Oral Answers to Questions
Andrew Griffiths Excerpts(5 years, 5 months ago)
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Greg Clark
You were right, Mr Speaker; this is becoming a habit. I am happy to respond to the hon. Lady. The ability—especially in the creative industries, but also in professional and business services—for people to ply their trade by visiting and working in other countries is essential. It is a big part of the negotiations, which I hope will result in a deal that allows a strong part of the UK economy to continue to flourish.
Andrew Griffiths (Burton) (Con)
Some 900 jobs were put at risk when Kerry Foods announced the closure of its plant in Burton. I know the Secretary of State has been in touch with the managing director of Kerry to press it on finding a new buyer. Will he commit to doing all he can to make sure that a new buyer is found and that those jobs are protected?
Greg Clark
I will indeed. I have been in touch with the owners of the site. My hon. Friend is absolutely right: the most important thing is that a new owner should be found for that historic site in Burton, so that it can continue its good track record of employment.
Businesses: Late Payments
Andrew Griffiths Excerpts(5 years, 6 months ago)
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Kelly Tolhurst
I stand here today and make announcements, but we also need to recognise that this is about culture. We want to use all the tools in the box to legislate and take action where possible, but we also want to work with the industry and businesses to change the culture. It is not right that large firms take advantage of smaller businesses through late payments, so today we bring forward our response to the call for evidence, to stem the scourge of late payments.
The hon. Gentleman mentions project bank accounts. As I briefly outlined in my response to the previous question, project bank accounts and the use of retention is obviously a concern for many people. It is part of the whole late payment arena. That is why, as I have said, we have worked with the industry and heard the views of both sides. A consensus has yet to be found in the industry. The challenge that we have set is that the industry must come to a way forward or we will take action.
To answer the hon. Gentleman’s question, I have indeed looked at some of the work that has gone on in Scotland and at what has happened in Northern Ireland. I highlight what the Federation of Small Businesses said today:
“Small businesses will be delighted with today’s announcement. FSB has worked very hard with government to create a whole-board approach to late payment within the UK’s large companies, and empower Audit Committees to look after the supply chain. Together with measures to strengthen the Small Business Commissioner’s powers and reform the Prompt Payment Code, the measures today could finally see an end to poor payment practice.”
Andrew Griffiths (Burton) (Con)
The words that my hon. Friend just spoke were those of my constituent, Mr Mike Cherry. There can be no greater praise than that from such an advocate for small business. The FSB supports these measures, so I commend her on them.
Does my hon. Friend agree that one of the main challenges is not late but prompt payment? Far too many big businesses continue to extend payment terms—150 days, 180 days or even more. That is simply not acceptable and is unfeasible for many small businesses. Will my hon. Friend add that to her to-do list and really make a difference for small businesses?
Kelly Tolhurst
I thank my hon. Friend for his question and recognise his particular interest as my predecessor in this post. He is absolutely correct: prompt payment is a particular concern for small businesses, and some large companies alter their payment terms. We are seeking views on giving the small business commissioner more powers because he acts for small businesses that have struggled with getting prompt payment. Currently, his powers are not binding; we feel that if his powers were binding, that could be part of his suit of armour in tackling late and non-payments.
Recall of Tumble Dryers
Andrew Griffiths Excerpts(5 years, 6 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Kelly Tolhurst
I must start by outlining that the protection of consumers, the safety of consumers and the safety of products placed on the market are of utmost importance to me and this Government. I did indeed update the House last week in response to a question about the action that we have taken in regards to Whirlpool; it is part of a legal process, as I have already outlined. All complaints about modified or unmodified tumble dryers that have been duly registered were included in the review. The review was significant: it looked at many areas, took all the data into account, and carried out the assessments, as the hon. Lady has outlined, and I am absolutely satisfied that the review undertaken by OPSS was appropriate and robust.
I have not taken a different decision from OPSS. We were very clear. OPSS wrote to Whirlpool after the review outlining areas where it wanted a guarantee of further work. Whirlpool had 28 days in which to respond. It responded, and the OPSS reviewed that information and was not satisfied, finding that the commitment was inadequate. We therefore decided to issue a notice—an intention to recall. As I have outlined today, we will be reviewing what has been submitted by Whirlpool. There is no intention to put, as has been suggested, big business over the needs and safety of consumers, and we will not do that. Fundamentally, the safety of people in their homes is of utmost importance to me and the Government and I will do everything in my power to make sure that large companies and manufacturers absolutely comply with their legal obligation to place only products that are safe on the market. If they fail to do so, this Government will take appropriate action to hold them to account.
Andrew Griffiths (Burton) (Con)
I congratulate both the OPSS and the Minister on having the cojones to hold Whirlpool to account, because there is no doubt that Whirlpool has been shifty on this and the Minister has called it out, so I say well done. Does she agree that it sends a clear message to business that either they put their house in order and ensure that their products are safe or the Government will act and have a product recall?
Kelly Tolhurst
I thank my hon. Friend for his comments and acknowledge his role in instigating the review of Whirlpool’s modification programme last May. Let me reiterate that the law is clear: manufacturers have a responsibility to ensure that only safe products are placed on the market, and appropriate action must be taken when a safety issue is identified. We will make sure that any organisations placing unsafe products on the market are forced to comply with the law, and we will continue to hold them to account.
Oral Answers to Questions
Andrew Griffiths Excerpts(5 years, 6 months ago)
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Andrew Griffiths (Burton) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I recognise the key role that my hon. Friend played in instigating the review when he was in post. Consumer safety is a Government priority and I assure him that we have kept Whirlpool’s action under review. I can tell the House that we have informed Whirlpool of our intention to serve a recall notice as the next step of the regulatory process. This is unprecedented action.
Oral Answers to Questions
Andrew Griffiths Excerpts(5 years, 7 months ago)
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Kelly Tolhurst
The hon. Gentleman makes an important point with regard to traditional retail and online sales. I have spoken with the likes of Amazon and eBay, and one thing I have been extremely surprised at is that they have worked with small businesses that have started online but then invested in bricks-and-mortar retail outlets. We need to work to make sure we have a mixed economy, and I have outlined the work we are doing with the Retail Sector Council, particularly looking at business rates and other issues.
Andrew Griffiths (Burton) (Con)
I congratulate the Minister on the work she does for small businesses. She will know that one of the major challenges small businesses face is not just with late payments but with getting prompt payments and reasonable terms from bigger businesses. Will she ensure that the Government do all they can to end the scourge of late payment? Will she also ensure that the prompt payment code has some teeth so that it actually does the job it is supposed to?
Kelly Tolhurst
I thank my hon. Friend for highlighting prompt payment. It is a particular focus within the Department to tackle late payments, which can be very damaging to small businesses. This week, the Chartered Institute of Credit Management has announced that there are 17 businesses that I have removed or suspended from the prompt payment code to make sure that we highlight where bad practice is occurring. We want to bring business with us. We do know that late payments can have a major impact on small businesses, and I therefore stand committed to ensuring that we do all we can as a Government to end this poor practice.
