why is the partners’ share of profits not disclosed in LLPs’ financial statements, and why is setting the rules for LLP accounting and disclosure considered private? Surely it is not.

[Lord Fox (LD)]

My Lords, as someone who has spent a lot of his professional life working on annual reports, I have often had questions about GAAP, but the Minister will be pleased to know that I will not ask them today.

The four SIs before us are to be welcomed. They are steps on the way from our discussions on both the last economic crime Bill and the one before that. We are moving forward, in a sense. I am glad that the noble Lord, Lord Vaux, introduced what I call the Knighton collection of companies that were registered to a terraced house in the Welsh borders, not far from where I live—as I believe does the noble Lord, Lord Bourne. I would like some reassurance that the statutory instrument on registered office addresses would deal with that.

As the noble Lord, Lord Vaux, eloquently set out, there are a lot of steps to go through to eliminate falsely registered companies. It comes back to the question of whether Companies House is capable of really handling this, ceasing to be a filing cabinet and starting to be an investigative organisation. To echo the point made by the noble Lord, Lord Vaux, it would be very helpful to have an update on how the huge cultural change that Companies House needs is going. Many of us were impressed by the team that we saw, but also a little frightened by the huge task that it has in front of it to make these SIs and the next 51—or however many there are—come to life.

I have some trepidation on the second of these SIs, on limited liability partnerships, because the noble Baroness, Lady McIntosh, seated opposite, is our Scottish legal expert. I wondered where Scottish partnerships come in, because the territorial extent of that statutory instrument is the whole UK. Where do Scottish partnerships sit within that?

The service address and principal office address regulations are useful and important too, but expose the central weakness that is still within our system. After all the work we did on the Bill, those with control still have the ability to hide that control. We welcome the Service Address (Rectification of Register) Regulations and the Principal Office Address (Rectification of Register) Regulations, but can the Minister set out, either now or in writing, how we are going to eliminate the cancer within this system of people obscuring the real ownership of assets to the authorities and wider society? With that, we welcome these four statutory instruments.

[Lord Leong (Lab)]

My Lords, I thank the Minister for setting out these regulations and everyone who has spoken in this short debate. I will take these instruments one at a time.

Under the current system, criminals can—often by using data unwittingly shared or stolen and for sale on the dark web—fraudulently register an individual residential address as a registered office with Companies House, without the knowledge of the actual residents. Since 2011 it has been possible for companies to be incorporated within 24 hours for as little as £12, with Companies House making no checks on the veracity of the address. Once this has been done, the perpetrators can apply for credit, business loans and other financial arrangements. This fraud often does not come to light until the individual wants to apply for credit and finds that they are unable to do so, often resulting in considerable problems.

This instrument relates to where individuals have had their residential address hijacked. It allows the registrar to change the address to a default address and to strike the company from the register of companies if a genuine new address is not provided. It establishes criminal offences for companies and officers where they do not comply. We welcome the streamlining of this process and expansion of the registrar’s powers that this instrument provides, including that, as well as acting on the basis of applications, the registrar can when necessary act unilaterally based on any information in their possession to move swiftly to change a company’s registered office address without giving notice in advance.

However, I would like to know how the Government seek to protect and support victims of these fraudulent practices, as mentioned earlier by the noble Lords, Lord Vaux and Lord Fox. Can the Minister say how they will be informed of developments? Will victims be supported if issues continue for them beyond the changing of the registered address—for example, if they have negative notes or ratings on their credit file? If so, how will this be addressed?

Given that this is clearly a widespread practice, does the Minister have any information about provisions to actively check business addresses? There could be existing situations in which fraudulent addresses are in use but currently unchanged or undetected; they may not come to light until the innocent victims have their lives blighted by the discovery of a fraudulent registration of which they were unaware, as in the case in Wales that was mentioned. Does the Minister have accurate figures for how many addresses are registered? Surely it must be in the millions. If, as I suspect, it is on that scale, what analysis has been done on whether this instrument will create an influx of work for the registrar? Has resource been allocated for this?

I move on to LLP. This instrument will ensure that the reforms to company law made by the Economic Crime and Corporate Transparency Act 2023 also apply to the law governing limited liability partnerships. It will ensure that company law applies without arbitrary differences between companies and LLPs. It pertains to straightforward administrative amendments relating to a company’s name, registered office and email addresses, its directors, annual confirmation of accuracy on the register, information about persons with significant control and so forth. We support this legislation, which seems both reasonable and straightforward, and so on this occasion I do not have any further questions for the Minister.

I move on to the Service Address (Rectification of Register) Regulations 2024. As many noble Lords will know from personal experience, directors and secretaries of companies and persons with significant control over companies are required to notify the companies registrar of their service address—that is, a location where documents may be deemed effectively served on that person.

This instrument empowers the registrar to change the registered service address to a default address nominated by the registrar where the registrar is satisfied that the registered service address does not meet the necessary legal requirements. The registrar may change the address by their own motion or on application and may also, at their discretion, change the address without notice or after a period for objections, the length of which may also be at the registrar’s discretion. Clearly, the situation in which company directors, secretaries and persons of significant interest could attempt to delay or evade being held to their legal responsibilities by providing non-compliant addresses would be unsatisfactory.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

As always, I thank noble Lords for a very powerful and constructive debate around this essential legislation. I genuinely think it will make an enormous difference to the quality of Companies House activities and of our business activities, reducing crime in a magnitudinous way and making the data that companies provide far more valuable in terms of them being able to operate legitimate businesses, to borrow money and to give confidence to customers. Markets are based on trust, so the more the Government can do—and have done, I am pleased to say, with the support of all Peers in the House—the better the business operations underneath that framework.

I will briefly go through some of the significant points. If I have missed anything I will be delighted to follow up after this discussion, but I am keen to make sure that everyone is answered as broadly as possible. If I do not have specific data requested, I will write and copy in all noble Lords.

I thank my noble friend Lord Bourne for his contribution; I hope I understood his question correctly. I do not have to hand a number for the instances of PO boxes being used as registered addresses, but I would be comfortable supplying it to him. The whole point is that this legislation will end the practice of having PO boxes. I think that only about 21,000 or 22,000 addresses are classed as default; of course, that is in effect the registrar’s own address. If you think about the however many million companies that are registered—perhaps 5 million or so—that is a very small proportion. A lot of these figures sound high—when you talk about tens of thousands, it seems an enormous number—but the reality is that, in proportion, they are relatively small. A lot of these default addresses—I am covering several points at the same time—are not for nefarious purposes. They might exist simply because, for example, an individual who had a company has died or the accountant who was registering it has gone out of business. So there are administrative reasons why default addresses are used.

