Accounting Standards (Prescribed Bodies) (United States of America and Japan) (Amendment) Regulations 2024
Lord Offord of Garvel Excerpts(1 month, 1 week ago)
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Lord Offord of Garvel
That the Grand Committee do consider the Accounting Standards (Prescribed Bodies) (United States of America and Japan) (Amendment) Regulations 2024.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
My Lords, I beg to move that these regulations, which were laid before the House on 21 February 2024, be approved.
The Accounting Standards (Prescribed Bodies) (United States of America and Japan) Regulations 2015 provide a regulatory easement of the UK’s company reporting rules for US-listed or Japanese-listed parent companies that have chosen to re-domicile in the UK. The easement was originally introduced in 2012 and provides qualifying companies with extra time to transition from their national accounting practices to UK-recognised accounting standards. Following their UK incorporation, parent companies listed in the US or Japan may take up to four financial years to make the transition in order to prepare their group accounts in line with UK accounting principles.
At the original time of introduction in 2012, this was deemed especially helpful for companies using US and Japanese accounting standards that might otherwise have struggled to adapt to UK accounting standards when domiciling to the UK.
In 2023, the department published a post-implementation review of the 2015 regulations. The review took evidence from a small number of previously US-listed and Japanese-listed, now UK-domiciled, firms about their cost savings from the easement. The survey responses confirmed that the regulatory easement provided flexibility and enabled cost savings by the businesses using it. Businesses responding to the survey estimated that the regulations’ accounting conversion easement had reduced the scale of their conversion costs significantly. One company also said the regulations made possible the “most prudent and efficient” way for it to submit while listed in the US.
Although the post-implementation review found that the regulations were a helpful feature of the UK’s regulatory environment, it also identified a small risk of abuse of the easement. In particular, the review noted that more could be done to improve understanding that the easement was a transitional, time-limited concession, not a permanent exemption from the UK’s company reporting rules.
Having conducted the post-implementation review, the Government decided to extend the regulations, believing them to be a small, but useful, contribution to a pro-growth regulatory regime that supports inward investment. To give this decision effect, the Government laid the Accounting Standards (Prescribed Bodies) (United States of America and Japan) (Amendment) Regulations on 6 September 2023. These regulations extended the easement in recognition of its evident benefit to businesses that have used it so far. The easement would have expired without the regulations, with the result that newly domiciled US and Japanese companies would have been required to convert accounting practice immediately when they filed their first set of UK accounts.
When extending the regulations, the Government also took the opportunity to reduce the risk of the easement being misused or misunderstood by its beneficiaries. Specifically, regulation 4 of the 2023 regulations introduced an obligation on companies using the easement to include a note in their accounts stating when the easement ceases to apply. This additional requirement on companies was deemed a simple and proportionate mechanism to reduce the risk of abuse.
Regrettably, my department, the Department for Business and Trade, made a parliamentary procedural error in laying the latter provision by mistakenly using the negative resolution procedure rather than the correct affirmative resolution procedure. The new statutory instrument, which I beg to move today, is intended to correct the error. It removes regulation 4 of the 2023 amending regulations and substitutes a new regulation 5A in the 2015 regulations, doing this by the correct affirmative resolution procedure. The remainder of the 2023 amending regulations were made correctly, but the Government are grateful to the Joint Committee on Statutory Instruments for drawing their attention to the procedural error.
Driving growth in the UK economy requires attracting inward investment. These regulations are just one example of how we can make it easier for overseas companies to incorporate in the UK and create jobs in the UK economy. I beg to move.
Lord McNicol of West Kilbride (Lab)
I thank the Minister for introducing this statutory instrument, which remedies the Government’s mistake from last year. It is obviously a very short one and we on this side are not going to oppose it. I welcome any opportunity to speak in favour of regulations that seek to make businesses more likely to domicile in the UK. Making sure that Britain is open for business is vital and something that we want to push the Government to do in all areas.
As the Minister said, the 2023 post-implementation review found these regulations to be a positive although not decisive factor in encouraging companies to domicile here. The review also encouraged the Government to put forward Regulation 5A, which we now have an opportunity to welcome.
The Minister talked about abuse. What amount and type of abuse does he believe the regulation will counter? I could not quite understand that. What response has there been from the relevant UK companies to the regulations, given that they have already been introduced and implemented? Are those businesses satisfied with the level of clarity?
The Minister referred to the 2012 regulations but the draft instrument and the Explanatory Memorandum talk about the 2015 regulations, so I was not quite clear what he was referring to. Some clarity on that would be much appreciated.
Lord Offord of Garvel (Con)
I thank the noble Lord for his comments on this statutory instrument, and I welcome his enthusiasm for a pro-growth regulatory environment in the UK, which we have in common on both sides of the House. These regulations provide an easement of the UK’s company reporting rules, specifically to US and Japanese-listed parent companies.
I emphasise that this is a minority sport; not many companies participate in it, but where they do, among the major economies, there is perhaps more divergence in accounting standards in the US and Japan, because they are the biggest in the G7. That is why we have accommodated them with this legislation. I point out that this is a transitional concession simply to give companies more time and scope to convert their accounts to UK-recognised accounting principles. It is also designed to help safeguard the integrity of the UK’s accounting systems and reduce the risk of abuse.
On the concept of abuse, the post-implementation review found one instance in which a company was at risk of using regulations beyond the allotted four-year period. This is a minor risk, with only one instance, but the Government thought it prudent to address the concern while we have this opportunity.
The companies using this easement found it to be a small but useful intervention, citing cost savings of tens of thousands of pounds in some instances. For several larger companies, it amounted to millions of pounds.
The Government now propose to correct the procedural error made in laying Regulation 4 of the 2023 regulations by means of this affirmative statutory instrument. I therefore commend it to the Committee.
Digital Markets, Competition and Consumers Bill
Lord Offord of Garvel ExcerptsTuesday 26th March 2024
(1 month, 1 week ago)
Lords ChamberRead Full debate Digital Markets, Competition and Consumers Bill 2022-23 View all Digital Markets, Competition and Consumers Bill 2022-23 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 53-I Marshalled list for Third Reading - (25 Mar 2024)
The Lord Privy Seal (Lord True) (Con)
My Lords, I have it in command from His Majesty the King to acquaint the House that His Majesty, having been informed of the purport of the Digital Markets, Competition and Consumers Bill, has consented to place his interest, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
My Lords, I will make a brief statement on the devolution status of the Bill. Parts 3, 4 and 5 of the Bill include provisions within the legislative competence of the Northern Ireland Assembly relating to consumer matters. The legislative consent process is not engaged in Scotland or Wales.
As noble Lords will be aware, the Executive and Assembly have only recently been restored in Northern Ireland. After the return of the Northern Ireland Assembly and Executive on 3 February, my ministerial colleague the Minister for Enterprise, Markets and Small Business wrote to his counterpart in Northern Ireland, seeking their agreement to initiate the legislative consent process and to support a legislative consent Motion in the Northern Ireland Assembly. Since then, my officials have been in regular contact with the Northern Ireland Civil Service and we are hopeful that the legislative consent process will progress swiftly over the coming weeks.
Although it has not been possible to secure consent by this time, we take great comfort from the engagement that has taken place with the Northern Ireland Civil Service throughout the passage of the Bill, including via correspondence between Permanent Secretaries. I take this opportunity to thank the officials in the Executive and express my gratitude for the close working to date. There has historically been a policy and enforcement imperative in Northern Ireland to maintain parity with Great Britain in relation to consumer protection matters. With the support of the Northern Ireland Office, my officials have liaised with the relevant Northern Ireland departments to ensure that the Bill considers and reflects the relevant aspects of devolved legislation. We remain committed to ensuring sustained engagement on the Bill with all three devolved Administrations as it progresses through Parliament.
Amendment 1
Lord Offord of Garvel
“(b) in such a way that the information referred to in subsection (1) is more prominent than any other information given to the consumer at the same time, and”Member's explanatory statement
This amendment removes the prohibition against a trader giving a consumer any other information at the time they give a reminder notice but requires that the information that must be contained in a reminder notice must be more prominent than any other information that is given.
Lord Offord of Garvel (Con)
My Lords, I am delighted to move Amendment 2, which mirrors the intention of the amendment tabled by my noble friend Lord Lucas on Report on reminder notices, an amendment which was also supported by my noble friend Lord Black, the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Jones.
Amendment 2 would remove the requirement for businesses to send reminder notices separately from all other information. Instead, other information can be given at the same time as a reminder notice, so long as the required information is the most prominent information. This amendment will ensure that the Bill strikes a better balance between ensuring that consumers are reminded about their ongoing subscription while enabling businesses to streamline their communications and provide other information which they consider to be useful to consumers in these notices.
I hope that your Lordships agree that this amendment delivers upon the undertaking I made on Report to address this issue, and therefore that noble Lords will support it. I beg to move.
Baroness Jones of Whitchurch (Lab)
My Lords, we welcome the Government’s amendment on subscription reminder notices. As has been said, the noble Lord, Lord Lucas, made a very sensible intervention when we debated this in Committee and on Report, and it provides a helpful clarification to service providers. I hope that this amendment and the other changes that we made on Report have now struck a much better balance between businesses’ needs and consumer interests.
We look forward to hearing details of the department’s further work on implementing the gift aid protections and other work on cancellation methods, but, for now, we are pleased with the progress that has been made on the Bill and we wish it a speedy onward passage.
Lord Offord of Garvel (Con)
I thank my noble friends Lord Black and Lord Lucas, and today the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Jones, for their continuing engagement on this topic and on the Bill more broadly. I am pleased they agree that the Government have achieved the right balance between business and consumers on reminder notices and that we have ensured that businesses’ communications with customers can be more streamlined.
Lord Offord of Garvel
“(za) section (Mergers involving newspaper enterprises and foreign powers) (and Schedule (Mergers involving newspaper enterprises and foreign powers));”Member's explanatory statement
This amendment provides for the provision inserted by my amendments relating to foreign control of newspaper enterprises to come into force on the day on which this Bill is passed.
Lord Offord of Garvel
“(3A) In subsection (5), after “deciding” insert “whether two or more enterprises have ceased to be distinct at a time or in circumstances falling within section 24,””Member's explanatory statement
This amendment clarifies that, following other amendments made by Schedule 4 to the Bill, section 59(5) to the Enterprise Act 2002, which refers to the creation of a relevant merger situation, also includes a reference to two or more enterprises ceasing to be distinct (which is a requirement for there to be a relevant merger situation).
Lord Offord of Garvel
“ScheduleMergers involving newspaper enterprises and foreign powersIntroduction
1 In EA 2002, Part 3 (mergers) is amended as follows.Prohibition on newspaper enterprise mergers involving foreign powers
2 After Chapter 3 insert—“Chapter 3AMergers involving newspaper enterprises and foreign powers70A Intervention by the Secretary of State(1) The Secretary of State must give the CMA a notice (a “foreign state intervention notice”) if the Secretary of State has reasonable grounds for suspecting that it is or may be the case that—(a) a foreign state newspaper merger situation has been created, or(b) arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a foreign state newspaper merger situation.(2) A foreign state intervention notice must describe the foreign state newspaper merger situation to which it relates.(3) For the purposes of this Chapter a foreign state newspaper merger situation has been created where—(a) as a result of two or more enterprises ceasing to be distinct, a relevant merger situation would have been created by virtue of section 23(1) if the modifications in Schedule 6A had effect,(b) one of the enterprises concerned is a newspaper enterprise, and(c) as a result of the enterprises ceasing to be distinct, a foreign power is able to control or influence the policy of the person carrying on the newspaper enterprise, or is able to control or influence that policy to a greater extent.(4) Schedule 6B makes provision about the circumstances in which a foreign power is able to control or influence the policy of a person for the purposes of this section (and references to a foreign power being able to control or influence the policy of a person to a greater extent are to be interpreted accordingly).(5) A foreign state intervention notice—(a) comes into force when it is given, and(b) ceases to be in force when the matter to which it relates is finally determined under this Chapter (see section 70F).70B Investigation and report by the CMA(1) Where the Secretary of State gives the CMA a foreign state intervention notice, the CMA must, within such period as the Secretary of State may require, give the Secretary of State a report in relation to the case.(2) The report must include—(a) a summary of representations relevant to the case that have been received by the CMA, and(b) a decision as to whether the CMA believes that—(i) a foreign state newspaper merger situation has been created, or(ii) arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a foreign state newspaper merger situation. (3) The CMA must carry out such investigations as it considers appropriate for the purposes of producing a report under this section.(4) For the purposes of its investigation the CMA must invite representations from the enterprises concerned in the case.70C Intervention to prevent foreign control of a newspaper enterprise(1) Subsection (2) applies where the Secretary of State has received a report under section 70B stating that the CMA believes that—(a) a foreign state newspaper merger situation has been created, or(b) arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a foreign state newspaper merger situation.(2) The Secretary of State must make an order containing such provision as the Secretary of State considers reasonable and practicable for the purposes of reversing or preventing the creation of the foreign state newspaper merger situation identified in the report.(3) An order under subsection (2) may contain—(a) anything permitted by Schedule 8 (provision that may be contained in certain enforcement orders), and(b) such supplementary, consequential or incidental provision as the Secretary of State considers appropriate.(4) An order under subsection (2)—(a) comes into force at such time as is determined by or under the order, and(b) may be varied or revoked by another order.(5) Paragraph 2 of Schedule 7 (enforcement regime for public interest and special public interest cases: order for the purposes of preventing pre-emptive action)—(a) applies in relation to a foreign state intervention notice as it applies in relation to an intervention notice, and(b) for this purpose, is to be read as if—(i) sub-paragraph (10) were omitted;(ii) for sub-paragraph (12), there were substituted—“(12) In this paragraph “pre-emptive action” means action which might prejudice a foreign state intervention notice or a report under section 70B, or might impede the taking of any action under this Part in relation to such a notice or report”70D Other powers under this Part(1) Nothing in this Chapter limits the exercise of powers in relation to a foreign state newspaper merger situation under other provisions of this Part.(2) The powers in this Chapter may be exercised in relation to a foreign state newspaper merger situation regardless of whether any other power under this Part has been exercised in relation to the case.(3) The CMA must, in considering whether to make a reference under section 22 or 33, bring to the attention of the Secretary of State any case which it believes may be relevant to the duty in section 70A(1).70E Meaning of “foreign power”(1) In this Chapter, “foreign power” means—(a) the sovereign or other head of a foreign state in their public or private capacity,(b) a foreign government or part of a foreign government,(c) the head or senior members of a foreign government in their private capacity,(d) an agency or authority of a foreign government, or of part of a foreign government, (e) the head or senior members of an agency or authority of a foreign government, or of part of a foreign government, in their private capacity,(f) an authority responsible for administering the affairs of an area within a foreign country or territory, or persons exercising the functions of such an authority,(g) a political party which is a governing political party of a foreign government, or(h) the officers of a political party, which is a governing political party of a foreign government, in their private capacity.(2) A political party is a governing political party of a foreign government if persons holding political or official posts in the foreign government or part of the foreign government—(a) hold those posts as a result of, or in the course of, their membership of the party, or(b) in exercising the functions of those posts, are subject to the direction or control of, or significantly influenced by, the party.(3) In this section—“foreign country or territory” means a country or territory outside the United Kingdom, the Channel Islands, the Isle of Man or the British Overseas Territories;“foreign government” means the government of a foreign country or territory;a“government” includes persons exercising the functions of a government;“territory” includes the constituent territories of a federal state.70F Other interpretation(1) For the purposes of this Chapter, section 44(10) is to be read as if the definition of “newspaper” included a news publication circulating wholly or mainly in the United Kingdom or in a part of the United Kingdom on any periodic basis.(2) For the purposes of this Chapter, a matter is finally determined when the Secretary of State—(a) makes an order under section 70C(2), or(b) publishes under section 107 a report of the CMA under section 70B which the Secretary of State has received and which states that the CMA has decided that the CMA believes that—(i) no foreign state newspaper merger situation has been created, or(ii) no arrangements are in progress or in contemplation which, if carried into effect would result in the creation of a foreign state newspaper merger situation.70G Regulations(1) The Secretary of State may by regulations change the meaning of—(a) “foreign power”, or(b) “newspaper”,for the purposes of this Chapter.(2) Regulations under subsection (1)(a) may, among other things—(a) provide for a description of person to be treated as if they were not a foreign power, and(b) frame any such description by reference to—(i) the independence of persons from other descriptions of foreign power, or(ii) the interest which persons have in a newspaper enterprise.(3) The Secretary of State may by regulations apply any provision made by or under Chapter 1, with or without modifications, for the purposes of this Chapter (including by way of amendments to the modifications in Schedule 6A).(4) Regulations under this section may, among other things, make provision having effect on or after 13 March 2024.”3 After Schedule 6 insert—“Schedule 6ADetermination of when a foreign state newspaper merger situation has been createdApplication of sections 23 to 29
