Groceries Code Adjudicator (Permitted Maximum Financial Penalty) Order 2015
Debate between Lord Young of Norwood Green and Lord Popat
Lord Young of Norwood Green (Lab)
My Lords, we do support it. I welcome the introduction by the Minister but I have a couple of points to make. I welcome the Government’s decision to reject the retailers’ view that somehow the maximum penalty should be much more complex, and to keep it simple at 1% of turnover. The question of whether this is absolutely the right figure is something that we can look at in the review next year.
I also welcome the point about the wide powers of investigation and the increase in resources. It must have been a coincidence but, as I was flicking through the pages of the Sunday Times business section, I happened to notice a little article about a German supplier to a company complaining that the company had a four-month payment regime, whereas, interestingly, Germany has a one-month regime. I have not been able to verify that but the Groceries Code Adjudicator commented that she did not propose to launch an investigation into this. I was a bit surprised at that, as I thought the area would be worth some investigation. Four months seems a significant period of time for a company to withhold payment to its direct suppliers. I would welcome the Minister’s response to that.
Lord Popat
I am grateful to the noble Lord, Lord Young, for his contribution and for accepting this SI. He mentioned the penalty of 1%. In many ways, he is right; I think it is best to keep it simple. One per cent is a maximum. Bearing in mind that the turnover of large supermarkets can exceed £1 billion, 1% can be a substantial sum of money. Again, if we find that this is not the correct amount, we can always review the legislation.
The noble Lord mentioned the article in the Sunday Times. I have a copy of it attached to my file. Lidl was the supermarket in question. I am sure that this matter will be investigated by Christine Tacon. The payment period is longer in the UK than in Germany, but there has been no Grocery Code Adjudicator investigation. The Grocery Code Adjudicator is independent. The Small Business, Enterprise and Employment Bill, which is having its Report stage tomorrow, is looking at prompt payment and will probably incorporate what Lidl has done to its suppliers by delaying payment for as long as four months. It might come under that jurisdiction rather than the Grocery Code Adjudicator.
Lord Young of Norwood Green
That might be the case, but the Grocery Code Adjudicator made a public statement that she did not intend to investigate it—so it is an important decision. There ought to be some dialogue with the Grocery Code Adjudicator to find out why this does not merit at least something, even if it is not a formal investigation. It is quite an important issue, and I would have thought that it merited some investigation. I cannot say that I am completely satisfied with the reply. I am not expecting the Minister to respond now, but when he has had further opportunity to reflect, perhaps he will.
Lord Popat
My briefing states that the GCA is independent and the small business Bill will look into it. I will certainly write to the noble Lord. The article states that the company pays its suppliers in Germany in 30 days but takes four months to pay in the UK—so it is something that we must look at.
The GCA’s published guidance commits her to a stepped approach to enforcement. The adjudicator has said that wherever possible, she will rely on informal regulatory actions to secure compliance with the code. For example, the adjudicator has secured the agreement of most of the supermarkets to limit forensic audits of transactions with suppliers to the previous two years, rather than six years. The GCA meets Ministers regularly and its performance will be reviewed by Ministers in 2016, so I think it is best if I write to the noble Lord on this matter. I read the article in the Sunday Times and have a copy with me. I will refer it to officials and write to the noble Lord.
Motion agreed.
National Minimum Wage Regulations 2015
Debate between Lord Young of Norwood Green and Lord Popat
Lord Young of Norwood Green (Lab)
My Lords, I, too, welcome this particular statutory instrument and the introduction by the Minister. I thank my noble friend for her historical assessment. I am sure that her relatives could have said “chrysanthemum”. They might have had trouble spelling it, but that is another matter.
I thank the Minister for recognising that we introduced the minimum wage—though, I have to say, that was against the wishes of some and with dire predictions about the millions of jobs that would be lost. I am glad that we have put that behind us and I welcome the enthusiasm now.
Obviously, anything that simplifies and clarifies is to be welcomed. I welcome the point about the enforcement budgets being increased. I am interested in whether the statistic of 162 employers being named is, as I presume, for 2013-14. Maybe I missed the precise date. I just wonder whether the number of employers being reported is going up. Is the number of queries to workers’ rights helplines increasing?
I note from the Explanatory Memorandum that the Minister is due to clarify the guidance this year. It is really important that we get that right. As a matter of interest, are we keeping any statistics on the fact that, over the recent past few years, we have now had introduced the concept of a living wage? I do not expect the Minister to have any information on that, but I wonder if we are keeping any statistical evidence on it. If he has something on it, better still. Other than those questions and comments, I am happy to support this.
Lord Popat
I thank the noble Lord, Lord Young, and the noble Baroness, Lady Donaghy, for their contributions to this debate. As I said in opening, this was the best legislation we have had in 30 years. I hope the noble Lord will believe that when I got the Motion from the officials, I insisted on putting the point that this was Labour Party policy and the best legislation we have had in some years. I thank the noble Lord for his approval of this Motion.
I commend the noble Baroness, Lady Donaghy, for her work on the national minimum wage and the work that she did with the Low Pay Commission. What a success story. I am glad that it is cross-party issue and that as a Government we are doing something for the people in this country who are at the bottom end of the market in terms of the wages that they are on. I am glad that my Government have raised the allowance for people to have that extra money. The personal allowance has gone up from £6,000 to roughly £10,000 in the past five years.
