UK Internal Market: White Paper

Lord Wei Excerpts

Wednesday 29th July 2020 Lords Chamber

[Lord Callanan]

I hope there will not be any disputes, but if there are, they will be legal disputes and the correct forum for resolving those is the courts system. We have no intention of setting up an alternative dispute resolution procedure when we have one of the best and most efficient court systems in the world to resolve disputes.

[Lord Wei (Con) [V]]

My Lords, the free ports policy, as part of levelling-up the country, was announced to great fanfare last year. Will the White Paper and the policies within it take account of free ports, and what happens if other Administrations disagree on creating such tax-free zones and zones to promote investment into their parts of our country? How will we co-ordinate such a policy as we take back the powers from Europe that will allow us to move ahead with it?

[Lord Callanan]

The free ports policy is unaffected by this legislation. If the power exists for devolved Administrations to create them, it is unchanged by this legislation.

Corporate Insolvency and Governance Bill

Lord Wei Excerpts

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

[Lord Wei (Con) [V]]

My Lords, I declare my interests as a company director with involvement in a number of firms that are affected by the current crisis. I welcome this Bill. We need to do what we can to enable firms to weather this particularly difficult situation. In the time that I have, I will highlight from some of the conversations I have been having in the marketplace an observation that there seem to be at least three types of company situation, although I am sure that there are more.

Broadly, there are companies that were basically already insolvent or on very thin margins before the crisis hit us, those that are temporarily insolvent but which are resilient and have a future, particularly those that have a pivot or a plan—we know the stories of much being done in incredibly innovative ways to pivot businesses; for example, pubs becoming supermarkets and drive-through cinemas massively expanding on stately homes—and there are those that are solvent and doing well but, frankly, have taken advantage of the various available schemes and liquidity to give themselves an extra cushion.

There is a danger that, as we move forward, agencies, regulators and financial institutions will not be able to distinguish between these three types of organisation. I am particularly keen that this Bill should provide some of the framework for that greater understanding. For example, a business with great prospects that has for whatever reason decided to delay reporting or to take advantage of some of the measures in this Bill may find later on that it impacts either their credit rating or certain non-legally controlled matters such as the decision to grant invoice discounting, which can sometimes be a pure business decision and not one necessarily governed by law.

We are hearing stories of company directors not being able to get mortgages currently because they are taking advantage of the various available schemes. Is there a danger, as I am hearing from certain quarters, that banks may force businesses into voluntary insolvency in exchange for equity? Under these measures, it may well be that, if I am a bank that wants to avoid being lumped together with other creditors in an unfavourable situation, it would be better for me to withdraw the overdraft to a business unless it gives me equity in that business, which would mean that I would be protected from that creditor-type situation.

Finally, there needs to be a longer-term view. Can we use technologies such as blockchain and give businesses a new option that is not just debt or equity? There are all kinds of instruments: sharing of royalties; securing or collateralising risk within a supply chain, which means that businesses do not always have to rely just on cash from creditors or new investors; starting to separate the delivery of essential goods and services within a supply chain from the actual survivability of a business, as we have seen in the banking world and could do for our supply chains.

Is this thinking around the three layers being taken into account? How can we avoid a cliff edge in a month’s time, when lots of businesses might start filing for bankruptcy—do we need to taper this over a long period? What are the Government doing to ensure that credit agencies and other bodies make wise business decisions that may not be governed by these laws but which will still have a huge impact on whether we have a zombie economy or one that will thrive and pivot into the new age to come?

Covid-19: Businesses and the Private Sector

Lord Wei Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Wei (Con)]

My Lords, declaring my interests as in the Lords register, especially in tech, I join other speakers in praising the contribution of the private sector, which by and large has really stepped up to play a role in helping tackle this crisis that is bigger than just making money for shareholders. It has supported us so much as a nation, and we need to look out for business and employees in the coming economic crisis.

I have three questions for the Minister, bearing in mind the time. First, in future can the private sector be engaged through the furlough scheme and a modified industrial strategy, taking Covid into account, to transition to a more resilient world, so that businesses are never again caught out because they operate only in a physical way? We have heard many examples—pubs becoming supermarkets, et cetera. This would help us all help those who will be unemployed move into the new jobs of the future. Rather than everyone being paid to stay at home and not work, perhaps we should start paying people a little to start imagining what the future could look like.

Secondly, could more be done to build trusted hubs online? For example, I think of the excellent work of Frontline.live, set up within weeks recently to facilitate requests for PPE and suppliers that can provide it. Rather than relying purely on government procurement technology, we could look at things such as leisure technologies and blockchain to find ways to eliminate fraud, increase transparency and ensure that supplies are delivered to spec faster and less bureaucratically, using different trusted platforms that need to be built. In this context, I think particularly about the many low-margin businesses in this country in food production or other areas that right now are struggling to raise finance, operate or pay off invoices. Could there be ways in which we could help support more resilient supply chains in low-margin industries, especially post Brexit, and create the ability for them still to have the funding they need to keep our critical services and goods and products flowing, even in crises such as this?