(1) Sections 23 to 29 apply for the purposes of Chapter 3A of Part 1, subject to the following modifications.(2) Section 23 is to be read as if—(a) in subsection (1), for the amount in paragraph (b), there were substituted “£2 million”;(b) in subsection (9), for paragraphs (a) and (b), there were substituted—“(a) in relation to the giving of a foreign state intervention notice, the time when the notice is given;(b) in relation to the giving of a report by the CMA under section 70B, the time of the giving of the report.”(3) Section 24 is to be read as if—(a) for subsection (1)(a) there were substituted—“(a) the two or more enterprises ceased to be distinct enterprises before the day on which—(i) in a case to which section 23(9)(a) applies, the foreign state intervention notice relating to them is given, or(ii) in a case to which section 23(9)(b) applies, the CMA gives its report relating to them under section 70B,and did so not more than four months before that day; or”;(b) in subsection (1)(b), after “distinct enterprises” there were inserted “, including facts about whether or the extent to which a foreign power is able to control or influence the policy of a person carrying on a newspaper enterprise as a result of the enterprises ceasing to be distinct enterprises,”;(c) the reference to the CMA in subsection (2)(a) included a reference to the Secretary of State;(d) for subsection (2)(b) there were substituted—“(b) it is given to the Secretary of State or the CMA more than four months before the day on which—(i) in a case to which section 23(9)(a) applies, the foreign state intervention notice relating to them is given, or(ii) in a case to which section 23(9)(b) applies, the CMA gives its report relating to them under section 70B; or(c) the facts are made public more than four months before the day on which—(i) in a case to which section 23(9)(a) applies, the foreign state intervention notice relating to them is given, or(ii) in a case to which section 23(9)(b) applies, the CMA gives its report relating to them under section 70B.”(4) Section 25 is to be read as if—(a) subsections (4) and (5) were omitted;(b) the powers to extend time-limits under section 25 were not exercisable by the CMA before the giving of a foreign state intervention notice by the Secretary of State.(5) Section 26 is to be read as if—(a) in subsection (3)—(i) “materially” were omitted; (ii) for “may, for the purposes of subsections (1) and (2), be treated” there were substituted “is to be treated, for the purposes of subsections (1) and (2),”;(b) for subsection (4) there were substituted—“(4) For the purposes of subsection (1), in so far as it relates to bringing two or more enterprises under common control, where a foreign power is already able to control or influence the policy of a person carrying on a newspaper enterprise to some extent, the foreign power is to be treated as bringing the newspaper enterprise under its control if anything is done which results in the foreign power being able to control or influence the policy of that person to a greater extent (whether by virtue of acquiring more shares or voting rights in the person, directly or indirectly, or otherwise).”(6) Section 27 is to be read as if—(a) references to the “decision-making authority” were to “the CMA or the Secretary of State”;(b) in subsection (5), for “a reference” there were substituted “deciding whether or when a foreign state newspaper merger situation has been created”.(7) Section 28 is to be read as if, in subsection (4), the reference to the “decision-making authority” were to “the CMA or the Secretary of State”.(8) Section 29 is to be read as if—(a) in subsection (1)—(i) the reference to the “decision-making authority” were to “the CMA or the Secretary of State”;(ii) for “a reference” there were substituted “deciding whether or when a foreign state newspaper merger situation has been created”;(b) in subsection (2)(a)(i) “materially” were omitted;(c) in subsection (2)(a)(ii), for “degree” there were substituted “extent”;(d) subsection (2)(b) and (3) were omitted.Application of the Enterprise Act 2002 (Anticipated Mergers) Order 2003 (S.I. 2003/1595)
(1) The Enterprise Act 2002 (Anticipated Mergers) Order 2003 applies for the purposes of Chapter 3A of Part 1, subject to the following modifications.(2) In Article 3, the words before paragraph (a) are to be read as if, for “in relation to references and notices”, there were substituted “for the purposes of Chapter 3A of Part 1 of the Act”.(3) Article 3(a) is to be read as if—(a) in the substituted version of section 27(5), for “a reference” there were substituted “deciding whether or when a foreign state news paper merger situation will be created”;(b) the substituted version of section 27(6)(a)(i), for “the reference” there were substituted “the foreign state intervention notice relating to the situation”.(4) Article 3(b) is to be read as if—(a) in the substituted section 29(2)(a)(i), “materially” were omitted;(b) in the substituted section 29(2)(a)(ii), for “degree” there were substituted “extent”;(c) in the substituted section 29(4), for “the reference” there were substituted “the foreign state intervention notice”.Schedule 6BControl or influence of a person by a foreign powerPart 1Conditions for control or influence(1) A foreign power is able to control or influence the policy of a person for the purposes of section 70A if one or more of the following conditions is met. (2) Condition 1 is that the foreign power holds, directly or indirectly, any of the shares in the person.(3) Condition 2 is that the foreign power holds, directly or indirectly, any of the voting rights in the person.(4) Condition 3 is that the foreign power holds the right, directly or indirectly, to appoint or remove an officer of the person.(5) Condition 4 is that the foreign power has the right or ability to direct, control or influence to any extent, the person's policy or activities (in whole or in part, and whether directly or indirectly), despite not meeting condition 1, 2 or 3.(6) Condition 5 is that—(a) the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed, would, if they were a foreign power, meet one or more of conditions 1 to 4 (in their capacity as such) in relation to the person, and(b) the foreign power has the right or ability to direct, control or influence to any extent the activities of that trust or entity (in whole or in part, and whether directly or indirectly), or has any other interest in, or right over or in relation to, the trust or entity, or any of the trustees of the trust or the members of the entity, whether directly or indirectly.2 In this Schedule, “officer”—(a) in relation to a body corporate, means a director, member of the committee of management, chief executive, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity;(b) in relation to a partnership, means a partner, a person purporting to act as a partner or a person concerned in the management or control of the partnership or who purports to act in the capacity of a person so concerned;(c) in relation to an unincorporated association other than a partnership, means a person who is concerned in the management or control of the association or purports to act in the capacity of a person so concerned.Part 2InterpretationInterpretation
3 This Part makes provision about the interpretation of this Schedule.Joint interests
4 If a foreign power holds a share or right jointly with another person (whether or not a foreign power), each of those persons is to be taken to hold that share or right.Joint arrangements
5 (1) If shares or rights held by a foreign power and shares or rights held by another person (whether or not a foreign power) are the subject of a joint arrangement between those persons, each of those persons is to be taken to hold the combined shares or rights of both persons.(2) A “joint arrangement” is an arrangement between the holders of shares (or rights) that they will exercise all or substantially all the rights conferred by their respective shares (or rights) jointly in a way that is pre-determined by the arrangement.(3) For the meaning of “arrangement”, see paragraph 12.Calculating shareholdings
6 (1) In relation to a person that has a share capital, a reference to holding any of the shares in that person is to holding any shares comprised in the issued share capital of that person. (2) In relation to a person that does not have a share capital, a reference to holding any of the shares in that person is to holding a right to share to any extent in the capital or, as the case may be, profits of that person.Voting rights
7 (1) A reference to the voting rights in a person is to the rights conferred on shareholders in respect of their shares (or, in the case of a person not having a share capital, on members) to vote at general meetings of the person on all or substantially all matters.(2) In relation to a person that does not have general meetings at which matters are decided by the exercise of voting rights, a reference to exercising voting rights in the person is to be read as a reference to exercising rights in relation to the person that are equivalent to those of a person entitled to exercise voting rights in a company.8 In applying this Schedule, voting rights in a person held by the person itself are to be disregarded.Shares or rights held “indirectly”
9 (1) A foreign power holds a share “indirectly” if the foreign power has any stake in a person and that person—(a) holds the share in question, or(b) is part of a chain of persons—(i) each of which (other than the last) has any stake in the person immediately below it in the chain, and(ii) the last of which holds the share.(2) A foreign power holds a right “indirectly” if the foreign power has any stake in a person and that person—(a) holds that right, or(b) is part of a chain of persons—(i) each of which (other than the last) has any stake in the person immediately below it in the chain, and(ii) the last of which holds that right.(3) For the purposes of sub-paragraphs (1) and (2), a person (“A”) has “any stake” in another person (“B”) if—(a) A holds any shares or voting rights in B,(b) A is a member of B and has the right to appoint or remove an officer of B,(c) A is a member of B and controls alone, or pursuant to an agreement with other shareholders or members, any of the voting rights in B, or(d) A has the right or ability to control or influence B to any extent, despite not being within paragraph (a), (b) or (c).Shares held by nominees
10 A share held by a person as a nominee for another is to be treated as held by the other (and not by the nominee).Rights treated as held by person who is able to control their exercise
11 (1) Where a person controls a right, the right is to be treated as held by that person (and not by the person who in fact holds the right, unless that person also controls it).(2) A person “controls” a right if, by virtue of any arrangement between that person and others, the right is exercisable only—(a) by that person,(b) in accordance with that person’s directions or instructions, or(c) with that person’s consent or concurrence. Arrangements
12 (1) For the purposes of this Schedule, “arrangement” includes—(a) any scheme, agreement or understanding, whether or not it is legally enforceable, and(b) any convention, custom or practice of any kind.(2) But something does not count as an arrangement unless there is at least some degree of stability about it (whether by its nature or terms, the time it has been in existence or otherwise).Rights exercisable only in certain circumstances etc
13 (1) Rights that are exercisable only in certain circumstances are to be taken into account only—(a) where the circumstances have arisen, and for so long as they continue to obtain, or(b) when the circumstances are within the control of the person having the rights.(2) But rights that are exercisable by an administrator or by creditors while a person is in relevant insolvency proceedings are not to be taken into account even while the person is in those proceedings.(3) “Relevant insolvency proceedings” means—(a) administration within the meaning of the Insolvency Act 1986,(b) administration within the meaning of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or(c) proceedings under the insolvency law of another country or territory during which a person’s assets and affairs are subject to the control or supervision of a third party or creditor.(4) Rights that are normally exercisable but are temporarily incapable of exercise are to continue to be taken into account.Rights attached to shares held by way of security
14 Rights attached to shares held by way of security provided by a person are to be treated for the purposes of this Schedule as held by that person—(a) where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with that person’s instructions, and(b) where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in that person’s interests.Part 3Power to amend circumstances in which there is control or influence15 (1) The Secretary of State may by regulations make provision—(a) to change (by increasing or decreasing) the proportion of shares or rights which a foreign power must hold in a person carrying on a newspaper enterprise, whether directly or indirectly, in order for the foreign power to be able to control or influence the policy of a person for the purposes of section 70A;(b) to change (by increasing or decreasing) the proportion of shares or rights which is to be held by persons in a chain of persons for the purposes of determining whether shares or rights are held indirectly;(c) about assumptions which are to be made when determining whether a foreign power is able to control or influence the policy of a person, including assumptions framed by reference to the ownership of shares or voting rights by any person; (d) about the extent to which a foreign power needs to be able to control or influence the policy of a person in order to control or influence that policy for the purposes of section 70A, including provision about a foreign power that is already able to control or influence the policy of a person to some extent being able to control or influence that policy to a greater extent;(e) to change or supplement Part 1 of this Schedule so as to include circumstances (for example, circumstances involving more complex structures) that give a foreign power a level of control or influence in relation to the policy of a person broadly similar to the level of control or influence given by the conditions in paragraph 1;(f) in consequence of any provision made by virtue of paragraph (e), to change or supplement Part 2 of this Schedule so that circumstances specified in that Part in which a person is to be regarded as holding an interest in another person correspond to any of the conditions in paragraph 1, or would do so but for the extent of the interest.(2) The provision that may be made under this paragraph, read with section 124(2)(a), includes—(a) different provision for different descriptions of foreign power, and(b) different provision for different persons or descriptions of person in a chain of persons.(3) Regulations under this paragraph may, among other things—(a) confer a discretion on the CMA;(b) make provision having effect on or after 13 March 2024.”Further amendments
(1) In section 86 (enforcement orders: general provisions), in subsection (6), after “section” insert “70C,”.(2) In section 88 (contents of certain enforcement orders), in subsection (1), after “section” insert “70C, ”.(3) In section 94(8) (rights to enforce certain orders)—(a) after “made by the Secretary of State under” insert “section 70C(2),”;(b) for “paragraph 2 of that Schedule” substitute “paragraph 2 of Schedule 7”.(4) In section 107 (further publicity requirements)—(a) in subsection (3), after paragraph (g) insert—“(ga) any foreign state intervention notice given by the Secretary of State;(gb) any report of the CMA under section 70B which the Secretary of State has received;”(b) after subsection (11) insert—“(12) The Secretary of State must publish any report of the CMA under section 70B which the Secretary of State has received within the period of 7 days beginning with the day on which the Secretary of State receives the report.”(5) In section 109 (attendance of witnesses and production of documents etc), in subsection (A1)(b), at the end insert “or a foreign state intervention notice under section 70A”.(6) In section 110A (restriction on powers to impose penalties under section 110), after subsection (8) insert—“(8A) Where the section 109 power is exercised for the purpose mentioned in section 109(A1)(b) in connection with a matter that is the subject of a foreign state intervention notice under section 70A, the relevant day is the day when the matter to which the notice relates is finally determined under Chapter 3A (see section 70F).” (7) In section 118 (excisions from reports), in subsection (1)—(a) omit the “or” at the end of paragraph (aa), and(b) at the end of paragraph (b) insert “, or(c) a report of the CMA under section 70B.”(8) In section 120 (review of decisions under Part 3), in subsection (1A), after paragraph (a) insert—“(aa) a decision of the CMA or the Secretary of State in connection with a foreign state newspaper merger situation;”.(9) In section 124 (orders and regulations under Part 3)—(a) in subsection (3)—(i) after “59(6A)” insert “, 70G”;(ii) after “above)” insert “, or paragraph 15 of Schedule 6B,”;(b) in subsection (5), after “65(3)),” insert “70C”;(c) after subsection (6) insert—“(6A) A statutory instrument containing regulations under section 70G or paragraph 15 of Schedule 6B may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”(d) in subsection (10), after “58(3)” insert “or 70G, or paragraph 15 of Schedule 6B”.(10) In section 127 (associated persons), in subsection (1)—(a) omit the “and” at the end of paragraph (aa), and(b) after that paragraph insert—“(ab) for the purposes of section 70A(3);”(11) In section 129 (other interpretation provisions), in subsection (1), at the appropriate place insert—““foreign state intervention notice” means a notice under section 70A(1);“foreign state newspaper merger situation” is to be interpreted in accordance with section 70A(3);”(12) In the table in section 130 (index of defined expressions), at the appropriate place insert—
“Foreign state intervention notice | Section 70A(1) |
Foreign state newspaper merger situation | Section 70A(3)” |
See my amendment inserting a new clause after clause 129.