The noble Lord, Lord Young, made a point about the employers named in 2013 and 2014. We are naming more employers. The revised naming and shaming scheme came in in October 2013. The new rules are part of the Government’s efforts to toughen up the enforcement of the national minimum wage and increase compliance. The 162 employers were mentioned earlier. Between them they owed substantial sums in arrears to their workers, and by naming and shaming employers it is hoped that bad publicity will be an additional deterrent to employers who would otherwise be tempted not to pay the national minimum wage. We received more complaints about the national minimum wage through the helpline during 2014-15 and we continue to increase awareness of the national minimum wage among employers and employees. I commend the regulations to the Committee.
Companies Act 2006 (Amendment of Part 17) Regulations 2015
Debate between Lord Young of Norwood Green and Lord Popat(9 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Popat (Con)
My Lords, the purpose of these regulations is to ensure the payment of stamp taxes on shares in relation to company takeovers by amending the Companies Act to prevent companies from using reduction of share capital provisions as part of a scheme of arrangement to facilitate a takeover. These reforms were announced in the Autumn Statement and are part of measures to protect the UK stamp duty base and ensure that businesses make a fair tax contribution.
The use of schemes of arrangement to facilitate company takeovers is not new but is becoming increasingly common. The increasing use of one form of scheme of arrangement for takeovers, often referred to as cancellation schemes of arrangement, has prompted the Government to take action now. In contrast to other forms of company takeover, cancellation schemes of arrangement do not incur a stamp tax liability. That is because stamp tax is chargeable on the transfer of shares from one party to another but not on fresh issues of shares. Cancellation schemes of arrangement involve the company that is the target of the takeover cancelling its shares, using the provisions in Part 17 of the Companies Act to reduce its share capital, and then issuing fresh shares to the acquiring company.
The Government believe that all takeovers should be treated equally in stamp tax terms. However, EU law—specifically the capital duties directive—prohibits the charging of tax on the issuing of new shares. Therefore these reforms amend Section 641 of the Companies Act to prevent a company from reducing its share capital through the use of a cancellation scheme of arrangement to facilitate its takeover. Of course, it will still be possible to effect a takeover using a transfer scheme of arrangement or contractual offer. Both these methods achieve the same overall outcome—the takeover of a company or merger of two companies— but stamp taxes are payable. It will also be possible to continue to use cancellation schemes of arrangement outside the takeover context, such as intragroup restructuring, de-mergers, rescheduling debt or returns of share capital.
We have acted quickly to bring forward these regulations after the announcement in the Autumn Statement, consulting informally with relevant experts and stakeholders in the legal and tax professions, as well as shareholder groups. We did so to reduce the risk of companies accelerating their takeover plans so as not to be impacted by the legislation. None the less, we appreciate that it would be unfair to apply the change to takeovers and mergers already in progress. As such, these reforms do not apply where the bidder has made a firm intention to make an offer—in accordance with the takeover code, or if the terms of the offer have been agreed, where not subject to the takeover code—before this instrument comes into force.
In terms of costs to business, apart from the requirement to pay stamp tax at 0.5% of the value of the consideration paid for the shares, there will be only relatively small one-off familiarisation costs for companies that are parties to a takeover or merger, and potentially their shareholders and creditors. These small costs will also apply to the intermediary community, such as legal firms and advisers specialising in takeovers and schemes of arrangement. Compared with the wider costs involved in a takeover, such as the costs associated with the actual integration of the businesses concerned, these costs are likely to be small.
These wider costs are detailed in our information and impact note, published alongside the draft SI. We believe that the small costs to business that may result from this measure are justifiable in the context of ensuring that businesses make a fair tax contribution and, in particular, that stamp tax on shares is payable whatever method is used to effect a takeover. Furthermore, we believe that these reforms will not impact significantly on the level of takeover activity in the UK. Those takeovers that make commercial sense will still take place. I commend these regulations to the Committee.
Lord Young of Norwood Green (Lab)
I thank the noble Lord for his explanation. It was a quite complex technical analysis and I will boil it down to the simple question that will exercise most people’s minds. Are we confident that these regulations, as drafted, will not give rise to some evasion or avoidance scheme that will ensure that companies do not pay the stamp duty they are obliged to pay? At the end of the day, I suspect that that will be the acid test, or one of them. I look forward to the Minister’s response on that question but, other than that, we support the proposal.
Lord Popat
I thank the noble Lord, Lord Young, for his support on this important legislation. Although it sounds complicated, it is straightforward. All we are asking is that companies that take over and acquire the entire share capital of a target company should pay their fair share of stamp duty. There were, effectively, many ways of avoiding this in the past and very few transactions were taking place. Lately, however, we have seen the number of transactions increasing. It is therefore only right that companies that take over other companies pay their fair share of stamp duty on the sale of the shares. It is a very small sum: one half of 1%. I thank the noble Lord for his support and commend the regulations to the Committee.
Lord Young of Norwood Green
Before the noble Lord sits down, I can see something coming from the back office, so to speak. I hope that that will provide some reassurance on my question.
Lord Popat
The position is no different from what I have just said. The regulations mean that, for new takeovers of UK companies, stamp duty will be payable on takeover. In other words, the cancellation scheme is no longer applicable. It will have to be a straightforward purchase—a transaction to acquire those shares. Hence, those companies have to pay their fair share of stamp duty.