Draft State Aid (EU Exit) Regulations 2019
Andrew Griffiths Excerpts(5 years, 8 months ago)
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The Chair
Again, I refer the hon. Gentleman to the document before the Committee. The Minister has ownership of it, and it is for her to explain its contents. If there are queries about responsibilities or intergovernmental correspondence, it is for her to explain that to the Committee, and it is then for the Committee either to support or to reject the regulations, based on the evidence she brings forward.
Andrew Griffiths (Burton) (Con)
Further to that point of order, Mr Hanson. Is it not a fact that if any member of this Committee feels that they have been given insufficient documentation, they can vote against the regulations at the end?
The Chair
Not only that, but Mr Esterson has indicated that he might wish to have an adjournment. It is perfectly possible to table a motion that the Committee should now adjourn. A vote would be taken and the Committee would determine it. There are a number of options. The key point is that the documents before us have been tabled by the Government and speak for themselves. The Minister has to explain them to all members of the Committee accordingly.
Kelly Tolhurst
I point out to the hon. Gentleman that the devolved Administrations are highly aligned with the policy position on setting a UK-wide state aid regime. Our conversations with the devolved Administrations are ongoing and will continue as they are. The Secretary of State has made it very clear that he is committed to meeting the devolved Administrations to discuss these matters and many others in relation to how we exit the EU. In fact, the Prime Minister has made it clear that, were we to enter into an agreement with the European Union and therefore not be in a no-deal situation, we would extend the opportunities for devolved Administrations to feed in.
Andrew Griffiths
Does my hon. Friend agree that just because we do not like the answer to a question, it does not mean the answer is incorrect? Is not what we are doing here just transposing the current EU regime into UK law, with the CMA replicating the role that the Commission currently undertakes?
Kelly Tolhurst
I thank my hon. Friend for that contribution. That is absolutely what we are doing here today. We have before us a no-deal SI, so in the event of no deal we will be replicating the EU laws in the domestic setting. The SI is extremely important for fairness and competition in the UK, so there really should be no resistance from the Committee to what is in it, because it is a fundamental of how we already work, and in a no-deal situation it would be important were we to enter into any future trade deals with the European Union.
I will continue with my opening remarks. Maintaining a level playing field across the whole UK means that the richer parts of the UK will not be able unfairly to distract investment away from less prosperous parts of the country. The existing principles and practices of the regulation of state aid will remain substantively unchanged in the domestic regime, in accordance with the aims and powers under the withdrawal Act. These regulations will therefore have minimal impact on public authorities that grant state aid or entities that receive it.
Instead, the regulations correct deficiencies in the retained EU law relating to state aid. That includes correcting references to EU concepts, such as the internal market and the functions of the Commission, which will ensure that the law remains operable in a domestic setting while minimising the impact on stakeholders. An alternative test of trade within the United Kingdom, however, would inadvertently change the scope of the rules by catching local measures that are currently not caught.
The main practical change under the new regime is that rules will be regulated and enforced by the CMA in place of the European Commission. The CMA is well placed to take over the European Commission’s role of approving, investigating and monitoring state aid across the whole UK. It has extensive experience and understanding of markets as the UK’s competition regulator, and is independent of the Government in its decision making. To prepare for its new role, the CMA has received £20 million from the Treasury contingency fund to prepare for EU exit in 2019-20, in addition to the £23.6 million it received for the year 2018-19, which specifically included £3.3 million for its state aid function.
The Government are working to ensure that the CMA will be ready to take on the new role and have every confidence in its ability to do so. The CMA is on track to recruit all the staff needed to start working on state aid by exit date, if necessary. The CMA will adopt the Commission’s existing state aid guidelines, which provide clear parameters for how and when aid should be approved. The CMA will also receive investigatory and enforcement powers broadly equivalent to those of the European Commission, although I should explain one point of divergence from the EU regime.
Under the EU rules, the European Council has the power in exceptional circumstances to intervene and approve aid before the European Commission has reached a decision. That power does not easily translate into the UK context and we do not consider it appropriate to use the regulations to vest the Government with similar powers. The regulations will still allow the Government to act swiftly if necessary, much as they have been able to do under the existing regime. Ultimately, the Government could bring forward legislation to amend the state aid rules if they deemed that to be absolutely necessary—an option that is not available to the European Council in the EU context.
I mentioned earlier that state aid rules help to ensure fair and open competition throughout the UK. Over the past year the Government have engaged extensively with each of the devolved Administrations and shared drafts of the regulations. As agreed, each devolved Administration will be responsible for managing the communication between their respective aid givers and the CMA. The Government have offered to sign a supporting memorandum of understanding with the devolved Administrations about the operation of the state aid regime, which we still hope to agree. Those discussions have indicated broad agreement on the substance of the Government’s policy to establish a UK-wide state aid regime that mirrors the EU’s. We will of course continue to work closely with the devolved Administrations on the development of state aid policy in the longer term.
As we leave the EU, the draft regulations will give certainty to public authorities and recipients of state aid, and help to maintain confidence for businesses across the UK. Commitments on state aid support free trade, as is recognised in the political declaration. The CMA has the expertise, operational independence and resources to enforce a UK state aid regime.
Bill Esterson
It is always a pleasure to serve under your chairmanship, Mr Hanson, given your formidable expertise and experience, which you demonstrated in response to the points of order.
The Minister rightly made clear the importance of the draft regulations. Given the number of these SIs that are being debated in the main Chamber, it is highly odd that something so important, detailed, extensive and far-reaching, with so much impact on all our constituencies up and down the country, is not. However, there is nothing I can do about that. All I can do is make my comments and present my analysis in this forum.
Andrew Griffiths
Given that we are just transposing the current EU regime into UK law and providing for the CMA to take over from the Commission, can the hon. Gentleman tell us what the Labour party would do differently?
Bill Esterson
The hon. Gentleman tempts me down various different routes. I shall come to how the Government have diverged from their normal practice of straight transposition with these regulations. That applies particularly to the debate we had about the devolved Administrations. These regulations do not follow the normal pattern, as will become clear as I set out my argument.
State aid plays a vital role in our economy. Ensuring that we have a functioning state aid regime means that putting in place regulations that deliver exactly what is needed is very important. It is therefore essential that we carry out the detailed scrutiny this afternoon in the same way that the Lords did on 14 March. Given the scale of the regulations and their far-reaching nature, I will put on the record our concern about whether we have been provided with sufficient evidence of whether they deliver the technical details required for a functioning state aid regime that supports our economy and communities up and down the country. We will, however, do what we can to tease out some of the concerns that we have been able to identify about the technical nature of what is being proposed.