Forgive me but I cannot remember whether it was the noble Lord, Lord Vaux, or another noble Lord who made the point about advertising—that because it is a default address, issues around concern and risk may be raised. I have some sympathy with that, although it is not for me to say. A default address does not necessitate that there is nefarious activity; it is often administrative. Clearly, if noble Lords go on Companies House, they will be able to see the date on which an address became the default address, which would potentially give one an indication of the situation.

It is worth talking about the chronology here. I so enjoyed the passage of the Economic Crime and Corporate Transparency Bill. The time went by so fast; it feels like only yesterday that we finished it. It became an Act towards the end of last year. As I said, I am pleased that, following a helpful conversation with the registrar, Louise Smyth, she has been extremely co-operative with my office in promoting our ambitions for Companies House. I am sure that—the noble Lord, Lord Vaux, asked a question about this—it would be extremely helpful for us all to arrange an update. I found speaking to Louise today, ahead of this debate, very helpful. It is important that we have an element of checking to see whether the resourcing is appropriate and whether the speed of activity is there, but I have the fullest of confidence in Louise and her team.

Let us look at the chronology going forward. Assuming that everything today goes to plan, these powers will come into force on 4 March. That will in effect enable the registrar to have far more discretion over how she acts.

I turn to the points made by the noble Lord, Lord Leong, about multiple registrations, how the registrar will effect her duties and the appellate process around that. It is clearly listed in the statutory instrument that you will not have to have 21,000 to the power of however many different applications, as the noble Lord, Lord Vaux, may have suggested. The point is this: currently, people may register my address as their company address. This is one of the core sparks that lit the blue touchpaper, or the rocket, that was the Economic Crime and Corporate Transparency Bill—this iniquitous situation in which any of us could be registered as a director and our address could be used as a company address. It is a completely bizarre situation that will come to an end on 4 March.

It will then be up to the registrar to make those inquiries; at the stroke of a pen, she will be able to cancel out however many thousands of companies registered to one address. How are we going to do this? The registrar will use the intelligence hub; it is already in existence, as far as I am aware, and is being significantly resourced and expanded. I am encouraged that she will have—this is what we discussed in great detail as the Bill passed through the House—the discretionary powers to do the work and do what is clearly the right thing.

The noble Lord, Lord Leong, rightly mentioned the appeals process. It would be unreasonable to suggest that a single agent of the Crown should be able to, at their whim and discretion, change the fortunes of businesses; that is simply not the case. There is a clear appeals process and, ultimately, the courts would adjudicate. Let me be clear: it is not in the interests of Companies House or the registrar to strike companies off if they believe that they are doing legitimate business. That would be a highly unusual scenario, but there are safeguards and checks and balances around that.

I hope I have covered some of the questions asked by my noble friend Lord Bourne and the noble Lord, Lord Vaux. I will cover two other short points on the chronology. These powers will come into effect on 4 March. In May we will get the statutory instrument for the fees—I believe it is being laid in Parliament, in the other place, today—which will go to £50 for incorporation and £34 for verification at the end of every year. The increase is quite significant in percentage terms, but I think all noble Lords in the Committee will agree that, in real terms, that is not a significant amount of money for the incorporation of a company, with all that that entails. I think we have reached quite a good place there.

The all-important work on verification is the real meat of the additional hard work by the noble Lords, Lord Vaux and Lord Fox, and other noble Peers. Our friends the ACSPs hope, as do Companies House and the registrar, that by the end of this year they will have begun the process of ensuring that the verification process around ACSPs is well under way. They expect to bring in the appropriate processes for individual verification in 2025. As noble Lords know, these include photo identity card and passport verification and so on; we have done so much work on this.

[Lord Fox (LD)]

On chronology, am I right in thinking that there is a commencement statutory instrument that needs to be brought forward for the overall Bill? When might we see that being tabled?

[Lord Johnson of Lainston (Con)]

That will happen next week, I am told. I look behind me hopefully on questions like that, but we will do that next week and I hope we stick to this timetable. As I have said, various SIs relating to fees and so on are being laid in the other place today.

I believe I have answered most of the questions from the noble Lord, Lord Vaux, and my noble friend Lord Bourne. The noble Lord, Lord Sikka, made some important points about dividend payments and the stability of our company system. I would not necessarily say that they are relevant to the Companies House regulations that we are looking at today. They are separate from Companies House’s requirement to make sure that the proper accounts are filed. The noble Lord asked who the enforcer for company law is; the court system is. It is important to stress that.

There have been discussions about when company law will be reviewed. As far as I am aware, we have no specific plans to do a full review, but I am happy to take all the noble Lord’s comments and issues back to the Department for Business and Trade, which has particular responsibility over certain reporting areas, to make sure that he is content that the work we are doing is effective.

I believe I covered the points from the noble Lord, Lord Leong, related to ensuring that the Registrar of Companies can operate effectively and the appellate process. Very importantly, on his comment about the powers of the registrar, these are new powers, so we will have to see how they develop. It is absolutely right that the House and the Government continue to keep a close watch on Companies House and the team there to ensure that they have the necessary powers and resources to deliver on a truly transformative regime for how companies are registered and how Companies House operates. As the noble Lord, Lord Fox, rightly said, it needs to move from simply being a repository of information to becoming a truly dynamic activator in overseeing how companies operate. This is exactly what these statutory instruments allow.

I am happy to follow up with any noble Lords who have specific requests, but I very much hope that I have their support on these statutory instruments.

Post Office Horizon Scandal: Compensation Payments

Lord Fox Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

The sadness about this is that the Secretary of State said that she did not want to conduct HR in public, and this is now the situation that we have got ourselves into. We are very clear that no civil servant made that statement; perhaps it is up to Mr Staunton to provide a name, and we can then investigate whether that was the case. In the meantime, it does not make sense, given that the Post Office has been fully funded for compensation already—before the programme “Mr Bates vs The Post Office”, two-thirds of postmasters had had their claims met in full. Indeed, of the £160 million paid out so far to sub-postmasters, £138 million was paid out by December, before the television series. Therefore, it was fully funded, and there is no basis for the allegation.

[Lord Fox (LD)]

My Lords, clearly the public statements of the Secretary of State and the former chair, Staunton, are mutually exclusive, and we look forward to hearing the Secretary of State’s version, which I hope will be repeated in your Lordships’ House. It would be easier to understand in full if it was supported by transcripts of all the relevant meetings. In her social media rebuttal, the Secretary of State said that she

“dismissed Staunton due to very serious allegations about his conduct while Chair of the Post Office”.