Lord Offord of Garvel
Member's explanatory statement
This amendment is consequential on my amendment inserting a new Schedule after Schedule 6.
Lord Offord of Garvel
“(6) For subsection (6A) substitute—”Member's explanatory statement
This amendment is consequential on my amendment inserting a new Schedule after Schedule 6.
Lord Offord of Garvel (Con)
My Lords, I add my thanks to all noble Lords who have been involved in the diligent scrutiny we have given the Bill in recent months. The Digital Markets, Competition and Consumers Bill will drive innovation and deliver better outcomes for consumers by addressing barriers to competition in digital markets and tackling consumer rip-offs. I am very grateful to noble Lords for the dedication, attention and time that they have given to the Bill before your Lordships’ House.
I want to express my particular appreciation to Members on the Front Benches, including the noble Baroness, Lady Jones of Whitchurch, and the noble Lords, Lord Stevenson of Balmacara, Lord Bassam of Brighton, Lord Clement-Jones and Lord Fox, for the courteous and constructive manner in which they have engaged with me on the Bill. I wish to extend my sincere thanks to my noble friends Lady Stowell and Lady Harding of Winscombe, and to the noble Baroness, Lady Kidron, for their invaluable contributions and clarity of views both during the debate and outside it. I emphasise my gratitude to the noble Lords, Lord Faulks, Lord Tyrie, Lord Kamall, Lord Holmes of Richmond, Lord Lansley, Lord Vaizey of Didcot, and the noble Viscount, Lord Colville of Culross, for their detailed consideration of Part 1 of the Bill. I am very grateful to them all; they have asked important questions and given much time and energy to the Bill, and it is a better Bill for that.
My noble friend Lord Lindsay and the noble Baronesses, Lady Crawley, Lady Bakewell and Lady Hayman, have championed consumer issues, for which I am most grateful. I also pay tribute to the noble Baroness, Lady Bennett of Manor Castle, for raising the important issue of net zero.
On Report, the Government made a number of amendments to the Bill with regards to subscription contracts. I thank my noble friends Lord Black of Brentwood and Lord Lucas for their engagement and collaboration on these issues. I am also most grateful to my noble friend Lord Mendoza for his work in highlighting the Bill’s impact on the ability of charities to claim gift aid.
On the issue of foreign states acquiring UK news organisations, to which my noble friend Lord Parkinson has spoken, I again thank my noble friend Lady Stowell of Beeston and the noble Lords, Lord Forsyth of Drumlean and Lord Robertson of Port Ellen, who so passionately highlighted the principle of freedom of the press.
I conclude by recording my gratitude for the invaluable support and assistance of my noble friend Lord Camrose. I put on the record my thanks to the Bill team, my private office, and all the officials and lawyers in the Department for Business and Trade, the Department for Science, Innovation and Technology, and the Competition and Markets Authority, who have provided such thorough support and expertise. I beg to move that the Bill do now pass.
Baroness Stowell of Beeston (Con)
I hesitate to rise, because I realise I am probably testing the patience of the House, having already spoken in Third Reading. I just wanted to say a couple of things.
I thank my noble friends Lord Camrose and Lord Offord on the Front Bench for their work on this Bill. As they will know, this is legislation for which the Communications and Digital Committee has been calling for several years—it started under the chairmanship of my predecessor, my noble friend Lord Gilbert. It is something that I have been pleased to take a very active involvement in, and I am very pleased to support it passing.
As we think about what this Bill is trying to achieve and why, it is worth also remembering why we in the UK are forging a different path from the ones that Europe and the US are on. In the last few days, we have seen the US DoJ launch a major anti-trust lawsuit against Apple. In the EU, the Commission is taking serious measures against some of the big tech firms to make them comply with the spirit and letter of its new Digital Markets Act. Both situations have an ominous sense of being exactly the kind of lengthy legal battles that favour big tech, which we are trying to avoid.
The House has rightly voted on a number of measures to try to ensure that our regulation can work as it is meant to, in a timely, proportionate and less confrontational manner. That is what the Government are seeking to do with this legislation.
As the Bill leaves here and enters its final stage, I emphasise two measures from among the amendments passed by this House. First, the deadline for the Secretary of State to approve CMA guidance is key in keeping things on track and avoiding concerning delays. Secondly, if the Government and the Commons cannot accept the amendments to revert the appeals process on fines back to JR standard, I hope that my noble friends within government will consider putting a clarification in the Bill that the appeals process on fines cannot be changed in ways that undermine the JR standard or open up avenues for more expansive and protracted legal challenge.
That aside, I am grateful to the Government for bringing forward this important legislation. It will mark out our regulatory regime as different from those in other parts of the world that are having such a big impact—and not necessarily in good ways.
Code of Practice on Dismissal and Re-Engagement
Lord Offord of Garvel Excerpts(1 month, 1 week ago)
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Lord Offord of Garvel
That the draft Code laid before the House on 19 February be approved.
Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
My Lords, this code of practice, which I will refer to as “the code” for the remainder of this debate, will give legal force to accepted standards about how employers should act when seeking to change employees’ terms and conditions.
The purpose of the code is to ensure that dismissal and re-engagement is only ever used as an option of last resort. The code also seeks to ensure that, where an employer wants to make changes to an employee’s terms and conditions, the employer engages in meaningful consultation with a view to reaching agreement with employees or their representatives in good faith. Employment tribunals will have the power to apply an uplift of up to 25% to an employee’s compensation if an employer unreasonably fails to comply with the code where it applies.
Between January and April 2023, the Government consulted on a draft code, enabling trade unions, employers and other interested parties to contribute their views. In accordance with the Trade Union and Labour Relations (Consolidation) Act 1992, the Secretary of State also consulted ACAS on a draft statutory code before publishing it. Careful consideration was given to those views and, as a result, changes were made to the draft code. An updated draft code was laid in Parliament on 19 February.
The Government have been clear that threats of dismissal and re-engagement should not be used as a negotiation tactic by employers. When the Covid-19 pandemic led to cases of dismissal and re-engagement, the Government asked ACAS to conduct an evidence-gathering exercise to help us better understand the issue. That report was published in June 2021. The Government then went further and asked ACAS to produce new guidance to ensure that employers were clear on their responsibilities when making changes to employment contracts. That guidance was published in November 2021. ACAS has also published guidance for employees. The Government are now going even further to address the use of dismissal and re-engagement by bringing forward the code, aiming to ensure that this practice is only ever used as a last resort and that employees are properly consulted and fairly treated.
In all these discussions, we must balance protections for employees with business flexibility. There have been calls to ban the practice of dismissal and re-engagement and suggestions to legislate to restrict its use in a manner that amounts to an effective ban. This Government believe that we must preserve companies’ flexibility to manage their workforce in times of crisis. It is, therefore, right that we have mechanisms to enable us to save as many jobs as possible. The code is a proportionate response to dealing with controversial “fire and rehire” practices, balancing protections for employees with business flexibility. I know that the vast majority of employers want to do the right thing by their employees. For most employers, decisions to change terms and conditions are not taken lightly, nor is the choice to let members of their workforce go.
The UK is a great place to start and grow a business and has a strong labour market. Its success is underpinned by balancing labour market flexibility and worker protections. It is vital that we continue to strike the right balance, while clamping down on poor practice. If this code is approved by Parliament, it will be issued and brought into effect by the Secretary of State in accordance with the procedure set out in Section 204 of the 1992 Act. The Government intend for the code to be in effect by the summer.
I am aware that a regret amendment has been tabled by the noble Lord, Lord Woodley. I will respond to it later in the debate. I hope that your Lordships will support the code. I beg to move.
Amendment to the Motion
Lord Offord of Garvel (Con)
I thank all noble Lords who have participated in this debate. I hope to clarify some key points that were mentioned. I will first turn to the regret amendment tabled by the noble Lord, Lord Woodley. I know that the noble Lord is a champion of protecting and enhancing worker’ rights, but the Government do not believe that his suggested amendment to the code would be appropriate.
The amendment suggests adding measures from his Private Member’s Bill on dismissal and re-engagement and from a report from the International Labour Organization. The measures contained in the noble Lord’s Bill would, in effect, ban dismissal and re-engagement. That is because the Bill would remove the ground of “some other substantial reason” for an employer to justify a dismissal in a dismissal and re-engagement scenario. Almost all cases of dismissal and re-engagement rely on this ground as potentially a fair reason. Therefore, this would, in effect, ban the use of dismissal and re-engagement.
As I said earlier, it would not be appropriate to impose an outright ban on dismissal and re-engagement. There are some situations in which dismissal and re-engagement have a valid role. Companies that are, for example, going through difficult economic times or a change in their business model may need the flexibility to use this option to save as many jobs as possible.
In regard to the International Labour Organization’s Committee on Freedom of Association’s definitive report 404, as raised by the noble Lord, Lord Hendy, I would like to clarify that the UK is committed to all ILO conventions that we have ratified, including Convention 87 on the freedom of association and protection of the right to organise, and Convention 98 on the right to organise and collective bargaining. We are carefully considering the Committee on Freedom of Association’s recommendations and will provide information to the ILO in due course.
Turning to the point made by the noble Lord, Lord Woodley, about P&O Ferries, echoed by the noble Lords, Lord Fox and Lord Leong, as we said at the time, the treatment of staff by P&O Ferries was disgraceful and was called out as such from this Dispatch Box. It fell short of the high standards we expect in this country, and which most businesses uphold. The company deliberately chose to ignore statutory consultation requirements. P&O Ferries broke the law by dismissing its workers with no warning, having made prior arrangements to bring in agency staff to replace them. What P&O Ferries did was “fire”, and not “fire and rehire”. The company dismissed staff with no notice or consultation. I understand that it was not seeking to renegotiate its employees’ terms and conditions, so the code would not have applied.
The noble Lord said that some of those employees were fired and rehired. I thank him for bringing that to my attention. I am not familiar with the detail of their personal circumstances, but speaking generally, if an employer seeks to renegotiate terms and expects that it may dismiss an employee and rehire them or another employee to effect the changes, then it would be bound by the code. The Government have taken action in response to what P&O Ferries did. This includes legislating through the Seafarers’ Wages Act 2023 and the ongoing Insolvency Service civil investigation.
A number of noble Lords raised the deterrent effect of the code and, as I said, the code of practice is a proportionate response, balancing protections for employees with business flexibility. An employment tribunal could increase an employee’s compensation by up to 25% where an employer unreasonably fails to comply with the code. The Government will bring forward legislation so that the 25% compensation uplift also applies to the protective award, where employers have not complied with the collective consultation obligations and have unreasonably failed to comply with the code. The noble Lord, Lord Woodley, asked for an update on this legislative change that will increase the deterrent effect of the code. Subject to parliamentary time, the Government intend to bring this forward this summer.
The noble Lord, Lord Leong, asked when the code would apply to an employee. The code will apply from the first day of an employee’s employment, though it will be subject to qualifying periods in individual claims.
Having heard the debate, I think there is perhaps just a philosophical difference on how we proceed in these matters. This Government believe that our workforce and labour laws are in an advanced and sophisticated state. We have record employment in this country: 33 million out of a population of 66 million working. We have just increased the national minimum wage at twice the rate of inflation over the last 25 years, and only 5% of our workforce is on the national minimum wage. Now that they have reached that level, they can be considered to have been taken out of low pay if that is defined as two-thirds of median hourly wages. They are now at that level, and therefore, within our labour force, our laws are working flexibly.
In my role as Minister for Exports, I travel the length and breadth of the country, and I meet companies of all shapes and sizes. The one observation I will make to this House is that post Covid, there has been a reassessment of the value of labour in this country. The labour force is now one of the most valuable parts of any company’s make-up and capability. There are labour shortages, and good labour is scarce. I would argue, perhaps, that there has never been a better time to be an employee, because of the ability to receive higher wages for good skills that are at a premium, and companies want to have those employees within their businesses. In this situation, and thinking as an employer, I can imagine that it would be only in exceptional circumstances, where we were trying to keep our employees together and keep our company on the road, that we would have such a discussion. It would be absolutely as a last resort.
To take the point raised by the noble Lord, Lord Browne, about there being no teeth and waiting times in the tribunal system, I acknowledge that there are perhaps backlogs in that system, but this is a process that no employer wishes to get caught up in, considering the amount of time and cost it would take when we want to have our employees happy and working and producing effectively for the benefit of all the stakeholders within the company. Just as a matter of philosophy, we would say that this is an exceptional situation. The TUC says that it estimates that only 3% of employers have ever gone down the road of fire and hire. As we said in the code quite clearly, it is not toIn conclusion, I would argue that the Government are taking robust and appropriate action in this area. A statutory code of practice is a proportionate response to dealing with controversial fire-and-rehire practices. The code will address this practice, aiming to ensure it is only ever used as a last resort, and that employees are properly consulted and treated fairly. It clarifies and gives legal force to accepted standards about how employers should behave when seeking to change employees’ terms and conditions. Subject to parliamentary approval, the code will be in force later this summer. The House should be left in no doubt that the Government will always continue to stand behind workers and stamp out unscrupulous practices when they occur.
Lord Browne of Ladyton (Lab)
Does the Minister have a response to my question about the coincidence of the Government consulting on imposing fees on those who seek to apply to an employment tribunal in the face of the case of UNISON v Lord Chancellor, where fees were held to be unlawful because they impeded access to justice? This issue was not addressed in the letter that the noble Lord, Lord Johnson of Lainston, sent to me. It was in my speech at Second Reading. Do the Government have a position on that? Is it just a coincidence that this is happening at the same time as employment tribunals are being given the ability to impose an extra 25% of financial penalties on employers who fire and rehire as part of the code of practice?