Shared Parental Leave and Leave Curtailment (Amendment) Regulations 2015
Debate between Lord Young of Norwood Green and Lord Popat(9 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Popat (Con)
My Lords, shared parental leave is important because it modernises outdated assumptions that the mother is always a child’s primary carer, even though over a quarter of women now earn more than their partner and earnings levels for men and women under 30 are approximately equal, which is significantly different from the 1970s. It enables fathers to be more involved in caring for their child, which brings a basket of positive benefits to the child and the family; it gives families choice about how they care for their child in the year following birth or adoption; and it enables both the mother and the father to combine working and family life and maintain their attachment to the labour market, ensuring that the best talent pool is available to employers.
Noble Lords will be aware of the lengthy legislative processes to deliver shared parental leave, and of the thorough debates that we have had on the subject. The Children and Families Act 2014 provided the necessary powers to make regulations, and a suite of regulations was debated in both Houses in the autumn on curtailment of maternity and adoption leave, on shared parental leave and pay, and on changes to the maternity and adoption regulations—including adoptions from overseas—and to regulations extending adoption leave and pay to intended parents in surrogacy. Other regulations were also laid before Parliament but were not required to be debated.
I am pleased to be able to say that with these amending regulations we conclude the long legislative road. In summary, the effect of the regulations that we are debating today is to clarify the drafting in the regulations being amended, as well as correcting some drafting errors. I regret the need to take up more of the Committee’s time to debate amending regulations, but they will remove ambiguity and errors that have been identified in the legislative framework that implements shared parental leave. It is a regrettable fact that errors creep in, despite the extensive measures that we have in place to eliminate them.
The adoption provisions for shared parental leave do not come into force until April, so they will come into force in their amended form. The provisions for birth parents have come into force, and we intend to draw the attention of interested parties to the changes. However, we think it unlikely that any individual parent or employer will be disadvantaged by the fact that the legislation was not perfect from the outset.
Noble Lords will be aware that large-scale take-up of shared parental leave requires significant culture change, and that will take time. The Government have taken steps to communicate the new policy to parents and employers. ACAS guidance for employers and working parents on the new arrangements is available on its website. Government guidance is available on the government website, GOV.UK.
We have publicised shared parental leave extensively, using cost-effective, targeted marketing which delivers better value for money than an expensive big splash. Digital activity is at the heart of the Government’s communications strategy for shared parental leave, and targeted digital advertising has been running from the beginning of September and will continue until April 2015. We have been targeting mothers since the autumn and we are reaching out to fathers through digital media that appeal to fathers, and through positive role models for men, such as the recent campaign led by the England rugby player Ben Foden, who is shortly to become a father for the second time. We have also been running a public relations and press campaign through mother and baby magazines and consumer outlets, as well as targeting broadcast magazine shows. As the project to deliver shared parental leave in this Parliament draws to a conclusion, I hope that noble Lords will support these amending regulations.
Lord Young of Norwood Green (Lab)
My Lords, I do not intend to detain us long on this, because it is important that we get it right. It is lucky that we have a bit of leeway between now and April. I guess that, given the nature of these corrections, it will not make any real difference to the communications that we have had so far because, as the Minister said, this is the new environment. I applaud the Government for the various communications channels that they have tried. I was trying to think not only of the mother and baby magazines but of what other, more male-oriented magazines might alert fathers. I think that the approach is good. Using digital media is also good but it will not encompass everybody. If the Government could give some more thought to those who are not necessarily as plugged in to cyberspace as we would like, that might be useful. Other than making those comments, I am happy to support the amending regulations.
Lord Popat
I thank the noble Lord, Lord Young, for his positive comments. I am glad that these regulations complete the legal framework for shared parental leave and pay. I commend them to the Committee.
Small Business, Enterprise and Employment Bill
Debate between Lord Young of Norwood Green and Lord Popat(9 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Popat (Con)
My Lords, I thank the noble Lord, Lord Young, for his amendments to Clause 147, and for giving us the opportunity to debate the important subject of the national minimum wage. I have heard a number of concerns raised by the Opposition about the underpayment of the national minimum wage. I hope that my notes will cover what the Government are doing about that.
Clause 147 is an important step towards ensuring that employers comply with the national minimum wage legislation. It will amend the National Minimum Wage Act 1998 so that the maximum penalty that can be imposed through a notice of underpayment will be calculated on a per-worker basis rather than per employer. This will substantially increase the penalty for employers who owe large arrears to a number of workers. My noble friend Lord Storey asked this question, so I am pleased to confirm that the penalty of £20,000 is per worker.
By applying the penalty to each worker, employers owing high arrears to a number of workers may be issued with a greater penalty overall, as well as a higher maximum penalty. The higher penalty will deter employers from breaking national minimum wage law in the first place, ensuring that workers receive what they are entitled to and to come down harder on those employers who continue to break the law.
I will now respond to each amendment. Amendments 68ZN and 68ZP are designed to increase the maximum civil penalty available for non-payment of the national minimum wage from £20,000 to £50,000 per worker. I heard what the noble Lords, Lord Whitty and Lord Watson, had to say on this subject, and we welcome the recognition from the Opposition that there is a need to increase these penalties but we do not see the evidence to set the upper limit at £50,000. As the impact assessment for the measure sets out, 6% of cases in 2013-14 involved total arrears in excess of £20,000. None of these cases was anywhere near the upper limit suggested in the amendment.
Under the Bill, the penalty will be applied on a per worker basis, as I said. When you look at the cases where HMRC issued a notice of underpayment in 2013-14, the change means that in almost every case, the employer would have been issued with a penalty equivalent to the total amount of arrears they owed, rather than having the overall penalty capped at £20,000. As a result, the amendment would have had very little impact on the level of penalties in those cases.