Can the Minister confirm that that is true and explain to your Lordships’ House why those allegations were not in fact investigated, rather than simply dealt with through a summary dismissal? If the Minister is unable to do so now, can he come back when the Statement is repeated and tell your Lordships’ House the answer to those questions?

[Lord Offord of Garvel (Con)]

As I have said, a detailed Statement on this will be given in the other place, and there will also be transcripts and meeting notes put in the House of Commons Library for full interrogation. It is clear that there were very serious concerns about governance. The noble Lord himself mentioned a toxic culture in the earlier Question on this issue, and the Government’s requirement to clean it up and change it. The most important figure on any board of any company is the chair, and, if the culture is wrong, perhaps the best place to start would be to remove the chair, which is what has happened. A full Statement will be given as to the circumstances of that, but it was not done on a whim and it was not a summary dismissal.

Post Office Horizon Scandal: Racism

Lord Fox Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank the noble Lord. We are all deeply distressed by the events that have happened during this 25-year sorry saga. The noble Lord refers to one of the documents that was used by Post Office Ltd, which was released in 2023 under the Freedom of Information Act. That did have language in it using descriptors that were very much out of date and should have been updated; it was offensive language and the Post Office has now, rightly, completely changed its methodology. But, once again, Sir Wyn Williams will go into this in great detail.

[Lord Fox (LD)]

My Lords, it is easy to see why the noble Lord was shocked by the racist terms uncovered, which were used by the investigating team in Post Office Ltd. It is even more shocking to note how recently those terms were being used, and still more shocking that many of the people who were using those terms are still employed by Post Office Ltd. We do not need the conclusion of the inquiry to know that Post Office Ltd is rotten to the core. When will the new chairman be appointed and when will the work start on cleaning this rotten business out?

[Lord Offord of Garvel (Con)]

I share the noble Lord’s frustration with this process. There was indeed offensive language used in the official documentation, which had not been updated since the 1980s and for which the Post Office has clearly apologised. As far as the culture in the Post Office is concerned, there is a rebuilding job required. The chairman has been removed and live conversations are going on right now to appoint a new chairman. My department is fully focused on rectifying this sorry situation.

Post Office Appointments: Ministerial Responsibility

Lord Fox Excerpts

Wednesday 7th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank my noble friend for his question and for all his efforts on behalf of the postmasters. We have to realise that this is a limited company owned entirely by the Government, with one share owned by the Secretary of State. It separated from Royal Mail Group when that went private, but the Post Office is actually classified as a public non-financial corporation. Public corporations include, for example, Ordnance Survey, Royal Mint and British International Investment. They are typically owned by the appropriate Secretary of State in that department, the reason being that they are hybrid: the Post Office has commercial activity, it makes revenue through the post offices, but it also receives public money to support the network. As a result, the governance is such that the chief executive reports to the chair, the chair reports to the Secretary of State, and the chief executive also reports to the Permanent Secretary when it comes to public money.

[Lord Fox (LD)]

My Lords, I am not sure that the Minister answered the question from the noble Lord, Lord Arbuthnot. We agreed that the Post Office needs leadership, and last week the Minister said:

“We will appoint an interim chair as soon as possible”.—[Official Report, 30/1/24; col. 1122.]


Perhaps with another week, the Minister can dwell a little more on the process. When will the details of the process be published? How will the job description of this appointment differ from the job description that was used by Business Secretary Kwasi Kwarteng when he appointed Henry Staunton as recently as September 2022? What will change in the job description of the chairman from the last appointment?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. The corporate answer is that the chief executive reports to the chairman; the job of the chairman is to fire the chief executive on behalf of the shareholder; the shareholder is the Government and, since these matters came to light in 2020, we have had the new shareholder relationship document that outlines all the governance on this. Indeed, the Minister for the Post Office has had monthly meetings, starting with Minister Scully through to the current Minister, Minister Hollinrake, with the chief executive. When the new chair is appointed, that chair will step into the position and continue to run the board on behalf of the Government.

Carer’s Leave Regulations 2024

Lord Fox Excerpts

Tuesday 6th February 2024 Grand Committee

[Baroness Pitkeathley (Lab)]

My Lords, I too thank the Minister and his officials. I declare an interest as vice-president of Carers UK. As my friend the noble Baroness, Lady Tyler has said, I have been working on this issue for many decades. I first put forward the idea of a carer’s leave Bill in 1990. When I am at my most pessimistic, I ask whether all I have achieved in 30-odd years is five days’ unpaid leave for carers. When you look at it like that, it ain’t much—but it is a very important step, as the noble Baroness said. When I am feeling optimistic—mostly, I am a glass-half-full person— I recognise what an important step this is in looking at the needs of working carers. Their need is not only for finance, although many of them are struggling with the cost of living; they need extra money now, so they need to keep on working in their jobs. If they do not, they build up future poverty for themselves for the future, because they cannot contribute to pensions. That causes a problem for society down the line. It is also of tremendous psychological import and benefit to carers to remain in the workplace as long as they can. This will help them do it.

The carers’ movement has always been opportunistic. I see this very much as a stepping stone. We now have unpaid leave—the next step is paid carer’s leave. Believe me, we will not give up on that. This is a very good time to be doing this, as we have elections coming up and manifestos to be written in which we might think about paid carer’s leave.

When thinking about new employers who will look through this legislation, we should remember the excellent employers who already do this. Employers for Carers, an organisation convened by Carers UK, has many wonderful examples of employers who already recognise carers without the need for legislation and recognise that a small change in working practices—the kind of flexibility that the Minister mentioned—makes a very big change to carers’ lives. Sometimes just allowing a carers’ group in the workplace will provide a very adequate method of support.

Those employers have recognised that carers are among the most dedicated people in their workforce and that retaining them and enabling them to continue their paid work will save a fortune in recruitment and retention. These employers and the new ones who will come into the fold following this legislation and the regulations will very much be beneficiaries, as carers will be, of this Act. They will understand that making carers the subject of this Act and giving them these extra rights makes sound economic sense. We are not just making a moral case for carers; there is a very sound economic case for keeping 2 million carers in work longer than they would otherwise be. As I always remind your Lordships, carers save the nation £162 billion every year, the cost of another health service, through their unpaid work.