My final question relates more to health. There have been some signs in parts of the NHS and Public Health England of a slightly anti-private sector attitude, which may have contributed to some of the challenges we have had in securing PPE and in supply chains around testing labs and so on. Could more be done to enable the NHS and, especially, Public Health England and other public bodies to have greater awareness of the potential to work with business, so that together we can solve future problems and crises more effectively and rapidly?

[The Deputy Speaker]

My Lords, we now come to two speakers who are out of order on the main list. We will first hear from the noble Lord, Lord Tyrie, and then from the noble Earl, Lord Shrewsbury, who we hope will have regained his signal. Then we shall have the Front-Benchers winding up. I call the noble Lord, Lord Tyrie.

Weights and Measures Act 1985 (Definitions of “Metre” and “Kilogram”) (Amendment) Order 2020

Lord Wei Excerpts

Wednesday 20th May 2020 Lords Chamber

[Lord Wei (Con)]

My Lords, I also thank the Minister for the clarity of his opening remarks. I welcome this change. I am going to disagree with the previous speaker and some of the others, because I believe that there is an interesting nuance to this measure and its context that goes way beyond the debate around the metric system versus imperial.

In fact, it is true to say that Britain and British scientists and thinkers have played a key role in developing the metric system, with the likes of Kelvin and, more recently, Kibble, who developed some of the techniques that have led to the current definitions that we are discussing today. Undoubtedly, in future the accuracy that this change will bring will be of great benefit in many fields: astronomy, quantum physics, computing and telecommunications, as well as more generally in business.

To me, this measure starts to potentially exemplify a positive trend towards decentralising control. No longer will we need to reference a lump of metal in Paris; we can actually develop our own understanding of these measures in laboratories in Britain. I am therefore saddened that the Explanatory Note says that we have to align with Europe in order to develop these standards. We were part of developing this system, so I do not think we necessarily need to reference any other country. In my view, we need to be able to make our own decisions, especially with Brexit, sovereignly about what measures we want to move forwards, and if our choice is to align with international standards then that should be our choice.

I have a question for the Minister: until recently there were apparently only two laboratories in this country that had the instruments to do these measurements. I would be keen to know whether there are more labs that have been equipped, resourced and encouraged to make these measurements on a regular basis around the country, so that we can decentralise even away from London or wherever we take our national standard from, and local communities, local scientists and manufacturers of weight and measurement instruments can actually develop these standards in accordance with the natural norms of the Planck measurement and so on.

I welcome this move and, while I would not say that it is necessarily about internationalism, although it is good to have common standards for trade, I would encourage the Government to give us clarity in the coming months and years on how we will develop our own sovereign decision-making on this. For example, will future decisions on changes are made to this system and others fall under the purview of chief scientists?

Brexit: Competition and State Aid (EUC Report)

Lord Wei Excerpts

Thursday 24th May 2018 Lords Chamber

[Lord Wei (Con)]

My Lords, I, too, thank the noble Lord, Lord Whitty, for tabling this debate and for his very able chairmanship of the committee, and in particular for steering us through the creation of this report. I declare my interests as set out in the register.

Broadly speaking, I am relatively happy with the findings of the report and its recommendations, but with some significant caveats. It is a solid document and I pay tribute to my fellow committee members, our adviser and our officials, as well as to those who contributed evidence to our inquiry.

The topic of competition and state aid as we near Brexit is vital to the country’s economy and future as we seek to build new global trade deals and bolster existing relationships. I would argue that this area is one where we ought as a country not just to aim for continuity beyond our departure from the EU, whenever that ends up being, but to invest and be more muscular in our approach. As a country, I feel that we have not always benefited from the existing regulatory and anti-trust infrastructure through our membership of the EU, and indeed from the state aid framework of which we have been a part. While rational, I feel that it has at times been an obstacle to companies and social organisations making a difference and growing. Yes, the machinery in Brussels and elsewhere has often pursued high-profile cases against larger players from the technology and other industries. However, as we have seen in our previous report on digital platforms, often the investigations initiated occur many years after the issues under dispute, and the fines, relative to the size and turnover of the companies concerned, are not always that punitive.

As a Conservative and a believer in free markets, I feel that for capitalism to function well there needs to be rigorous enforcement of anti-trust measures, as well as the use of lighter-touch yellow card systems, and even an approach that looks at abuses in the area of supply chains. With the status quo, I fear that what may be close to being a monopoly or oligarchy in the UK can be overlooked for many years because it has not reached the scale that would trigger appropriate measures at a European level. We also know from previous research that some larger firms deliberately buy and shut down start-up competitors at just the level below the threshold when such a deal would attract the attention of the competition authorities. So my question to the Minister is: do the Government have plans to make better use of the freedoms that being out of the EU will give them to create a more flexible and vigorous regime for competition regulation and enforcement, in the interests of consumers, and even in the interests of smaller businesses and start-ups?

