National Minimum Wage (Amendment) Regulations 2021

Lord Lennie Excerpts

Monday 1st March 2021 Lords Chamber

[Lord Lennie (Lab) [V]]

My Lords, I will make some brief comments and have some questions to follow. When I reread last year’s debate on this statutory instrument, it was interesting to note that the coronavirus pandemic was not mentioned once. A year later, we are in our third lockdown and Covid-19 has exacerbated existing inequalities and injustices in the labour market, in part brought about by some employers paying below the national minimum wage, as the noble and right reverend Lord, Lord Harries, said.

In this discussion my thanks are due to my noble friends Lady Chakrabarti, Lady Clark and Lady Blower and Lord Hendy. None of them is saying that this should be rejected—of course they are not; they are all saying that it should be welcomed. The debate they want to have is about the future and how the minimum wage will rise, as my noble friend Lord Liddle outlined in his interesting sectoral approach in the absence of unions and collective bargaining. We shall see what the Government make of that.

The Low Pay Commission, whose recommendations today’s welcome increases are based on, said that the impact of recent economic upheaval has affected low pay sectors more than others. We know that too many workers are still not paid the national minimum wage. The ONS said that there are over 2 million jobs where employees aged 16 and over were paid below the minimum wage in April 2020—more than four times the number a year earlier. Workers paid less than the national minimum wage are often those who are relied upon during this pandemic. They are our key workers—our essential workers. According to a recent LSE report, just under one in three independent sector care workers was paid the minimum wage in 2019, compared to around one in 14 of all UK workers.

I have some questions. As the economy begins to open up, how will the Government make sure that employers are paying the national minimum wage? Many comments have been made about enforcement, especially for those workers who we have relied on in the past year. As the labour market changes rapidly, we need confirmation of where the national minimum wage fits within the gig economy. With reference to the recent Supreme Court ruling, does the Minister want Uber drivers, and many others in the gig economy, to be entitled to be paid the national minimum wage? Should those drivers have it backdated, having not received the national minimum wage previously?

The Low Pay Commission has said that the pandemic and upheaval in the economy have disrupted many of the usual data sources on which the national minimum wage is calculated. What additional measures have the Government taken to support the commission to overcome this lack of data from its usual sources?

Finally, as the Minister said, this statutory instrument increases the period of time for which employers are required to maintain records from three years to six. How is this being communicated to businesses, especially those that may currently be closed? Are there any additional costs to businesses associated with this change?

Uber: Supreme Court Ruling

Lord Lennie Excerpts

Monday 1st March 2021 Lords Chamber

[Lord Lennie (Lab) [V]]

The Supreme Court ruling of 19 February was a good day for workers in the gig economy and an embarrassing one for the Government. It has taken four years to get this ruling, with Uber kicking and screaming all the way. During that time, the Government commissioned and received, but then ultimately ignored, a report from Matthew Taylor about workers’ rights in the gig economy.

Either the Government accept that workers must have decent, understandable and contractual rights at work—including receiving at least the national minimum wage—or they do not, in which case workers will continue to be exploited by these huge multinational organisations. Do the Government accept that this ruling must apply to all Uber drivers and those other comparable gig-economy workers, such as those who work for Deliveroo? If not immediately, when precisely will the Government bring forward an employment rights Bill based upon the Taylor report and, by doing so, prevent businesses having to interpret this ruling for themselves?

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

The Government are committed to improving the clarity around employment status and to bringing forward an employment Bill, which we will do as soon as possible. The Bill will protect and enhance workers’ rights, promote fairness in the workplace and strengthen workers’ ability to get redress for poor treatment.

Trade Bill

Lord Lennie Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 6th January 2021 Lords Chamber

Moved by

[Lord Lennie]

46: Schedule 2, page 13, line 26, leave out from “1(1)” to end of line 27 and insert “may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

[Lord Lennie (Lab) [V]]

I will be brief. Framing this debate has proved to be difficult because, quite rightly, the Government and the Opposition are focused on dealing with the pandemic, and therefore less attention has been paid to Britain’s post-Brexit trading arrangements. That said, the Government’s intentions are to achieve the best possible trading position and, as regards the amendment, the best possible public procurement arrangements. The intentions are clear and agreed. How to do so is not.

The Labour Party, along with many others, including the TUC and good, solid companies, are of the view that the Government must introduce measures that protect the best from being undercut by the less good. A race to the bottom should not be entertained. The Government have made several previous commitments: there was to be a Green Paper on this subject; there would be a review of the relevant EU law, post Brexit; we were told that there would not be any risk of a race to the bottom. However, that fear persists.

Can the Minister answer some questions, even at this late stage of the Bill’s passage? Will the Government seek to protect and enhance workers’ rights, living standards and our climate change position post Brexit? Will they implement International Labour Organization —ILO—standards as a form of protection, especially against modern slavery? What is the Government’s position regarding what was known as EU retained law in the area of public contracts? Do they intend to legislate to make good any shortcomings in this area? Unless the Government commit to those aims, it is hard to see how protection and standards will be maintained, let alone enhanced, in the years to come.