I too was going to raise the issue of parent carers with the Minister, but my friend the noble Baroness, Lady Tyler, has already done it. Do the Government have any plans for an awareness campaign to ensure that carers, who are often isolated, will have the opportunity of working with the voluntary organisations in the field? Carers must be made aware of this new and very welcome right.

[Lord Fox (LD)]

My Lords, so much of life on these Benches feels a little like pushing water up a hill. If you will excuse me for mixing the medium, this was like pushing an open door; it really has been a delight. I feel very lucky because, as both the previous speakers pointed out, they have been operating in this field for decades whereas I, in a sense, picked this Bill up by luck. My friend, Wendy Chamberlain, in the Commons, won the ballot and chose this Bill to bring forward. As I am representing that particular department, I got the good fortune of sponsoring the Bill. I am very pleased, but also humbled, as I came late to this piece.

This is also, I think, the third Minister we have had during the course of the Bill. This, of course, allows me to repeat all the speeches I made to the previous Ministers as a novelty. The Minister’s explanation of the effects of the Bill were excellent. We all, in our different ways, understand the impact it will have on people’s lives and on employees’ lives.

The point I emphasise, though, is that it creates a conversation that carers can safely have with their employer for the first time on this subject. It means that carers who have been in the workplace can come out as carers in the workplace—because they have previously had to worry about whether it would affect their relationship with their employer. The Bill allows them to have a conversation where they can be safe to have that conversation in the place they are.

The points made about the benefits to the economy and the employer are huge. During the run up to this Bill, we talked to a number of large, medium and small employers that were already doing it voluntarily. They found that the benefits far outweighed the very small expense they had to stump up. Simply having to recruit someone is an extremely expensive exercise. We know there is a shortage of skills anyway, but to lose an employee because they have to stay at home and care for someone is a very expensive loss to a business, if the employee is a long-standing and well-established person.

The point about communication is vital. It is not just about communicating to the carers, who need to know this is available to them; it is also about communicating to the employers that it is now on the statute. I am sure the department has a plan, but it would be interesting to hear something about it, either today or in writing. For example, Make UK, which used to be the EEF, has a strong HR support division. It is one of their businesses and what they do. Part of the service that businesses get from being affiliated to Make UK is HR support, and legal and regulatory support. That organisation should be hit really hard with the information on the Bill—if it has not been already—so that it understands the role of employers in not just allowing it but promoting it across their workforce.

There is still a lot of work to be done in terms of getting the information out there. It should not just be employees demanding it—employers should be fully aware of what is now available. So who is going to be accountable for the communication process? In the end, that is going to be the success, of otherwise, of this measure. If people have to find it out through the ether, there is going to be a very slow take up. I am sure that Carers UK will put it out there, but there is a lot of extra work to do.

Once again, I thank the Government for supporting it. It has been a pleasure to help the Government to meet one of the things in their manifesto, although I doubt I will be making a habit of it. For this one, however, thanks to the Government and His Majesty’s loyal Opposition. Most of all, I thank the campaigners who got us this far. The reason we were able to do this is because it was unpaid; it cut out all of the small print that would have been in the legislation, but it establishes a point. I take the point made by the noble Baroness and I hope, in future, that we will be able to take that and move it forward to a bigger and better thing—but we should not diminish the significance of this particular provision.

[Lord Leong (Lab)]

My Lords, first, I thank the Minister for setting out these regulations and the correction. Correct me if I am wrong, but is it now two weeks instead of one week?

Digital Markets, Competition and Consumers Bill

Lord Fox Excerpts

Committee stage
Monday 5th February 2024 Grand Committee

[Lord Offord of Garvel (Con)]

I hope that the noble Lord did not misunderstand me. I think we said that this is already covered in legislation. The definition is capable of including a vehicle that is or may be being used to store goods that may disclose a breach of legislation. We are being clear that the definition of “goods” is sufficiently broad to include goods or vehicles. I was coming on to say that an enforcer may inspect products under paragraph 25 of Schedule 5 for the purposes of checking the compliance of those products with relevant legislation, so we are tying this back to the relevant legislation. We believe that the definitions are already sufficiently wide and therefore there is no need to further legislate.

[Lord Fox (LD)]

That is beginning to be helpful, but the Minister will be aware that different local authorities are receiving different legal advice. Some are comfortable with the definition that he has given and others are uncomfortable with it. At some point, possibly during Report, a Pepper v Hart definition that solidly allows legal officers in local authorities to make the decision that a car is a container in particular circumstances would, at the very least, be helpful. Perhaps adopting the amendment of the noble Lord, Lord Lucas, would be even more so.

[Lord Offord of Garvel (Con)]

I was not aware that there are different definitions in different local authorities. That seems a valid point to address, so we will look at it before Report.

Amendment 124C is on fines for obstructing enforcement officers, for which I again thank my noble friend Lord Lucas. This addresses the question of the appropriate level of fines for the offence of obstructing an enforcement officer, under paragraph 36 of Schedule 5. Currently, the fine must not exceed level 3 on the standard scale, which is £1,000. Amendment 124C would increase that to level 5—an unlimited amount. I fully agree with my noble friend that any sort of obstruction, whether intentionally failing to comply with instructions or knowingly giving misleading information, is a serious matter that must be subject to criminal enforcement.

The current level of the fines was subject to previous government consultation ahead of the introduction of the Consumer Rights Act 2015. It was set to reflect the deterrent purpose of the offence, proportionately and consistently with comparable criminal offences. For example, the penalty for obstructing a police officer or an officer of His Majesty’s Revenue and Customs is set at a maximum of £1,000, which is level 3. We consider that the current level of these fines continues to be proportionate to the offence, consistent with comparable regimes. I once again thank my noble friend for his consideration of this issue and hope that my explanation persuades him not to press his amendment.

I thank my noble friend Lord Lindsay and the noble Baronesses, Lady Bakewell and Lady Crawley, for tabling Amendment 125, which was presented by the noble Lord, Lord Clement-Jones. It would end the prohibition on enforcers to use information provided by a person in response to a written information notice in criminal proceedings against that person. Prohibitions of this sort apply throughout the UK legal system and serve to help protect a person from self-incrimination when enforcement authorities are given broad powers to send information notices to compel the production of information.

The Government have listened carefully to trading standards departments, which consider that removing this prohibition would enable them to gather evidence needed for consumer prosecutions more easily. We have been told that using other information-gathering powers comes with operational challenges, such as having to resource travel outside the local area to carry out investigations. We are keen to work with enforcers to address these challenges. However, this prohibition is an important protection. It safeguards a right that is recognised under English common law and the Human Rights Act.