Lord Offord of Garvel (Con)
As the noble Lord knows, one can read Hansard as well as one can, but not being in the Chamber to hear his eloquent argument of the case makes me slightly deficient in this response. I am disappointed that my noble friend was unable to write more comprehensively on the matter. Perhaps I can follow up with a second letter in that regard.
Lord Woodley (Lab)
My Lords, this has been a lively, interesting and, indeed, productive debate. I just want to say one thing to the Minister. In a previous life, I was the leader of Britain’s largest trade union, and I spent more time fighting for companies and for company survivals, and indeed to make sure that they had the right investment to protect jobs and increase jobs in our country, than I ever did fighting against them. That is why I take a little offence that the Minister suggested that my amendment indicates that fire and rehire is banned in all cases. That is the worst case of selective deafness that I have heard from two Ministers, to be quite honest. I point out to the Minister that it does not say that. It makes it absolutely clear that if we are in a situation where the very foundation of the company depends on these actions being taken, not only should they be carried out but we would support that.
However, with regard to where we are, I do not see anything reasonable in the code of conduct, as indeed we have all said here. The Minister also mentioned that—ironically—a TUC investigation into these things found that only 3% of employers were using fire and rehire as a tactic. I said this in the previous debate: 3% across all employers in this country means 38,800 employers. This is not chicken feed; it is big business. It is a pandemic that is right across our country and it will only get worse if we do not legislate to stop it. Again, it has been very interesting that, not only during my previous debate but today on this amendment, not a single speaker has spoken in favour of the code of conduct, never mind anything else, and that includes on the Tory side of this House.
I therefore regret that the Minister’s response is not really doing anything to remove those concerns that we have all registered here about this code of practice. It is toothless, and it does not give the protection and decent compensation that workers who are being exploited deserve. However, as I am sure your Lordships now realise, I do not intend to divide the House on this matter, so I beg leave to withdraw.
Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024
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Lord Offord of Garvel
That the draft Regulations laid before the House on 19 February be approved.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
My Lords, before I begin, I draw noble Lords’ attention to my interests as set out in the register of interests, including as a person with significant control and shareholder of Cashmaster (Holdings) Ltd, Badenoch Investments, Badenoch & Co, Badenoch Partners, Badenoch Advisors, and the Badenoch Trust, as well as a shareholder of several other companies.
These regulations were laid before the House on 19 February under the Economic Crime and Corporate Transparency Act 2023, which I will refer to hereafter as the 2023 Act. This Act is a prime example of the Government’s continued investment in tackling economic crime. The 2023 Act’s reforms will enable us to bear down on the kleptocrats, criminals and terrorists who abuse our open economy, strengthening the UK’s reputation as a place where legitimate business thrives and dirty money is unwelcome.
A substantial secondary legislation programme is now needed to make these reforms a reality. The instrument before us today, as well as some 50 other statutory instruments, will facilitate the necessary changes, including new processes and procedures at Companies House. I am glad to say that the first set of regulations in the programme was already approved by both Houses. These regulations provided the registrar with enhanced powers to rectify instances where address details for companies and company officers have been fraudulently filed on the register of companies. Since 4 March, Companies House has started to make use of these new powers, meaning that it has started to cleanse its register and quickly remove people’s names and addresses where they were used without their consent.
I turn now to the details of this instrument, which applies across the whole of the United Kingdom. At the moment, obligations under the Companies Act 2006 are enforced primarily through the criminal justice system. There is currently only one civil penalty regime operating under the Companies Act 2006, namely the accounts late filing penalty regime. Under this regime, a company automatically incurs a penalty for not filing its accounts on time—this regime will not be affected by these regulations.
The 2023 Act sets out that the registrar may impose a financial penalty as an alternative to prosecution, where she is satisfied beyond reasonable doubt that a person has engaged in conduct which amounts to a relevant offence under the Companies Act 2006. In turn, this instrument sets out how financial penalties will be imposed and enforced.
There are a few points here that I consider worth highlighting. First, the penalties will be based on the severity of the offence, and the maximum fine under the criminal law, up to a maximum total of £10,000. The registrar can also impose more than one penalty in certain cases. This provides flexibility to ensure appropriate and effective targeting of offenders.
Secondly, these regulations provide the registrar with the power to revoke or vary the financial penalties she has issued. For example, she could do this in cases where new information comes to light which aggravates or mitigates an offence.
Thirdly, the 2023 Act allows that, where a civil penalty is imposed on a person, it can contribute to that person being disqualified from acting as a UK director.
The registrar will now have the discretion to choose between issuing a financial penalty or passing a case on to law enforcement to consider criminal sanction. Therefore, this new financial penalty regime will be another tool in the registrar’s arsenal to promote compliance and maintain the integrity of the companies register. It ensures that we are striking the right balance between deterring non-compliance and not unduly burdening a small business.
The regulations before us today also make minor and technical changes to the Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023 to ensure consistency between the two financial penalty regimes.
I will now provide an update on the ROE financial penalties regime. As of 19 March, 30,698 overseas entities had registered with Companies House. A further 857 overseas entities had notified Companies House that they had disposed of their interests in land before the register opened. Companies House has taken action against those that have failed to comply with the requirements. As of 19 March, over 400 penalty notices have been issued, with penalties totalling over £20 million. This includes cases where Companies House has received representations and appeals which are ongoing. In the next phase of the compliance process, Companies House will start imposing charges against land held by overseas entities where penalties remain unpaid.
I am of course happy to provide noble Lords with an update on progress when we debate the next set of regulations related to the register of overseas entities—these will be laid before Parliament in the coming months.
In conclusion, let me stress that these regulations are an important part of the effective implementation of the 2023 Act, and I hope noble Lords will support them. I beg to move.
Lord Offord of Garvel (Con)
I thank noble Lords for their contributions. I reiterate that the Government are firmly committed to the fight against economic crime and, thus, have worked to implement the 2023 Act as quickly and effectively as possible. As we have said, alongside the registrar’s new powers, which take effect from 4 March, the new financial penalty regime instigated by the regulations before us today will help to promote compliance and maintain the integrity of the UK’s companies register. This will indeed constitute a further step in that journey to transform Companies House from a relatively passive institution to a more active player tackling economic crime.
I turn to some of the points made by the noble Lords, Lord Fox and Lord McNicol. In relation that made by the noble Lord, Lord Fox, on multiple penalties, where an address is misused—for example, in relation to more than one company—more than one financial penalty can be imposed, of up to £10,000. Appeals—there is an appeals process; of course, there must be an appeals process—will be heard in a county court or in the sheriff court in Scotland.
Regarding an update on implementation and resources, next month a report will be provided to Parliament. The House can be reassured that Companies House will have the resources it needs. For example, the incorporation fee has been increased from £12 to £50. Recruitment is well under way to ensure that Companies House has the right capabilities to deliver on these reforms—that point was raised by the noble Lord, Lord McNicol. To ensure that the teams are in place, recruitment is under way, including new Companies House investigation teams. We are looking at additional staff in the hundreds. By the summer, Companies House will have onboarded over 240 new roles in its intelligence and enforcement teams. This is a new culture for what has previously been a very passive institution. There will be further guidance on this as we work with Companies House to build this capability out.
In relation to the point that the noble Lord, Lord McNicol, made about the discretion of the registrar to impose a financial penalty or to pass the case to law enforcement officers to pursue prosecution, the registrar will soon publish guidance on that enforcement approach. It will provide more detail and clarity on how it will make use of new powers. Obviously, proportionality will come into play. Where there is perhaps more petty behaviour, then fines will be appropriate; where there is more systematic criminal behaviour, clearly that will result in the exercise of criminal sanctions.
The amounts of penalties will be considered on a case by case basis but are capped by the maximum fines able to be imposed under criminal law. Financial penalties are obviously one enforcement measure available to the registrar, alongside criminal prosecution and disqualification. Companies House will work with other agencies where there is evidence of serious and organised crime, as there may be active investigations that the registrar would not want to disrupt.
In terms of where the penalty money goes, it will be paid into the Consolidated Fund held by the Treasury, as required by the 2023 Act.
Having dealt with most of the points, I think there is consensus around the new regime, the devil being in the detail of how it is implemented. This has been a good debate, illustrating the need for a robust financial penalty regime. I hope noble Lords will agree that the regulations provide for just that.
National Minimum Wage Legislation
Lord Offord of Garvel Excerpts(1 month, 1 week ago)
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Lord Sahota
To ask His Majesty’s Government what steps they are taking to improve the enforcement of national minimum wage legislation.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
My Lords, the Government take enforcing the minimum wage extremely seriously. We are clear that anyone entitled to be paid the minimum wage should receive it. Robust enforcement action is taken against employers who do not pay their staff correctly. Since the introduction of the national minimum wage in 1999, the Government have overseen the repayment of more than £173 million to 1.4 million workers, issued nearly £86 million in financial penalties and completed more than 87,000 investigations.
Lord Sahota (Lab)
I thank the Minister. The International Labour Organization recommends that there should be one inspector for every 10,000 workers to check that employees are being paid the minimum wage. The UK ratio is 0.4% for every 10,000 workers; that way, UK employers can expect an inspection every 500 years. That is not good enough. You only have to talk to overseas students and workers in minority communities to see how widespread the problem is. In order to stop paying the minimum wage to some employees, employers make them work 20 hours, but on the books they are paying them for only 10 hours—this is one way they get round it. We need stronger and tougher sanctions against rogue employers, so we can get on with it.
Lord Offord of Garvel (Con)
The Government remain totally committed to the effective enforcement of employment rights and provide a lot of funding, including over £35 million this year to the existing dedicated labour market enforcement bodies. That is a 121% increase in funding since 2010, so a lot of money has gone into this area. On top of that, we provide funding of over £50 million per annum to ACAS, to support employment tribunals. We have had great success in reducing the number of companies not paying the national minimum wage.
Lord Fox (LD)
My Lords, we heard about in-work poverty in the previous Question. One reason there is so much in-work poverty is that too many workers are slipping through the national minimum wage net. One of the key areas in this is food delivery apps. Uber justifies its treatment of its employees as so-called self-employed as balancing flexibility and protection. Does the Minister agree that it is the food delivery apps that get all the flexibility, while the workers get no protection at all?
Lord Offord of Garvel (Con)
In the recent Supreme Court judgment on Uber, it was made clear that those who qualify as workers under existing employment law are entitled to core employment rights and that all gig economy businesses must ensure that they fulfil their legal responsibilities. We now have a situation in which the national minimum wage is two-thirds of hourly median pay, and under OECD rules that means it is no longer classified as low pay. We know that 5% of our workforce is on national minimum wage, which is a great success.
Lord Sikka (Lab)
Currys, EasyJet and Greggs are part of a parade of companies that never forget to pay bosses but somehow forget to pay the minimum wage to workers. Their memory can be improved by effective sanctions requiring that the fine for not paying the minimum wage must equal remuneration of the entire board, of which at least 50% must be paid personally by directors. When will the Minister introduce this sanction?
Lord Offord of Garvel (Con)
One of the sanctions available to the Government is the naming and shaming scheme, which is very successful. We have a large number of companies which have been subject to that, and we have therefore increased greatly the number of companies complying as a result. When HMRC finds employers which breach this, it can impose a penalty of up to 200%; the penalties are severe for companies which do not comply.
Lord Bellingham (Con)
My Lords, the Minister pointed out the work by the HMRC national minimum wage enforcement team, and the general consensus is that it is doing an effective and professional job. Does it concern him that 95% of the 65,000 HMRC staff are working from home at least one day a week? Can he tell the House whether this is hampering effectiveness?
Lord Offord of Garvel (Con)
I thank my noble friend for his question. There are a number of bodies that enforce our employment laws in the UK. Obviously, HMRC is the body that oversees the national minimum wage; my department, DBT, ensures that agency workers are well protected; and within the Home Office, we have the Gangmasters and Labour Abuse Authority. So we have three very effective regulators, which are well funded, and we continue to pursue, name and shame, and impose penalties on companies that do not respect the law.
Lord Leong (Lab)
My Lords, this year we celebrate 25 years of the national minimum wage, which was brought in by the Labour Government. It has played a vital role in protecting the UK’s lowest-paid workers. Some 524 employers were recently named and shamed for underpaying around 172,000 national minimum wage employees by nearly £16 million. Can the Minister confirm that these underpaid employees have now received all the pay that they have earned and how often sanctions beyond the standard fines are applied to repeat offenders?
Lord Offord of Garvel (Con)
Since the introduction of the national minimum wage in 1999, the Government have ordered employers to repay over £173 million to 1.4 million workers. It is far more effective that the employers are made to pay the workers than be dragged through courts, which delays payments to workers and does not provide any respite. I am interested in the fact that this is the 25th anniversary of the national minimum wage. When this Government came to power in 2010, the number of employees on low hourly pay was 21% of the workforce; today, that is 8.9%. I also point out that, when this Government took over from Labour in 2010, benefits were the largest source of income for the poorest working-age households, but under the Conservatives it is now their wages.
Lord Watts (Lab)
Is it not the case that far too many employers still find it to their own advantage to pay below the living wage and below the basic wage? Is it not time that we made this a criminal act, so that we can hold the directors of those companies accountable for their actions?
Lord Offord of Garvel (Con)
As we have said before, our labour market in the UK is one of the most sophisticated and best-working in the world. Out of a population of 66 million people, 33 million are working, and only 5% of that workforce is on the minimum wage. In the meantime, 30% of the population do not pay any tax and the 1% highest earners pay 30% income tax. I think noble Lords would agree that our workforce is in good shape. Instead of criminalising employers, we need to spread the education required to make sure that everyone has higher wages.
The Earl of Clancarty (CB)
My Lords, some of the examples that have been given are technically people who are self-employed. Does the Minister not believe that the whole area of self-employment needs to be looked at very carefully in this respect?
Lord Offord of Garvel (Con)
Of the 33 million workers in the country, there are 27 million employees; that means that we have a proportion of the workforce which is self-employed. You might say they are the unsung heroes—the ones who put their laptop on at 8 am and close it down at 10 pm—and they deserve our respect.
Lord Harris of Haringey (Lab)
My Lords, is it not the case that, two years ago, the Government undertook to close the loophole which enabled P&O Ferries to pay way below the minimum wage? Has the Minister seen the reports in yesterday’s newspapers that many of its employees are currently being paid half the minimum wage? What are the Government doing about this?
Lord Offord of Garvel (Con)
Obviously, that case is well known, and P&O was rightly named and shamed. I saw the article but I am not aware of the details of the case. However, I am very clear that we will check to make sure that P&O continues to act within the law.
Baroness Blower (Lab)
My Lords, in its day, the national minimum wage was indeed an achievement. However, does the Minister agree with me, and with the OECD and the ILO, that the best way to ensure that workers have sustainable good pay and conditions is through sectoral collective bargaining—for example, in the care sector?
Lord Offord of Garvel (Con)
I am sure we all agree on one thing: that we want our workforce in this country to be well paid and to increase their training and skills. Surely the best form of welfare we can give anybody is a good job.