This set of regulations comes to 80 pages. I, and other Members, have been on Public Bill Committees that have been allocated many days, if not weeks, to consider far shorter Bills with line-by-line scrutiny, quite often following pre-legislative evidence sessions from expert witnesses. Yet we are given 90 minutes, of which about 64 remain, and we will have to do our best to identify the key areas for such scrutiny. It is a most unsatisfactory situation, but we will do what we can.
Bill Esterson
My hon. Friend is quite right to pursue that point further. I prepared a section of my speech on that, and I will pick up his point in detail when I reach it. I have identified some additional points from what he said earlier and the Minister’s reply.
Paragraph 6 of the explanatory memorandum covers the legislative context. It lists no fewer than 14 pieces of legislation affected by the regulations and underlines just how much of a challenge it is for the Committee to scrutinise these changes, which are vast in scale and have far-reaching consequences. The volume of legislation listed in paragraph 6.4 demonstrates why it simply is not possible for us to say whether the regulations deliver the technical changes the Minister claims are being made. It is not that she is wrong; it is that I have no way of telling whether she is right or wrong. That is an important distinction. [Interruption.] I am perfectly capable of reviewing the legislation, as the hon. Member for Burton points out. Unlike him, I do not have the legal background—
Bill Esterson
Oh, the hon. Gentleman does not have a legal background either—never mind. We are in danger of being diverted again.
In paragraph 6.10 of the explanatory memorandum, the Government say they will rely on EU case law in their application of state aid rules, but there is legal opinion that we may have to rely on case law from before we joined the EU—this point was picked up in the Lords—as we will no longer be bound by the treaties of the EU. That may be tested in the UK courts, and it may take years to resolve. That has been the case with other regulations passed in Committees like this, and Ministers have not been able to give a satisfactory answer—presumably because there are conflicting legal views about how it would be resolved. Before we joined the European Union, there was of course no comprehensive state aid regime to regulate what was and was not permitted, so the difference between the two options is very significant.
The information provided to us does not give us the evidence we need to make a reasonable judgment about the technical adequacy of the regulations. For a simple example of that, I refer Members to paragraph 6.14 of the explanatory memorandum. I have no doubt about the need to omit specific references to Germany in article 107(2)(c) of the EU regulation, but I also have no way of knowing whether such a technical change is appropriate. More to the point, we have no way of knowing whether all the necessary technical changes of a nature similar to those identified in paragraph 6.14 and a number of other paragraphs have been made.
A further example of our inability to form an opinion can be found in the wording of paragraph 6.28, which states that
“a large number of deficiency corrections were required to make the Procedural Regulation operable in a domestic setting.”
The explanatory memorandum does not describe in detail what that large number of deficiency corrections is, it does not say what the evidence base is for asserting the need for those corrections, and it does not give back-up expert witness evidence in support of that assertion. That sentence is a pretty fair indication that we have an impossible task and are being asked to approve something with a clear lack of evidence to support doing so.
The CMA is being asked to take on responsibility for oversight of the state aid regime from the European Commission. In paragraph 7.2 of the explanatory memorandum, the Government refer to
“the costs and benefits of setting up a completely new body or having an established regulator take this on”.
I note the information before us does not give the details of that cost-benefit analysis or why the decision was taken to choose the CMA rather than setting up a new body.
That takes me back to the points made in earlier interventions about the devolved Administrations. Paragraph 10.1 refers to the discussions with the devolved Administrations and the CMA. It sounded to me in those earlier exchanges as though the Minister was in danger of being right in the middle of a constitutional crisis. Without publication of the Secretary of State’s response to the letter from the Welsh Government, this dispute has not been resolved to anybody’s satisfaction. How can we judge what the outcome is or should be without sight of that response?
Kelly Tolhurst
Thank you, Mr Hanson. I think the hon. Gentleman’s point of order highlights that he was not questioning my integrity, so I thank him for pointing that out.
Andrew Griffiths
We have heard Opposition Members speak at such length and with such passion that one might have thought that, if they were so bothered and exercised about the subject, half of their members of the Committee would have turned up to take part.
Kelly Tolhurst
My hon. Friend makes a fair point.
In many of our debates on no-deal regulation, the fact that we are where we are regarding the powers in the withdrawal Act and bringing in retained European law through secondary legislation has been a bone of contention for the hon. Member for Sefton Central. I understand that he wants further scrutiny, but I assure him that the reason we are here today, dealing with a no-deal SI, is that we are retaining EU law and bringing it over so that in the event that there is no deal on exit day, we have a functioning domestic regime. The regulations have been laid and there have been opportunities to read and examine them. I do not believe that the Government in this case are shirking their responsibilities or not giving Parliament the opportunity to scrutinise. We have been debating for an hour in this Committee. The withdrawal Act does not allow us to make big policy changes; we can make the changes required. We are debating a no-deal SI, which will come into effect if we leave the European Union with no deal. If we can reach agreement on a deal, the regulations will not be relevant.
Terms and Conditions of Employment
Andrew Griffiths Excerpts(5 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the draft National Minimum Wage (Amendment) Regulations 2019, which were laid before this House on 28 January, be approved.
The Government want fair employment for all. Through our industrial strategy, we committed to boosting productivity and increasing earning power across the country. The way in which people work is changing, thanks to new technology and new employment models. We need to ensure that the labour market continues to work for everyone.
In December, we published the “Good Work Plan”, which sets out the biggest package of workplace reforms in over 20 years. This includes our vision for the future of the labour market and our ambitious plan for implementing the Taylor review recommendations. The important package will ensure that workers have access to the rights and protections that they deserve. It will also create a level playing field for employers, ensuring that responsible employers are not undercut by a small minority who seek to circumvent the law.
The national minimum wage and the national living wage are crucial to those commitments. They help to protect the lowest paid in our society. We can be proud of our labour market. Our employment rate of 75.8% is the highest since comparable records began in 1971. Unemployment is down to 4%. Since 2010, the national minimum wage has increased faster than average wages and inflation, meaning more money for the lowest-paid workers while employment continues to increase. This success means that we can continue to increase the rates above inflation. We will continue to work towards our target of the national living wage reaching 60% of median earnings by 2020, subject to sustained economic growth.
Andrew Griffiths (Burton) (Con)
The Minister is doing a brilliant job as the Minister responsible not only for small business but for the labour market. I was lucky enough to be the Minister when we brought forward the biggest increase in the national minimum wage for 10 years. Does she agree that the greatest beneficiaries of that are women in the workplace who tend to be the lowest earners, and that our actions in increasing the minimum wage on the scale that we have has gone a long way towards helping to reduce the gender pay gap?
Kelly Tolhurst
I thank my hon. Friend, my predecessor, for making those comments on what the Government have undertaken over recent years to increase wages for the lowest-paid workers. I agree with him that what we have done to increase the rate of pay for the lowest-paid workers has supported women in the workplace and has been able to help to reduce the gender pay gap. We also have other programmes coming forward, including our consultation on mandatory ethnicity pay reporting, which we will say more about soon.
