Update on the UK Steel Industry
Debate between Lord Stoneham of Droxford and Lord Stevenson of Balmacara
Lord Stevenson of Balmacara (Lab)
My Lords, I am grateful to the Minister for repeating the Statement made earlier in another place.
Steel is the foundation of many of the UK’s most important manufacturing sectors, including aerospace, defence, automotive and construction, and the threats facing it show no sign of abating. Countries such as China are engaging in ruthlessly uncompetitive practices which are destroying our steel industry. Central to ensuring that our steel industry survives and thrives is the urgent need for an industrial strategy, which has not yet been apparent.
The Chancellor has declared that Britain will be,
“carried aloft by the march of the makers”,—[Official Report, Commons, 22/3/11; col. 966.]
but manufacturing exports have slumped and manufacturing output is still below its level of seven years ago, before the crash. Since this House rose for the Easter Recess, the problems in the UK steel industry have turned into a full-blown existential crisis.
I welcome the long overdue admission from this Government that it is their duty to help find a future for UK steel making. I also welcome the Secretary of State’s warm comments about the role played by the unions, in particular by Community—which, of course, points up the absurdity of the Government’s proposals in the current Trade Union Bill. I also note the reference in the Statement to the invaluable work being done by the First Minister of Wales, which we echo.
Our thoughts need to be focused on the uncertainty and distress now being felt in Port Talbot and, despite the welcome news of a conditional agreement between Tata and Greybull, in other steel plants in the UK and the host of small and medium-sized businesses which depend on them. The Secretary of State mentioned his respect for the hard-working men and women of this vital industry who need help. I hope that what is now happening and prompting this response by the Government today is not too little, too late.
I have some questions for the Minister. Given that the Scunthorpe deal took nine months to reach, and in light of the reference in the Statement to Tata as “a responsible seller”, can the Minister tell us how long Tata is willing to keep the Port Talbot plant operational while a buyer is found? Will she confirm that it is the Government’s intention to ensure that any sale is of the integrated operations there? Will she also confirm that the pension arrangements, both current and future, entered into by Tata with its staff will be part of the sale? This is important for those affected.
Can the Minister confirm that the Secretary of State will contact all the present customer base and reassure them that these plants have a viable future and will remain open for business so that they can be confident enough to continue placing orders? In that respect, can she confirm that the IP held by Tata will be part of the deal?
On procurement, will the Government finally accept that future public sector procurement arrangements, from defence to construction, need to do more to support the British steel industry? It should not just be “easier” to buy British; it should be mandatory.
Lord Stoneham of Droxford (LD)
My Lords, six months ago—I was slightly surprised that it was six months ago—these Benches advocated the Government setting up a Minister-led steering group to look at the whole range of problems of steel and develop a strategy to save what we could of this great industry. All the impression of the past few weeks is that the Government have been running around like a rabbit in the headlights, with the local MP knowing that Tata was going to make a key decision on Port Talbot but the Minister responsible not knowing so. Have the Government used the past six months to develop a strategy for steel and, if not, why not? What is the Government’s industrial strategy towards steel?
National Minimum Wage (Amendment) Regulations 2016
Debate between Lord Stoneham of Droxford and Lord Stevenson of Balmacara
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the Minister for introducing this statutory instrument. I also congratulate her on her brilliant sense of timing. She has clearly been having acting lessons—to be able to pause so gracefully to allow those who do not want to hear her to leave is a masterpiece in timing from which we could all learn.
In its 19th report of the current Session, the Secondary Legislation Scrutiny Committee chaired by the noble Lord, Lord Trefgarne, drew these draft regulations to the special attention of the House on the grounds that they give rise to issues of public policy likely to be of interest to the House. We owe a considerable debt to this hard-working committee, which has once again done your Lordships’ House a great favour in helping us hold the Government to account by drawing this SI to our attention. Therefore, the Minister should not be surprised at the Motion. She should look to the wider context within which this is placed because we are not against the principle, but we think the committee has made some important points.
