Small Business, Enterprise and Employment Bill

Andrew Griffiths Excerpts

Wednesday 16th July 2014 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Speaking in my capacity as co-founder and co-chair of the all-party group on anti-corruption, I welcome the proposals in the Bill to create a public register of beneficial owners known as the register of people with significant control. That move will mean that the UK is the first major economy to have a public register providing details of who really owns and controls what are currently anonymous shell companies. That is important because, although businesses play an important role in developing thriving societies around the world, some companies abuse global corporate structures. Secret ownership structures allow wealth to be hidden away. Many companies and individuals avoid or evade tax by keeping their money in a complex network of trusts and shell firms, which are often based in secretive tax havens. That deprives developing countries of much needed tax revenue that could be invested in public services and infrastructure.

It is secret company ownership that makes most cases of large-scale corruption, criminal money laundering and terrorist financing possible. A World Bank review of 213 big corruption cases between 1980 and 2010 found that more than 70% of them relied on anonymous shell entities. Many of the company service providers were registered in the UK or in our Crown dependencies and overseas territories.

The cost of this activity to developing countries is vast. The best recent estimates suggest that between $21 trillion and $31 trillion in private financial assets is held in tax havens, which is greater than the entire global aid budget.

That is why the all-party parliamentary group has been lobbying hard and speaking to Ministers about how we can ensure that the public register does the job that it sets out to do. We want to ensure that a number of issues are taken into consideration. We want to ensure that the information on beneficial ownership is available to the public as open data, that it is machine-readable and that it conforms to the Open Knowledge definition. We want to ensure that the information can be verified and that there is sufficient information to distinguish one individual from another. For example, a date of birth might be necessary. We want to ensure that there is a legal responsibility for companies to acquire and declare information on the identities of beneficial owners, as well as a legal requirement on beneficial owners to declare to companies that they are the ultimate owner. As I said to the Secretary of State, we want to ensure that there are significant penalties for failure to comply to ensure that everybody complies with the requirements. People must not think that it is worth while ignoring the requirements and they must not get away with doing so.

I want briefly to raise the concerns of Public Concern at Work about whistleblowing. The proposals go some way towards addressing those concerns, but do not go far enough. There are still concerns about gagging clauses. Many people who receive severance payments believe that they are gagged, but in law they are not. There are concerns about blacklisting and job applications. There is no cause of action in law if somebody who has blown the whistle and has been put on a blacklist is not recruited on that basis. There is currently no protection for armed forces and national security whistleblowers who raise concerns about wrongdoing or malpractice. We need greater protection for individuals who seek advice from trade unions. For example, people who raise concerns but do not take the matter forward still need protection under the law. We all welcome greater support for whistleblowers, so I would be interested to hear the Minister’s views on the concerns that have been raised.

Finally, it would be remiss of me not to touch on the proposals in the Bill on pub company regulation, particularly as I am due to meet members of the Tyneside branch of CAMRA at the Millstone pub in South Gosforth on Friday. Many of the issues have been discussed by hon. Members, but Tyneside CAMRA believes that the Government need to go further in protecting community pubs. Its members are particularly disappointed that the Bill does not include market rent only and guest beer options, because it believes that requiring the big pubcos to provide tied licensees with those options would be the simplest means of ensuring fair play. Those options would support not only community pubs, but microbreweries across the country, such as the excellent Big Lamp brewery in Newburn in my constituency.

[Andrew Griffiths (Burton) (Con)]

Will the hon. Lady give way?

[Catherine McKinnell]

I will give way.

--- Later in debate ---

[Andrew Griffiths (Burton) (Con)]

It is a delight to take part in the debate, albeit with a shortened contribution, and to follow my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who did such a fantastic job when he was a Minister.

I wholeheartedly support the Bill, which will be welcomed by businesses in my constituency. They will benefit from the red tape that is to be cut, the help to export, the support that they will be given to access finance, and the ability to be paid more quickly. It will be welcomed by the workers who are on the minimum wage, who will see that enforced, and by those on zero-hours contracts, who as a result of the safeguards will no longer be victimised.

Obviously, as the Member of Parliament for the home of British brewing, and the chairman of the all-party parliamentary beer group, I want to speak on the issues that relate to pubcos. I can honestly say that this is the most pub and beer friendly Government that we have seen in generations. It was this Government who scrapped Labour’s hated beer duty escalator, which saw beer duty increase by 48%. It was this Government who had the historic two successive cuts in beer duty, which have seen a growth in our beer market—two successive quarters of beer growth for the first time in 10 years and sales up in our pubs.

I had concerns about the consultation, but I strongly believe that this is a good compromise and a workable solution to draw a line in this long-running sore that we have seen for too long in the debate over the tie. It works because it introduces a tough statutory code that clearly demonstrates how pubcos and breweries should operate, and offers proper protection to tenants. They can see in this code the help that they deserve and the requirements on those pubcos. With an adjudicator with real teeth they will have protection. They will have somewhere to go quickly to get proper redress. The adjudicator can say if a tenant is paying too much in rent or for their beer, and can fine those pubcos if they act irresponsibly. That is the perfect protection.

Intervening in the marketplace, such as scrapping the tie, would have had disastrous effects. No one today has mentioned the BIS report by London Economics, which showed that 1,600 pubs would close almost overnight if the tie was scrapped. No one wants to see that. We need evolution. We need this to work for our tenants and for our pubs.

There are things that we can do. I draw attention to a number of speeches, such as that of my hon. Friend the Member for North Swindon (Justin Tomlinson) in particular, and the issue of the smaller family brewers—the 500 mark. No one is suggesting that they have acted irresponsibly. No one is suggesting that the legislation is to catch them. One solution would be to move some of the more prescriptive and expensive regulatory issues from the basic code to the enhanced code—things such as the RICS requirements and the need for a compliance officer. Those sorts of things could be moved into the enhanced code, freeing up the smaller family brewers from being dealt with by the legislation.

There is a need to look at the tenancies at will, which are covered by the legislation. They are basically quick tenancies. If a pub is closing, if a tenant leaves or dies, the pubcos have two choices. Either they close the pub, board it up and wait until they have a tenant to take over or they have a tenancy at will. The suggestion of a tenancy at will not being encompassed in the legislation, up to a point of say 12 months, would allow that flexibility in the marketplace.

I urge the Minister to consider the franchise issue. Marston’s in my constituency has a number of franchise pubs. Franchises are very different from tenancies. There is no rent review or wet rent. They are covered by the British Franchise Association code of ethics. There is an argument that they should not be covered. I am glad that we do not have free of tie in relation to the guest beer. The Society of Independent Brewers, which one would think would be most in favour of this, has warned that it would be damaging, and we would just see foreign fizzy lagers, not British cask ale.

I commend the Government on the Bill. It offers help to our pubs and I hope it works.