Some might say that such a regime would incur greater costs, and that we have benefited from the resources and staffing capacity of the EU to pursue some of the better-resourced firms in a co-ordinated way. Indeed, it is true that, as a country, we have the ability to leverage off the machinery of the EU to pursue those firms. But, as I have highlighted, there is a cost to outsourcing our capability—one that is borne by our consumers and our industries, and perhaps even by our wider economy through reduced productivity from less competition. To enable greater innovation and lower costs for ordinary people, I would argue that the CMA and other bodies in this area ought not just to have resources to scale up to backfill the cases in future that the EU will no longer take from us, but have even greater resources to be able to pursue a vigorous approach using both formal and informal methods. That would pay dividends for the country and ultimately be recouped through growth and increased taxes, and through more new entrants local to these isles having access to markets that have been closed off to them.

As for state aid, I can understand the sentiment in the report which seeks to continue the same measures on state aid to avoid a regional race to the bottom. But, like other noble Lords in this debate, I see Brexit as a major opportunity to review the way in which we go about enforcing state aid rules. This is truly an area where we have tended to gold-plate in the past—and I declare an interest as having been involved in companies or organisations that, historically, have bid for sums from local government or bodies subject to state aid. The picture has been one of delays and paperwork, where the sums involved have been relatively low, such that I am certain that many worthy projects that would have benefited our cities, nation and planet no doubt never saw the light of day because those involved decided against applying, given the trouble involved. Surely, as our cities re-emerge and become powerhouses once again, and with the potential for government departments to procure from more innovative start-ups and social organisations, and thereby reduce costs and improve outcomes, we ought to be using Brexit to streamline state aid, increase the caps and empower procurers to tap into the entrepreneurial energy out there. What plans are there are to do this, and do the Government share my concerns that the current system is hampering progress?

I want to use my remaining time to cover one issue raised by the government response to the report in relation to the role of the CMA, indicating that state aid will fall within its remit after Brexit. Given the points I have just made, it seems to me that there ought ultimately to be a separate and independent body altogether, which we might choose to call the PMA, or Procurements and Markets Authority, to carry out state aid and other functions. It would perhaps be empowered to hold to account government and the devolved Administrations, as well as, over time, non-government organisations and businesses, on procurement decisions generally, not just in relation to state aid. It would ideally process state aid applications in a more streamlined manner, and ensure fairness in the government procurement process, opening it up so that more players can have a chance, rather than just those which make the lives of our civil servants more convenient and lower-risk.

It could also have a hand in tackling abuse of suppliers by large organisations, and even play a role in developing best practice in how to manage procurement in the relationship between government and the public with utilities and quasi-monopolies, such as water companies, trains, energy companies, retail banks and large public sector service providers, which is currently a hot topic. Currently, when these bodies fail to deliver, this tends to lead to an argument to nationalise them, which in my view just shifts the monopoly provider role to government, and does not solve the core issue of performance, diversity, and affordability. A post-Brexit PMA could learn lessons from around the world, such as how the Canadians regulate their banks—for example, by increasing the amount of capital they need to hold if they do not adhere to high corporate governance standards—and work with regulators to apply best practice and move away from a targets-driven bureaucratic culture that creates barriers to entry and costly red tape to one that incentivises providers to be responsive and responsible suppliers of services to citizens and government alike.

Would the Government be open to looking at such solutions post Brexit? Such an approach would, in turn, free up the CMA, ideally with a very visible lead prosecutor such as you have in the United States, to go after local instances of oligarchic anti-trust behaviour, using both formal methods such as through the courts but also informal methods with consumer groups and other whistleblowing mechanisms to bring to light anti-competitive behaviour wherever it may be found. What plans do the Government have in this area, and have they given thought to being a bit more creative in the coming transition?

I believe that, with Brexit, we have a historic opportunity to truly champion a better model of growth for our citizens. It is historic because, if you go back to the era of Peel, Cobden and the abolition of the Corn Laws, we have been a nation that has sought to lower the cost of living for our citizens through lowering tariffs and increasing competition—something that we should be proud of and which formed the basis for the modern incarnation of my own party. But I fear that, in our desire to complete a smooth transition, we may be taking too tentative a path, rather than rediscovering our historic purpose to champion the rights of the needy, the small business, the self-employed, the charity and the ordinary citizen to have a better and sustainable life and to have a greater choice of providers in their lives.

This report has highlighted that it is possible to recreate in some ways what already exists outside the EU, but it also rightly points to the potential to go much further, to be more ambitious and to think more deeply about the role that we want our competition and state aid framework to play to bring about fairness and more of a level playing field for our citizens and businesses alike. This report should be seen as a great start. The question is whether this Government and future ones can build on it to make the most of the opportunities that Brexit will bring.