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

My Lords, I will now address Amendment 46, tabled by the noble Lord, Lord Lennie, which seeks to apply the affirmative procedure for any regulations made using the powers under Clause 1.

Perhaps understandably, because this is the last amendment that we will be addressing on Report, noble Lords wished to get certain matters off their chest at the commencement of debate on this amendment, so perhaps they will understand if I do not respond specifically to those points but restrict my comments to the amendment. I will of course commit to the noble Lord, Lord Purvis, that I will write to him with details of the exact timetable, which I do not have available to me at the moment.

Turning to this amendment and, as I say, restricting my comments to the amendment, given the late hour, I first remind noble Lords that the UK will accede to the GPA on the basis of continuity. This means that the “coverage schedules” referenced by noble Lords today and in Committee will remain broadly the same as those that the UK has had under EU membership. I know that noble Lords have suspicious minds and I say “broadly” because the UK’s independent GPA schedules incorporate technical changes to reflect the fact that the UK is no longer an EU member state, and there are now successor government entities other than those listed in Annexes 1 to 3. I have provided more details of these changes in a written response to a question asked on this issue in Committee by the noble Lord, Lord Fox, which I am happy to outline to the House.

The UK’s independent coverage schedules were shared with the International Trade Committee in 2018, along with the text of the GPA and the schedules of other GPA parties. They were then laid before Parliament for scrutiny, in line with the Constitutional Reform and Governance Act, and were concluded without objection in 2019. Since then, Switzerland has agreed to implement the GPA, as revised in 2012. As such, to ensure appropriate parliamentary scrutiny and transparency, the new Swiss schedules were laid before Parliament in October 2020. So I hope noble Lords will agree that there has been ample opportunity to scrutinise the terms of the UK’s GPA accession.

With regard to the scrutiny of our future participation in the GPA as an independent party, I again reassure noble Lords that provisions under Clause 1 are limited to a very specific set of scenarios in the GPA. I stress that this does not include any broader renegotiation of the GPA or of the UK’s market access offer to the GPA.

In the short term, the powers are required to implement an update to the list of central government entities in Annexe 1 of the UK’s GPA schedule. The update will reflect the fact that many entities have merged, moved or changed name since the list was originally written. Given the limited nature of such changes, I believe it is not appropriate to apply the affirmative procedure to Clause 1. Moreover, it is important that these necessary regulations be made swiftly because, as I often find myself saying, if there are delays, the UK could be in breach of its obligations under international law. I draw noble Lords’ attention to the fact that the Delegated Powers and Regulatory Reform Committee of this House has twice considered the power in this clause and on neither occasion saw the need to comment on the use of the negative procedure.

As we are now reaching the end of Report, I will make some concluding remarks. I think that anybody who has witnessed the way our House has dealt with this Report stage can only admire the scrutiny noble Lords have given. That scrutiny has illustrated various aspects of the Bill which were not necessarily fully visible to people at the beginning, and it has drawn people’s attention to how important trade policy now is to the United Kingdom. The fact that the United Kingdom now has full control of its trade policy will lead in the years to come to some very positive developments, as we have already seen with the free trade agreements we are negotiating.

I very much thank noble Lords for the way they have approached Report stage. This is the first Bill that I have had the pleasure of taking through the House, other than our “son of Bill”, which we did before Christmas. I thank noble Lords for the way that they have assisted me and dealt with my inadequacies from time to time, no doubt, in the way that I have presented this Bill.

I thank your Lordships for the attention you have given to this Bill and I look forward to Third Reading. With that, I ask the noble Lord to withdraw his amendment.

[Lord Lennie (Lab) [V]]

I thank the noble Baroness, Lady Bennett, and the noble Lord, Lord Purvis, for their support for this amendment. I also thank the Minister for his honesty in pointing out our shortcomings in failing to take up these issues when we previously had the opportunity to do so; but that is another matter. I beg leave to withdraw the amendment.

Amendment 46 withdrawn.

Trade Bill

Lord Lennie Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 29th September 2020 Grand Committee

Moved by

[Lord Lennie]

1: Clause 1, page 1, line 16, at end insert—
“(1A) No regulations under subsection (1) may be made until the Secretary of State has entered into negotiations with other parties to the GPA with the objective of enabling greater labour market interventions and compliance with ILO standards in any UK procurement contract to which the GPA applies, and(a) the Secretary of State has made a statement to the House of Commons that the objective has been achieved either in full or in part, or (b) the Secretary of State has made a statement to the House of Commons that the objective has not been achieved.”Member’s explanatory statement
This amendment would require the Secretary of State to enter into negotiations to secure greater labour rights in procurement contracts that the GPA applies to, and to report back on the outcome of these negotiations.