Statutory instruments have a major impact on people’s lives so it is right that they are given proper scrutiny in Parliament. As a responsible and loyal Opposition, we take pride in doing this and intend to continue to do so. However, as was made clear by my noble friend Lady Smith in the debate in your Lordships’ House last week, it is important that the Government also act responsibly and do not abuse the trust we should place in this process by trying to slip through substantial and far-reaching changes. Just because the power exists in primary legislation is a necessary but not always sufficient reason. When she responds to this amendment, will the noble Baroness share with us whether the question of using primary legislation for this important measure was considered?
The SLSC’s report says:
“It will fall to employers to meet the cost of the increases in employees’ pay. BIS puts the estimated total cost of the NLW’s introduction at £1,138.7 million in 2016–17”.
The report goes on:
“BIS says that business reactions to increased labour costs can include reducing profits, reducing the number of hours worked, restructuring their workforce, increasing prices, increasing the productivity of their workers, or substituting younger workers aged less than 25”.
As the report highlights, this response raises a number of questions about what work has been done by BIS on whether the benefits of the national living wage to low-paid workers could be offset by any or all of these business reactions. The department’s response—I think this was the reason that the committee picked up this point—was that there were too many uncertainties for a reliable estimate of the cost to be given. The SLSC is surely right to highlight this as a major deficiency in a policy. When she responds, will the Minister give us a bit more detail about what modelling has been done on likely business responses?
I accept, as has the Regulatory Policy Committee, that it is difficult to monetise these options but even so it surely would not be difficult to give a broad-brush assessment of what the department thinks is likely to happen on the ground. A significant trend towards any or all of these options will materially affect the benefits anticipated and if we accept the ripple effect described in the impact assessment it will flow to some 6 million hard-working but low-paid people.
Secondly, the SLSC report points out, as the Minister said, that BIS accepts that non-compliance with the national minimum wage may increase. In the excellent impact assessment—I pay tribute to officials for the work they have done on this—the detail included spells out the measures that are going to be taken by BIS, some of which the Minister mentioned. There are what we might call carrots covering various allowances and tax reductions although it is fair to point out that these will not compensate either in total or in timing for the increased costs being transferred to millions of businesses, particularly those which are small or medium-sized. A very good example of this is the reference on page 29 of the impact assessment which says that, “Funding from the apprentice levy will be put in the hands of employers to support training. This will improve worker productivity”. I invite the Minister to set out for me in writing how the additional cost of the apprenticeship levy, which is intended to be borne by larger employers, translates into a compensating financial benefit for the higher labour costs being transferred to the SME sector.
In truth, the stick, as described by the Minister, is the proposal to double the financial penalties for companies which do not pay the new national minimum wage. BIS has confirmed that extending the coverage of the statutory wage floor and adding complexity may increase non-compliance. Will the Minister set out, in more detail than she has already, how she will comply with the SLSC’s request for the Government to publish more information in future and thus satisfy the wish expressed by the committee that Parliament can properly judge the extent to which compliance with the new rate delivers the expected benefits to employees?
There is a good section in the Explanatory Memorandum on the equalities impact of the new proposals and the duties of the department in this regard. It is demonstrated within the Explanatory Memorandum that low-paid work is most prevalent in some sectors, such as retail, social care, hospitality and cleaning. It also appears to be more prevalent in part-time work, shift work, and among younger and older workers. It affects women more than men, and the largest numbers of people affected live in the north-west, the Midlands and Scotland. Clearly, if the policy works as intended, things should improve in these sectors, areas and groups. It may help to reduce the gender imbalance in pay, and we can hope that a more equal society will gradually emerge.
However, as the SLSC points out, there are real risks that non-compliance will rise and that changes in employment practice will vitiate the policy objectives. The national living wage will have national universal coverage for workers aged 25 and above, and the forthcoming publicity and other measures contained in the SI will help. Does the Minister agree that it may be necessary, and would certainly be desirable, to design additional measures to root out poor practice and illegality in the low-paying sectors listed in Table A3 of Annexe 2, the worst regions identified in Table A4 of Annexe 2 and among the groups identified in Chart A1 of Annexe 1 of the Explanatory Memorandum?