However, I reassure noble Lords that if, in future, there is evidence to suggest that a higher maximum is needed, we can make that change through secondary legislation. I hope that I am giving reassurance to the party opposite that if we think in future that £20,000 is not enough and we need to raise it, we can bring in secondary legislation to increase the penalty.
Lord Young of Norwood Green
How many cases were in court for underpayment of the national minimum wage last year?
Lord Popat
I will certainly come back to the noble Lord on that in a minute.
I turn to Amendment 68ZQ. It is designed to impose reporting requirements on the Government’s approach to national minimum wage compliance and enforcement, as well as the impact of the minimum wage on wages more broadly.
I welcome the Opposition’s continued interest in this area and their desire to ensure that the system is working as well as it can. However, we believe that we are already transparent in our approach to reporting on the effectiveness of the national minimum wage and its impact on workers’ wages. Every autumn, the Government submit evidence to the independent Low Pay Commission, including an assessment of the national minimum wage’s impact on the labour market. That evidence is considered by the Low Pay Commission before it makes its recommendations to the Government. If new minimum wage rates are to be set, Parliament has an opportunity to debate them before they are introduced in October. Therefore, I hope that noble Lords will agree that the amendment is not necessary, as it simply imposes obligations that will duplicate reporting that is already taking place.
Finally, I turn to Amendment 68ZR, which would give local authorities power to enforce the national minimum wage. The Government already have an enforcement body dedicated to the national minimum wage, with a strong track record in this area.
I will respond to the question of the noble Lord, Lord Young. Since it started that work in 1999, HMRC has identified more than £54 million in arrears for more than 229,000 workers during more than 65,000 employer interventions. We are doing a lot more. The Bill, as my noble friend Lord Stoneham said, is to give small businesses help and support. We have gone as far as we can to make sure that employers do not break national minimum wage legislation. The noble Lord, Lord Young, asked how many cases of arrears there were last year. In 2013-14, there were 680 cases, with total arrears of £4.6 million.
Lord Young of Norwood Green
My Lords, I heard what the Minister said in response. I do not think that we are not totally satisfied with it. I may have missed in the exchange over the figures the Minister’s response to our view about enforcement by local authorities. Can he confirm what attitude is taken towards that?
Lord Young of Norwood Green
Towards regulations devolving the enforcement of the national minimum wage to local authorities, as proposed in Amendment 68ZR.
Lord Popat
My Lords, we have a very strong HMRC enforcement regime. We do not see any point in giving the power to local authorities. However, HMRC has regional offices to enforce the legislation. Of course, many other government departments play an important role in enforcing it.
Lord Popat
The noble Lord, Lord Morris, raises the important issue of how we help to ensure that people are paid the minimum wage and what guidance we give them on working out by how much they are being short-changed. Since 2013, we have published detailed new guidance on calculating the national minimum wage, which is available on the GOV.UK website. We have also updated several GOV.UK pages which hold information about the national minimum wage. This includes new information about current and future national minimum wage rates, a worker’s checklist, guidance on work experience and internships, information on the increased penalty for breaching the national minimum wage and the revised criteria for naming and shaming employers who breach national minimum wage legislation. Therefore, quite detailed information is available for workers to help them work out by how much they might have been short-changed in cases of people being paid less than the national minimum wage.
Lord Young of Norwood Green
A propos the Minister’s final point, is there not also the employment rights helpline, which we introduced? Does the Minister have information on the level of complaints or reporting of failure to pay the minimum wage on the employment rights helpline?
Lord Popat
I am afraid that I will have to write to the noble Lord with that information. I do not know whether it is available on our websites.
I have just been given some information on how many calls have been received on that subject. From the beginning of 2014 to October 2014, the number of inquiries that we received was 10,086. The number of complaints that we received relating to the national minimum wage was 1,550. I will certainly write to the noble Lord with more information on this subject, which we appreciate is quite important.
Lord Young of Norwood Green
I thank the Minister for his response. We will take into account the points that he has made and reflect on whether we need to come back to any or all of these issues on Report. I beg leave to withdraw the amendment.
Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014
Debate between Lord Young of Norwood Green and Lord Popat
Lord Popat (Con)
My Lords, I should point out that I shall be speaking to both sets of regulations. However, before I deal with the substance of the regulations, I would like to draw noble Lords’ attention to the sensitive names regulations. These are subject to a special parliamentary procedure whereby they must be approved within 28 days of being made.
The regulations offer companies more flexibility, they are deregulatory and they consolidate current names and trading disclosure regulations. They will also apply to limited liability partnerships and businesses. The changes being made will remove burdens from business. When setting up a company, LLP or business, entrepreneurs need to concentrate on getting business done and should not have to deal with unnecessary red tape associated with the name that they wish to give a business. That said, it is important that there are some rules associated with the chosen name—for example, that it is not the same as or similar to a name that is already in use or that the name does not convey something that could mislead the general public and result in harm. These regulations seek to strike a balance between the need to deregulate, and thus provide flexibility to companies to choose their name, and sufficient protection for the public.
The Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014 list the words and expressions that are considered sensitive under the Companies Act 2006. As a result of the Company and Commercial Law Red Tape Challenge, this list has been reduced by 26 words compared to current regulations. The consultation on this issue asked three questions: whether it was necessary to continue to have regulations specifying words and expressions deemed to be sensitive, thereby requiring approval for use in a name; if so, whether the current list of sensitive words and expressions should remain the same; and whether the sensitive words and expressions list could be reduced. The responses were clear that some words could mislead the public into thinking that the company has pre-eminence, a particular status or function. Therefore, it is necessary to regulate the use of some words and expressions.