The regulations will increase the rates of the national minimum wage and national living wage from 1 April. We estimate that this will lead to a pay rise for more than 2.1 million workers. I would like to place on the record my gratitude for the work of the independent Low Pay Commission, which recommends the rates, bringing together the views of businesses and workers, using research and analysis to inform its work and reaching a consensus on what the rates should be. I am delighted to say we have accepted all its recommendations for the increases to the rates from 1 April.
The regulations will increase the national living wage for those aged 25 by 38p to £8.21. This is an above-inflation increase of 4.9% and means a pay rise for a full-time worker of more than £690 a year.
Andrew Griffiths
May I too commend the work of Bryan Sanderson from the Low Pay Commission and his team? Given that he manages to bring together unions, labour market experts and businesses and get them to agree, does the Minister think we should get him involved in our European Brexit negotiations?
Kelly Tolhurst
I thank my hon. Friend for pointing out the good work of the Low Pay Commission and how it brings people together to come up with balanced proposals, such as those before us today, which the Government have accepted.
The regulations mean that a full-time worker will be more than £2,750 better off next year compared with the year the national living wage was introduced. The regulations also increase the rates for younger workers and apprentices. Those aged between 21 and 24 will be entitled to a minimum hourly rate of £7.70, which is a 32p increase; workers aged between 18 and 20 will receive an extra 25p an hour, taking their rate to £6.15; 16 to 17-year-olds will earn at least £4.35 an hour—a 15p increase; and apprentices aged under 19 and those in the first year of their apprenticeship will receive the largest percentage increase of 5.4%, meaning an hourly rate of £3.19.
Andrew Griffiths
The hon. Lady is making a very good speech, but does she agree that as a result of the taxation policies of this Government, the richest are paying more tax than ever before, and that by changing the tax rates we have lifted the lowest paid in our society out of paying tax entirely?
Chi Onwurah
I thank the hon. Gentleman for his intervention, but it does show a lack of understanding of the economic realities in our country. The richest are not paying their fair share; the poorest are paying more in tax, particularly through that most unequal and unprogressive of taxes, value added tax, which the coalition Government immediately raised when they came into power. So the poorest in our country are being taxed more and the richest are not bearing their share of the burden.
Andrew Griffiths
The hon. Lady mentioned VAT. Is it her party’s policy to lower VAT, should it ever come into power?
Kelly Tolhurst
I thank all Members who contributed to the debate. I was pleased to hear that the Opposition will not oppose this statutory instrument, although I was disappointed by some of the comments about the Government’s commitment to workers and, in particular, to young people—it seems to be a recurring theme, because some of these criticisms were levelled against me in a debate last week. This Government and the Prime Minister have been clear about our commitment, so I will take no lectures from the Opposition on supporting low-paid workers, and no suggestion that Government Members do not understand the real world. As I have said numerous times, I am proud to be a member of a Conservative Government who are committed to the biggest reformation of rights in the workplace in 20 years. I am proud to be a Minister who is part of that.
Andrew Griffiths
I thank the Minister for what she has said so far. We hear a lot about workers’ rights being eroded by us leaving the European Union, but are we not demonstrating, through the Taylor report, that we are actually going further and faster than Europe in guaranteeing new rights to the lowest paid and to vulnerable workers?
Kelly Tolhurst
I thank my hon. Friend for that point. He is indeed correct, because we have been clear that we will not be rolling back workers’ rights when we leave the European Union. That has been further guaranteed by the introduction of the “Good Work Plan”—I will say more about that later—and we have already laid three SIs dealing with workers’ rights. We are going further on workers’ rights and increasing the wages for the lowest paid. We are sticking to our commitment. I am proud to be part of a Government who have put workers’ rights and the lowest paid in our society at the top of our agenda, so I will take no lectures from the Opposition in that regard.
We will increase the personal allowance of the lowest-paid workers to £12,500 in April. That will take 1.7 million people out of tax. Since 2015, the national minimum wage has risen faster than average wages and inflation. For the lowest paid, there has been 8% growth, above inflation, between April 2015 and April 2018. I will therefore not listen to accusations that we have not continued to work towards our commitment to reach 60% of median pay by 2020.
Carillion
Andrew Griffiths Excerpts(6 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)
I congratulate the hon. Member for Leeds West (Rachel Reeves) not just on securing this debate, but on her brilliant work in leading the Business, Energy and Industrial Strategy Committee. It has done exactly what a Select Committee should do, which is hold business to account, question the Government, find answers, and bring transparency and openness to this issue. I commend her work and that of the Chair of the Work and Pensions Committee for their joint efforts. They have produced a good document, and we will respond to it shortly. I also congratulate the Chair of the Public Administration and Constitutional Affairs Committee on that Committee’s diligent work in examining this issue in great detail, and on providing a huge amount of important information. The Government are considering the Committee’s detailed report, and we will respond to it in the near future.
None of us underestimates the huge impact of the collapse of Carillion. It was a huge shock, not just for the 18,000 people who worked for it, but for all the innocent contractors and small businesses that supplied it. The Government tried to respond to that collapse because the insolvency of Carillion had an impact on the lives of too many people. Our job was to put in place a response that was as swift, co-ordinated and comprehensive as possible, to ensure not just that we maintained the vital public services that Carillion was delivering to hospitals, schools, prisons and the Ministry of Defence up and down the country, but that we did all we could to protect those innocent contractors who were caught up in the Carillion collapse.
I believe we have been successful in mitigating the very serious impacts of the liquidation, and 12,345 jobs have been safeguarded so far—some 68% of the pre-liquidation workforce—compared with 2,404 redundancies. I recognise that 2,404 redundancies is a very serious matter for all those concerned but there can be no doubt that it is an unprecedented result for such a small number of people to have been made redundant, in comparison with the size of that business. That is testament to the efforts not just of Government, but of industry more widely, which ensured a speedy and positive response.
A total of 876 apprenticeships have been transferred to new employers so that those young people can continue to embark on their careers. At the request of the Secretary of State for Business, Energy and Industrial Strategy, the banks put together nearly £1 billion of support for those affected, including £100 million of enterprise finance guarantee from the taxpayer-owned British Business Bank.
However, it is also important that we learn the lessons of Carillion’s insolvency and ensure that we do everything in our power to avoid such an event happening again. The Government have taken steps to ensure that the causes of the insolvency will be fully investigated, and of course we are taking into account all the work that has been done by the Select Committees. I remind hon. Members that the investigations that have already commenced include those by the official receiver, the Financial Reporting Council, as requested by the Secretary of State for Business, Energy and Industrial Strategy, and the Financial Conduct Authority.
The official receiver has powers to obtain information and, if misconduct is proven, can recover assets, pursue disqualification proceedings or refer the case for prosecution if criminality is discovered. The Financial Reporting Council has also commenced an investigation into the actions of two finance directors of Carillion and the conduct of KPMG as Carillion’s auditors. We are determined to get to the bottom of this. The Secretary of State has also recruited the eminent Sir John Kingman to undertake a thorough review of the FRC to ensure that it is doing exactly what it should be in order to be a robust and effective regulator. We are giving Sir John all the support he needs to conduct that thorough investigation. The Financial Conduct Authority is investigating whether Carillion manipulated financial statements prior to July 2017 and it is also considering allegations of insider trading.