In summary, Amendment 125 stems from an operational issue that does not justify rolling back well-established legal protections. I therefore hope the noble Lord will feel able not to move this amendment.

--- Later in debate ---

[Lord Bassam of Brighton (Lab)]

The noble Lord is such a strong unionist that I would be surprised if that were not the case.

[Lord Fox (LD)]

When the Minister writes that letter, perhaps he could extend it to include the United Kingdom Internal Market Act because that seems not to have been taken into consideration. Some of us here today—at least two of us—participated in the lengthy discussions about differing standards across borders and how they might be enforced, and this seems to fall well into that territory. What consideration has been made of that Act in drawing up the terms of the Bill? It would be helpful if the letter set out the various positions within the internal market Act and how they have been represented in the Bill.

[Lord Offord of Garvel (Con)]

I thank the noble Lord. I share his interest in this matter, and that was exactly what I was intending to examine. The United Kingdom Internal Market Act is a fundamental new piece of architecture that, on us exiting the EU, allows us to trade as one single nation, and I will always be promoting that.

Digital Markets, Competition and Consumers Bill

Lord Fox Excerpts

Committee stage
Wednesday 31st January 2024 Grand Committee

I hope very much that my noble friend will be able to respond positively to this idea. If not, I hope that he will agree to meet me and others who would like to encourage him to think positively about this as a way to open up a discussion on an area about which there are many concerns.

[Lord Fox (LD)]

My Lords, I know the Minister is a big fan of innovation, so the introduction of some innovative procedure by the noble and learned Lord, Lord Thomas, will no doubt have filled him with delight. We all look forward to seeing how that wheels out.

It is a pleasure to follow the noble Lord, Lord Hodgson, who seemed, if he does not mind me saying so, to list second-order problems. How much split of the award you get depends on whether you can bring the case in the first place. If there is no case, there is no 50:50 or 75:25. Earlier, as memory serves, we talked about individual litigants and their ability to form groups, and the Government were set against that process. Here, we are again talking about a system that avoids or stops people getting together to fight the fight. We should remember clearly the power balance that we are talking about here. In the digital field, I used the example of the top five platforms. Their revenue is on the level of that of nation states. In order to fight battles with people, companies and organisations such as that, there needs to be some ability to come together and find the funding.

I am not a lawyer, but I am persuaded by the arguments advanced by the noble Lord, Lord Sandhurst, and the noble and learned Lord, Lord Thomas. When it comes to what the noble Lord, Lord Hodgson, said, there are of course code of conduct issues; generally speaking, when I have been involved in legislation, things such as codes of conduct arrive in secondary legislation, not as part of the primary legislation. I hope that he can join in debating the principle. He is right that the details of the principle are important, but I suggest that they are a second-order issue. With that in mind, what the noble Lord, Lord Hodgson, said, combined with his amendment, looks a little like long grass—

“Make me pure, Lord, but not yet”.


We need to have the debate that will be initiated by the noble and learned Lord, and others, before we start worrying about the industry code of conduct that comes behind it.

[Lord Bassam of Brighton (Lab)]

My Lords, the Committee should be enormously grateful to the noble Lords, Lord Sandhurst, Lord Arbuthnot and Lord Carlile, and to the noble and learned Lord, Lord Thomas, for bringing forward this group of amendments dealing with litigation costs in group actions. There is real and practical importance for those who will potentially benefit from this when seeking redress. The noble Lords have persuasively argued the case for the amendments in their names. Indeed, the noble Lord, Lord Sandhurst, gave notice that he would bring forward such an amendment with others at Second Reading. He has been good to his word.

At the time, the Minister, the noble Viscount, Lord Camrose, argued that the Government had,

“urgently addressed the potential implications of the judgment”,—[Official Report, 5/12/23; col. GC 1452.]

in the PACCAR case, which had then recently been decided by the Supreme Court. However, the Government’s solution to the problem is, as we have heard from noble Lords this evening, limited to addressing the issue for some claims in the Competition Appeal Tribunal, leaving a big problem for litigation funding agreements—LFAs—used in other proceedings. We note the Government’s view that the Bill is not the right place to deal with the wider issues, but, as currently drafted, this will create a two-tier system in the UK, whereby claimants would have different rights and different access to financial backing, and therefore different legal support, depending on the court in which they pursued their claims. Having listened to noble Lords, that cannot be right if we are to ensure equal access to justice. As the noble and learned Lord, Lord Thomas, argued, the proposed amendment to Clause 126 goes some way to addressing the issue, by widening the scope of agreements that will be placed in the pre-PACCAR position, but it does not solve the problem for cases outside the CAT.

Of course, back in early December, few of us understood the true import of LFAs, but that was before the TV drama, “Mr Bates vs The Post Office”. Now, of course, we are far more conversant with them, and so are the public. Without such arrangements, the sub-postmasters and sub-postmistresses would not have been able to challenge the Post Office in the courts, and that cannot be right.

Currently, for an LFA to be enforceable by the funder for opt-in and opt-out cases, it must comply with the Damages-Based Agreements Regulations 2013. Those regulations were introduced to deal with contingent fee agreements between claimants and lawyers, not funding arrangements with third-party funders. As I have already said, Clause 126 deals with only CAT opt- out cases. I am persuaded that we need a comprehensive solution to the problem.

We understand, as the noble and learned Lord, Lord Thomas, explained, that the noble Lords who have tabled these amendments were unable to bring forward a more comprehensive solution to the PACCAR ruling at this stage of the Bill. I was very interested in what he said because he referenced the Standing Orders of the House and the ability of your Lordships’ House to determine a Bill’s scope. It is, as he said, done rarely but we certainly did it once or possibly twice in my time as Opposition Chief Whip, to the benefit of the House. On those occasions, we sought counsel’s legal opinion, which we posted in the Library of the House. I do not think that we need counsel’s opinion on this case, having a former Lord Chief Justice and other eminent lawyers making the argument.

Assuming that the Minister is unable to offer a solution today, I assure the noble Lords behind this amendment that we will willingly support amendments brought forward to resolve the issue. Since the “Mr Bates vs The Post Office” drama, government Ministers have suddenly woken up to the salience of the issue. There is surely enough goodwill in the political system for colleagues to agree a way forward on this. Legislative time is at a premium, as the Minister will no doubt tell us, and we see this as an opportunity not to be missed and to be used.

