Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 15th December 2020 Commons Chamber

[Paul Scully]

I was self-employed, running companies, for most of the 25 years that I was working before I was elected to this place; there but for the grace of God go I. I will continue to reflect the views of the self-employed in conversations with the Treasury. I also speak to the hospitality sector every single week and will be doing so later today. We have allocated £40 million extra to wet-led pubs, in addition to extending the moratorium on rent evictions and legal processes facing tenants, the VAT cut and the business rates relief.

[Bill Esterson (Sefton Central) (Lab)]

What assessment he has made of the level of greenhouse gas emissions generated by (a) imports to and (b) exports from the UK.

[The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)]

The Government publish estimates of consumption emissions every year. The latest figures show that UK emissions on a consumption basis fell by nearly 25% between 2007 and last year.

[Bill Esterson [V]]

When emissions from the production of imports, and from sea and air transport are included—minus those of exports—the UK has reduced its greenhouse gas emissions by 0.6% a year, not the 1.5% that the Government quote for territorial emissions alone. This country depends on imports, including the emissions that they produce. Ministers can kid themselves all they like, but is it not the case that unless the UK cuts the emissions that we are responsible for around the world, we are not going to make the contribution that we need to in order to deal with the climate emergency?

[Kwasi Kwarteng]

The hon. Gentleman is right to point out that we do have to take into account the carbon emissions that we are responsible for through trade, but he will also recognise that this is part of an international movement. There is no country in the world, in the EU as well, that is properly accounting for carbon emissions in this way. I point out to him that we were the first G20 country to mandate disclosures under the TCFD—Task Force on Climate-related Financial Disclosures—framework across the economy, and we are leaders in terms of carbon accounting.

--- Later in debate ---

[Paul Scully]

I know the hospitality business in York has been affected, as it has around the country. Yes, we will continue to look at this and, when the data allows, we will move York and other areas into more forgiving tiers. For the hospitality sector—as I say, it welcomes Government support, largely, but wants customers—this is what is going to help the pubs, bars and restaurants in York and beyond to be able to survive and thrive.

[Bill Esterson (Sefton Central) (Lab) [V]]

Many freelancers and self-employed people have had little or no financial support. They do not qualify for furlough, for the self-employed scheme or for business grants. With billions of pounds being returned in tax relief for business rates by the major retailers, why are Ministers not using that money, as the retailers are suggesting, to support those hundreds of thousands of people who have had little or no financial support so far?

[Alok Sharma]

As the hon. Gentleman knows, a whole range of support is available. I completely accept that not everyone will feel they have got precisely the amount of support that they would have liked, but a significant amount of support is available and, of course, all of this is always kept under review.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 10th November 2020 Commons Chamber

[Paul Scully]

The right hon. Lady raises a really important point. As well as having regular meetings with the hospitality and retail sectors about the immediate future, we also have the Retail Sector Council and the Hospitality Futures Group, an industry-led a group, which we participate in fully to make sure that we can address such long-term concerns.

[Bill Esterson (Sefton Central) (Lab)]

What recent assessment he has made of which business sectors have been most affected by the covid-19 outbreak.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)]

We know that many areas of the economy face challenges, as we have just heard, especially in sectors that have closed under new national restrictions, such as hospitality. That is why we have extended the coronavirus job retention scheme to March and provided an unprecedented support package to businesses and to workers.

[Bill Esterson]

Many working people have been excluded since March. They do not qualify for furlough; they do not qualify for the self-employed scheme; and their businesses do not qualify for the grants. It is no good the Government giving the mantra about universal credit. It will not wash, because most people who have been excluded do not qualify for universal credit. The Government were right to U-turn over the injustice facing hungry children, so when will they fix the growing injustice faced by millions of excluded people in this country who just want to put food on the table for their children?