[Lord Lennie (Lab) [V]]

My Lords, like others, I regret that the Committee stage of the Trade Bill has to take place in a Covid-secure manner—our new normal—and I look forward to when we can all return to the Chamber. Until then, we must make the best of what we have. I am extremely grateful to all the staff who have worked so hard to make this all possible.

Trade is an essential component of the UK’s future economic recovery from Covid-19 and to our continuing future prosperity. Labour’s overarching concern is to ensure that the necessary protections and measures that have been developed over more than a century of rising standards are not put at risk by this or any other future Government. We cannot have a series of trade deals that open the door to reduced workers’ rights or living standards or to higher carbon emissions. To ensure that this is not the case, Labour supports acceding to the GPA after Brexit as an independent member, while safeguarding the capacity for public bodies to make procurement decisions in keeping with public policy objectives.

The Government have said that it is their objective to join the GPA as an independent member, with substantially the same arrangements that we currently have with the EU. If we are to have this, there is the significant matter of retained EU law. For that statement to hold true, surely the EU law must continue to apply beyond 31 December 2020. As an example, the public contract regulations will end at the end of next year. It remains essential that the UK maintains the strongest procurement systems for companies in the UK. Labour is about having the strongest possible procurement system. This would instruct the Government to pursue with GPA partners the inclusion of labour standards, environmental standards, support for small and medium-sized enterprises and the consideration of the public health consequences in our annexes to the GPA.

Amendment 1 refers to

“labour market interventions and compliance with ILO standards”.

We want to ensure that companies that fulfil their obligations to the workforce and meet their commitments to working with trade unions in a constructive manner are not undercut by companies that do not. This would reward businesses while supporting their workforce. ILO standards seek to support and protect workers in supply chains, especially those exposed to modern slavery, which are a vital component of procurement.

Amendment 2 refers to environmental exceptions with carbon considerations. Public procurement through the GPA must help in the fight against climate change. Current UK minimum standards take into consideration energy and water usage, carbon footprint, resource efficiency and life-cycle costs in order to set minimum standards of sustainability for government purchases. Our standards need to be protected, both to maintain these procurement standards and to ensure that our schedules at the GPA remain up to date, with action to meet the climate crisis.

Amendment 3 seeks to ensure that SMEs have access to procurement contracts, which can often be a real problem. Now, more than ever, this is essential if this recession is to turn into recovery. Amendment 4 seeks to improve the way in which public procurement operates by addressing public health. The public health value of a provider should be a factor in awarding contracts, not just price. Public health medicine is part of the greater enterprise of improving the public self and that is why procurement matters in this respect.

The TUC has a range of concerns about the provisions of the GPA being more limited than the current measures within the EU procurement directive of 2014, which were transposed into UK domestic law through the public contract regulations 2015. The TUC says that there is no condition in the GPA that obliges member states to ensure that, when performing public contracts, contractors comply fully with the applicable environmental law and with the social and labour standards set out in the EU and national laws in collective agreements. The TUC believes that provisions must be made in the Bill to enable contracting authorities in the UK to include wider definitions of social value and price-quality ratio as well as obligations set out in respect of social, environmental, labour law and collective agreements within their tender specification, contract evaluation and award criteria. These should be incorporated into the regulations that replace the public contract regulations when they expire in December 2020.

Amendments 100, 101 and 102 seek to ensure that any secondary legislation needed to implement commitments under the GPA following our accession should be affirmative. Labour believes that Parliament should have the right to scrutinise the all-important “coverage schedules” that the Government will lay before the WTO in respect of our accession to the GPA.

We are minded to support Amendment 5 in the name of the noble Lord, Lord Hendy, which would ensure that the UK could not implement the GPA if it would prevent public authorities from insisting that public procurement tenders and contracts conform to the UK’s ILO commitments.

I hope that the Minister considers the long-term economic, social, environmental and labour values to be gained from this approach. Unless we are prepared to use this moment, it is hard to see how we will maintain the standards of procurement that we currently have, let alone enhance them. I beg to move.

[Baroness Burt of Solihull (LD)]

My Lords, I shall speak to Amendment 3 on small businesses, to which I have added my name. As we enter the post-transition and post-Covid world of international trade, we must ensure that the role of SMEs in procurement is fully protected so that it can help strengthen the UK’s economic playing card as we navigate the current turbulence and beyond.

At Second Reading, I asked the Minister, the noble Lord, Lord Grimstone, whether, given our new freedom from the EU, we should adopt the policy of the US, Canada, South Korea and Japan to put an annexe in our GPA schedules to allow them to set aside and disapply regulations on behalf of small businesses and other organisations to help bring parity of support for small businesses in accessing markets against larger firms. After all, is that not why the UK decided to leave the EU in the first place? The noble Lord informed me that non-discrimination is the core principle of procurement in the UK and we do not have set-asides for SMEs in international agreements. Okay—I hear him. But whether or not it is intended, it can be more difficult for small businesses to compete against larger firms by virtue of their size and the complexity and requirements of the procurement process.