I turn to the amendment in the name of the noble Lord, Lord Hodgson, on which he gave a very brilliant exposition. I tried to follow most of it, but I can see the force of his argument. His amendment is eminently supportable. As the noble Lord, Lord Fox, points out, it has the upside for the Government of kicking the issue into the long grass, but there is clearly a need for some review at some stage. However, I hope that the amendment in the name of the noble Lord, Lord Hodgson, becomes otiose if we can see a way forward with the route that has been pointed out by the noble Lord, Lord Sandhurst, and the noble and learned Lord, Lord Thomas, this afternoon. We should be very grateful for those noble Lords, and it is nice to know that, in the noble Lord, Lord Arbuthnot, we have a star of the silver screen in our midst. I am sorry that he is not here to hear the arguments put to his benefit. With that, I look forward to the Minister’s response.

--- Later in debate ---

Moved by

[Lord Fox]

108: Clause 147, page 93, leave out lines 3 and 4 and insert—
““consumer” means—(a) a person (“P”) acting for purposes that are wholly or mainly outside P’s business, or(b) a person acting in the name of, or on behalf of, P in relation to P’s purposes;”Member’s explanatory statement
This amendment would expand the definition of a consumer to make it explicit that it includes third parties working on behalf of a consumer, as is the case for traders.

[Lord Fox (LD)]

My Lords, I congratulate the Deputy Chairman of Committees, who once again did a magnificent job. I speak on behalf of my noble friend Lord Clement-Jones to move Amendment 108 and speak to all the other amendments in this group that are in his name—seven in total. Talk has rightly centred on the CMA’s role in standing up for consumers. This whole group focuses on an important area where consumers are in danger of not getting the best possible treatment as a result of the flexing of market power. The amendments are designed to probe the competitive relationship between providers of a service and legitimate third-party agents who sell those services on.

Online intermediaries in marketplaces can serve a valuable role, helping consumers exercise choice and explore a wider range of options for their needs, ultimately supporting competition and innovation, as long as this is done in a transparent manner. Perhaps the most obvious arena for this sort of activity is the travel industry: flights and hotel bookings. There is of course a natural struggle between the provider of services—the airline, for example—online travel agencies or OTAs, and the third player, which is the platform. This is usually Google.

The question that this group poses is: what is the CMA’s role in the competition between these parts of the industry? It also asks: how is consumer choice maintained or enhanced in that activity? My noble friend’s amendments are designed either to explore the need to protect consumers who make bookings through a third-party agent, or to ban activity that could mislead consumers about the merits of booking through a third-party agent. There are of course other elements to these relationships, and I hope this debate can flesh those out as well.

There is certainly evidence that some low-cost airlines are extensively using their market power to advance their own commercial gain while potentially eroding protection and choice and inflating prices for millions of UK holidaymakers. For example, since December 2023, most OTAs have been prevented by Ryanair from booking flights on behalf of consumers. This rendered the OTAs unable to fulfil holidays that include a Ryanair flight. I understand that a consequence of this is that it is almost impossible for consumers to book an ATOL-protected package holiday that includes a Ryanair flight. I do not have full confirmation of that, but that is my belief. It is difficult not to conclude that this blocking was designed to push customers towards booking hotels as well as flights through Ryanair, rather than as part of a package holiday through an OTA. It is easy to conclude that Ryanair was able to do this because of the market power it holds over its routes.

For its part, in a regulatory announcement Ryanair welcomed the removal of its flights from OTA websites, promising lower fares “where necessary” to encourage all passengers to book directly on ryanair.com. The fact that it did not reference the fact that it had caused the removal of the OTAs in the first place, and its use of the phrase “where necessary” regarding pricing, are clear indications of its instinct in this move. I use this example to demonstrate how serious and real things are for this sector and the consumers it serves.

The question for debate here is: how could and should the CMA act to balance the relationships that surround service providers and third-party agents? The relevant provisions here are in Clause 223, on the prohibition of unfair commercial practices, and Schedule 19, on

“Commercial practices which are in all circumstances considered unfair”.


Together, these provisions set out a list of conduct to which the consumer protections in Part 4 will apply automatically in all cases.

The list in Schedule 19 is relatively granular, so it can be extended in scope easily to deal with these issues. For example, as set out in Amendment 136, Schedule 19 could include:

“Refusing to enter into (or otherwise blocking) a transaction with a consumer on the basis that the consumer is acquiring the trader’s product through a third party acting on its behalf”.


Secondly, it could include:

“Refusing (or otherwise blocking) third party agents, acting on a consumer’s behalf, the necessary means to make or manage the consumer’s purchase”,


thereby degrading the consumer experience. Thirdly, it could include:

“Making a materially inaccurate or disparaging claim about third party alternatives through which a consumer could otherwise acquire the trader’s product”.


Fourthly, it could include:

“Imposing higher prices for a consumer who chooses to acquire a trader’s product through a third party acting on its behalf than for a consumer who acquires that product directly, in particular without providing such consumer with a clear, accurate and complete explanation as to the reason for such a price increase”.


Fifthly, it could include:

“Any act or omission which deprives a consumer of sufficient freedom to make an informed choice as to whether to purchase a product directly from a trader or to engage a third party to make such purchase on their behalf”.


We then need to ensure that the protections afforded by Part 3, on enforcement of consumer protection law, and Part 4, on consumer rights and disputes, apply equally to consumers irrespective of whether, for example, they have made flight bookings through OTAs acting as consumers’ agents or they have booked directly with the airline. The relevant provisions of the Bill relating to the definition of a “consumer” are in Clause 147, on relevant infringements, and Clause 223, on the prohibition of unfair commercial practices.

In both cases, the definition of “trader” is already explicitly extended to circumstances in which a person is acting personally or through another third party on their behalf. This concept of indirect consumer-trader relationships should be extended to the definition of “consumer”. A new paragraph should be introduced in Clauses 147 and 223 to make it explicit that it is immaterial for the purposes of that definition whether a consumer chooses to engage with a trader directly or through a third party acting on the individual’s behalf as an agent. These proposed changes are set out in Amendments 108 and 129.

Other references to indirect booking need to be provided for—again, to include the provision that it is immaterial whether a consumer engages with a trader directly or through a third-party agent. The relevant clauses here are Clause 230, on rights of redress, and Clause 243, on the meaning of “transactional decision”. Amendments 145 and 146 would make it explicit that the protections in Part 4 apply to contracts entered into by the consumer with traders, both directly and indirectly.

Given the sort of behaviour already in the market, we also need to introduce the concept of misleading or aggressive commercial practices by a trader, which are designed either to deter consumers from booking through third parties—including OTAs, which book flights on consumers’ behalf as their agents—and/or to prevent such third parties from making such bookings. In other words, we need to outlaw those practices.