[Nadhim Zahawi]

The Government have put forward a comprehensive package of support, as we heard from the Secretary of State, for both individuals and businesses. The self-employed income support scheme has also been extended. The support package is not only about the welfare system, which has had an additional £9 billion put into it to help people, but about the bounce back loans, the tax deferrals and the rental support, which are all important parts of it, as well as mortgage holidays and other business support grants through local government.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 3rd March 2020 Commons Chamber

[Amanda Solloway]

My hon. Friend, who I know cares passionately about this issue, makes a really good point; CCUS will be vital to meeting our net zero target and revitalising the UK’s industrial areas. The Government have invested over £50 million in CCUS innovation, and recently we consulted on potential business models to help progress deployment. The CCUS action plan aims to enable the commissioning of the first facility in the UK in the mid-2020s. We committed in our manifesto to investing £800 million towards that, and £500 million to help energy-intensive industries move to low-carbon techniques.

[Bill Esterson (Sefton Central) (Lab)]

If the Government want to help clean growth, they can invest in the Mersey tidal power project. It is clean, entirely predictable, and could power 1 million homes. It offers high-quality jobs and has massive domestic and export potential. Steve Rotheram and the Liverpool City Region Combined Authority have just committed a further £3.5 million to the project, so will the Government back the people of the north-west by supporting investment in this exciting new project? It is a chance to demonstrate that they are interested in and serious about tackling the climate crisis.

[Amanda Solloway]

Yes, absolutely. We need to do that for research and development in all technologies, and I will welcome the opportunity to meet the hon. Gentleman in the future.

Construction Industry: Cash Retentions

Bill Esterson Excerpts

Thursday 27th February 2020 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing yet another debate on this topic.

“Stop, thief!” That was my reaction when I learned that £573 million has been lost by SMEs in the construction industry in the two and a bit—quite a bit more than a bit—years since October 2017, when the Government published a report showing that £229 million a year is lost as a result of the application of retentions, which has been described so well by Members across the Chamber.

A crime has been committed. In fact, a series of crimes has been committed over many years. This is a crime in which there is an imbalance of justice between large and small: the big firm is allowed to exploit the small firm with impunity and continue to get away with it. The perpetrators are a relatively small number of very large organisations. The victims—in any crime there are victims, and we should take their side—are SMEs in the construction sector, and self-employed contractors, who often rely on SMEs for work. Retentions are applied unfairly and disproportionately in the supply chain. It is a crime that that has been allowed to continue.

Let us see some action to stop the thief. Let us end this criminal activity and imbalance. Let us ensure there is a level playing field in the construction industry by taking the kind of action that the hon. Members for Waveney (Peter Aldous) and for Kilmarnock and Loudoun, and many of the rest of us, have sought for some time. It is time the Government stood up for the little person rather than siding with the large corporates. Frankly, the lifestyles of a small number of people running large organisations are funded on the backs of hard-working owners and workers in small businesses in the construction sector. Why on earth is that allowed?

I am afraid that the idea in one of the consultation responses that we should not worry about insolvency because there is a buoyant market is at best complacent and at worst downright disingenuous. We have only to look at what happened with Carillion—I think it was actually £2 billion in late payments that was lost by 30,000 businesses—and at the examples given to us by the Federation of Master Builders. K&M Decorating lost £230,000 in retentions alone. A number of the federation’s members that were in supply chains with Carillion went into liquidation as a result of unpaid retentions. We must not be complacent. We cannot afford to take the attitude that insolvency is not the problem that it really can be. Insolvency often happens, and even when it does not, chasing retentions—certainly the final element of them—is a huge problem for many businesses, some of which give up.

Let us remember that the amount of retentions we are talking about is often the margin for smaller firms in construction contracts. If firms are unable to collect those retentions, their financial viability is often threatened.

[John Spellar]

Does not that mean that many big contractors are in a mutually destructive relationship? If some of their subcontractors—or even their sub-subcontractors—go bust, they have to bring in new firms, delaying and putting at risk their projects. Somebody—actually, it has to be the Government—has to break that mutually destructive cycle.

[Bill Esterson]

I agree with my right hon. Friend, and that goes back to what the hon. Member for Waveney said about the big contractors beginning to wake up. They cannot carry on as they are because by continuing this disruptive practice, they will be undermined. When the large firms start to challenge the very behaviours from which they profit, we start to realise that perhaps those behaviours are coming to an end. We live in hope that that is part of the answer.

Some of the consultation responses said, “Everything’s fine, leave it alone”, but that is clearly a minority view. We often see the attempt to get small firms to apply for prompt payment in return for a discount, a quite disgraceful business practice that happens not just in retentions but across the board—and not just in the construction industry. Again, the Government should be challenging and ending that. It goes back to the point about tight margins.