However, most responses also thought that it would be beneficial to business to review the sensitive words and expressions list and reduce it where possible. By reducing the list, we will be reducing the burden on those businesses that may wish to use the words or expressions that were previously considered to be sensitive. Any proposed company name that includes a specified word or expression must have the approval of the Secretary of State. Approval is granted by the Registrar of Companies at Companies House on behalf of the Secretary of State. Furthermore, in some cases, the views of other specified bodies must also be sought in connection with an application for a name containing a sensitive word or expression; for example, to use the word “bank” a company would need the support of the Financial Conduct Authority.
When deciding which words to remove from the list, we considered the number of applications received over a period, including whether or not approval to include the word was normally granted and the likely impact on the public should the word or expression be removed from the list. I am confident that the words that we are removing will not have a negative impact on the public if they are included in a company, LLP or business name unchecked.
In moving the second set of regulations, the Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2014, I begin by making it clear that the majority of the content of these regulations is merely a consolidation of five current statutory instruments relating to company names and trading disclosures. These regulations have been consolidated in line with Red Tape Challenge principles. Responses to the consultation offered support for merging the regulations.
Although this instrument essentially restates previous regulations, there are some key changes that I would like to draw to your Lordships’ attention. The most significant is that we have extended the list of characters that can be included in a company name. Under these regulations a company will be able to include accents, diacritical marks and ligatures in its name. This change recognises the advances in technology that will now enable Companies House to accept these characters and, more important, that many companies that register in the UK operate on an international basis and may wish their name to reflect this.
The regulations also make a change to the trading disclosure requirements. It is usual for a number of companies to be registered at one location. In circumstances where six or more companies share one location, the current requirement is for the name to be displayed continuously for 15 seconds at least once every three minutes. We are relaxing this requirement so that if there are six or more companies at one location, a list of their names may instead be made available on request.
A number of changes are also being made when considering whether the company name is the same as another one. These changes will also allow groups of companies to swap the names within their group structure more easily. This is something that was particularly highlighted by business, which felt that the current regulations were particularly unhelpful in these circumstances. A number of common words such as “group”, “holdings” and “international” will no longer be disregarded when comparing names; for example, Butchers Holdings Ltd will no longer be considered the same as Butchers Ltd, making it easier to register such a name if the other is already registered.
I hope that your Lordships will agree that the regulations before us strike the right balance of protecting the public and allowing many more companies to choose a name that they believe best reflects their business. These regulations make a number of small changes that will reduce the red tape that companies currently have to cut through and I commend them to the House.
Lord Young of Norwood Green (Lab)
My Lords, what a thrilling set of statutory instruments to end the year with. I can understand why people have stayed in the Chamber. To paraphrase the bard, I suppose that a company’s name would be the same as any other if it was allowed to use the diacritics and ligatures and things that I must admit I was not absolutely sure of until I waded my way through the regulations. We are happy to support what seems a common-sense revision of the regulations. I suppose that the only concern one might have is to ensure that, in creating new flexibilities, this does not give an opportunity for companies to behave in a way that is less than ethical. The only question that comes to mind as we introduce these changes is: will there be any review process to see whether the high standards that we aim to achieve in company behaviour are maintained? The only other thing I want to say is to wish everybody a merry Christmas and a happy new year. That includes the staff and everybody else.
Lord Popat
My Lords, in terms of companies being ethical, I think that we have a world record in that respect. Our company law protects the public and the Government and makes sure that companies operate ethically. As for reviews, there was a review in 2006, instigated by the party opposite, and I recall the noble Baroness, Lady Vadera, doing one in 2009. This is another one in 2014. I hope that we are doing more to make it easier for companies to trade in the UK. I thank the noble Lord for his good wishes for Christmas and I commend the regulations to the House.
Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014
Debate between Lord Young of Norwood Green and Lord Popat
Lord Young of Norwood Green (Lab)
My Lords, I, too, welcome the measures brought forward by the Government today. It is important that jobs in the UK are advertised and made available to the people who live and want to work here. Indeed, we have already called on the Government to ban agencies from recruiting solely from abroad. However, Ministers are failing to go further to tackle the real problems in the employment agency sector and to halt the exploitation of Britain’s 1 million agency workers.
Agency working can provide flexibility that works for employers and employees, but the main recruitment industry body has warned that the number of rogue agencies has increased over the past three years. These agencies are associated with the worst elements of insecurity in our labour market, including the undercutting of wages and non-payment of the minimum wage. There is evidence that they are marketing agency workers to employers as a way to undercut wages of permanent staff, exploiting agency workers with unfair and illegal charges for travel, accommodation and taxes, in some cases leading to non-payment of the minimum wage, and engaging in tax avoidance schemes.
To reiterate, it is not only us who are saying this. The main industry body for the recruitment sector has warned that the problem of rogue agencies associated with non-payment of the minimum wage is getting worse. Regulatory bodies, including the Employment Agency Standards Inspectorate and HMRC, have also found evidence of non-payment of wages and of tax avoidance schemes. I would obviously welcome the Minister’s comments on that.
If we are in government after next May, we will crack down on employment agencies to tackle the worst elements of insecurity in our labour market. The next Labour Government will close loopholes which allow employment agencies to undercut the wages of permanent staff, ban employment agencies from recruiting only from abroad and force rogue agencies illegally exploiting their workers to clean up their act through measures such as the introduction of a licensing system.