National Minimum Wage (Amendment) (No. 2) Regulations 2024
Lord Offord of Garvel Excerpts(1 month, 2 weeks ago)
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Lord Harlech
That the draft Regulations laid before the House on 31 January be approved. Considered in Grand Committee on 12 March.
Lord Harlech (Con)
My Lords, on behalf of my noble friend Lord Offord of Garvel and with the leave of the House, I beg to move the Motion standing in his name on the Order Paper.
Digital Markets, Competition and Consumers Bill
Lord Offord of Garvel ExcerptsWednesday 13th March 2024
(1 month, 3 weeks ago)
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Lord Bassam of Brighton (Lab)
My Lords, we are very grateful—we are always very grateful, actually—to the noble Lord, Lord Clement-Jones, for tabling this amendment, which raises a valid concern around the suitability of the current provisions in Section 58 of the Enterprise Act.
We take the view that the world has changed significantly since that legislation was put on the statute book. It was changed as a result of the passage of the National Security and Investment Act, but not in a way that addressed the points that have been properly raised by the noble Lord. Some aspects of this debate featured during the passage of the Online Safety Bill, and I strongly suspect we will revisit this on other occasions in the future, as the noble Lord, Lord Lansley, has invited us to with the Media Bill.
The noble Lord, Lord Clement-Jones, described this as a “brazen attempt” on his part. Well, I hope the Government will be open-minded about looking at whether and how the public interest notice regime could be revised in the future, to take account of different types of media provider. However, because I know that noble Lords would like to progress on to another interesting group on a similar topic, I will hand the Floor to the Minister.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)
I thank the noble Lord, Lord Clement-Jones, for Amendment 64. It would expand the list of media merger public interest considerations to include:
“The need for free expression of opinion and plurality of ownership of media enterprises in user-to-user and search services”.
I previously addressed this issue in Committee, when I referred to the Government’s ongoing consideration of Ofcom’s recommendations. As suggested by the noble Lord, ensuring that our regime is updated to reflect current market conditions remains important.
My noble friend Lady Stowell of Beeston has been engaging extensively with government on changes to the wider media merger regime, and I understand that discussions have been constructive. My noble friend Lord Parkinson of Whitley Bay, who is in his place, is the Lords Minister responsible for media mergers. To avoid repetition, I will not speak to the detail of these discussions now but will leave it to my noble friend, who will return to the substance of this in the next debate. I hope the noble Lord will be able to withdraw his amendment and allow us to discuss this further when the next group is debated.
Lord Offord of Garvel
Member’s explanatory statement
This amendment, which would amend section 124 of the Enterprise Act 2002 (orders and regulations), is consequential on paragraph 17(6) and (9) of Schedule 9 to the Bill which omits order making powers in section 111(4) and (6) of that Act.
Lord Offord of Garvel (Con)
I thank noble Lords for their amendments, contributions and questions. I turn first to Amendment 68, proposed by the noble Baroness, Lady Bennett of Manor Castle. This amendment would provide that consumers’ collective interests included avoiding any detrimental effects resulting from the advertising of high-carbon products and services. The Bill already protects consumers during the transition to net zero. Enforcers can take action to tackle misleading green claims. Moreover, helping to accelerate the UK’s transition to net zero is one of the priorities in the CMA’s new annual plan. I hope that this reassures the noble Baroness.
Amendment 69, from the noble Lord, Lord Clement-Jones, would prohibit the use of packaging that is similar to that of other products. The promotion of imitation packaging is already a banned commercial practice, as listed in Schedule 19. Part 3 strengthens the civil enforcement regime, ensuring that enforcers can tackle misleading replica goods. I hope the noble Lord will therefore not press his amendment.
Lord Clement-Jones (LD)
My Lords, that is a bit terse, even by the Minister’s standards. I think we need to hear a little more about the form of enforcement, because the amendment is about the unsatisfactory nature of current enforcement. I referred to there having been only one enforcement since 2008, despite the fact that it was successful. What guarantee do the welcome recipients of the provisions in paragraph 14 of Schedule 19 have that there will be an effective enforcement regime?
Lord Offord of Garvel (Con)
The view of the Government in this legislation is that the banned commercial practice is banned already, as set out in Schedule 19, and that a strict civil enforcement regime is already in place, strengthened by Part 3. It is down to enforcers to tackle these misleading replica goods; our view is that it is up to the enforcement regimes to enforce under the current law.
Lord Clement-Jones (LD)
My Lords, I am not sure that the Minister has a full brief about the nature of the available enforcement. Will he write to me to provide a few more particulars and give more assurance in this respect?
Lord Stevenson of Balmacara (Lab)
My Lords, it is important that we unpick the point made by the noble Lord, Lord Clement-Jones, which I think was touched on but not addressed by the Minister. If we rely on civil remedies, we are not really addressing the problem that there is, in effect, an opportunity, for those who wish to, to exercise criminality; this surely cannot be left to the civil courts.
Lord Offord of Garvel (Con)
As some clarification is required, I am happy to write further on the matter.
Amendments 70, 71 and 93 to 98 are technical government amendments. The Bill empowers the courts to impose monetary penalties for a breach of consumer law and procedures. To accommodate the different processes by which court orders are served or enforced in Scotland and Northern Ireland, the amendments provide that prescribed penalty information may accompany an order in a separate notice, as well as being contained within it.
On government Amendments 72 to 90, on online interface and the powers of consumer law enforcers to tackle illegal content, I thank noble Lords who have contributed on this important issue. I am pleased to bring forward government Amendments 72 to 90 to give all public designated enforcers take-down powers to tackle infringing online content. The amendments enact the commitment made by the Government in their recent consultation response.
I thank the noble Lord, Lord Clement-Jones, for Amendments 91 and 92. Amendment 91 would require the CMA to provide advice on a business’s compliance with consumer law on request. It would also prevent enforcement action by any enforcer if the advice were complied with. The CMA already provides general guidance and advice on compliance. It is businesses’ responsibility to comply with the law, referring to guidance and seeking independent legal advice where necessary. It would not be appropriate to transform the CMA into a bespoke legal advice service. The amendment would also drain CMA resources from much-needed enforcement activity. Moreover, Amendment 92 compels the CMA to accept primary authority advice received by a business where that advice has been complied with. It is common practice for the CMA to consult the primary authority before taking action; this strikes the right balance and avoids binding the CMA to such advice, thus inappropriately neutering its discretion. I hope the noble Lord will agree that the purpose of a direct enforcement regime is for the CMA to enforce faster and more frequently; these amendments would diminish this objective and remove the deterrent effects of the regime.
Lord Clement-Jones (LD)
My Lords, does the noble Lord understand the need for certainty of advice when it is given by a primary authority and that the primary authority must feel, when it gives that advice, that it has the full backing of the CMA? There seems to be no assurance that this is under consideration or even a matter of concern.
Lord Offord of Garvel (Con)
We are clear that the CMA provides general guidance and advice, but it is the responsibility of businesses to comply with the law. If the CMA is transformed into a bespoke legal advice service, it will not be doing the work it is meant to do, which is focusing on enforcement. Therefore, we believe the balance is right in the mechanism put forward.
Turning to trading standards and Amendments 99, 100 and 101, I am grateful to my noble friend Lord Lindsay and the noble Baronesses, Lady Bakewell and Lady Crawley, for their continued advocacy for trading standards departments and for meeting with me on these issues. I very much enjoyed meeting the case officers in this place. Amendment 101 would end the prohibition on enforcers using information that a person has been compelled to provide under broad information notice powers in criminal proceedings against that person. This prohibition safeguards a person’s right not to self-incriminate—a long-established right protected by the common law and the Human Rights Act. The courts have held that material which exists independently of the will of the suspect, such as pre-existing data obtained during a search of the suspect’s premises, may be admissible in a criminal trial against them. By contrast, to comply with an information notice, a person will likely be required to generate documents. Legislation already permits trading standards departments to exercise their investigatory powers outside their local authority boundaries, including by carrying out in-person inspections of business premises. We have been informed that trading standards departments have used these on-site powers to secure documents from traders suspected of an offence and then relied successfully upon such documents in prosecutions against them.
Amendments 99 and 100 would permit any trading standards department based in Great Britain to carry out investigations across national borders. As I committed to my noble friends in writing, I have asked government officials to work further with trading standards to identify practical measures supporting greater cross-border co-ordination. To clarify, if an infringer is based in Scotland and the offence has caused harm in England, the English enforcer can pursue a prosecution through the English courts and vice versa—the procurator fiscal can prosecute a case where a trader is based in England but the infringement was committed in Scotland. All court orders in respect of consumer protection breaches have effect in all parts of the United Kingdom, regardless of where they have been made. We are open to exploring a variety of options, for example, exploring how best to facilitate local authorities across the country to exercise investigatory powers on behalf of each other. I have asked them to consult with trading standards when developing guidance on this legislation to ensure clarity on what it provides for. Once again, I thank my noble friend and the noble Baronesses for their engagement on this issue.
Government Amendments 102 and 103 make further consequential amendments to the Estate Agents Act 1979. They achieve consistency in how the Act applies to non-compliance with obligations under the court-based and the CMA direct enforcement regime.
Turning to standard essential patents, raised by the noble Lord, Lord Clement-Jones, through Amendment 152, I can confirm that the Government have now published their key objectives on SEPs and a forward look at work to be conducted in 2024. This follows input received in 2023 from key stakeholders from industry. The Government will first take forward non-regulatory interventions where action can be taken now. Later in 2024, the Government will launch a technical consultation on other potential interventions. On the question of injunctions, the Government believe that other measures, such as guidance, information on SEP licensing and how to respond to SEP disputes, is a proportionate government response at this stage. A resource hub will provide guidance that will enable businesses to better understand the SEP licensing system and the UK courts’ approach to the remedies available for patent infringement and existing services available for dispute resolution. The IPO will also continue engagement with relevant industry and institutions to continue to inform our ongoing policy development and interventions. My noble friend Lord Camrose has confirmed that his department will be making steps in what the noble Lord, Lord Stevenson, has described as a very complicated area.
I hope that this will—
Lord Clement-Jones (LD)
I am sorry to intervene again. The Minister is really confirming what the IPO has advised in its forward look. The Minister is saying, “Yes, this is important, but we are not going to do anything about injunctions”. Does he recognise the asymmetry in all this? This is why SMEs need enforcement to be looked at much more carefully in terms of the amendment that I have tabled. What is the essential objection to going forward with some kind of change, given that the rest of the proposals from the IPO seem to be pretty satisfactory?
Lord Offord of Garvel (Con)
On the basis that my noble friend Lord Camrose has responsibility for the IPO, he has kindly offered to write to the noble Lord on this matter and give further clarification.
This has been a varied and valuable debate. I thank noble Lords again for their engagement. I hope the assurances that I have provided will therefore give noble Lords confidence not to press their amendments.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the Minister for his response, though I am not sure “confidence” is quite the right word for the emotion I am feeling at the moment.
I said that I would comment only on my Amendment 68, but I must make brief reference to commend the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Crawley, for doing what many think your Lordships’ House should be restricted to—providing modest improvements and ways to help the Government make the system work better. I do not think it should be restricted to that, but it is certainly important that it does it. Reflecting on the trading standards issues, it was not mentioned but is worth noting that the Chartered Trading Standards Institute noted last year that, in the last decade, the number of trading standards officers in local authorities has halved, so they need anything that makes their work easier. The Government would, I am sure, say that they believe in efficiency and government productivity, and the suggestion from the noble Baroness seemed to be designed for that purpose. None the less, those are very technical areas, so I will park them there, as I will park the government amendments.
Regarding my Amendment 68, we will be watching closely what the CMA does in terms of action on green- washing. There is a general belief that the Bill simply does not have the teeth, or strength, that it needs. The overall issue—that we are way beyond our current targets on climate emissions—was not addressed by the Minister. I thank the noble Lord, Lord Stevenson of Balmacara, for the comments and strength he brought to the intention to see more action in this area. In the meantime, I beg leave to withdraw the amendment.
Lord Offord of Garvel
Member's explanatory statement
This amendment provides that, where an order is made requiring payment of a monetary penalty, the requirement to provide monetary penalty information (see clause 203) within the order may instead be met by providing the information in a separate document. This will ensure that if any such information is not known at the time of making the order it can be included instead in that document.
Lord Offord of Garvel
Member's explanatory statement
This is amendment is consequential on my amendments to clause 158.
Lord Offord of Garvel
Member's explanatory statement
This amendment provides that orders under the Estate Agents Act 1979 prohibiting unfit persons from doing estate agency work can be made in cases where a person has failed to comply with an undertaking given to the CMA under clause 185 of the Bill.
Lord Leong (Lab)
My Lords, I thank all noble Lords who have spoken in this debate. Once again, I have been extremely impressed by the range of expertise and the depth of insight. Conscious of the time we have all been here, I will address some of the key amendments as briefly as I can.
Amendments 104 and 118, in the names of the noble Baronesses, Lady Hayman, Lady Bakewell, Lady Ritchie and Lady Harding, would require the Secretary of State to publish a strategy conferring the right to access repair. They would also ban practices which prevent repair or prematurely terminate software support. The right to repair is an essential part of the circular economy. Many businesses understand that this is an opportunity for innovation, creating new jobs, saving money, reducing waste and saving scarce resources.
We are sympathetic to the noble Baroness’s amendment. The noble Baroness, Lady Hayman, has made strong arguments for her amendment, and she has a lot of support around this House for action to be taken on this issue. We are, in principle, supportive of the right to repair and its contribution to the circular economy, although we recognise that the impact on the sector will be significant. We would, therefore, encourage the Minister, if he cannot accept this amendment today, to make a firm commitment at the Dispatch Box that the Government will work with the noble Baroness, across departments, to ensure that real progress will be made on this issue in the near future.
We support Amendments 105 and 106 from the noble Lord, Lord Clement-Jones. These would make selling goods online, when they do not meet specified safety requirements, constitute an unfair commercial practice. Additionally, we are broadly sympathetic to Amendment 108 in the name of the noble Lord, Lord Clement-Jones, which lists five new unfair commercial practices. However, we would welcome proposals for further discussion.
Moving on to fake reviews, Amendment 109, in the names of the noble Earl, Lord Lindsay, and the noble Baroness, Lady Crawley, would insert provisions around fake reviews of products into Schedule 19. We welcome government Amendment 107, which adds various activities relating to fake reviews directed at consumers to the list of unfair practices in Schedule 19 to the Bill.
However, we would encourage the Government to adopt Amendments 107A and 107B from the noble Lord, Lord Clement-Jones. These propose small improvements to address the role played by internet service providers and social media in promoting fake reviews. If the Minister does not accept these amendments, can he explain why ISPs and social media are not specifically covered within the government amendments?
We must not forget the real-life consequences of the issues at stake among all the technical details. We all remember the awful tragedy of the Grenfell Tower fire in June 2017, which killed 72 people and injured 70 more. The source of this blaze was recently identified as a faulty fridge-freezer. Even one more preventable death from recalled products, where there are known risks to consumers, would be one too many. We urgently need to act to do whatever we can to prevent further tragedy.