I will not detain the Committee by going through them all, but when pitching for public contracts, I suggest that few small businesses would feel that the playing field was equal. Take late payment, the scourge of small businesses, particularly because of the relative power of the organisation doing the procuring. The Federation of Small Businesses has long been calling for bad payers to be barred from applying for government contracts. I know that this is something that the Government acknowledge, and this amendment would effectively help the Government to defend themselves against late payers on the trading stage. Why does the Minister feel confident that, when we are competing against the likes of the US, South Korea and Japan, UK small businesses will get fair access to public contracts? Nobody wants to see poor payment practices on the trading stage; this is about fairness and parliamentary accountability, so I would appreciate some commitments from the Minister today.

That brings me to the point of the amendment. It lays a duty on the Government to ensure that small businesses can compete fairly to get greater access to procurement contracts in countries to which the GPA applies. It makes sure that the Government fulfil this obligation by laying a Statement before Parliament reporting that this has been done, and the outcome. If the Minister is committed to a level playing field for small businesses, why not agree to put it into law?

--- Later in debate ---

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord, Lord Fox, for listening so intently to my speech to make those calculations. It is of great benefit to me that he did so. The changes are technical. I do not have them in front of me, although I know what they are. However, if I may, I shall write to the noble Lord and recount them for him.

[Lord Lennie (Lab) [V]]

I thank the Minister and other noble Lords who have taken part in this debate, in particular my noble friends Lord Hain, Lord Hendy and Lady Blower for their contributions on Amendment 5, my noble friend Lord Rooker on Amendment 100, and my noble friend Lord Judd for his childhood memories from the age of 13 about maintaining standards.

We are about trying to avoid any possibility of lowering standards or racing to the bottom. Maintaining current standards and including provisions in current EU law in the crossover to post-EU exit would be the greatest reassurance that we could all receive about the Government’s intentions. I am not in any way doubting the Minister’s well-intentioned summary of his intention and the Government’s provisions. However, if it is not carried over, it leaves the possibility of escaping from one or other provision at some time in future.

The noble Lord, Lord Balfe, remembers Jacques Delors coming to the TUC and talking about the EU’s intentions to provide standards across the whole of the continent. At the time, part of the TUC felt conflicted with those who believed that collective bargaining was the only way forward. A long time has passed since then, and we recognise the importance of legislation in supporting workers and standards, and other provisions that are subject to public procurement.

Therefore, there is no clear-cut decision to be made on these amendments, and the affirmative process brings things into the open. It is not just about the minimum decisions about changing departments’ names; it is about matters, from that, right the way through the procurement process that can be brought out into the open and debated in both Houses as and when it is necessary. It provides the Government with the opportunity to avoid the charge that they are not subjecting themselves to proper scrutiny. That said, for the moment, I beg leave to withdraw these amendments, but we may well return to this at a future stage of the Bill.

Amendment 1 withdrawn.

Corporate Insolvency and Governance Bill

Lord Lennie Excerpts

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

[Lord Fox]

My Lords, I am grateful to all noble Lords who have spoken in this important debate. I am a signatory to Amendment 15 and I thank my noble friend Lady Bowles, the noble Baroness, Lady Altmann, and the noble Lord, Lord Hain, for co-signing it. I join other Peers in acknowledging that the Government have moved in terms of listening to the previous debate and going forward, but the issue that Amendment 15 seeks to address is a serious one. If this Bill went through without the sorts of assurances that we are looking for from the Minister, or remained unamended, that would create a huge issue for pension trustees all over the country. Never mind the ones that are going into insolvency—as the noble Lord, Lord Balfe, set out so eloquently, every single pension trustee would revisit every single pledged asset and would go back to the management of their sponsoring companies to ask for cash instead. I do not need to remind the Minister that cash flow is one of the biggest challenges facing businesses at the moment; it is actually cash that is the problem. To knowingly put in a measure that will drain profitable businesses of cash would be careless, and I do not think that that is what the Government are doing. I think this is an unknowing consequence of the Bill.

To be clear, this concerns assets that have already been pledged. When the Minister spoke earlier, he seemed to be referring to assets being pledged at the time of insolvency, but these are assets which have been pledged in lieu of cash. Given that, I am a little bemused by the idea put forward by the noble Baroness, Lady Neville-Rolfe, that the Pension Protection Fund would somehow be overreaching itself in seeking to protect these funds for pensioners and that it would be giving the PPF too much power. Rather, it is merely the power to protect assets that have been signed over to the pension fund. If they were not assets such as those set out by the noble Baroness, Lady Altmann—real estate and securities—then it would be money. I do not think that the noble Baroness, Lady Neville-Rolfe, is proposing that the courts should have the power to extract money from pension funds, so why should they not have the power to protect against judges extracting assets that have been put aside in lieu of money?