We will not tolerate a world of work that is becoming more brutal because of the way in which cowboy employment agencies have been allowed to operate. They are undermining dignity at work, driving down standards and creating greater insecurity for families. I endorse the comments of my noble friend Lady Donaghy in relation to the internet and so on. I apologise for not being in my place at the start of the debate. I had not anticipated that we would get through the previous statutory instruments quite so quickly.
Lord Popat
I thank the noble Baroness, Lady Donaghy, and the noble Lord, Lord Young, for their brief contributions to this debate. In response to the point made by the noble Baroness about inspectors, we are doubling EAS resources this financial year, with a view to increased resources for the financial year 2015-16. These additional resources will be used for targeted enforcement in high-risk areas to protect the most vulnerable agency workers. The noble Baroness also mentioned internet advertising for jobs, which is not just in the UK but worldwide. Most internet advertising is obviously in English as well.
The noble Lord, Lord Young, mentioned the minimum wage. He is quite right that there are a few companies which abuse the system and do not pay the minimum wage. We have in fact boosted the resources available for national minimum wage enforcement. In the new year, we will have the Small Business, Enterprise and Employment Bill, which I will be taking through the House along with the noble Baroness, Lady Neville-Rolfe. We are going to increase the penalty for people who abuse or break the minimum wage law from £5,000 to £20,000 by secondary legislation. This penalty will be applied not per company or on a per notice basis, but on a per worker basis. So we are doing something to ensure that companies do not break the national minimum wage law and that their workers are correctly paid. We will wait for that Bill to come through but, having said that, we have made a couple of amendments recently to make sure that people are paid the minimum wage.
Lord Young of Norwood Green
What plans, if any, do the Government have for dealing with these rogue agencies that the main agencies within the recruitment sector are saying exist? Are the Government making any special efforts to shut them down?
Lord Popat
Most agencies comply with the regulations but, although it is not a widespread practice as such, I agree that there are a few which do not. Hence we have these regulations coming in and we are doubling the number of inspectors. We have inspectors available to monitor them and to make sure that they do not break the law. We want to make sure that there is fair play and that British agencies advertise jobs in Britain as well as overseas.
I will just cover another point that the noble Lord, Lord Young, made. The subject of overseas-only advertising was raised and how we know it is a problem. The Government have received some complaints about employment agencies advertising jobs in the European Economic Area countries but not in the UK. These regulations will ensure that all agencies based in the UK give work-seekers a fair opportunity to apply for jobs in the UK.
I hope that I have covered all the points—unless there are any further ones—but if I have left out something I will be very happy to write to noble Lords. This change will level the playing field for workers in Britain. It will ensure that they have equal access to vacancies advertised by agencies and that the small number of agencies who deny job opportunities to workers in Britain will be subject to enforcement action, as I mentioned earlier. I am delighted that the Committee is more or less in agreement with these regulations. I know that issues were raised about the minimum wage and internet advertising. I hope that I have covered those but if I have not, I will make sure that officials drop a line to noble Lords on those subjects. I commend these regulations to the Committee.
National Minimum Wage (Amendment) (No. 2) Regulations 2014
Debate between Lord Young of Norwood Green and Lord Popat
Lord Popat
I thank noble Lords for their contributions and commend the work of the noble Baroness, Lady Donaghy, on the Low Pay Commission. She raised a couple of issues about whether companies could afford to pay more. We are committed to improving the living standards of low-paid employees. We support businesses that voluntarily choose to pay a living wage or more than the minimum wage, as long as this is affordable and does not cost people their jobs.
The only way to achieve a sustainable increase in wages is to have better economic growth so that companies can afford to pay higher wages, as the noble Lord, Lord Young, mentioned. One of the problems for this country is that while all the figures look interesting and good—manufacturing is up, growth is up and exports are up—our productivity is still static and has not returned to the peak achieved in 2007. Companies need to achieve higher productivity to be able to afford to pay higher wages.
The noble Lord, Lord Young, talked about the enforcement of the national minimum wage. HMRC investigates employers who are not paying the national minimum wage. Those employers will have to pay back arrears owed to workers or face a financial penalty and be publicly named and shamed under the national minimum wage naming scheme. Since HMRC began to enforce the national minimum wage in April 1999, it has identified more than £54 million in pay arrears, affecting more than 229,000 workers, and has carried out more than 65,000 employer interventions.
The noble Baroness, Lady Donaghy, asked what steps had been taken to ensure that the national minimum wage is enforced. I have just responded to the question asked by the noble Lord, Lord Young, on that. We are committed to increasing compliance by making sure that HMRC investigates every complaint that it receives. As I said, since 1999, the pay of some 229,000 workers has been looked into where companies have not complied with the regulations. We are committed to providing effective guidance. We will consider the Low Pay Commission’s views carefully and consult it further to ensure that our website provides better information to people who want to make a complaint about low pay.
These regulations increase the national minimum wage from 1 October. They also allow trailblazer apprentices to be treated in the same way for minimum wage purposes as other apprentices on government apprenticeship programmes. A number of specific points have been raised. I shall look at Hansard and will be happy to write to noble Lords if I have not covered all the points that were raised.
As I said, the Government are committed to the minimum wage because of the protection it provides to lower-paid workers and the incentives to work it provides. It is crucial that people at the lower end of the market are paid more. It is important that they are paid a living wage to enable them and their families to survive. This Government have also introduced fiscal measures, such as increasing the personal allowance. Although the relevant rate has gone up by between 2% and 3% over the last four years, pay net of tax has gone up due to the higher personal allowance. That allowance will go up to £10,500 from April 2015.