The following amendments address this issue directly. Amendment 110, again in the name of the remarkably industrious noble Lord, Lord Clement-Jones, would make it a misleading action to sell goods online without taking reasonable steps to ensure that they have not been subject to a product recall. Amendment 111 would require the Secretary of State to make regulations to define the “reasonable steps” set out in Amendment 110. Amendment 120, in the noble Lord’s name, defines the terms “online marketplace” and “safety requirements”, which we support.
The Government set up the Working Group on Product Recalls and Safety to bring together experts from fire services, trading standards, consumer groups and industry. They were tasked with identifying the causes of fire from white goods—everyday items such as dishwashers, washing machines, tumble dryers and fridge-freezers—and the actions needed to reduce them. Experts suspect that selling recalled and faulty goods via online stores and social media platforms is common practice. I ask the Minister: when did this working group last meet? Are there are plans for consultations to explore this dangerous behaviour?
Moving on to drip pricing, we thank the Government for listening to our concerns in this area and bringing forward Amendments 112, 113 and 114. We ask the Government specifically to keep the definition of mandatory fees under review.
Amendment 115, in the name of the noble Earl, Lord Lindsay, is a sensible one, proposing that price should be removed from any invitation to purchase so that it is not an inducement to buy.
The following government amendments are technical, clarificatory and consequential and we are broadly in agreement: Amendments 116, 117, 119, 121, and 141 to 149.
In Committee, I spoke about the UK’s secondary ticketing market. It is estimated to be worth £1 billion annually. The industry model is to purchase tickets for sporting and cultural events in bulk, and then resell them at inflated prices, as referred to by the noble Lord, Lord Moynihan. Such practices exclude people who cannot afford artificially high prices and exploit the people who can. Several renowned artists, through their management firms, are implementing measures to ensure that genuine fans secure tickets initially, and to identify and nullify tickets resold for profit.
I am pleased to speak to Amendment 150 in the name of the noble Lord, Lord Moynihan, supported by the noble Lord, Lord Clement-Jones, and my noble friend—and good friend—Lady Jones of Whitchurch. Not only would it prevent bulk-buying of tickets, it would end the fraudulent practice of speculative selling. This is where touts list and sell seats they do not have, bank the proceeds and then hope to secure a ticket later to fulfil an order. This is despicable. I respectfully remind the Minister that these practices most certainly are not good examples of competitive markets, nor do they give consumers genuine choice and flexibility.
Online ticket touts create nothing except misery for fans. They exploit the market and distort it, purely for their own profit. The voices of the creatives, the ones both we and their fans want to support, are calling for the Government to act. We on this side will support the noble Lord, Lord Moynihan, if he seeks to test the opinion of the House on Amendment 150. Of course, we will consider and vote for it in its place on the list.
Finally, we support Amendment 151, which addresses a very specific situation. When a trustee of a charity receives tickets in respect of their role, they must not resell them on a secondary ticketing site for more than face value plus a handling charge.
I hope the Minister has been persuaded by my whistle-stop summary, and as I catch my breath, I will listen with interest to his response.
Lord Offord of Garvel (Con)
As ever, I start by thanking noble Lords for their amendments and all who spoke for their important and considered contributions. On Amendment 104 on right to repair, tabled by the noble Baroness, Lady Hayman, it has been a great pleasure to discuss this with her during this process and, indeed, since Committee. I also thank the noble Lord, Lord Leong, and the noble Baronesses, Lady Bakewell and Lady Bennett, for their impassioned contributions on this issue.
Noble Lords may recall from Committee that there is much excellent work under way in this area across government, involving in my department, Defra, the Department for Energy Security and Net Zero and the Department for Science, Innovation and Technology. Waste prevention and eco-design are two key strands of this work. As well as this cross-government work, Defra, which published Maximising Resources, Minimising Waste last year, is currently setting up the necessary programme management and governance functions around that work, and will work closely with other government departments, including those with a consumer perspective, to achieve these goals. I appreciate the point that there is a lot to co-ordinate here, and I hope that this governance will reassure noble Lords that the problem is being gripped. The Government will also set out in a future publication how each scheme interacts and adds up into a coherent whole.
I appreciate the point that the noble Baroness made about Northern Ireland, and we will of course consider carefully the implications of new EU regulations in Northern Ireland. Naturally, we will adopt an approach that best suits the UK circumstances when designing our own regulations; we are always open to allowing for more or less any objective that would even improve on the EU’s regime.
While I am sympathetic to the intent of these amendments, the Government’s view is that there is already a strategic framework in place for supporting right to repair. I greatly appreciate all the work that the noble Baroness, Lady Hayman, is doing in this space. Of course, her continued input would be greatly welcomed as this work progresses. I have said to her before that we are violently agreeing on the need for this to happen, and I am very happy to work with her to move forward.
I turn to Amendment 108, tabled by the noble Lord, Lord Clement-Jones, relating to third-party agents. I would like once again to reassure him that the protections sought in these amendments are mostly provided for elsewhere in consumer law. Clauses 225 and 227 prohibit traders using misleading actions or aggressive practices, including influencing a consumer’s decision on whether to use a third party. A particular dispute between an airline and an online travel agent has often been raised, including in Committee, when discussing this issue.
The CMA has significant powers to investigate and act if it finds that businesses are behaving anti-competitively in a particular market. It is right that those matters be determined by the CMA as it sees fit, which means that I cannot comment on its work—but I can assure the noble Lord that it is alive to this issue. More broadly, we have recently consulted on the package travel regulations that govern many of these sectors, and I look forward to sharing the response to the call for evidence.
I turn to the issue of invitation to purchase, and thank my noble friend Lord Lindsay for his Amendment 115, as well as the noble Baroness, Lady Bakewell, for her contribution on this issue. The amendment would remove the requirement that a price is provided before an action is considered an invitation to purchase. Actions that are considered an invitation to purchase attract specific consumer rights. The Government believe that the changes proposed by this amendment would expand the definition too far, rendering the invitation to purchase provisions unworkable in practice. The Government are confident that sufficient legal protection is already in place for circumstances in which vulnerable customers engage rogue traders to undertake services on their behalf. In the Consumer Rights Act 2015 there are pre-contract information obligations on traders to provide identity and contact details. Nevertheless, I draw your Lordships’ attention to my commitment for officials to continue to work with noble Lords to identify practical measures to support trading standards officers.
The noble Baroness, Lady Bakewell, raised an important point about VAT. I can provide an assurance that pricing information must already include any relevant taxes, including VAT, and VAT and pricing information is also subject to the Price Marking Order that the Government consulted on last year. We will introduce secondary legislation to improve transparency, including on all taxes.
Lord Offord of Garvel
“12A “(1) Submitting, or commissioning another person to submit or write—(a) a fake consumer review, or(b) a consumer review that conceals the fact it has been incentivised.(2) Publishing consumer reviews, or consumer review information, in a misleading way.(3) Publishing consumer reviews, or consumer review information, without taking such reasonable and proportionate steps as are necessary for the purposes of—(a) preventing the publication of—(i) fake consumer reviews,(ii) consumer reviews that conceal the fact they have been incentivised, or(iii) consumer review information that is false or misleading, and(b) removing any such reviews or information from publication.(4) Offering services to traders—(a) for the doing of anything covered by sub-paragraph (1) or (2);(b) for the facilitating of anything covered by sub- paragraph (1) or (2) to be done.(5) For the purposes of this paragraph—(a) “consumer review” means a review of a product, a trader or any other matter relevant to a transactional decision;(b) “fake consumer review” means a consumer review that purports to be, but is not, based on a person’s genuine experience;(c) a consumer review conceals the fact it has been incentivised if—(i) a person has been commissioned to submit or write the review, and(ii) that fact is not made apparent (whether through the contents of the review or otherwise);(d) “consumer review information” means information that is derived from, or is influenced by, consumer reviews;(e) a person “submits” a review or information if they supply it with a view to publication;(f) “writing” includes creating by any means; (g) “commissioning” includes incentivising by any means (and “commissioned” is to be read accordingly);(h) “publishing” includes disseminating, or otherwise making available, by any means;(i) publishing in a “misleading way” includes (for example)—(i) failing to publish, or removing from publication, negative consumer reviews whilst publishing positive ones (or vice versa);(ii) giving greater prominence to positive consumer reviews over negative ones (or vice versa);(iii) omitting information that is relevant to the circumstances in which a consumer review has been written (including that a person has been commissioned to write the review).”Member’s explanatory statement
This amendment adds various activities relating to fake reviews directed at consumers to the list of unfair commercial practices in Schedule 19 to the Bill.
Lord Offord of Garvel
“(b) the total price of the product (so far as paragraph (ba) does not apply);(ba) if, owing to the nature of the product, the whole or any part of the total price cannot reasonably be calculated in advance, how the price (or that part of it) will be calculated;”Member’s explanatory statement
This amendment, along with my amendment to insert new subsections (3A) and (3B) into clause 229, requires a trader to set out in an invitation to purchase the total price of a product including any mandatory fees, taxes and charges that apply to the purchase of a product rather than “drip-feeding” such amounts during the transaction process.
Lord Offord of Garvel
Member’s explanatory statement
This amendment, and my other amendment to clause 232, changes the parliamentary procedure for regulations under clause 232 so that any regulations made under the clause (not just the first) are subject to the affirmative procedure.
Lord Offord of Garvel
“(aa) the descriptions of practices mentioned in paragraph 12A of that Schedule;”Member’s explanatory statement
This amendment provides that the new unfair commercial practice relating to fake reviews provided for by my amendment to Schedule 19 will be an excluded description of practice for the purposes of clause 236(7) (and accordingly will not be subject to criminal liability).
Lord Offord of Garvel
“(2A) In section 74(3) (interpretation of Chapter)—(a) in paragraph (b) for “the Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277)” substitute “Chapter 1 of Part 4 of the Digital Markets, Competition and Consumers Act 2024”; (b) in paragraph (c) for “those Regulations (see regulation 19 of those Regulations)” substitute “that Chapter (see section 230 of that Act).”Member’s explanatory statement
This amendment makes a further amendment to the Online Safety Act 2023 that is consequential on the revocation of the Consumer Protection from Unfair Trading Regulations 2008 and the commencement of Chapter 1 of Part 4 of the Bill.
Lord Offord of Garvel
“(5) See section 274(4) to (8) for how this Chapter applies in relation to a contract that—(a) was an excluded contract at the time it was entered into, and(b) on subsequently ceasing to be an excluded contract, becomes a subscription contract.”Member’s explanatory statement
This amendment is consequential on my second amendment to clause 274.
Lord Offord of Garvel (Con)
My Lords, I am delighted to speak to this group of amendments, and I thank the noble Lord, Lord Clement-Jones, and my noble friends Lord Lucas and Lord Mendoza for their amendments. I will first address the government amendments.
Amendments 122 to 125, 138 and 139 aim to address the concerns raised by my noble friend Lord Mott about certain microbusinesses, such as small local farm shops, being unintentionally captured by the new subscriptions rules simply because they are incorporated. Together, these amendments alter the requirement for a business to be unincorporated in order to benefit from the exclusion. Instead, a business will benefit from this exclusion so long as it meets the “micro-entity” thresholds in the Companies Act 2006. The other requirements of the exclusion, which require a business to deliver foodstuffs to the home or workplace without the use of couriers, remain unchanged. This ensures that the exclusion remains well targeted and captures only the smallest of businesses. I am grateful to my noble friend for highlighting this issue, and I hope he is reassured by these amendments.
Lord Offord of Garvel (Con)
Once again, I thank all noble Lords for their passionate and eloquent speeches. I turn to Amendments 126A, 126B and 127A in the name of the noble Lord, Lord Clement-Jones, and Amendment 127 in the name of the noble Lord, Lord Lucas, relating to reminder notices.
The purpose of these notices is to give consumers essential information about their next renewal payment, and how to end their subscription if they no longer want it. That is why they are only required ahead of certain payments being taken, where the consumer could alternatively avoid paying by exercising their right to end the contract. We believe reminder notices are particularly important for 12-month contracts that automatically renew, given that a consumer may commit to another full year of payments if they miss the opportunity to end their contract.
For such contracts, businesses will only need to send two reminder notices per year, with one other reminder required if the contract starts with a free trial. We believe this is reasonable and strikes the right balance between ensuring consumers are prompted to consider their ongoing subscription and ensuring businesses are not overburdened.
I turn now to Amendment 127, tabled by my noble friend Lord Lucas, and I thank my noble friend Lord Black for his contribution, also relating to reminder notices. I am grateful to my noble friend for his amendment and I agree with him that businesses must be able to provide other information in these notices, such as promotional or advertising material. It is, after all, a key means of engaging with customers. However, as drafted, this amendment would mean that, while the reminder notice must be clearly given, the essential information that must be contained in the notice could get lost in marketing material. Therefore, while the Government cannot accept the amendment in its current form, I commit to bringing forward government amendments at Third Reading which will seek to strike the right balance on this topic.
Our amendments will allow businesses to provide other material—as they choose—in a reminder notice, but they will also ensure that the required information remains the most prominent information in the notice. This approach will ensure consumers receive clear and timely information about their current subscription, while allowing businesses the opportunity to provide promotional offers or other information in a reminder notice.
I turn to Amendments 131, 133 and 134, tabled by the noble Lord, Lord Clement-Jones, on cooling-off periods. I share the noble Lord’s intent to ensure the cooling-off rules work for digital content providers. As I explained in my earlier remarks, before introducing the relevant secondary legislation for how refunds work during cooling-off periods, the Government will consult on a “use it and lose it” proposal. It is essential that we consult on this proposal, as the proposal, or a version of it, may well apply to other services or products, such as personalised goods.
We have focused mostly on the digital sector today, but many other sectors, with different circumstances, may also be relevant. In light of this, we do not agree that detailed arrangements just for digital content should be in the Bill. The full range of sectors should be considered in consultation, and such detail is better suited to secondary legislation, which can be updated when required. That is why we have made it very clear, through our Amendments 136 and 137, that secondary legislation can take account of different products and circumstances. That is also why the noble Lord’s Amendment 135 is not necessary. Its objective is already achieved with the existing drafting and has been explicitly clarified through the Government’s own amendments.
I now turn to Amendments 126 and 140 on gift aid, tabled by my noble friend Lord Mendoza and the noble Lord, Lord Clement-Jones, respectively. I also thank the noble Baroness, Lady Jones of Whitchurch, for her contribution on this topic. For the reasons set out earlier, we do not consider excluding memberships which qualify for gift aid to be the best way to address this issue. Instead, the Treasury will amend the gift aid regime to ensure that it is compatible with the subscriptions chapter. As I have already said, the Treasury has shown its firm intention to lay the necessary legislation with the statement recently made in last week’s Budget.
On the points raised by the noble Lord, Lord Clement- Jones, we do not consider placing such conditions for the commencement of the chapter as the best way to achieve these aims. Noble Lords rightly point out that charities will need clarity on how consumer and gift aid regimes work together. I assure your Lordships that we will work closely with the Treasury, HMRC and the charity sector to provide guidance where needed before the regime commences.