I reassure the House that the Government are committed to ensuring that the insolvency is thoroughly investigated. Tens of thousands of documents are being considered and we will ensure that we get to the truth. The Government are also committed to ensuring that we learn the lessons. First, we are tackling the problem of late payments. It is clear that payment terms beyond 60 days are unacceptable in the vast majority of cases. Last year, we introduced the payment reporting regulations, which require the UK’s largest firms to report on their payment policies and payment performance every six months. The hon. Member for Sefton Central (Bill Esterson) said that, under a future Labour Government, everyone would be paid on time—my concern is that nobody would be paid if there were a Labour Government.
We want to provide transparency in payment practices, ensuring that small and medium-sized enterprises have more information about large firms that they are considering doing business with. My hon. Friend the Minister for Implementation has overseen a consultation on how we can take the payment performance of Government suppliers into account when awarding major contracts, which is one of the things the hon. Member for Leeds West was concerned about. We have issued a call for evidence on how we can end the scourge of late payments.
Secondly, in relation to how the Government manage their key suppliers, my right hon. Friend the Chancellor of the Duchy of Lancaster set out in his speech on 25 June how we would do that, including introducing effective contingency plans; introducing a playbook of guidelines, rules and principles; and requiring suppliers to publish key performance indicators on our more important contractors.
Thirdly, in relation to corporate governance, my Department is implementing new regulations relating to executive pay—that was mentioned in the debate—and bringing in extra transparency and accountability in the way executive pay at listed companies is handled. We are consulting on reform of the insolvency and corporate governance regime, including on important areas such as the framework within which companies determine dividend payments and strengthening shareholder stewardship.
The hon. Member for Leeds West raised the issue of what she called the Government’s prompt payment code. I just remind her that that code is a voluntary, industry-led code of practice that enables businesses to demonstrate to suppliers that they are committed to prompt payment. Of course it needs reform and improvement, but it is industry-led.
I can assure the House that the Government are determined to learn the lessons of the insolvency of Carillion and put in place a regime that protects shareholders, workers and all those businesses connected in the supply chain.
Draft Contracts for Difference (Miscellaneous Amendments) Regulations 2018
Andrew Griffiths Excerpts(6 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)
I beg to move,
That the Committee has considered the draft Contracts for Difference (Miscellaneous Amendments) Regulations 2018.
The draft instrument makes three separate changes to the existing contracts for difference regulations. First, it amends the Contracts for Difference (Allocation) Regulations 2014 to establish remote island wind projects as a category of technology that is eligible to take part in the CfD scheme and compete alongside other less established technologies. In doing so, it delivers on a manifesto and clean growth strategy commitment.
Secondly, the regulations remove from the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 the requirement for certain generators to intend to accredit their project under the combined heat and power quality assurance standard. That minor amendment will facilitate the delivery of future CfD allocation rounds and is not otherwise expected to impact on the operation of the CfD scheme.
Thirdly, the regulations update the definition of “waste” in the definition of eligible generator regulations. That ensures that generators are not incentivised to intentionally modify or contaminate biofuels in order to avoid the application of sustainability criteria that would otherwise apply.
We are proposing the legislative changes following a 12-week public consultation earlier this year, during which they received broad support. The CfD scheme is designed to offer long-term price stabilisation to new low-carbon generators, allowing investment to come forward at a lower cost of capital and, therefore, at a lower cost to consumers—something I think we would all welcome.
The scheme typically sees support contracts awarded in a competitive auction process, which ensures that costs to consumers are kept to a minimum. The technologies that are eligible to take part in the CfD scheme are categorised in two distinct groups or pots, as they are known. Pot 1 contains the more mature technologies, such as solar PV, which typically require less support, whereas pot 2 contains the less mature technologies, such as offshore wind, which typically require more support.
The scheme has been successful in bringing forward significant new investment in large-scale renewable generation. The two previous CfD auctions should deliver more than 5 GW of renewable electricity capacity by the early 2020s, helping us to meet our decarbonisation targets. We plan to open the next one in spring next year and are laying the regulations today to give certainty to businesses in advance of that.
I will briefly describe each of the three amendments in turn. The first amendment will make remote island wind projects eligible for pot 2 auctions. The Government confirmed in the clean growth strategy our intention that wind projects on remote islands that are expected directly to benefit local communities would be eligible for the next pot 2 auction.
Those projects have certain unique characteristics that set them apart from wind projects elsewhere in the UK, including higher costs. It is, therefore, appropriate for remote island wind projects to be recognised as a distinct technology within the CfD scheme; one that is subject to its own administrative strike price—a maximum price—and eligible to take part in pot 2 auctions, alongside other less established technologies.
The regulations set out the criteria that projects must satisfy to constitute a remote island wind project for the purposes of the CfD scheme. Those criteria have been carefully selected to ensure that remote island wind projects are sufficiently remote to be subject to more challenging operating conditions, as well as to increased network-related costs.
Allowing remote island projects to compete alongside other less established technologies in pot 2 would allow developers to build on the falling cost of onshore wind and provide a further boost to the supply chain. More than 750 MW of wind projects in the Western Isles, Orkney and Shetland could be eligible for the next auction. If successful, they could deliver long-term benefits to the UK.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I welcome those opportunities for the Scottish highlands. Will the Minister give us the timescale for when the next pot 2 auction will open?
Andrew Griffiths
Indeed, I will come to that in the course of my speech.
The second amendment will remove the requirement for certain generators to intend to accredit their projects under the combined heat and power quality assurance standard. The CfD scheme currently supports only two types of projects—dedicated biomass and energy from waste—if they are built with combined heat and power. The Contracts for Difference (Definition of Eligible Generator) Regulations 2014 require developers of such projects who want to be eligible to apply for CfDs to intend to accredit their projects under issue 6 of the combined heat and power quality assurance standard, usually referred to as the CHPQA. I have tried to eradicate TLAs—three-letter abbreviations—within the Department, Sir David, but they do creep into the speech. I am sure you will understand.
The Department recently launched and responded to a consultation on options to replace issue 6 of the CHPQA standard. The incoming replacement will include increased efficiency reference values against which future CfD-supported CHP projects will be assessed. The regulations will remove the requirement to intend to accredit from the legislation. Developers will still have to accredit their projects under the CHPQA standard to receive CfD support, but that will instead be specified in the contract terms with which developers have to agree and comply to receive CfD support.
The amendment will not have a practical impact on the CfD scheme’s operation, because in practice a developer’s intention to comply with the CHPQA’s requirements is not capable of being meaningfully tested at this stage in the CfD application process, long before a plant is built.