The regulations we have been discussing today support the Government’s commitment to delivering fairness, supporting business and delivering world-class apprenticeships. I believe that they are fair and appropriate. The increase in the adult rate will maintain the relative position of the lowest paid while also being one that business will be able to afford.
Lord Young of Norwood Green
I just want to make sure that the noble Lord is going to answer in writing—if he does not have the figures here—whether the number of complaints made to the employee rights helpline has increased and how many relate to the national minimum wage. I am trying to read the body language of the civil servants. If those figures are not available, then by all means he can write to me.
Lord Popat
My Lords, I do not have the figures in my brief but I am very happy to write to the noble Lord. I commend the two sets of regulations to the Committee.
Royal Mail Sale
Debate between Lord Young of Norwood Green and Lord Popat(10 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Young of Norwood Green
To ask Her Majesty’s Government what recent assessment they have made of the value for money achieved from the sale of Royal Mail.
Lord Popat (Con)
My Lords, the Government’s overall objective in selling shares in Royal Mail was to protect the universal postal service by ensuring that Royal Mail has a sustainable and secure future. The sale raised £2 billion for the taxpayer and it enables Royal Mail to access the private sector capital that it needs to invest in growth. The sale guards against the real need for Royal Mail to request additional taxpayer support in the future.
Lord Young of Norwood Green (Lab)
My Lords, I thank the Minister for his reply, even though it was what I expected. If the enhanced share price, which today stands at 479.60p, was just market “froth”, can the Minister explain why the long-term priority shareholders sold their stakes for huge profits? Given that the National Audit Office has said that the business department’s desire to sell Royal Mail before the election next year resulted in a knockdown price that cost taxpayers £750 million, does the Minister feel that there are any lessons to be learnt for any future sale?
Lord Popat
My Lords, there are a number of questions in the noble Lord’s question. First, let me cover the share price. The share price for Royal Mail is very volatile. It reached £6.15 in January and stands at £4.79 as of this morning. The Government achieved their intention to ensure that Royal Mail started with core, long-term, stable investors who understood the business, along with some hedge fund participation to ensure liquidity in the aftermarket. This was absolutely real value for money and such a success story of this Government.
Royal Mail: Pricing of Shares
Debate between Lord Young of Norwood Green and Lord Popat
Lord Popat
My Lords, the prospectus was very clear about the risks involved in acquiring these shares. With regard to small investors, we allocated around 18% to retail investors. Ninety per cent of the retail investors who applied for shares up to £10,000 took up the shares knowing what the risks would be.
Lord Young of Norwood Green (Lab)
My Lords, can the Minister explain the contradiction between the Secretary of State’s claim that value for money was central to the Government’s strategy, given the current share price of over £5, and the view of many respected analysts that the offer price was seriously undervalued and 20% oversubscribed by banks? Can he give the House an assurance that the remaining 38% of shares will not be sold at another knockdown price?
Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013
Debate between Lord Young of Norwood Green and Lord Popat
Lord Young of Norwood Green
My Lords, we have had a fair amount of consensus this afternoon on previous statutory instruments but I think that this is the one where we part company, as we have signalled in previous debates on this issue under the Enterprise and Regulatory Reform Act. If there was one move that the Government made that we firmly endorsed, it was to encourage the mediation process through ACAS. We supported that; we thought that it was constructive and sensible. If only the Government had pressed the pause button after having done that and had waited for a period of time to see its effect, that would have been profoundly important. However, the Government were not satisfied with that. As my noble friends have commented, they have gone on to introduce a number of other significant changes. One change was increasing the period of service required before a claim for unfair dismissal could be entered from one year to two years, and my noble friend Lord Monks has referred to that. That is a profound change in itself.
The consultation process that the Government went through was, as someone somewhere else said, “a damn close run thing, Carruthers”. The figures are really quite marginal. In some cases, they swing the other way on whether or not there should be caps. As my noble friend Lord Monks said, the Secondary Legislation Scrutiny Committee itself pointed out in paragraph 20 of its report:
“It is of course for Government to decide on policy-formulation in the light of consultation responses. We note, however, that there was a lack of consensus on both the key issues relating to compensation for unfair dismissal canvassed in the 2012 consultation process. In the case of the overall cap, the Government saw this as reason to make no change. By contrast, an even division of opinion among respondents has not held the Government back from implementing its proposal to introduce a pay-based cap. It is hard to see these outcomes as demonstrating consistency in the Government’s response to consultation”.
We welcome the Government’s response on that point. However, we cannot help feeling that the lower paid will again face the consequences of this and that it will have an impact on older workers, who may have longer service with an employer.
We do not believe that this will address the real issue. Unfortunately—my noble friend Lady Donaghy is right—this is based on perception, as the Government have admitted, and on the wide publicity that has been given, not only in the tabloids but in the broadsheets, to the one or two cases which return significantly large figures. This is an ill-conceived proposal and we would like the Government to think again. However, in any event, I welcome the Minister’s response.
Lord Popat
My Lords, I thank noble Lords for their valuable and detailed comments during this short debate.
The order focuses on giving adequate recompense to those who have been unfairly dismissed while also providing certainty for business on its potential liability. It will bring expectations more in line with the likely amount of award that can be expected in an unfair dismissal claim at tribunal. Secondly, it will enable employers to hire with more confidence, as this individualised cap will reassure them about potential liabilities.