The noble Baroness, Lady Altmann, put a clear question to the Minister, one that I think is very apposite to this point. Does the PPF have the power to prevent judges extracting pledged assets from pension funds and putting them into the pool of assets for distribution to other creditors? If the Minister is able to stand up and say that clearly and unambiguously—for those Members watching remotely, it does not look like he is—there is no problem. However, if the Bill leaves this House unamended or without that pledge, this issue will become a very serious one not just for the pension funds of distressed companies but for every defined benefit pension fund in the country.

[Lord Lennie (Lab) [V]]

My Lords, straight off the bat, I too welcome the Government’s movement on this specific part of this necessary Bill. There will be a sense of relief for direct benefit pension funds and their trustees, the Pension Protection Fund and the regulator. As has been said, all will now have rights of access to information about the intentions of companies and to voice their opinions about the decisions that are being contemplated; a seat at the table, access to court and so forth. This will be true throughout the UK.

When a company seeks a moratorium or when it considers other actions in a potential redundancy and insolvency circumstance, the monitor will be required to notify the pension scheme, the PPF and the regulator to have due consideration of their views about the proposed action. In the event that a moratorium comes to an end or if the monitor changes, the pension scheme trustees and the PPF must be informed. This will mean in effect that the debts owing to a direct benefit pension scheme do not rank below other finance debts. That would recognise the real status of a pension as deferred earnings and should not allow others to accelerate the debt position at the expense of pension provision, as was feared in the original text. These changes have come about due to the strength of the arguments put by my noble friends Lady Drake and Lady Warwick, the noble Baroness, Lady Bowles, on the Liberal Democrat Benches, and the noble Lord, Lord Balfe, and the noble Baroness, Lady Altmann, on the Conservative side. I congratulate them on achieving this much.

However, can the Minister provide the reassurance being sought about the value of direct benefit schemes being put at risk by the sale of assets, and ultimately the whole working of the PPF? Will he closely monitor and consult on any necessary remedial actions that may arise from his examination of this issue? The Minister can take the credit due to him for his part in bringing forward these amendments to the Bill, and they are welcome. But can he confirm that the Government will stay alert and ready to intervene on behalf of pensions and the PPF in the event that the measures in this legislation do not go far enough in protecting them?

[Lord Callanan]

My Lords, I take this opportunity to thank everyone who has spoken in this important debate, and I am grateful for Amendment 15 because it is a very important provision. I am also grateful to noble Lords for their continuing efforts to ensure that pensions are treated appropriately through this Bill. None the less, I hope that they will agree that we are now seeking to introduce specific and satisfactory provisions to deal with pensions’ interests.

I also take this opportunity to assure noble Lords that where charged property is disposed of, it can be done only with the permission of the court and where the court believes that it is necessary to support the rescue. Where the court is satisfied and gives its permission, the net proceeds must go towards satisfying the amounts secured by the charge before they can be used in any other way. From a practical perspective, this amendment is not necessary. If a company in a moratorium was going to court to seek permission to dispose of charged assets, it would at the least have had to have had a conversation with the person to whom those assets are charged. Well before giving clearance to the company to dispose of such assets, the court will of course take account of their views at the hearing.

In response to my noble friend Lady Altmann and the noble Lord, Lord Hain, we have been in detailed discussions with colleagues in the DWP, along with both the Pensions Regulator and the Pension Protection Fund, in the formulation of these amendments. We are seeking to ensure that the PPF is able to play a role in a company’s rescue plan where it is appropriate for it to do so. Let me also provide the assurance that the noble Lord, Lord Lennie, was looking for. Of course, we will continue to monitor these arrangements to ensure that they act in the fairest possible way for all the different stakeholders in the process that I referred to earlier.

On that basis, I hope that I have been able to provide sufficient reassurance to noble Lords and that they will feel able to not move their amendments when the time comes. I beg to move.

Corporate Insolvency and Governance Bill

Lord Lennie Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Lennie (Lab) [V]]

My Lords, I had rather thought that the Minister would speak at the beginning of this debate, as that might have obviated some of the discussion that we have had to have; he has not yet fulfilled what the Report stage amendments will be, based on the letter that he produced last night. There seem to be shared concerns among all speakers about the relative position of debt—finance debt, pension debt—and the weakness of the PPF. Does it or does it not have a seat on the discussion body? Would that be at the beginning of the discussions or, as someone put it, just a cc or copying in of the PPF into the information? Will the risk of gaming through acceleration of a company into insolvency by those who seek to gain from that position be guarded against? And so on.

At this stage, we should at least thank the Minister for his reconsideration in advance of signalling that there will be moves at Report stage. Whether they will be sufficient moves we will have to wait and see. This may not be the last word on these matters, but it may go some way towards putting in place a sensible, if not ideal, position for the PPF and the defined benefit pension scheme trustees, in the event of insolvency moratorium or restructuring plans. It is not yet clear how far he is prepared to go and it is a complex issue, as we have heard from all the speakers.