The hon. Member for Kilmarnock and Loudoun asked for the timescale for the next pot 2 allocation, which is of particular interest to him and his colleagues north of the border. We have put on record, and I am happy to confirm, that the next pot 2 auction will be held in spring 2019. That gives the industry enough time to be aware of the auction, put schemes together and make sufficient proposals. It also shows an urgency to support those remote islands with cheap renewable energy.
The third and final amendment concerns a minor change to the definition of the term “waste” in the Contracts for Difference (Definition of Eligible Generator) Regulations 2014. It is relevant only to technologies that may use waste as a fuel to generate electricity. The amendment simply makes it clear that substances that are deliberately modified or contaminated to try to bring them within the definition of waste will not constitute waste. That prevents the gaming of the system and will ensure that we do not inadvertently encourage generators to modify or contaminate biofuels to avoid the application of sustainability criteria that would otherwise apply.
The legislative changes in the regulations need to be made ahead of the next CfD allocation round, which is planned for spring 2019, so that developers have certainty as to who will be eligible to take part and on what basis. Subject to the will of Parliament, the regulations will come into force on the day after they are made. I commend them to the Committee.
Andrew Griffiths
I often think that when all sides of the House agree on something it is time to be concerned, but in this particular case I think not. All sides of the House agree on the importance of renewable energy, the importance of the Government investing in its provision and the importance of providing people, particularly those on remote islands, with access to cheap renewable energy. We come together in this Committee to support the Government’s intention to deliver that.
I am grateful to the hon. Member for Southampton, Test, who has yet again demonstrated his vast knowledge and experience. There are few in this House who have paid more attention, done more study or are as informed as him. I am grateful to him for the points he raised. He paints a picture of some elaborate ruse being the reason for bringing forward the SI today. If he can concoct conspiracy theories in that way, I would be interested in his views on who shot JFK, whether Elvis is still alive and whether there is a world war two bomber on the moon. Those are the kinds of conspiracy theories we need to address. I reassure him that the Government’s intention with this SI is to introduce practical remedies to ensure the provision of renewable energies to remote islands across the country.
Dr Whitehead
I assure the Minister that if there is any conspiracy in this, as I sought to set out in my remarks, it is the most benign of conspiracies. If it is one, it is one that we can support in a conspiratorial way.
Andrew Griffiths
I thank the hon. Gentleman not only for his comments, but for his wholehearted support for these measures.
He raised some important questions. He asked whether we will need state aid approval for remote islands. I am the Minister responsible for competition policy in the Department for Business, Energy and Industrial Strategy, and I confirm that we have state aid approval for the inclusion of remote island wind as defined using this criteria. He asked whether the Commission had granted that. It has granted that state aid approval; that was published by the Commission in February of this year. I hope that reassures the hon. Gentleman on any concerns he has about the approval process for state aid.
The hon. Gentleman also asked about the definition of remote islands and whether that excludes English islands. As he will know—I am sure he has seen the map in the consultation document published in December—a small number of remote islands off the coast of England and Wales could satisfy the criteria, but we do not envisage at this stage more projects coming forward. In practice, the only planned projects that we are currently aware of that might meet the definition of remote island wind are in Orkney, Shetland and the Western Isles.
The hon. Gentleman alluded to pot 1 and onshore wind. No decisions have been taken on running another allocation round for pot 1 technologies at present.
Alan Brown
The Minister is saying that no decision has been made about pot 1 future auctions. Does that mean that the response I got at Scottish questions today about possible onshore wind in Scotland being eligible for future auctions was not correct?
Andrew Griffiths
I am not saying that at all; I am saying that I am not in a position at this stage to give the hon. Member for Kilmarnock and Loudoun the reassurances he seeks. I absolutely understand why he asked the question, and his aspirations in relation to those projects, but I am unable to give him the solution he seeks at this present time.
Successful remote island wind projects will require the construction of new transmission links. The point that the hon. Member for Kilmarnock and Loudoun makes about interconnectors is a salient one. It is one that the Department is well aware of and it is looking at. Transmission links that wave and tidal projects would also be able to use are important. Establishing new transmission routes could therefore help unlock the potential of other innovative new technologies. The Government clearly have to be the catalyst to bring on those disruptive technologies.
Dr Whitehead
For brief clarification on new links being developed, my understanding is that Shetland does not currently have an established interconnector link but shortly will have. Until such a link is finally established, Shetland does not technically qualify as a remote island under the headings put forward in the text of the SI. However, when that link is built, it will qualify, but the link may be built because it has some wind that has qualified. There appears to be a potential chicken and egg problem there. I am sure that the Minister is on the right side of the egg or the chicken, but might he clarify that point?
Andrew Griffiths
That is absolutely right. The phrase that the hon. Gentleman used is most apposite: “shortly”. We hope that the facility will be in place quickly, and that will allow the completion of such projects to proceed.
Finally, the independent energy regulator, Ofgem, assesses the need for transmission investment based on a proposal developed and submitted by the relevant transmission owner. The transmission owner for the relevant part of Scotland has already submitted its proposal for Orkney to Ofgem, and we understand that it will submit proposals for the Western Isles and Shetland later this year. Remote island wind is a key part of the needs cases.
The Government are committed to cutting emissions, increasing efficiency and helping to lower the amount that consumers and businesses spend on energy across the country, in conjunction with supporting economic growth as part of our modern industrial strategy. The draft regulations implement changes to the contracts for difference scheme to enable it to continue to support new renewable generation and to provide best value for bill payers in the coming years. I commend the regulations to the Committee.
Question put and agreed to.
Resolved,
The Committee has considered the draft Contracts for Difference (Miscellaneous Amendments) Regulations 2018.
Draft Companies (Miscellaneous Reporting) Regulations 2018
Andrew Griffiths Excerpts(6 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)
I beg to move,
That the Committee has considered the draft Companies (Miscellaneous Reporting) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Sharma, even in this somewhat sticky weather.
The UK has an international reputation for the strength of its corporate governance framework, which gives us a competitive advantage and is important in making the UK an attractive place to work, invest and do business. One of the reasons we have maintained that reputation is that we have kept our corporate governance framework up to date by conducting reviews and making improvements from time to time.
In that spirit, in November 2016 the Government published a Green Paper on corporate governance reform, which focused on ways to improve shareholder scrutiny of executive pay and strengthen boardroom engagement with employees, customers, suppliers and other stakeholders; it also looked at the case for strengthening corporate governance in large privately held businesses. The backdrop to the Green Paper was public disquiet about high executive pay, which over the past two decades has grown much faster than pay generally. The largest increases occurred between 1998 and 2011—they have now stabilised—when mean pay of FTSE 100 chief executive officers rose from £1 million to £4.5 million.
Michael Fabricant (Lichfield) (Con)
Is my hon. Friend aware that John Lewis Partnership plc has an arrangement in its trust deed that no one can earn more than 75 times the lowest paid person in that company? Although that ratio may not be appropriate for FTSE companies, does he not think there is merit in having that type of maximum pay range?