I take exception with how some of the responses were reported by the Government in the summary of consultation responses, because it was quite hard to tell the difference between the responses from large firms and those from small firms—the perpetrators and the victims. We could work it out in the end, but we had to really look for it. Perhaps the Minister will speak to that point.

A constituency firm of mine called WT Jenkins, which does highway lighting, showed me its files on the shelf in the office. Its typical retentions, when I spoke to it about five years ago, were between 5% and 10% of contract price. That is in the public sector. There are problems in the public sector and in the private sector, in house building in particular. The firm was waiting between two and five years; the hon. Member for Waveney mentioned three years in his speech. It is an absurd way to carry on.

Other Members may have seen a letter sent to the Secretary of State from R Durtnell and Sons Ltd, building contractors who had been going for 430 years. I hope the Minister has had sight of it. The firm’s three-page letter describes the refusal to pay, the exaggeration of claims of defects by the main contractors and an exploitative model. It made clear in the letter that it paid its suppliers and its retention liabilities on time, yet it had to suffer having retentions withheld against it for many months, if not years, in wholly unacceptable ways. Other hon. Members spelled that out well in their examples.

Like the hon. Member for Kilmarnock and Loudoun, I thought, “Great! We have had a Government response to the consultation. Fantastic news”—and then I read it. I thought that I could have told the Government every single one of the comments, because they have all been made in this House and to us individually by businesses and business organisations over the years. It has taken two years to get to the point of the response.

My right hon. Friend the Member for Warley (John Spellar) rightly mentioned the lack of urgency. We have had roundtables, with the last one, as we heard, happening in May last year. Why are we getting only a summary of responses? Why have we not had an action plan? A paragraph saying:

“Several policy options are under consideration”,

simply does not cut it. That is not good enough. It will not stop the crime of retentions. We need action and we need it fast.

In the consultation, the phrase “the principle is sound” was used when referring to the concept of retentions. Not, I am afraid, in the way it is applied. It is not doing anybody any favours, certainly not those at the sharp end. As we have discussed previously, it is increasingly affecting the industry as a whole and those at the top as well. We can see some signs of improvement in the public sector with project bank accounts. Highways England is spending a £20 billion on work through project bank accounts and the devolved nations are taking active steps along similar lines.

The Government have a great tool in procurement. They can insist that those who spend money with the Government apply productive, responsible business behaviours through their supply chains. Why are they not doing that already? Perhaps they are considering that in their response, and perhaps the Minister will say that they will take such an approach. The fact that the tenancy deposit scheme in the private rented sector is effective and works well shows what kind of model can be put forward. The hon. Member for Waveney’s ten-minute rule Bill gives the Government a blueprint for what could be applied.

The hon. Member for Kilmarnock and Loudoun mentioned Dame Judith Hackitt’s comments. A poor quality of work is one of the system’s consequences, with substitutions for poor materials made because of the impact of non-payment in the retention system on cash flow and profits. It is a very real problem, and anybody who looks at the poor quality of new build housing can see exactly what is happening. I have seen it at a 300-home development in my constituency next to the new Maghull North station, with shoddy work and the application of retentions while the developer, Persimmon, makes vast profits and pays significant bonuses to its directors. It is not good enough and it has to change.

The Housing Grants, Construction and Regeneration Act 1996 is quoted by a number of respondents to the Government consultation. Pay-when-paid is not allowed, but it continues and we need further action, intervention and support to deal with that problem. Is it not about time that the Small Business Commissioner and their office had full responsibility for looking into this issue and were given the resources needed to address retentions in construction in both the private sector and Government procurement supply chains?

This is an incredibly important issue for the construction industry and the wider economy. When will we get the full Government response? The Government say that they will work with industry. The policy options mentioned in the report are

“a possible retention deposit scheme, and phasing out of retentions completely, and work continues to assess the viability and potential impact of these.”

Why has it taken so long? When will it come forward? It should have been with us today had anything been brought in front of us for the debate. The retention deposit scheme has clear support in the consultation, as does a phasing out of retentions altogether. Everyone expects the Minister to give some answers on those ideas at this stage.