Secondly, I want to express my huge appreciation and admiration for the noble Baronesses, Lady Drake and Lady Warwick, from the Labour Benches, assisted by the noble Baroness, Lady Altmann, and the noble Lord, Lord Balfe, from the Conservatives, in their pursuit of this matter. It is hugely important to everyone that we get this right. The 2004 protection fund legislation was profound, important and lasting. It should not be put at risk by what we are attempting to do in response to the Covid crisis, whether on a temporary or permanent basis. They deserve our thanks and praise for the thorough way in which they have conducted themselves. There is much more to come but, for now, we will have to await the amendments and judge on Report whether those intentions have been fulfilled.

Finally, I urge the Minister in the meantime to take up the offer of discussions made by the noble Baronesses, Lady Drake and Lady Warwick, in advance of Report stage, to see if they can iron out any creases that there may be in what he may propose.

[Lord Callanan]

I thank all noble Lords for tabling amendments on this important topic. I first clarify to the noble Lord, Lord Lennie, and others that I thought it would be helpful to email noble Lords last night to inform them of my intention to table an amendment on Report because, under the new procedures, I was not able to stand up at the start of this grouping to tell people in advance. I thought it would be helpful to give people advance notice of this to stop them asking for all the things that we were going to do anyway. I thought that it might have played some part in curtailing the debate on this.

I start by reminding the House that both the moratorium and the restructuring plan are not insolvency events—they are company rescue procedures. Where the company itself can be saved as a going concern, obviously, the returns to all creditors and stakeholders of the company will be better.

I turn specifically to Amendment 20 for Great Britain, tabled by the noble Baroness, Lady Drake, and others, and Amendment 39 for Northern Ireland. I do understand the intentions behind these amendments. However, removing financial services contracts from the list of liabilities for which a company does not have a payment holiday when it enters a moratorium would mean that the company does not have to pay these liabilities during the moratorium.

The purpose of excluding these contracts from the payment holiday is to ensure that the moratorium does not affect existing financial services legislation or the operation of the financial markets, and that financial markets participants continue to have legal certainty to facilitate the efficient functioning of those markets. Not excluding them could have potentially severe consequences for the operation of the markets and, in turn, the stability of the financial system and the availability and cost of these products.

In addition, it is important to recognise that financial services firms are a key part of making the moratorium provisions work. Critically, they are not excluded from the moratorium, as I said on the last grouping, where they are a creditor to a company in distress so that they continue to support those companies. It is recognised that not excluding financial services contracts from the payment holiday definition could remove the incentive for these firms to continue to provide finance. That could leave companies in financial difficulty in a far worse-off position than they would otherwise be.

I understand the purpose of these amendments, and the concerns that many noble Lords raised during this debate and at Second Reading on the super-priority of financial services debts in the moratorium. In discussions with the various stakeholders, it has become clear that unpaid financial services debts that have been accelerated for payment during the moratorium receive this super-priority status. We would not want this to provide an incentive for financial services firms to jeopardise the rescue of businesses during a moratorium by accelerating financial services contracts for payment, so as to benefit from this super-priority of their debt in a subsequent insolvency. I will therefore table an amendment on Report to address this issue, and I thank noble Lords who have raised it with me.

I turn to Amendments 27, 63, 64 and 118. Again, I understand the intentions of these proposals. We can all agree that recent high-profile insolvency cases that featured large deficits owed to the defined benefit pension scheme were worrying. We all recognise the uncertainty that this brings for employees, both past and present, in such cases. Again, I assure the Committee that the Government recognise the need for safeguards around these pension schemes and have been working closely with key stakeholders over the last few weeks on these issues. We have reflected on the concerns raised, so I confirm that it is our intention to table amendments on Report to ensure a greater role for the Pension Protection Fund and that pension protection is made clear in the Bill. Again, I am grateful to noble Lords for their engagement on this issue. Both the amendments that I have mentioned will be tabled tomorrow to give noble Lords the opportunity to study them in advance of Report.

Let me address some of the points made. Initially, the noble Baroness, Lady Drake, and I think the noble Lord, Lord Fox, asked—he may not have done so—whether pension schemes can be crammed down. The protections that apply generally will cover a pension scheme included in a restructuring plan proposal. There are strong protections, including a high threshold for class support of 75%, and where cross-class cram down is requested and none of the members of a dissenting class are worse off than they would have been under the next most likely outcome. Importantly, even if all the statutory requirements are met, the court can refuse to sanction a restructuring plan if it is fair and equitable for it so to do.