I do not want to suggest or imply that there is not a majority of responsible employers who are always going to abide by minimum wage legislation, but the figures presented in the report which accompanies the regulations are cause for concern and, as I am sure the Minister will agree, more can always be done.
Finally, I challenge the use of the term “national living wage”. As I understand it, the reason for the change from the NMW to the NLW is that:
“The Government believes that the economy needs rebalancing from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society”.
The impact assessment goes on to say:
“The UK can also do more to raise the wages of the low-paid compared to other countries—22% of UK workers are low-paid, compared to the OECD average of 16%”.
It explains that the OECD defines low pay as less than two-thirds of median earnings, but the initial introduction of the NLW will put those who receive it at 55% of the current UK median wage. Even if the aspirations for a £9 per hour living wage are achieved by 2020, it is estimated that that will get to only 60% of the UK median wage. In other words, this is more about raising the level of the existing national minimum wage than it is about introducing a genuine living wage. According to the Living Wage Foundation, the current UK living wage is £8.25 an hour and the current London living wage is £9.40 an hour. Will the Minister explain this anomaly? In particular, will she explain why the target for 2020 is only 60% of the median wage and why the Government are not trying to reach the OECD target of 66.7%? I beg to move.
Lord Stoneham of Droxford (LD)
My Lords, the Minister should not be surprised that we are having a debate of this nature. On this side, we fully understand the reasons why the noble Lord, Lord Stevenson, has moved his amendment. There is concern that the Government entered into this policy on the hoof. They did very little consultation or preparation for it. There are also signs that there were was not much cross-departmental consultation within government. The measure is designed, we think, to deflect attention from what was at that time the reduction of the tax credit policy. Like the noble Lord, Lord Stevenson, we are very concerned about the looseness of words to describe something that it is not. We have had in the housing area the concept of affordable rents, and indeed affordable housing, when they clearly are not affordable. Now we have the national minimum wage perverted into the national living wage. We welcome the increase but it is a deception to think that we will necessarily be able to reach what is a genuine living wage, as the noble Lord, Lord Stevenson, pointed out.
However, if this is the first step—and I accept that it is—to do more for low-paid employees and reduce subsidies to employers, then of course we welcome it. That initial step is acceptable, but there are a number of conditions. Clearly there was a lack of involvement of the Low Pay Commission in drawing up these original proposals. We accept what the Government have said—in future they will use the Low Pay Commission for advice on further increases, and in bringing together the national minimum wage with the so-called national living wage. But as the Secondary Legislation Scrutiny Committee pointed out, this is a big change: it involves £1.2 billion of costs in the labour market, and 6 million employees are affected. I must declare an interest here as chair of Housing & Care 21, which employs people who will be affected by these changes, although we largely pay well above the national minimum rate. The whole area of social care is particularly vulnerable. I know that the Government have made a number of initiatives on this, but obviously we will want reassurances that public sector contracts are seeking to push pay levels up, rather than contain them. Also, young people are excluded from these changes and no recognition is given to the extra costs of actually living in London. Therefore, the higher living wage should apply there.
We have a number of questions for the Government, some of which the noble Lord, Lord Stevenson, has already put. In what form will the Low Pay Commission’s advice be sought when it comes ahead of the Budget next year in setting the rates for 2017? What encouragement will be given by the Government to raise productivity, particularly in low-paid sectors? At the end of the day, if we wish to avoid inflation and unemployment, we have to raise productivity in these areas. What extra resources are going to be put into HM Revenue to deal with the extra policing of a much wider group of employees to ensure compliance? As the care cost cap implementation was delayed for five years at the start of this Government, what reassurance can the Government give that they will not delay that further, given the costs that will obviously be implied by these changes in the cost of social care? Finally, do the Government have any ambition to extend to those under 25 years of age the whole concept of the national living wage?
We cannot vote for this amendment to the Motion, because we set the direction of policy, but we do expect assurances from the Government for the ongoing investigation, particularly regarding the work of the Low Pay Commission. This measure generally supports our own policy of raising tax allowances and making sure that those at the low end of the pay market are paid a living wage.