A level playing field is needed. Suppliers have to be treated fairly. There can be no more Carillions. There must be an end to the crime of retention and to the abuse, as well as proper support for victims and justice for the construction SMEs and self-employed contractors. In whose interest is it to continue as we are? It is certainly not in the interest of the small businesses and the self-employed contractors, and it will not be in the interest of the large firms for much longer. The Government can do something about this issue. They have the evidence to act and they must get on with it.

--- Later in debate ---

[Nadhim Zahawi]

I opened by saying that the Government are committed to tackling the problem of late and unfair payments, so I hope that answers the question whether we are going to do something about the issue.

To respond to other points that were raised, the hon. Member for Kilmarnock and Loudoun and my brilliant hon. Friend the Member for Waveney both mentioned their private Members’ Bills. It is important that any action we take is robust, proportionate and evidence based, which is where we are at the moment. Several policy options are under consideration, including the retention deposit scheme. It would be premature to commit to anything at this stage while several policy options are under consideration.

[Bill Esterson]

The Minister is right to look for evidence. We have a tenancy deposit scheme that works. We have evidence from New Zealand, Canada, Australia, France and New Mexico that such a scheme is possible in construction. The evidence of best practice from around the world is in front of him. The evidence is also there from the construction industry in this country that it is desirable and needed. This has gone on for far too long; can the Government just get on with it?

[Nadhim Zahawi]

I am grateful to the hon. Gentleman for his encouragement. The hon. Member for Kilmarnock and Loudoun talked about a clear majority supporting the retention deposit scheme. I take issue with that, and not as a party political matter. There is no clear majority supporting any solution at the moment. It is right for the Government to begin to distil opinions and come to a view.

The hon. Member for Kilmarnock and Loudoun also mentioned that significant parts of the industry have called for the scheme and asked why the Government will not legislate for it. Given the evident complexity of the policy issues, as we have discussed, it would be premature to commit to introduce a retention deposit scheme. In addition, costs are driven by what the industry wants to adopt and what it wants to resist. Unfortunately, the lack of consensus to date means that a preferred solution has not yet emerged. We will continue to work with stakeholders and I would like to think that we can get to a place where we have that consensus.

Thomas Cook Customers

Bill Esterson Excerpts

Tuesday 5th November 2019 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

As your next-door-but-one constituency neighbour, Mr Speaker, may I congratulate you on your election?

I thank the Secretary of State for her statement. She is right to raise these matters today, because they raise serious questions that will need far more attention in the new Parliament, whichever Minister is at the Dispatch Box. I also have some questions today to take this forward.

In her statement, the Secretary of State mentioned a “high aggregate amount”. Can she tell us more about what that is? On the question about audit, to which I will return shortly, will she tell us why no regulation was in place to ensure that this serious weakness did not materialise? I should also like to put on record my thanks to all those involved in bringing 140,000 holiday- makers home.

We welcome the fact that the online services have now been bought, and that shops in the constituencies of Members across the House are being reopened by Hays Travel, but why oh why did Thomas Cook have to close first, and why were the opportunities that were given to the shops and online services not given to the airline? Intervention to ensure the retention of those viable parts of the business would have been a major step towards addressing the serious weaknesses that the Secretary of State identified in her statement. The Government were told at the time that parts of the business were successful, and Hays Travel clearly agreed because it bought the shops. There is also value in the brand, which is why the online business has been recovered. Could the airline have been saved, as the ones in Germany and Scandinavia were, if the liquidation had been delayed?

Why did the Government not listen to those calling for intervention? Why did they not take a stake in the company, so that the shops and digital business could have been transferred while still trading and so that other parts of the business could have been saved? Let us remember that the Turkish and Spanish Governments wanted to step in. They saw the potential value, but our Government did not. Had our Government intervened, the hardship to which the Secretary of State rightly referred could have been identified and possibly avoided. Does she regret her failure to speak to the company and to intervene to protect the jobs and rights of workers? Had the company continued trading, with the Government holding a stake, the rights of workers would have been protected. It is good news that staff will now have jobs with Hays Travel, but will they be paid for the time since Thomas Cook closed? Will their rights from their years of service be protected? Are staff being TUPE-ed over, or not?