My noble friend Lady Altmann and, on this occasion, the noble Lord, Lord Fox, asked about the debt priority of pensions and whether the current ranking is appropriate. When insolvency occurs, there is a balance to be struck in considering the order in which those owed money are paid out of the available assets. There are seldom enough funds to pay all creditors in full in an insolvency. To ensure fairness, the law requires that available funds be distributed in a certain order. Unsecured creditors are paid once the secured creditors and preferential debts, which of course include employees’ hard-earned wages and salary, have been dealt with; they share the funds that are then left over. Any deficit owed to a pension scheme ranks alongside all other unsecured creditors, which will inevitably include trade suppliers, some of which will be small and micro companies. I confirm to the noble Lord that this legislation has not changed the existing provision and that it carries on.

With those explanations, and with the notice I have given of the proposed government amendments on Report, I hope that I have provided sufficient justification for the noble Baroness to withdraw her amendment.

--- Later in debate ---

The rest of the amendments I would normally have quite a lot to say on, because I am extremely interested in the balance of corporate governance, other stakeholders and the inclusion of workers on boards. But it is just not possible in this short time to do justice to them, though many are extremely worthy. Again, it is a huge disappointment that the Government should have accelerated some permanent measures and seem to have neglected many others.

[Lord Lennie [V]]

I thank my noble friends Lord Hendy, Lord Hain and Lord Monks for bringing forward their amendments on this part of the Bill. Given the constraints on time, I ask the Minister whether the Government intend to bring forward further legislation on this matter. Does this have to be dealt with now, or can it wait for further legislation?

[Baroness Bloomfield of Hinton Waldrist]

My Lords, these are important amendments, which deserve a proper response. The Government agree with much of the sentiment behind some of the amendments, and so I hope noble Lords will forgive me if I commit to write to them with a proper response tomorrow. Clearly, the Government are not able to accept the amendment, and I hope that the noble Lord will therefore withdraw it.

Corporate Insolvency and Governance Bill

Lord Lennie Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Lord Lennie (Lab) [V]]

My Lords, I begin by thanking everybody who has spoken in this important debate today, and the Minister for the briefings, meetings and information that he has provided on the Bill—it has been very helpful. It has been good to hear so many contributions concentrate on the vital matter of how the Government can produce a framework to support businesses and give them the best fighting chance of succeeding, rather than falling prey to insolvency.

I would like to draw particular attention to the speeches on pensions and pensions governance, by my noble friends Lady Drake and Lady Warwick; on workers’ rights, by my noble friends Lord Hendy and Lord Hain; and on encouraging entrepreneurs in the future, by my noble friend Lord Blunkett. I reassure my noble friend Lord Liddle that the Labour Party is no longer interested in replacing capitalism; sustained capitalism is here to stay, I assure him. I also draw attention to the speech of my noble friend Lord Stevenson, who introduced, with understanding, comprehension and intellect, the range of concerns that we have with the Bill and its shortcomings.

In this brief contribution, I will summarise where the Labour Party feels that the Bill could, and should, do more, and indicate where we will table key amendments in Committee. Faced with the most dramatic recession for centuries, we must do all that we can to save as many viable businesses as possible from going under. This will help make the recession less deep and the recovery less difficult.

The Resolution Foundation estimates that up to 7 million people—workers—will face unemployment if the coronavirus pandemic lasts for up to 12 months; already we are at three months. A second wave of support for businesses will be essential if we are to prevent avoidable future closures and mass redundancies. Already, there have been redundancies of 500 jobs at Aston Martin; 1,500 jobs at Lookers; 3,000 jobs at the Restaurant Group; and, as of yesterday, 10,000 jobs worldwide at BP. Surely that must concentrate the mind of the Government to do more, and more quickly, to provide additional help for the sectors that will take longer to recover, such as hospitality, tourism and the arts. We need a recovery plan to take us out of recession.

Having forced the closure of many businesses, it is right that the Government should do all that they can to support these businesses in their rescue and recovery phases. The Government must act quickly. Where the Bill proposes measures that help to reduce insolvency, we will of course support it. Where it needs improvement, particularly to support the less powerful, we will seek to amend it.

On a permanent basis, we think it is right to give breathing space to firms; preventing suppliers from sending businesses into early liquidation is the right thing to do. On the temporary measures, it makes good sense to remove the threat around winding-up orders, and the suspension of personal liability for wrongful trading makes sense on a strictly time-limited basis. Easing the requirements for company filing deadlines and AGMs is also sensible.

The length of time that measures need to be in place is, however, open to question, as my noble friend Lord Stevenson and the noble Lord, Lord Fox, have said. Does anyone believe that extending deadlines until 30 June, or 30 days after the Bill is passed, will really be long enough?

Preventing hostile action against businesses during this time will be essential, until they have enough opportunity to prove their continued viability. Surely the Government, like the rest of us, know that this will take beyond 30 June or 30 days after the Bill is passed. The end of September might make more sense as an initial deadline. Some believe—indeed, some Tories believe—that the end of the year would be a better deadline than that. Many businesses will not even have reopened on 30 June—hospitality, entertainment, restaurants and pubs, to name but a few. How can they hope to be persuaded of their continued viability 30 days thereafter?