Andrew Griffiths
I thank my hon. Friend and constituency neighbour for raising that point. The John Lewis Partnership is an exemplar of the way businesses should deliver corporate governance. It has a well-earned reputation for doing the right thing. Although it would be wrong of us to be prescriptive about pay ratios, sunlight is the best antiseptic, and this kind of transparency will change behaviour.
Catherine West (Hornsey and Wood Green) (Lab)
There is good practice in certain local authorities where chief executives are paid only 10 times what, say, a cleaner is paid. A chief executive’s role is complex, but pay should not be excessive, so I would say that 10 times is about right. What does the Minister think of that?
Andrew Griffiths
The hon. Lady makes a good point. It is not just in private business that we see good behaviour. My hon. Friend the Member for Lichfield alluded to John Lewis, but there are lots of examples of local authorities where there is pay restraint, accountability and transparency. That is very important. It is not for me at this stage to dictate what multiplier is good or bad, but I think we have all been astounded by some of the sums that have been paid to chief executives of local authorities—incredible sums that would make even a premier league manager blush.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
In the spirit of the previous interventions, I rise to acknowledge the work of John Spedan Lewis, who set an early trend for having women at the top and in corporate governance roles by talking about the importance of a woman being the financial secretary of a company and keeping everything in check. I also support the points that were made about the importance of a multiplier. Will the Minister clarify what the draft regulations mean by “employees” in comparison with workers?
Andrew Griffiths
I am not sure whether it is the heat, but there is certainly a lot of excitement in the Committee Room. Perhaps I can calm things down a little bit, first of all by agreeing with the hon. Member for Feltham and Heston. She is absolutely right: pay restraint and doing the right thing in relation to employees is an important element of good corporate governance, but making sure that women take their rightful place in the boardroom in senior positions is hugely important. I am delighted to see the recent figures from the Hampton-Alexander review, which show that only 10 of the country’s biggest companies now have male-only boards. I think that is 10 too many and have written to each one of those businesses to ask why they cannot find, among the millions of fantastic women in the workplace today, just one woman good enough to take up a position on their board. It is unacceptable. The hon. Lady is absolutely right.
There were concerns about boardrooms being remote, unrepresentative and disconnected from employees and the experiences of ordinary people. There was also heightened interest in the standards of corporate governance in large private companies in the wake of the failure of BHS and some other large private companies. There is growing awareness that large private companies can have an economic importance similar to that of listed companies. Their size means that their conduct and governance can have an equally significant impact on the interests of employees, suppliers, customers, pensioners and others.
Catherine West
Will the Minister update the Committee on whether employees will be sitting on company boards?
Andrew Griffiths
I will be delighted to come to that point, but I hope the hon. Lady will bear with me a moment.
The Government’s response, announced in August last year, set out nine key reform measures. There was a combination of new statutory reporting requirements and changes to the UK corporate governance code, which is the responsibility of the Financial Reporting Council, and industry-led measures. The regulations we are debating today will implement the four new company reporting elements of the reform package.
First, large companies will be required to explain in their annual reports how their directors have complied with the requirements of section 172 of the Companies Act 2006, including the need to have regard to employee interests and fostering business relationships with suppliers, customers and others. Investors and the public are increasingly interested in how companies take account of stakeholder views and interests, because they are important to a company’s long-term, sustainable success. The information will make it easier for shareholders to hold companies to account and encourage directors to think more carefully about how they take account of such matters.
Secondly, very large companies will need to make a statement about their corporate governance arrangements, including whether they follow a corporate governance code and if so, how. That requirement will encourage directors to consider the robustness of their existing arrangements and the ways in which they are communicated. Extra transparency will also strengthen public confidence in the way large private companies are run.
Thirdly, quoted companies with more than 250 UK employees will be required to publish pay ratios comparing the CEO’s remuneration to median employee pay and employee pay at the 25th and 75th quartiles. The ratios will need to be accompanied by an explanation, including the reasons for an increase or decrease in the ratio from year to year and whether the median pay ratio is consistent with the pay, reward and progression policies for UK employees as a whole. The hon. Member for Feltham and Heston asked which employees are taken into account. We think it would be difficult for companies to include those who are employed through agencies, as they are not directly responsible for paying those employees, so they would not be included within that pay ratio. The information will give shareholders new information to help them assess whether pay at the top is justified and consistent with pay and incentive arrangements in the rest of the workforce.
Finally, quoted companies will be required to illustrate more clearly for shareholders the impact of future share price growth of 50% on the value of share-based incentive plans. That will give shareholders a better understanding of how significant share price growth over a performance period will increase executive pay. It will also encourage remuneration committees to consider, if appropriate, whether any discretion should be exercised to avoid mechanistic pay outcomes.
None of those reporting requirements will apply to small businesses. As the Minister responsible for small business, I am keen to ensure that regulation does not become over-burdensome. The measures are aimed at quoted, large and very large companies. The total costs for business arising from the new reporting requirements are expected to be £16.7 million in year one and £9.8 million annually thereafter.
The reporting obligations complement and in some cases reinforce other elements of the corporate governance reform package. They should not be seen in isolation. For example, the new regulation 14, requiring large private companies to make a statement about their corporate governance arrangements, is linked to work being undertaken by James Wates to develop corporate governance principles suitable for use by large private companies. Those principles are being consulted on with a view to finalising them by the end of the year, but we expect that many companies will use them as an appropriate framework when making a disclosure about their corporate governance arrangements under the new reporting regime.
Importantly, the Financial Reporting Council has a new UK corporate governance code. The new requirements on companies to state how they have had regard to the employee and other wider stakeholder interests set out in section 172 of the Companies Act will help to underpin revisions to the code. Those revisions include a new code principle establishing the importance of boardroom engagement with stakeholders and a new provision requiring boards, on a comply-or-explain basis, to establish at least one of three robust methods of gathering the views of the workforce: having a director appointed from the workforce, having a formal workforce advisory panel, or having a designated non-executive director. The FRC has been consulting on those changes and expects to publish the final, revised code on the 16th of this month.
In addition, the Investment Association, at the Government’s request, has launched a public register—a world first in transparency—of companies encountering significant shareholder dissent of more than 20% to executive pay packages and other resolutions. That shines a stronger light on companies that are not listening to their shareholders, and in particular on companies that face significant opposition in successive years.
Andrew Griffiths
I will make some progress, if I may. I think I have been quite generous in giving way.
The final part of the regulations relates to reporting by community interest companies. The Companies (Audit, Investigations and Community Enterprise) Act 2004 requires CICs to produce a community interest company report annually, including information about directors’ remuneration. The regulations clarify that small CICs must report on their directors’ remuneration. That obligation was inadvertently removed when associated provisions regarding small companies were repealed in the course of implementing the accounting directive in 2015. That was not part of the corporate governance reform package, but the regulations present a good opportunity to remedy the gap. It is uncontroversial and does not involve any change in policy—indeed, small CICs have continued to file the information.