For the reasons stated earlier, we do not consider that there should be specific detail about the cooling-off period in the Bill for particular products or services. However, we will consult before the end of the year and will be sure to engage closely with the charitable sector to understand issues specific to it.
As I emphasised earlier, the purpose of consultation is to develop rules which are fair and workable for traders and consumers and take account of circumstances such as those set out by the noble Lord. This will inform the secondary legislation that will be needed for the regime to be operable, and therefore we do not think a specific requirement that the regime cannot commence without it is necessary. As I mentioned before, the law is clear that, where a consumer donates regularly to a charity without receiving goods, services or digital content in return, this will not meet the definition of a subscription contract. Such donations are therefore out of scope of the chapter.
I hope this reassures noble Lords of the Government’s intent and that therefore they will not feel the need to press their amendments.
Lord Offord of Garvel
Member's explanatory statement
This amendment, along with my other amendments to Schedule 21, provides that a contract for the supply of foodstuffs etc delivered to the consumer’s home is excluded from the subscription contracts regime if the trader’s business is a “micro-entity”, which is assessed on the basis of the business’ turnover, balance sheet and number of staff, regardless of whether the business is incorporated or not.
Lord Offord of Garvel
“(a) in a way which is straightforward, and”Member's explanatory statement
This amendment sets out the principle that must inform the way in which a trader enables a consumer to bring a subscription contract to an end.
Lord Offord of Garvel
Member's explanatory statement
This amendment enables a consumer to exercise a right to cancel a subscription contract for breach of an implied term under the Chapter by notifying the trader by any clear statement of their decision to cancel the contract. The concept of a consumer ending a contract by making a clear statement of their decision to do so is already in use in consumer law.
Lord Offord of Garvel
Member's explanatory statement
This amendment enables a consumer to exercise a right to cancel a subscription contract during a cooling-off period by notifying the trader by any clear statement of their decision to cancel the contract. The concept of a consumer ending a contract by making a clear statement of their decision to do so is already in use in consumer law.
Lord Offord of Garvel
Member's explanatory statement
This amendment makes clear that the power under clause 266(1)(a) may be exercised to provide that a consumer may lose the right to cancel during a cooling-off period if the consumer chooses to receive digital content or services during that period.
Lord Offord of Garvel
Member's explanatory statement
This amendment clarifies that the Chapter does not apply in relation to any contract that was entered into before clause 253 comes into force. This is to ensure that it does not apply to a contract that was not a subscription contract when it was entered into before that clause comes into force (e.g. because it was an excluded contract) but then becomes a subscription contract after that clause comes into force.
Lord Offord of Garvel
“(a) a bankruptcy order having been made in relation to the trader (or, in Scotland, the trader’s estate having been sequestrated),(b) a winding up order having been made in relation to the trader as a result of the trader’s insolvency,(c) an appointment of a liquidator (otherwise than following the making of a winding up order) as a result of the trader’s insolvency,(d) the trader being in administration,(e) the appointment of an administrative receiver (or, in Scotland, a receiver) in relation to the trader, or(f) in any jurisdiction, the trader being subject to an order or procedure that corresponds to any order or procedure mentioned in paragraphs (a) to (e).”Member's explanatory statement
This amendment broadens the definition of insolvency for the purposes of the Chapter.
Lord Offord of Garvel
“(4A) In subsection (4)(a)(i) the reference to limiting (or further limiting) the accreditation to particular descriptions of ADR or of special ADR arrangements includes, in particular, limiting it to ADR relating to consumer contract disputes that have already been referred for ADR or to special ADR arrangements that already exist (as the case may be), whether for a limited period or otherwise.”Member's explanatory statement
The amendment clarifies that the powers of the Secretary of State under clause 297 to limit or further limit the scope of an accreditation includes limiting it to finishing off subsisting referrals of disputes for ADR and/or operating existing special ADR arrangements.
Lord Offord of Garvel
Member's explanatory statement
This amendment, together with my other amendment to clause 335, ensures that the power to make regulations containing consequential amendments is conferred on the Treasury rather than the Secretary of State if the regulations only contain amendments to tax legislation, in compliance with the usual approach. This would, for example, enable the Treasury to make amendments to the Income Tax Act 2007 so as to ensure that gift aid can continue to be claimed in the case of payments made under subscription contracts between consumers and charities.
Lord Offord of Garvel
“(4A) In the case of regulations under section 335 made by the Treasury, the references in subsections (3) and (4) to each or either House of Parliament are to be read as references to the House of Commons only.”Member's explanatory statement
This amendment secures that the power to make regulations under clause 335 containing only amendments to tax legislation are subject to procedure in the House of Commons alone, in compliance with the usual approach for such powers in recognition of the financial privilege of the Commons. See also my amendments to that clause providing for the power to be exercisable by the Treasury.
Lord Offord of Garvel
Member's explanatory statement
This amendment is consequential on my amendment leaving out Clause 127.
Lord Offord of Garvel
“(ai) Part 1;”Member's explanatory statement
This amendment to section 393 of the Communications Act 2003 relocates the previous amendment to that section made by clause 109(3) (which is omitted by my other amendment to that clause).
National Minimum Wage (Amendment) (No. 2) Regulations 2024
Lord Offord of Garvel Excerpts(1 month, 3 weeks ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Offord of Garvel
That the Grand Committee do consider the National Minimum Wage (Amendment) (No. 2) Regulations 2024.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)
My Lords, the purpose of these regulations, which were laid before the House on 31 January, is to raise the national living wage and the national minimum wage rates on 1 April 2024.
The Government will increase the national living wage for workers aged 21 years and over by 9.8%, to £11.44 an hour. This record cash increase of £1.02 per hour means that we will hit this Government’s long-term target for the national living wage to equal two-thirds of median earnings for those aged 21 and over in 2024. With this national living wage uplift, this Government are also delivering their long-held ambition to extend the national living wage to workers aged 21 and over, as we reduce the age threshold from 23 and over this April, meaning that those aged 21 or 22 will see a £1.26 cash increase in their hourly pay.
This is a historic moment, as we are ending low hourly pay for those on the national living wage in the UK. The UK was the first country in the world to set such an ambition, and we are now proud to achieve it. A full-time worker on the national living wage will see their gross annual earnings rise by over £1,800 per annum. In total, the average earnings of a full-time worker on the national living wage will have increased by over £8,600 since it was announced in 2015. That is double the rate of inflation.
The Government will also increase wages for young people under the age of 21. For those aged 18 to 20, the national minimum wage rate will increase to £8.60, which is an increase of 15%. For those aged under 18, the national minimum wage will increase to £6.40 an hour, which is an increase of 21%. The minimum hourly wage for an apprentice under the age of 19, or in the first year of their apprenticeship, will increase to £6.40 an hour, an increase of 21%. The accommodation off-set will also see an increase to £9.99.
The new rate increases are based on recommendations from the Low Pay Commission, following its extensive consultation with stakeholders and consideration of the current economic data and circumstances. The Low Pay Commission is an independent expert body made up of employer and worker representatives and independent commissioners. This year has seen some challenging economic circumstances for both workers and employers, including high inflation. When the Low Pay Commission recommended the new rates for the minimum wage, it took into account many of these economic circumstances, including how affordable the rate increases are for businesses and the current state of the economy. By accepting these recommendations from the Low Pay Commission, the Government are striking the right balance between the needs of workers and the affordability to business, while also ensuring that we deliver on our long-term commitments on the national living wage.
The Government would like to place on record their thanks to the Low Pay Commission, its previous chair Bryan Sanderson and the commissioners for their commitment to gathering thorough evidence and providing these recommendations. I also welcome the noble Baroness, Lady Stroud, to her role as the new chair of the Low Pay Commission.
We expect that this increase to the minimum wage will put more money in the pockets of around 3 million of the lowest-paid people in every corner of the country. The new rates are due to come into force on 1 April 2024. In the meantime, any worker who is concerned that they are not being paid the correct wage should check their payslip and speak with their employer. If the problem is not resolved, they can contact ACAS or complain to HMRC.
Since 2015, the Government have more than doubled the budget for compliance and enforcement to £27.8 million in 2022-23. HMRC enforces the national living wage and national minimum wage on behalf of my department. I thank HMRC for its ongoing work with employers and workers to ensure that all workers receive the pay they are due and help give businesses the right resources to stay national minimum wage compliant.
I remind the Grand Committee that, on 1 April, regulations will also come into force to ensure that so-called live-in domestic workers are paid at least the relevant minimum wage rate, providing protection from exploitative low pay. This will help protect these workers, giving them a new right to the entitlement to the national living and minimum wage for the first time. These regulations, alongside the regulations debated today, will aim to reward the lowest-paid workers in every sector and in every part of the country for their contribution to our economy.
This Government are aware of the cost of living pressures and will continue to closely monitor all the impacts of increases to the national living wage and national minimum wage rates on workers and businesses alike. We will continue to carefully monitor economic developments as the NLW target is implemented. The Government will shortly publish this year’s remit to the Low Pay Commission and ask it to provide recommendations for the rates, which will apply from April 2025.
Lord Leong (Lab)
My Lords, we are pleased to welcome this instrument and thank the Minister for introducing these regulations. As he referred to, they implement the recommendation from the Low Pay Commission to lower the age of eligibility for the national living wage from 23 years old to 21 years old. We also welcome the inflation-related annual increases in the national minimum wage and in the apprentice hourly rates for those aged under 21.
However, even after the increases enabled by this instrument come into effect on 1 April this year, under-18s will earn just £6.40 per hour, while 18 to 20 year-olds will earn only £8.60 per hour. Unfortunately, as young people know, most shops, landlords and services do not offer lower prices for customers aged under 21. Ironically, many of these businesses actually employ people under 21 on the national minimum wage. What further sanctions will apply to businesses that do not pay the national minimum wage?
If we are privileged to be elected, the next Labour Government will use its New Deal for Working People to eradicate in-work poverty by tackling the structural causes of inequality. We are committed to raising the national living wage to ensure that it is adequate and addresses the rise in the cost of living and inflation. Having a national minimum wage that does not reflect the actual cost of living particularly impacts people who do not have family who can support them; care leavers are one severely affected group.
Some of the most disadvantaged and economically insecure young people in the country, even if they try to do the right thing and work hard, can find themselves unable to meet basic costs. As most noble Lords know, the previous Labour Government proudly introduced the national minimum wage. The next Labour Government would make sure that the national living wage actually lives up to its name. We would ensure that a genuine national living wage is applied to every adult worker and is properly enforced, because we know that giving working people more money in their pocket means that more money will be spent in their community and in the everyday economy, nourishing their neighbourhoods and creating more and better-paid jobs locally.
Without hesitation, we support these regulations. I look forward to the Minister’s response to my question about sanctions.
Lord Offord of Garvel (Con)
I thank the noble Lord for his contributions to today’s debate. As I said, these updated regulations will reward low-paid workers right across the country for their contribution to our economy.
I will deal with some of the points made, especially in relation to our young people. As was discussed in the Chamber recently, it is crucial that we get young people into work immediately after they come out of school. If at that point in their early careers, they do not have the skills to make that wage, we must not lock them out. The graduated scheme to allow them to come in at the lower rate and move up as they get to 21 is similar to what any of us who have been in work experienced. When we started out and were relatively unskilled, we were on a lower wage rate, and then we graduated to the national minimum wage aged 21. That is a perfectly reasonable graduation scheme for our young people. We know the impact on their lives of not getting into work immediately—it can create a lifetime wage scar—so it is very important that we do not lock them out of the market at the most formative period of their working life.
On sanctions, HMRC administers the scheme. We very actively monitor who is not paying the right rate. Every year, we do a very public name and shame on those companies—sometimes some well-known names are named—which we know has a major impact on behaviour. There are sanctions that can be applied by HMRC directly to companies that do not comply.
It is absolutely fair to congratulate the previous Labour Government on introducing the minimum wage. The noble Lord referred to a possible change of Government, but a note of caution is that we must take businesses with us on this journey. There are 5.5 million companies in the UK, of which 99% are SMEs. That is why the Low Pay Commission is so crucial to this debate: it sets what is considered to be a fair rate. Bearing in mind that the burden will fall on businesses—this will cost £3 billion over the next five years—we need to get the right rate.
I will make one more point on that. Prior to this Government being in place, our lowest-paid cohort had a higher percentage of their annual income coming from benefits. Today, a higher percentage comes from earnings, so we have been successful in moving that cohort into work. I emphasise that a full-time worker on the national living wage is earning £8,600 more today than in 2015. That will be an increase of 70% by 1 April this year. As inflation has been 35% in that time, this cohort has had a double increase in their wages. We are now in a position to say that with the national living wage being set at two-thirds of median earnings, that cohort has been taken out of low pay, which is defined as being below two-thirds of median earnings. There are now 1.5 million people on the national living wage who are no longer in that category.
We are proud of the Government’s record of delivery. We have achieved our target of the national living wage reaching two-thirds of median earnings for all workers aged 21 and over. I again extend my thanks to the Low Pay Commission, which is very important. Its independent and expert advice means we can ensure that the right balance is struck between the needs of workers, affordability for business and the wider impact on the economy. We look forward to receiving its recommendations for the 2025 rates, which will be published later this year.
Digital Markets, Competition and Consumers Bill
Lord Offord of Garvel ExcerptsMonday 11th March 2024
(1 month, 3 weeks ago)
Lords ChamberRead Full debate Digital Markets, Competition and Consumers Bill 2022-23 View all Digital Markets, Competition and Consumers Bill 2022-23 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 47-II Second marshalled list for Report - (11 Mar 2024)
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish a conduct investigation notice in full rather than a summary of the notice.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish a statement under clause 28(2) in full rather than a summary of the notice.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish a statement under clause 30(1) in full rather than a summary of the notice.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish an enforcement order in full rather than a summary of the order.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish a notice under clause 32(5) in full rather than a summary of the notice.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish a notice under clause 34(1) in full rather than a summary of the notice.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish a PCI investigation notice or a revised version of the PCI investigation notice rather than a summary.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would require the CMA to publish a pro-competition order rather than a summary of the order.
Lord Offord of Garvel
Member’s explanatory statement
This amendment would ensure that a penalty imposed on undertaking that is not an individual is calculated by reference to the undertaking’s turnover.
Lord Offord of Garvel
“(4A) Rules of court and Tribunal rules may make provision about the transfer from the Tribunal to the appropriate court or from the appropriate court to the Tribunal of all or any part of a claim made in proceedings under subsection (2).”Member’s explanatory statement
This amendment would permit rules of court and Tribunal rules to make provision about the transfer of claims between the appropriate court and the Tribunal.
Lord Offord of Garvel
“(2) A CMA breach decision becomes final—(a) when the time for applying for a review of that decision has passed without an application being made, or(b) where an application has been made, when the application has been finally determined or has otherwise ended. (2A) For the purposes of subsection (2)(b), an application is not finally determined until any appeal relating to it has been determined (ignoring any possibility of an appeal out of time with permission).”Member’s explanatory statement
This amendment confirms the circumstances in which a CMA breach decision becomes final.
Lord Offord of Garvel
Member’s explanatory statement
This amendment removes an amendment to section 393 of the Communications Act 2003 as this will now be addressed by the same amendment to that section contained in Schedule 29 to the Bill (see my amendment to that Schedule at page 407 at line 23).