A number of points were raised which I should like to address in my remaining time. The noble Lord, Lord Monks, referred to reducing the cost to employers. We estimate conservatively that, as I said earlier, only 0.25% of unfair dismissal claimants might be affected by the cap. This is about allowing employers and employees to take informed decisions on how to resolve disputes. If they know in advance the likely outcome of a tribunal, it will help the two parties to settle in advance.
The noble Lord, Lord Monks, also said that the Government were inconsistent in their approach to considering the consultation response. As I said in my opening remarks, although there was not unanimous support for any single option, when considering the totality of the evidence and not only the bald figures that we received from this information, the Government were convinced by the response argument for a salary-based cap. The cap applies to many different circumstances. A pay-based cap is a more individualised yet clear method of ensuring that parties know the potential level of award while still fairly compensating claimants.
The large gap between the expectation and the reality is a problem for both employees and employers. It is unfair to allow a situation where the mis-sold promise of big pay awards means that individuals make decisions based on flawed assumptions. We want to ensure that individuals can make informed and intelligent decisions based on more realistic information and an assessment of likely awards. This is not about pushing the parties down any particular route; it is there to help them.
A number of other issues were raised on the same subject. The order will give business clarity about the potential cost to employers in cases where they have to fire employees. Certainty is very important for employers when they employ people. It is also important that we do not give unrealistic hope or expectation to employees who are unfairly dismissed. The order clarifies the position for both parties.
We are competing in the global world and it is important that our employment legislation is clear-cut. This order is clear-cut for both employees and employers. I hope that I have covered all the points raised. If I have not, I shall be happy to write to noble Lords.
Lord Young of Norwood Green
My Lords, the Minister said that a pay-based cap will make the system more consistent. It may make it more consistent, but is it fair? The impact for someone on lower pay of losing their job can be far higher than on someone on a significantly higher pay rate. It is not just consistency that you look for when making this kind of legislation, it is whether it treats people fairly. The Minister did not address that issue and I would welcome his views on it.
Lord Popat
My Lords, as I said earlier, 0.25% of cases at the tribunal for unfair dismissal have resulted in compensation of £74,200, but 90% of the cases that have gone to the tribunal have resulted in compensation of just under £5,000. Therefore, even somebody on the minimum wage will probably be able to get the right level of compensation. All parties recognise the need for a cap. As I said earlier, the median award is £4,560, which is below the median salary. Therefore, for 99.75% it is quite reasonable for low-paid people to have this cap or the maximum of £74,200.
National Minimum Wage (Amendment) Regulations 2013
Debate between Lord Young of Norwood Green and Lord Popat
Lord Young of Norwood Green
My Lords, I, too, in principle welcome the Government’s proposal. I am always pleased to see their conversion to supporters of the national minimum wage. As someone else remarked in another context, it was not always thus. However, it is good to see that there now seems to be an enthusiastic endorsement of both the principle and application of the national minimum wage. We do not want to be in a situation where it decreases the number of jobs. We could argue that what has a major impact on jobs and the number of jobs available is the amount of growth we can get in the economy, but I do not think that this is the right place to debate the Government’s economic strategy. However, it is well known that we do not feel they have got it right—said he with the gift of understatement.
I endorse the comments of my noble friend Lady Donaghy. The Minister referred to the importance of effective enforcement and the problem of non-compliance. Are there any statistics of the number of complaints going into either ACAS or any of the other bodies? There is an employment rights helpline and I would be interested to know what the statistics are on complaints about non-compliance with the national minimum wage.
Other than having those concerns, we endorse the proposal.
Lord Popat
This has been a valuable short debate and I thank noble Lords for their important questions. A couple of specific points were raised and I shall respond to them in a moment. However, first, I should like to emphasise that the Government are committed to the minimum wage because of the protection that it provides to lower-paid workers and the incentives to work that it provides.
These regulations support the Government’s commitment to delivering fairness and supporting business, and I believe that they are fair and appropriate. The increase that the Government have recommended is reasonable, bearing in mind that the personal allowance of a large number of low-paid people has gone up in the past 18 months, which will help them to earn more money net of tax.
The noble Baroness, Lady Donaghy, and the noble Lord, Lord Young, both raised two very important issues. The LPC was established with the right infrastructure in 1997 and it does excellent work. It is quite independent of the Government and represents people from trade unions and other organisations. With the minimum wage, there is widespread acceptance that what we are recommending is appropriate.
With regard to enforcement figures, in 2012-13 the Pay and Work Rights Helpline received around 58,000 calls. Of these, the overwhelming majority—over 90%—were dealt with by the helpline. Just under 3,000 calls were referred on to the enforcement agencies for further action. We are making a real effort to ensure that employees are aware of the minimum wage and that employers are aware of the onus on them to pay the minimum wage to their employees.
I hope that noble Lords feel that they can accept the regulations. I trust that my response has been appropriate. If it has not been, I shall be very happy to write to noble Lords.
Lord Young of Norwood Green
I thank the Minister for that. For clarification, when he said that out of the 58,000 calls to the helpline 3,000 were referred to the enforcement agencies, I presume that that meant 3,000 calls from those receiving the national minimum wage. Am I right in that presumption?
Lord Popat
That is correct. In fact, the information that I have is that just under 3,000 calls were referred on to the enforcement agencies for further action—in other words, the enforcement agencies were going to take further action to resolve any outstanding issues or discrepancies between employers and employees.