What can the Secretary of State tell us about her response to the warnings about auditor conflicts of interest? She mentioned audit responsibility and potential failure in her statement. Auditing conflicts of interest have been repeatedly identified at Carillion, at BHS, in the banks and now at Thomas Cook. Has she read the excellent report from the Business, Energy and Industrial Strategy Committee, and what is her response to its recommendations, including its calls for a new regulator and for the audit profession to be proactive rather than reactive? Why is the Secretary of State so resistant to change? The Competition and Markets Authority wants action; why does not she?

What action is the Secretary of State taking to address the scandalous payment of bonuses to executives who have profited at the expense of workers and customers and who presumably have direct responsibility for the appalling hardship to which she has referred? Analysis by Unite and Syndex shows that £188 million in bridging loans would have prevented the liquidation. That would have allowed profitable parts of the business to be sold while still trading, and for workers’ rights to be protected. This would have supported the wider economy and communities, too.

The Government should be a partner of business, not stand apart from it. That means intervening and providing support where intervention stands a chance of succeeding. The more evidence emerges about the Thomas Cook collapse, the more it appears that the case for intervention was there to be made. If they would not intervene at Thomas Cook, exactly when would the Government intervene?

If the Secretary of State wants to avoid hardship for those covered by insurance, she needs to change her approach and her attitude to intervention. When she referred to a drop in the ocean in responding to a question from the shadow Business Secretary, she demonstrated that she did not agree with her predecessor, who said that reforms were needed to ensure a strong level of consumer protection and value for money for the taxpayer. He was right, was he not?

The Secretary of State said that the Thomas Cook approach was unacceptable and that support must be given to those severely impacted by its closure through no fault of their own. I agree, but the Government have failed Thomas Cook. They sat back and let it fold. Only proper reforms will make sure that catastrophic failures of this type do not happen again.

[Andrea Leadsom]

I am glad that the hon. Gentleman recognises the Government’s efforts, particularly on the repatriation of customers stranded overseas and, of course, in the work, which I know through chairing the Government taskforce, to try to ensure that we get the best possible arrangements for Thomas Cook staff. He asks why the Government did not bail out Thomas Cook. He will be aware that, according to court reports, there was about £1.9 billion of debt on Thomas Cook’s balance sheet. It did approach Government looking for a loan facility of up to £250 million, but it is clear that, had the Government put that significant sum of taxpayers’ money into Thomas Cook, we would have ended up in the same position as we are in today. We would have had to repatriate those customers. We would have to have done exactly as we have done, but the taxpayer would have been £250 million worse off, so it was not an appropriate use of taxpayers’ money. It is very sad that Thomas Cook went bust, but it is not right that Government should just bail out every business. Businesses need to stand on their own two feet.

The hon. Gentleman made some very important points about regulation. I can tell him that I wrote to the Financial Reporting Council asking it to prioritise as a matter of urgency consideration of an investigation into the audit of Thomas Cook’s 2018 accounts, as well as the conduct of its directors. He asked why the Government did not foresee this.

It was never envisaged that a UK tour operator would fail to insure itself fully to cover claims for personal accident or fail to ensure that it had ring fenced the funds to meet those liabilities so that they were safe if the company got into difficulty. The company has a legal obligation to cover personal injury claims arising from package holidays abroad, and that is why I have asked the official receiver to investigate, in particular, this aspect of the conduct of Thomas Cook’s directors.

Draft Insolvency (Amendment) (EU Exit) (No. 2) Regulations 2019

Bill Esterson Excerpts

Tuesday 22nd October 2019 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure, Mr Pritchard, to see you in the Chair this afternoon.

We are being asked to approve the regulations, or our amendments to the regulations, which were already agreed in January; the Minister has gone through them in some detail and I have no objection to what she said. The Committee is here to apply section 8 of the European Union (Withdrawal) Act 2018, in so far as it relates to the failure of retained EU law to operate efficiently. We will not oppose the measure. For the record, that is in stark contrast with the Committee that the hon. Member for Glasgow Central and I attended yesterday, where that was anything but the case. I will just put on the record that the Committee’s proceedings are an appropriate use of the powers in the Act, and I am glad that the Government have returned to that appropriate use and to the promise they made—namely, that they would not make major policy changes and they would not affect rights.