Lord Offord of Garvel
“(4) In order to give effect to any need to keep information confidential, the CMA may publish the notice or other document in a redacted form.”Member’s explanatory statement
This amendment would ensure that the CMA may redact documents which it is required by this Part to publish in order to give effect to any need to keep information confidential.
Lord Offord of Garvel
Member's explanatory statement
This amendment would prevent a court or the Tribunal from making a disclosure order requiring the disclosure or production of digital markets investigation information while the investigation to which the information relates is ongoing, regardless of who holds the information.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)
I thank all noble Lords who have contributed to the final group this evening, group 4.
Amendment 61 tabled by the noble Lord, Lord Clement-Jones, would enable the Competition Appeal Tribunal to award exemplary damages in collective proceedings. He is familiar with the Government’s position on this matter. I have been pleased to have the opportunity to discuss it with him further since Committee, and have written.
The Government consulted before introducing the collective action regime in 2015. The great majority of respondents said that exemplary damages should not be available in collective actions to ensure that firms were not unduly pressured to settle claims due to just the risk of punitive damages. Introducing exemplary damages in collective actions could also act as a disincentive to leniency applications—these are critical to the detection and enforcement of infringements by public regulatory authorities. Without effective leniency programmes and public enforcement, it could be far more difficult for private parties to pursue redress.
This view was shared by both businesses and consumer groups, including the consumer group Which?, which did not consider extending exemplary damages to collective actions to be necessary. I am sure that this will be of particular interest to the noble Lord, Lord Clement-Jones, given his commendable focus on ensuring consumers are at the centre of our thinking. The Government believe the current provisions in the Bill reflect the right approach on this matter.
Government Amendments 62 and 157 relate to litigation funding. The Government have recognised the challenge posed by the PACCAR judgment and the impact on access to justice. Furthermore, it has always been the Government’s intention to address the impact of the PACCAR judgment in full at the earliest opportunity. Since Committee, the Government have announced that it will quickly bring forward a separate Bill to enable this. I am sure that noble Lords across the House will welcome this news.
Clause 127 was introduced previously to mitigate the impact of PACCAR by enabling PACCAR-compliant funding agreements to be applied to opt-out collective actions. This clause will no longer be required, and these amendments effect its removal. I hope that noble Lords will support these amendments, along with government Amendment 66, which is a tidying-up amendment to remove a redundant cross-reference in Schedule 13.
Lord Clement-Jones (LD)
My Lords, I am sorry to interrupt the Minister but the noble Lord, Lord Bassam, and I would be keen—despite the dinner hour approaching—to know a bit more about the Minister’s plans as regards the short Bill. We want a bit more specific information about timing and what is happening. Is there a period of consultation, or can we go straight to legislation. What is the plan? With the best will in the world, we are delighted to hear what the Minister has to say, but can we have some specifics?
Lord Clement-Jones (LD)
My Lords, that is rather better than the ministerial “in due course”. That is all I can say.
Lord Offord of Garvel (Con)
I thought the noble Lord would appreciate that clarity.
Amendment 63 was tabled by my noble friend Lord Hodgson and I thank him and the noble and learned Lord, Lord Thomas, for their contributions to the debate. While the Government recognise the important role that litigation funding can play in facilitating access to justice, we are not blind to some of the challenges and opportunities to reform and improve the funding system. That is why, in recent days, the Lord Chancellor has written to the Civil Justice Council, inviting it to undertake a review of the sector. This work will ensure that claimants can get the best deal and it will expressly consider the need for further regulation or safeguards. Its terms of reference will be announced in the coming days.
Lord Clement-Jones (LD)
I am sorry my Lords; I regret to keep interrogating the Minister, but there is a clear separation, I assume, between a review as to whether or not regulation is required, in the form that the noble Lord, Lord Hodgson, talked about, and re-establishing the basis for litigation funding following the PACCAR case. I assume there is a clear distinction between the two activities.
Lord Offord of Garvel (Con)
That is correct.
Colleagues from the Ministry of Justice will be following this debate closely and will have heard the points made by my noble friend Lord Hodgson regarding the need for momentum for this review. Therefore, it would not be right to have a statutory review that would duplicate this work.
Amendment 65, tabled by the noble Lord, Lord Tyrie, is about whistleblowing. I thank the noble Lord and the noble Baroness, Lady Kramer, for their passionate contributions on this topic this evening. As I made clear in Committee, the Government recognise how important it is that whistleblowers are supported to shine a light on wrongdoing and believe that they should be able to do so without fear of recriminations. In 2023, the CMA increased the cap on rewards for illegal cartel whistleblowers from £100,000 to £250,000 to strengthen its enforcement work. Additionally, the Government are undertaking a wider review of the effectiveness of the whistleblowing framework in meeting its original objectives to facilitate whistleblowing, protect whistleblowers against detriment and dismissal, and to facilitate wider cultural change around whistleblowing.
My colleague the Minister for Enterprise, Markets and Small Business has recently mentioned in the other place that the research for the review is near completion. The Government intend to provide an update on this shortly.
Lord Clement-Jones (LD)
Before the Minister stands up, I will add to that. The Minister used the word “research”, which I thought was extraordinary. “Research” is a flabby kind of expression in these circumstances. Do the Government intend to review the current state of whistleblowing with a view to ensuring there is a more comprehensive approach to it, or is this just some nice-to-have academic exercise?
Lord Offord of Garvel (Con)
I thank both noble Lords for that. The update will be provided shortly. I agree with the noble Lord, Lord Clement-Jones, on the beauty of the wording that the “research” for the review is near completion. It does perhaps need some clarification, so let us get the timetable and I will provide that as soon as possible.
The noble Lord’s continued engagement is greatly welcomed as we undertake this important work. However, we do not think it appropriate to place a new and binding obligation for a further review to be conducted within a specific timeframe. I will come back to him with exactly what the timeframe is.
Amendment 153 from the noble Lord, Lord Tyrie, would require the measures in the Bill to be reviewed at five-year intervals by an individual appointed with the consent of the relevant parliamentary Select Committee. I thank the noble Lords, Lord Tyrie and Lord Kamall, and the noble Baroness, Lady Kramer, for their contributions to the debate on this amendment. I commend its intent. However, the Government have already committed to carrying out an evidence-led post-implementation review to assess how the Bill is delivering on its aims. The CMA has also engaged constructively with parliamentary committees to support their scrutiny of its activities. This will continue in the future. Noble Lords will be aware that the CMA is also required to present and lay its annual report in Parliament, covering its operation and effectiveness.
I thank the noble Lords, Lord Clement-Jones and Lord Tyrie, and my noble friend Lord Hodgson for their amendments. I hope that they are sufficiently reassured by what I have said and do not feel the need to press them.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for that response. Even on an empty stomach, there are things to be taken away from what the Minister said. I score him two and a half out of four as far as this is concerned. What he said on exemplary damages was disappointing. I cannot see why the Government do not understand that using a review that took place in 2013 as a stick to beat us with by saying that we cannot have exemplary damages for collective proceedings seems a bit perverse. Time has moved on. The whistleblowing side is the half—so nul points for exemplary damages and half a point for whistleblowing, but if there had been more than just research it might have been full marks. As regards the other two points, the fact that there will be a post-implementation review is sensible. The Minister did not say much more about the post-PACCAR pledge, but we take a little bit on trust, particularly at this time of day. In the meantime, I beg leave to withdraw Amendment 61.
Lord Offord of Garvel
Member’s explanatory statement
This clause would leave out Clause 127 of the Bill (use of damages-based agreements in opt-out collective proceedings), which addresses the Supreme Court judgment in R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28 in respect of certain proceedings, because the Government intends to bring forward a separate Bill addressing that judgment in respect of all proceedings.
Brexit: Benefits to Economy and Society
Lord Offord of Garvel Excerpts(1 month, 4 weeks ago)
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Lord Wallace of Saltaire
To ask His Majesty’s Government whether they plan to report to Parliament on the benefits that leaving the European Union has brought to the United Kingdom’s economy and society in the past four years; and if so, when.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)
In January 2024, my department published an overview of the benefits of Brexit, on its fourth anniversary, to the UK economy. Since the referendum, the UK economy has grown faster than those of Germany, Italy and Japan, and is equal with the French. The IMF is now predicting that the UK will have the fastest growth in the G7 in the next five years. Meanwhile, our exports have reached £870 billion, and we are well on target to reach our overall target of £1 trillion. That growth in trade is greatly assisted by our free trade agreements, now signed with 73 countries globally plus the EU.
Lord Wallace of Saltaire (LD)
My Lords, I am extremely sorry that the Minister’s department gave such little publicity to its fourth anniversary paper. Given that the Government fought the last election, very successfully, on getting Brexit done, and we are now coming up to an election in which they will want to say again that Brexit was a success, should they not be making a major theme of what the benefits have been in a report on the last five years? Does the Minister agree that the public are more aware of the costs than the benefits of Brexit? Good balance in a report to show that there have been at least some benefits might help the Conservatives regain a little support in the opinion polls.
Lord Offord of Garvel (Con)
I thank the noble Lord. The major benefit that we must be better at communicating is certainly around our international trade. We all know that when the UK voted to join the Common Market in the 1970s, Europe accounted for one-third of global trade at that point. When we left in 2019 it was 16% of global trade, and the forecast is that it will be 9% in 2050. Putting aside the cultural, political or geographical issues, the British people have made a savvy business decision to tilt to where the trade is—the Indo-Pacific—and we should be better at communicating that to people.
Lord Kamall (Con)
My Lords, what does my noble friend the Minister make of the comments of High Representative Josep Borrell, effectively the EU’s Foreign Minister, who said:
“Europe is a garden … the rest of the world is a jungle”?
Does that not reveal an underlying neo-imperialist current that permeates the European Union in its relations with the world? Are we not better off not being part of this project of white European supremacy and superiority?
Lord Offord of Garvel (Con)
I thank my noble friend. This could get quite spicy. I will keep to trade. We have just joined the CPTPP—we need a new name for this trans-Pacific partnership. The last time I looked at the map, Britain was not anywhere near the Pacific Ocean. We managed to get America’s place in this group of 12 countries which have 15% of global GDP and 40% of the world’s middle-class consumers, who all want to buy goods that are made in Britain. We could not have done that deal while we were inside the EU. We are 95% of the way through negotiating with India. We could not have done that deal inside the EU. Trade is tilting towards the East and we need to be where the trade is.
Lord Anderson of Swansea (Lab)
My Lords, has any of that made up for the loss of trade to the European Union? Would it not be helpful—
The Earl of Clancarty (CB)
My Lords, there are certainly no Brexit benefits at all for the arts and creative industries. Is the Minister aware that for the musicians touring, despite the good news about tax relief that we have heard today, there remain problems with visas, cabotage, carnets and much else, which need to be sorted? Until they are, our music industry will be struggling.
Lord Offord of Garvel (Con)
I thank the noble Earl. We heard in the Budget today the Chancellor identify the creative industries as one of the five key new industries coming through which will power our economy forward. We have in the UK probably the best tax regime for the creative industries. On individual country-by-country touring issues, we are resolving them one by one, to the benefit of our young artists.
Lord Anderson of Swansea (Lab)
My Lords, have any of these trade deals cumulatively made up for the loss of trade to the European Union? Would it not be helpful to publish two columns—one with the extravagant claims made by Mr Johnson and his friends during the referendum and one with what has actually happened?
Lord Offord of Garvel (Con)
I thank the noble Lord. I can give some detail on that. If you take out inflation and things such as precious metals, our exports today are in real terms 1% ahead of 2018. After a very difficult five years of world contraction, our exports are, in effect, £870 billion. Interestingly, our economy is 80% services and 20% goods, but our exports are 50/50 because our goods are good and go around the world. The direction of travel is that our exports will be two-thirds services and one-third goods. Our services have gone up by 15% and our manufactured goods have gone down by 12%. Therefore, our services are more than making up for goods. The killer stat is that if you look at our exports, our manufactured goods to the EU are down 13% and to non-EU down 12%, so there is no difference. Brexit is a red herring.
Lord Clarke of Nottingham (Con)
My Lords, has my noble friend seen the estimate by Goldman Sachs that British GDP is 5% smaller than it would have been had we not left the single market? The OBR’s figure is 4%. Are the Government contemplating resuming discussions with the European Union to improve our trading relationships with that huge and prosperous free trade area, perhaps in order to get nearer to the arrangements that Norway has with the EU on trading matters, Norway not being a member of the EU either? Our present position is continuing to cost us a considerable amount of economic activity in this country.
Lord Offord of Garvel (Con)
As I said, in the last five years we have obviously had Brexit, but also there has been Covid, massive disruption to the supply chain in China and massive contraction in manufacturing around the world. We have Ukraine, energy prices; it has been an extraordinarily difficult period of contraction in all global economies, whether in Germany, France, Australia or the USA. Our economy is now set fair to grow fast. Like my colleague Minister Hands in the other place, I will be working very closely with individual EU countries. We are signing co-operation deals on financial services, we have resumed participation in the North Seas Energy Cooperation, the UK has rejoined Horizon Europe and Copernicus, and we have agreed to extend zero-tariff trade on electric vehicles. There is a whole list of co-operations with the EU that we continue to push through.
Lord Fox (LD)
My Lords, the Minister, in answering my noble friend, dismissed the role of geography. If you are exporting goods, geography is very important; it is much easier and cheaper to sell to your nearest customers than half way across the world. Here is another list, that the Minister could perhaps consider, of issues that I hear about from people selling goods and the friction they encounter: customs declarations; safety and security certificates; evidence of origin of goods; VAT requirements; health certificates; and chemical certificates. Here is the friction that our people and manufacturers are facing every day. Will the Minister admit this is an issue and will he undertake to try to do something about it?
Lord Offord of Garvel (Con)
I thank the noble Lord. Yes, this is an issue, and it relates to 24% of our pie chart of exports; that is, our manufactured goods exported to the EU. Some 41% of our exports go to the EU 27 today, and it is 49% if you make it the Europe 34, so this idea that we do not trade with Europe any more, when half of our exports go there, is simply not the case. On the matter of friction on trade, we are making massive strides with the single trade window, the Electronic Trade Documents Act, the new border target operating model, and the ecosystem of trust. We are moving into a new digital world where goods will move much faster, and we recently had a situation where we sent a batch of valves from Burnley to Singapore without any paperwork, thanks to the Electronic Trade Documents Act.
Lord Leong (Lab)
My Lords, spring is in the air and love is all around. With Valentine’s Day last month and Mothering Sunday this weekend, florists’ businesses should be blooming. Unfortunately, they face additional costs and paperwork on the 80% of flowers that are imported from the EU, due to the border target operating model. The Government’s lack of a plan for Brexit has been particularly exposed when it comes to trade. What steps are the Government taking to avoid further disruption to businesses importing from the EU?
Lord Offord of Garvel (Con)
There have certainly been some difficulties and friction in certain areas and sectors, as I have identified. Those are being worked on and will be considerably improved by the new border target operating model, of which more later.