The rights of workers are absent from the Government’s proposals. As has been made clear by the noble Baronesses, Lady Drake and Lady Warwick, when a company is drafting an RP, surely it makes sense to consult its most valuable asset—its workforce. The legal underpinning of this would prevent the kind of hostility that there currently is at British Airways. Rather than keeping the workforce uncertain and cast in the role of reacting to the proposal, as their jobs and futures are at stake, surely they should have the legal right to consultation and to have their voices heard, as a contribution to restructuring plans.

The treatment of pension funds is curious. I am grateful to the Pensions and Lifetime Savings Association for highlighting this problem. Defined benefit provision schemes, as unsecured creditors, will likely lose out to banks and other financial arrangements, as secured creditors, thereby ranking pension funds below the bankers. In the event of insolvency, by the time the secured creditors have been paid out, there is unlikely to be anything left to pay pension fund contributions. Why do the Government not propose to treat them as priority creditors? Pensions are deferred earnings and their value should not be put at risk by this legislation.

As to the future, the Government should have a credible plan about how they will support the green new deal. Will they put in place new apprenticeships that will support the insulation of our homes, the design and building of electric cars, and the building of new forestry areas—major projects designed to help our economic recovery? If nothing else, this crisis has shown that only government can will the resources to steer companies out of a deep economic recession.

The Labour Opposition support the Government in these measures in so far as they go, although this is a long and complicated piece of legislation, but we have concerns about the limitations of, and other absences from, the Bill. We will table amendments to this effect in Committee. In the meantime, we look forward to hearing the Minister’s response.

Smart Meters

Lord Lennie Excerpts

Monday 8th July 2019 Lords Chamber

Asked by

[Lord Lennie]

To ask Her Majesty’s Government what assessment they have made of the roll-out of smart meters.

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

My Lords, the smart meter rollout in Britain is making good progress, with over 14.3 million smart and advanced meters operating, as of the end of March 2019. The programme remains on track to offer smart meters to every home and small business by the end of 2020.

[Lord Lennie (Lab)]

I thank the Minister for that Answer—just the 50 million or so short of target. Given the promised financial benefits to hard- pressed customers and the obvious global advantages of moving to a low-carbon economy associated with SMETS 2, why do the Government persist in leaving the implementation of this policy to the energy suppliers? Can the Minister state clearly why Ofgem rejected five of the major suppliers’ rollout plans for 2019 as being inadequate? Do the smart meters just not do what it says on the tin?

[Lord Henley]

My Lords, I had better write to the noble Lord with greater detail about Ofgem’s comments. It has completed the 2019 review and believes that suppliers are on track to meet our commitment that every household should have had the offer by 2020.

Environment and Climate Emergency

Lord Lennie Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Henley]

My Lords, we passed the legislation last week. We have announced an environment Bill, the Agriculture Bill is coming along, we have announced an energy White Paper and there is the industrial strategy, which has energy-specific parts. A whole range of government action is going on and there will be more to come.

[Lord Lennie (Lab)]

My Lords, I will give the Minister a second chance—as he knows, everyone deserves a second chance—to answer the question that was not answered in last Wednesday’s debate. Why will international aviation and shipping not be included in the Government’s climate change emissions legislation?

[Lord Henley]

My Lords, as I made quite clear in the debate last week, our plans for net zero cover the whole economy, including international aviation and shipping.

Nissan in Sunderland

Lord Lennie Excerpts

Tuesday 5th February 2019 Lords Chamber

[Lord Henley]

My Lords, I accept that a no-deal exit would be difficult. The point we are making is that we do not want no deal; that is why we are looking for a deal. Other than that, I have to say to the noble Lord that he paints a unduly gloomy picture. Things might be difficult for the automotive industry but, as I made clear, he will have seen that over the past few years—that is, since the vote in 2016—competitive decisions have been made in the automotive industry that have brought new car models to Nissan, Toyota, BMW, PSA Vauxhall in the UK, and that has created jobs in all parts of the country.

[Lord Lennie (Lab)]

My Lords, other car makers in this country—Honda, Toyota and BMW—have pulled out from bringing models to this country. That demonstrates a lack of confidence in the future of manufacturing here, due in part to Brexit uncertainty. Nissan clearly does not feel that it can rely on the assurances given by the Secretary of State in his recently published letter that there will be free, frictionless trade between here and Europe. Why not?

[Lord Henley]

Things have changed. It is not solely to do with that. As other noble Lords have said, the whole car industry is going through a rather turbulent time. We only have to look at what has been happening in, for example, sales of diesels. For that reason, Nissan has to make difficult decisions. It has decided that it will go ahead with the X-Trail but will build it in Japan, no doubt for markets over there. Nissan is still committed to Sunderland. There are still 7,000 jobs there. There are still 35,000 more jobs in the supply chain. Things are not as bad as the noble Lord is trying to suggest.