Enterprise Bill [HL]
Debate between Lord Stoneham of Droxford and Lord Stevenson of Balmacara
Lord Stevenson of Balmacara
My Lords, I have been beguiling the Committee with the fact that I have had to act for several other proposers of amendments because sicknesses have left us a bit bereft. On this occasion, I can switch track slightly because here we are doing a decent thing in allowing some amendments on valuation to be debated on behalf of someone who cannot be present which I think he would certainly have tabled if he were here. We agree with them, so we have tabled them in our own right.
The noble Earl, Lord Lytton, has provided us with a brief which I will be drawing heavily on. However, as with the other amendments, I do not have the expertise to do justice to some of their individual elements. I suggest to the Committee that we take all the amendments that relate to valuation and the Valuation Office Agency together, which, if we do it cleverly and efficiently, will take us neatly to the witching hour of 7.30 pm, when we will be able to feel that we have done a good job. I will be imposing heavily on the good will of the civil servants briefing the Minister, but I hope that that will be sufficient. I am joined by the noble Lord, Lord Stoneham, who has put his name to one of the amendments.
The issue that unites all the amendments is that everybody involved in valuation agrees that the current arrangements for the business rates system, particularly the appeal system, are simply unsustainable. What is missing from the Bill is a balance between the need to remove ill-founded and speculative appeals with the need to preserve fair access to justice for those who feel that they have a case to argue.
At the heart of this, unifying all the amendments, is information, although I will speak specifically to the question of festivals, which arises in Amendment 52R. Therefore, most of my remarks will be about the generality of the VOA and how we may deal with it in future, but I will spend a few minutes on festivals.
We have drawn on work done by the Federation of Small Businesses, which also feels strongly about this. I think there is an alliance out there on this issue, and I look forward to hearing the Minister’s response.
Amendment 52F and those which are grouped with it, Amendments 52H to 52K and 52N, relate to whether information currently withheld by the VOA should be made available to those who have a genuine interest. I will not say much more than that, because that seems to be a point of fairness rather than a point of law: those who are being rated and having rates applied to them should be able to know the basis of that and to make judgments with their professional advisers fully informed.
Amendment 52G moves us to the billing authority and makes provision for disclosure of information about issues relating to a business improvement district scheme, which is a slightly different point but involves the same issue, which is that there is unlikely to be any way to judge what the non-domestic rates yield would be in a BID if you do not have access to that information. Again, limited disclosure would be in the best interests of all concerned.
There is no provision for an ADR ombudsman or other suitable arrangement in the VOA system, and Amendments 52L and 52P suggest that that gap needs to be filled. We would be grateful if the Minister would take that into account. Because of the way in which the UK has implemented the ADR legislation, a range of options is open, and we are not producing one solution against another, but it is fairly clear that there should be an outlet to an external agency such as an ombudsman.
The question of appeals more generally is raised in Amendment 52Q, in which we are also joined by the noble Lord, Lord Stoneham. The proposal in the Bill is that there should be an upfront fee for any appeal. That seems an odd thing to require. The people who will likely be most affected are small businesses, particularly those who are struggling to get started. It does not seem in the best interests of enterprise to require fees to be paid upfront which will not necessarily be returned if an obvious injustice is being done and redress for justice denied is not being provided.
On the question of festivals, we have become aware of the fact that the VOA has begun to raise invoices and seek money from people who have used agricultural land and buildings for cultural events and festivals. One can understand that, when previously rarely used assets are being used for a different purpose, there is obviously a question of whether fair taxation is being applied. It would be hard to argue that using land that was not being used for anything else for a business activity would raise a rateable question.
I hope that the amendment will set off in the Minister’s mind the suggestion that there is something a bit bizarre about constantly asking farmers and others to develop new ways of raising income and then, when they find one in the readymade form of a festival ready to come in on the site, not only to require them to pay rates for it but also to have a retrospective element. That seems rather unfair. I hope that, if only on the question of equity, the Minister might consider favourably the suggestion made by the festivals group that there should be no backdating. The situation may have changed, but that does not necessarily mean that those one-off festivals that have happened should suddenly be faced with very substantial Bills—we are talking about £50,000 or £60,000—when people have budgeted on the basis that there would be no such cost. In future, consideration should be given to some form of derogation for short-lived festivals of this type, when clearly there are economic benefits to the whole of the country and to the locality, and a good cultural effect that would be completely lost if the cost exceeded the income. We might be cutting off our noses to spite our faces. I would be grateful if the Minister could consider the amendment. I beg to move.