I hope the Committee will support the regulations.
Andrew Griffiths
I thank all hon. Members for a debate that has challenged the nature of the proposals and raised some important questions, which I will address as quickly as I can.
The hon. Member for Hornsey and Wood Green raised the issue of employees on boards. These regulations, plus the new provisions of the corporate governance code, significantly strengthen the employee voice in the company boardroom while driving up accountability. For the first time, all large companies will have to report each year on how they have regard to their employees’ interests and the impacts of that. Strengthening the employee voice at board level will happen at different levels. Given the huge variety of companies in the UK and the different ways that groups operate and are structured, one method would not suit, but as I laid out earlier, the range of options to ensure that the employee voice is heard in the boardroom is adequately addressed in the regulations.
To reiterate the point about employees and not the wider workforce being covered, the regulations are being made under the Companies Act 2006, and we are using the definition of an employee in that Act, which is someone employed under a contract of service by the company. It is not for the regulations to redefine what is meant by an employee. We did not consult on that matter, which is part of a much bigger employment rights question. For instance, a person employed by a company under a zero-hours contract would be regarded as an employee for the purpose of gathering that information.
Catherine West
To clarify, what other protection will there be for non-employees, such as other agency workers?
Andrew Griffiths
The hon. Lady will know that, as part of our enforcement, we have doubled the amount we are putting into protecting those on the lowest pay. We are increasing resources in the Employment Agency Standards Inspectorate to protect agency workers. Through our work in relation to the Matthew Taylor review, we are specifically looking at what we can do to strengthen the protections for agency workers and give them more rights and more clarity in relation to who employs them and the pay that they should receive. It is part of a wider corporate governance package and a wider set of protections for workers such as those employed by the Employment Agency.
Bill Esterson
I am glad the Minister mentioned the Taylor review, which was published a year ago. There is a great deal of frustration about how long it has taken to get responses to it and for action to be taken as a result. Perhaps the Minister could indicate when the Government will come forward with proposals and a response to that work?
Andrew Griffiths
The hon. Gentleman is impatient. I announced our response to the Taylor review in my second week as the responsible Minister. The consultations closed two weeks ago, and we are busily working on a response to them, which we will come forward with as soon as possible. We are keen to ensure that we deliver a whole new set of rights and protections to workers across the United Kingdom, and we are keen to demonstrate that we do not need the European Union to protect workers’ rights. We are committed to extending and going further and faster in this country.
Alec Shelbrooke (Elmet and Rothwell) (Con)
My hon. Friend does himself a disservice, because when that report was published, he immediately came to the House and spoke about clamping down on unpaid internships, which is an issue close to my heart. As he says, the Government are leading on rights. I have introduced Bills about that in all the Parliaments I have been in, and Conservatives are taking the latest private Member’s Bill about it through the House of Lords. I congratulate him on all the work he has been doing on the Taylor review.
Andrew Griffiths
I thank my hon. Friend for those kind words, but there is no doubt that he has led the way on these protections. I commend him for the steadfastness and determination that he showed in ensuring that we bring in protections for some of the most vulnerable people in the workplace.
The hon. Member for Sefton Central pretty much asked why we are not implementing the Labour party proposal for a pay ratio of no more than 20:1. It is not for the Government to set arbitrary caps on individual companies. We will drive the transparency and accountability that can expose unjustified executive pay, and that is what we are doing with pay ratio reporting. The Labour party’s proposal is fraught with legal and other difficulties. Would a Labour Government extend the 20:1 pay ratio to non-UK companies bidding for Government contracts? That would raise state aid and World Trade Organisation issues. If they would not, that would put UK contracting companies at a clear disadvantage. There is no sense to the proposal that the Labour party puts forward.
In relation to prompt payment, on which we share common ground, we all want to ensure that small and medium-sized enterprises in particular in this country are paid promptly and fairly. Section 172 and the draft regulations require companies to set out their relationship with their contractors and how they treat their supply chain. Another part of this important corporate reform that the Government are bringing forward is payment practice reporting. That is now live and we are seeing real evidence of how bigger companies pay their supply chain. That will go a long way in providing the kind of evidence, transparency and changes in behaviour that we want in this country.
Andrew Griffiths
I think I have given way quite enough. We have been going for some considerable time, and as the temperature rises I know that right hon. and hon. Members would like us to draw this to a close.
I think the hon. Member for Sefton Central raised the issue of Persimmon and asked why there are not greater consequences. There were consequences for Persimmon: there was a vote of shareholder dissent—something that this Government introduced—that went on the register that this Government introduced, and the chair of the remuneration committee and the chairman of the company resigned. Those are consequences of its actions and they clearly demonstrate that there is real benefit to the reforms we are bringing in.
There was a question about enforcement and Government checks on compliance and non-compliance. If Companies House finds that a company has not submitted a report, for example by shareholders, and a company fails to comply, the Insolvency Service can bring forward measures from its criminal enforcement team. The Secretary of State has authorised the Financial Reporting Council to report proceedings concerning effective accounts, directors’ reporting and strategic reports, to obtain an order that directors prepare a revised report.
On clawbacks, particularly in the Carillion matter, the hon. Member for Sefton Central will know that many of the points he raised are addressed in our corporate governance Green Paper, to which we have had many responses. It looks specifically at clawbacks, particularly in relation to director pay and bonuses. That consultation has now closed and we will respond to it in the very near future.
The hon. Member for Glasgow South West always makes important contributions in these kinds of debates. He rightly asked about the five-year deadline for a review. I alluded earlier to the fact that this is a constant iteration and reassessment of whether corporate governance rules are effective and doing the job we want them to do. It is perfectly possible that, if we see an area of corporate governance that is not working, we will revisit it sooner than in five years, to ensure that it is working properly.
The hon. Member for Glasgow South West also raised the subject of public sector procurement, which the Government are keen to address. I point him to the speech made by the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Hertsmere (Oliver Dowden), last week when he brought forward new measures on public sector procurement, not only to ensure that it is easier for SMEs to bid for and win public sector and Government contracts but to look at the wider good of a company’s activities. That can include charities and third sector groups. There will be much more flexibility for smaller businesses to make a real contribution to their economy and community if they win public sector contracts.
The draft regulations will give shareholders important new information about executive pay and encourage boards to consider carefully how it relates to the pay of other employees. For the first time there will be specific reporting on how directors have regard to stakeholder and other matters in section 172 of the Companies Act.
We will raise standards of corporate governance in large private businesses. Alongside changes to the corporate governance code, the regulations will improve how our largest companies engage at board level with employees, customers, suppliers and stakeholders. They will improve boardroom decision making, deliver more sustainable business performance and build wider public confidence in the way businesses are run. They will ensure that our corporate governance framework remains the world’s best. I commend the draft regulations to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Companies (Miscellaneous Reporting) Regulations 2018.