This time, the relevant provisions of the Bill are in Clause 224, “Misleading actions”, and Clause 226, “Aggressive practices”. These clauses deem commercial practices to be unfair if they involve misleading actions or aggressive practices that cause the average consumer to take a transactional decision they would not have taken otherwise. A new subsection should be introduced in each of Clauses 224 and 226 to make explicit that, for the purposes of Clause 224(1)(a), “misleading information” includes

“an action where the overall effect is to deter the average consumer from using third party agents to conclude transactions on their behalf, including disparagement relating to such third parties”.

For the purposes of Clause 226, in the context of determining whether a commercial practice uses harassment, coercion or undue influence, account should be taken of

“whether the practice significantly impedes the average consumer’s freedom of choice in respect of whether they choose to make a booking directly with a trader or to use a third-party agent to conclude transactions on their behalf”.

This is the effect of Amendments 139 and 141. The Minister will understand that this is an important example of the potential misuse of market power, to the detriment of consumers. We await his response.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lord, Lord Fox, for that introduction. He made an excellent argument about why we should include third parties working on behalf of consumers in the remit of the Bill. As he described, this particularly relates to package travel firms.

Whether using a legacy airline or a low-cost carrier, all of us will have booked flights online. These days we have unprecedented freedom to fit our travel arrangements to our specific requirements and then pay for them at home, at the office or on our phones. But how many of us have had the far less welcome experience of discovering, a few minutes later, that our deal was not as good as we thought and that there were cheaper fares for the same flight? This is frustrating and unfair, and, unfortunately, it is due to deliberate anti-competitive practices, many of which the noble Lord described.

Low-cost airlines—LCAs—have transformed the aviation landscape. They have disrupted the market, offering travellers unprecedented choice and competition. Their rise in the UK has empowered consumers, democratising air travel and making it affordable for a much broader demographic than used to be the case. The greater availability and lower cost of flights to and from the United Kingdom has, in turn, led to the rise of online travel agencies and tour operators, known as OTAs. These offer travellers a wide array of pre-packaged holiday options, which include flights, accommodation and add-on activities. The convenience of being able to plan and book an entire trip from the comfort of one’s home has fuelled the popularity of online package travel. OTAs are becoming extremely popular and convenient ways for families to plan, book and pay for their holidays.

However, in recent years the low-cost airlines, themselves once the industry disruptors, have felt threatened by the newer online travel agencies. The industry is witnessing a growing trend of complex anti-competitive actions aimed at stifling competition. One such tactic is curtailing seat availability to specific destinations, which renders them inaccessible through OTAs or individual bookings unless bundled as airline packages. Another anti-competitive tactic is to introduce cumbersome verification procedures for passengers who book through OTAs rather than directly with the airlines, adversely affecting the consumer experience. Unfortunately, in this battle for market share between the LCAs and the OTAs, the consumers are often the casualties.

The situation is made still more opaque for consumers by the existence of 13 different types of airfare. I am grateful to my noble friend Lord Leong, who has looked into this. He tells me—I will mention only the most common six—that there are normal fares, point-to-point fares, excursion fares, APEX fares, PEX and super-PEX fares, and branded fares. Additionally, some come with specific restrictions, some are non-refundable, others cannot be exchanged or transferred, and none of these restrictions is immediately obvious or consistent with ticket types.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, this group of amendments concerns package travel. I will address Amendment 108, along with Amendments 129, 136, 139, 141, 145 and 146. I thank the noble Lord, Lord Clement-Jones, for tabling them and the noble Lord, Lord Fox, for speaking to them so eloquently. These amendments cover the same theme: the use of third parties in contracts between consumers and traders.

I reassure the noble Lord that the protections sought in these amendments are mostly provided for in other parts of consumer law, which I will detail. For example, Clauses 224 and 226 prohibit traders using misleading information or aggressive practices. This prohibition would already cover situations involving a consumer’s decision on whether to use a third-party agent. Similarly, Amendments 145 and 146 seek to make clear in the legislation that a consumer enjoys consumer rights, whether they purchase from a trader directly or via a third-party agent. However, in either situation the contract is between the trader and the consumer, and therefore the consumer benefits from the relevant consumer rights. Amendment 146 focuses on the transactional decisions related to purchases from a trader. Whether the decision is carried out by the consumer themselves or a third party is not relevant. The consumer that the contract is with will receive the relevant consumer rights. The practical effect of Amendments 145 and 146 is already achieved through consumer law.

I shall record two instances in which these amendments would have an adverse and unintended effect and thus why the existing wording of consumer law is set out the way it is. Consumer protection requires a consumer-to-trader relationship for consumer rights to apply. If, as suggested in Amendments 108 and 129, the definition of a consumer were changed to include third-party agents, they would in effect also become consumers in the eyes of the law. That means that the consumer’s relationship with the agent would be classed as a consumer-to-consumer relationship instead. Should there be an issue between the consumer and the third-party agent, the consumer would then no longer benefit from the same consumer rights as ordinarily apply. The amendment suggested by the noble Lord would broaden a very established principle of consumer law with this unintended effect.

I shall conclude my response—including the matters raised by Amendment 136—with reference to travel agents and the sale of package travel holidays, as I believe that may have inspired some of the noble Lord’s amendments. This is a sector in which it is common for consumers to use agents on their behalf. I am aware that issues have arisen between online agents and flight operators. Ministers in my department were pleased to meet representatives from an online travel agent and an airline recently to understand the issues from all perspectives.

Through our markets regime, the Government have ensured that the CMA has significant powers to investigate and act if it finds that businesses are behaving anti- competitively in a market. It is right that those matters are for the CMA to determine itself.

Separately, the Department for Business and Trade carried out a call for evidence on the Package Travel and Linked Travel Arrangements Regulations 2018 during September-December 2023. Those rules set the consumer protection framework for package holidays. It is vital that consumer protections for package holidays, as a key consumer leisure activity and expense, provide strong protections and that regulations support consumers to access choice and a competitive market. I am pleased to confirm that we are now analysing a substantial volume of responses, including from consumer groups, package organisers and suppliers, such as airlines. The operation of airlines and travel agents is governed by PTRs and ATOL. Those are being reviewed. That is the appropriate way to consider these issues.

Given the noble Lord’s interest, once further analysis has been undertaken, I will be eager to share with him the Government’s response to that consultation. I hope that, in light of what I have set out, he will be comfortable to withdraw his amendments.