Lord Stoneham of Droxford (LD)
The noble Lord, Lord Stevenson, has masterfully summarised the amendments. I put my name to Amendments 52F and 52P in the interests of trying to improve the processes. In the interest of brevity and trying to improve the timescale, I am happy to give my support formally.
Enterprise Bill [HL]
Debate between Lord Stoneham of Droxford and Lord Stevenson of Balmacara(9 years, 2 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Stoneham of Droxford
I need to declare my interest as chair of Housing & Care 21. We built 1,000 homes last year. We have built far fewer this year but are very engaged in this intricate industry.
All the points have been made but I just wanted to say that this industry is very cyclical. The other feature of it is that it is dependent on a mass of subcontracts, so it is very complex. If we are going to do a review, now is a good time. We are at the beginning of the cyclical upturn and there is a concern to get work done. The whole capacity of the industry needs looking at because a lot of it was wiped out in the recession. Anything we can do to improve the capacity of the industry and make it more resilient is good. As sure as fate, whatever happens, there will be another recession and some of these problems will re-emerge. My whole experience of the industry is that it just goes suddenly dead. It is the most scary industry because people stop buying homes and it goes right through the chain, and then of course it is the small guy who loses out because he has no capacity to get his money back—he is down and dusted—and a huge part of the capacity of the industry goes with it every time. These measures are needed to build confidence in the industry, to build capacity and to allow it at the end of the day to produce more homes at less risk.
Lord Stevenson of Balmacara (Lab)
My Lords, I should declare an interest as my wife is a partner in a firm of solicitors and her expertise is in construction contracts. She does not talk to me about it so I do not know anything at all, but I still thought I should declare it.
This is the third time around the track on this particular topic. The quality of debate has not dipped; indeed, the interesting thing is that more people are now joining in. An emerging theme is now being drawn out, and I think it is a good one. For me, there are two points which have not been picked up, and I would like to reinforce them. First, as the noble Lord, Lord Stoneham, was saying, construction is an interesting sector and a very important one for the economy, so we must be very careful about it. The ONS produces figures on the progress of our recovery which always feature an element of construction. It is important at a local level and an everyday level but also in a macroeconomic way, and we should give regard to that.
The second thing is that there is a way that this could be sorted out by the sector itself, and it has not been. The contractual arrangements could be reformed, and the JCT, which has been mentioned, has indeed begun to think through some of these things. There are available options for people who want to make contracts that take advantage of them. But the interesting thing is that that has not happened. Something is going on here and that simple point has been made in some of the briefing we have received. There is “grand theft auto” of the working capital. The unfairness is that while this is a resource that should be of benefit to the contractors who are owed it at the end of whatever contractual period they have signed up for, it is withheld from them. The consequence of course is that it does not feature in their ability to raise finance for ongoing projects later on.
That is an important issue, which makes this practice very pernicious in the way it is applied. The original idea was that you held back the cash in case the constructor did not come back to do any remedial works that might be required. But as my noble friend Lord O’Neill said, this is a story from the past because contracting has got its act together now and is much better. Also, the contractual arrangements are better, so I do not think that it is as much of a danger as it was. My last project, which was a small one, was interesting. When you analysed the retentions money, it explained why senior members of the company kept popping up on our doorstep. The retention represented the directors’ bonus for completing a good project. They were aware of what was going on and they were very keen that we did not retain any money, and we did not. It is a fact that it is woven into the way in which these people operate, and it will be difficult to get out of.
Our amendments suggest that we already know enough about this for the Government to act. The consensus in the Room is that we should think about a review and then act promptly, but certainly set a more ambitious timetable of 2020 rather than 2025. In proposing our amendment, we simply add to the pressure that must now be felt by the department and I hope very much that when we come to hear the Minister, she will be able to respond to that.