[Lord Fox (LD)]

I thank the Minister for his response and for his offer to look through the data, which we will be happy to pick up. I thank the noble Baroness, Lady Jones, for her support and for enlightening me on the intricacies of airline ticketing. I suggest that there may well be a new class Z, which she and I will get, where our luggage gets lost as a result of what we have been saying here today.

Central to the Minister’s response is that all this exists already in some form or other, or the words have not been quite crafted correctly. Saying that the existing protections are there belies the fact that there are problems today. If those existing protections were 100% where they should be, doing what they should, the noble Baroness and I would not be able to stand up and list the problems that exist. It behoves us and the Minister to talk between Committee and Report, including my noble friend Lord Clement-Jones, to set out where there are clear issues at the moment and where there could be changes, even if we did not use the words contained in these amendments.

There are problems, and it would help if the Minister acknowledged that. The existing wording and the use and interpretation of those laws is not solving those problems, so there is something to sort out here, one way or another. With that said, I beg leave to withdraw the amendment.

Amendment 108 withdrawn.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, on this group of amendments on net zero and the collective interests of consumers, I thank the noble Baronesses, Lady Jones and Lady Bennett, for their Amendment 109, which would explicitly provide that consumers’ collective interests include avoiding any detrimental effects that they may incur by not reaching net-zero carbon emissions by 2050. I am grateful to the noble Baronesses for raising the important issue of protecting consumers during the transition to net zero. At present, where environmental issues arise, the court or enforcers already have the requisite powers to take action, including by tackling misleading green claims which affect consumers’ purchasing decisions. In addition, in its annual plan, the CMA listed

“helping to accelerate the UK’s transition to a net zero economy”

as one of its priorities.

We are already making strong progress towards net zero by 2050. The UK has reduced its emissions further and faster than any other major economy. To that end, we feel that there are sufficient measures already in place to protect consumers during the transition to net zero. I hope that the noble Baroness, Lady Jones, will feel sufficiently reassured to withdraw her amendment.

On the right to repair, I thank my noble friend Lord Holmes and the noble Baroness, Lady Hayman, for their Amendments 128A, 145A and 201 and, in the latter case, for our recent discussion on the issue, where we had much of a meeting of minds.

The Consumer Protection from Unfair Trading Regulations 2008 are being restated in the Bill and prohibit unfair commercial practices. These include misleading actions which are likely to affect a consumer’s decision-making, so consumers are already protected from misleading statements made by traders on the availability of spare parts. Furthermore, there is a range of activity across government presently which support the aims of the proposed amendments, which in summary focus on sustainability and ensuring that products are repaired, where feasible.

The Department for Energy Security and Net Zero’s eco-design initiative aims to encourage the uptake of products which use less energy, resources and materials through product-specific regulations. The Department for Environment, Food and Rural Affairs is responsible for waste and resources policies, including preventing waste occurring in the first place. Both departments work with the DBT to ensure that, over their lifetime, products use less energy. This ultimately saves carbon, reduces waste and helps households and businesses to reduce their energy bills.

New and updated eco-design measures introduced in summer 2021 have, for the first time, included requirements for manufacturers to make spare parts available and replaceable with commonly available tools, as well as to provide information to professional repairers to assist with repairs. These new requirements cover dishwashers, washing machines and washer-dryers, refrigeration appliances, televisions and other electronic displays. The measures will help to establish a “right to repair” for consumers, as part of a more resource-efficient economy. Defra has recently set out aims in its new waste prevention programme to move to a circular economy by keeping goods in circulation for as long as possible and at their highest value. This includes increasing the reuse, repair and remanufacture of goods. We are consulting now on reforms to the Waste Electrical and Electronic Equipment Regulations and will consult later this year on reforms to the batteries regulations. We have also launched a separate call for evidence on reforms to the WEEE regulations to seek views on how they can further support the circular economy by incentivising more sustainable product design and higher levels of reuse of electrical products.

Further, from 29 April 2024, the new product security regulatory regime will require manufacturers to publish information on the minimum length of time that security updates will be provided for consumer connectable products. However, mandating a minimum security update period before the impact of these measures is known could run the risk of imposing obligations on businesses disproportionate to a product’s lifespan and any associated security benefits. The Government have committed to a post-implementation review of these new measures to understand their impact before any further action is considered.

Similarly, adding rights to repairability to consumer law now will oblige retailers to pre-emptively seek information from the manufacturers of products that they sell. More work is required before this is suitable for the Government to ask. In the meantime, it would mean greater costs and a reduction in choice for consumers. It may also have implications for our WTO and international treaty compliance, as it would constitute a new technical barrier to trade about which we would need first to notify and consult partners.

[Lord Fox (LD)]

I welcome what the Minister says, in some respects. Will the issue of updating electrical and electronic products be part of that review, too? In other Bills, we have discussed who has the obligation to maintain software updates for equipment from the perspective of safety as well as longevity. I hope that the review takes that into consideration, too.

[Lord Offord of Garvel (Con)]

I thank the noble Lord, Lord Fox, for that. There is a lot of information, and it is reasonable that I write to the noble Lord about the gamut of the consultation that is going on. As I said in response to the noble Baroness, Lady Hayman, a lot of consultation work is going on in the two main departments—business and Defra. It is therefore only fair that we spell that out, and we are happy to do so.

To finish what I was saying, I hope, on the basis of what I have said and those assurances, that noble Lords will not press their amendments.

I turn now to Amendment 134, on greenwashing, for which I am grateful to the noble Baronesses, Lady Jones of Whitchurch, Lady Kidron and Lady Bennett of Manor Castle, and the noble Lord, Lord Clement-Jones. The amendment would add specific greenwashing claims to the list of banned practices in Schedule 19. Misleading consumers about the environmental qualities or impact of goods and services so that it leads them to take a different purchasing decision is already against the law. Further, initiatives are under way, including the CMA’s draft guidance on sustainability agreements between businesses, which are aimed at helping to achieve environmental goals. The CMA has also published guidance on environmental claims on goods and services to help businesses understand how to communicate their green credentials without misleading consumers.

Part 3 of the Bill will strengthen consumer protection enforcement by allowing public enforcers to make applications to the court, which will not only stop the infringing conduct but allow the imposition of financial penalties. In addition, the Bill introduces new powers for the CMA to take action more quickly against bad business practices, without needing lengthy court action, and to give penalties of up to 10% of turnover for those breaking consumer law.

In summary, given that greenwashing is already prevented in law, our priority is to keep these existing interventions under review to observe their impact before rushing into further legislative action. For these reasons, I hope that noble Lords will feel comfortable not to press this amendment.