Mostly these regulations are minor technical changes, as the Minister said, to what was passed in January; I do not intend to revisit what I said then. Those changes include Scotland-only regulations, as insolvency is a devolved matter, and my understanding is that they have the support of the Scottish Government. The regulations passed in January had industry support, but can the Minister say what discussions took place with industry about the changes? The explanatory notes and the Minister in her speech referred to the consultation with the Scottish Government, but can she just catch us up on the consultation with industry on these additional minor changes?

The regulations relate to no-deal preparations. At the moment in the Chamber, my right hon. Friend the Leader of the Opposition is responding to the Second Reading debate on the European Union (Withdrawal Agreement) Bill. However, even if the Bill is passed, there is still the very real threat that no deal could happen, because—this is one of the great weaknesses of the Bill—the default position at the end of December 2020, in the event that a free trade agreement has not been negotiated by the Government, is for us to leave without a withdrawal agreement being in place; the Minister referred to that. We would leave with no deal at the end of December 2020, according to the legislation that is currently being debated in the Chamber. One of the reasons that is a real concern is because it takes many years to negotiate free trade agreements. That threat must be taken seriously.

Can the Minister confirm that the regulations and many others that have been passed in Committees such as this one, including in Committees that the Minister and I have attended, as a result of that serious weakness—one of many—in the European Union (Withdrawal Agreement) Bill, leave open the strong prospect of no deal? Will these no-deal regulations remain potentially necessary for implementation, not just on 1 November 2019 if the Bill is rejected and we leave with no deal on Halloween, but on 1 January 2021 if the Bill passes? Perhaps she can confirm that they will still apply, be relevant and be available, if needed.

Although we will not oppose the regulations, we will continue, for the reasons I have just set out, to do all we can to prevent no deal, not least to ensure that regulations, including these ones, never need to be enacted.

Draft Freedom of Establishment and Free Movement of Services (EU Exit) Regulations 2019

Bill Esterson Excerpts

Monday 21st October 2019 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is an even greater pleasure than usual, Mr Hanson, to serve under your chairmanship. I congratulate you on becoming a grandad for the first time and I hope we will not detain you for too long from visiting your new grandchild, which I know you are keen to do—but I apologise that I will detain you for a little while.

Before we consider these regulations, we should consider the comments of the3million, the organisation representing the more than 3 million EU and EEA citizens resident in the United Kingdom. The organisation has described this measure as not being what was promised by the Government and says that it undermines promises made by the Government, which, of course, is something that the Democratic Unionist party has been only too familiar with in recent days.

What is it that we are considering today? We are considering the removal of the rights of EU, EEA, Swiss and Turkish nationals who are self-employed or business owners or operators in the United Kingdom. Who are these people and how will they be affected? They are thousands—potentially hundreds of thousands —of people who are working in professional services, entrepreneurs, people who operate start-up businesses, people who operate in IT and in professional and financial services, architects, or self-employed workers in the gig economy. There are serious potential consequences not just for them but for their staff, their customers and their suppliers—both for businesses and the self-employed—as well as for their families and the local economies in which they operate.

The Minister talked about the impact of the regulations; in fact, at one stage, he said that he was keen to move on to the impact. But there is no impact assessment, so how can we possibly know? This is a perennial discussion—it seems that we have been dealing with the issue long enough for it to be perennial and not just something of a repeated nature. Every time we have a set of these regulations, the impact assessment is lacking. Because this measure affects so many people, it is impossible for the Minister to say that it will not have a significant impact on the economy. He simply has no way of knowing that, because that investigation—that impact assessment—has not been carried out.

[Stephen Doughty]

My hon. Friend is making strong points, with which I completely concur. He will note that the Minister used very careful words: he said “no further restrictions at the point of exit”. The fact that this matter is being considered in this way, rather than through the immigration Bill, will raise significant concerns about these rights changing in due course. We on the Select Committee on Home Affairs have looked at the subject many times. This issue did not come up, and we have discovered all sorts of problems with the existing EU settlement scheme, let alone with this provision, which many people were unaware of.

[Bill Esterson]

I am grateful to my hon. Friend for those remarks, which I will address in some detail later.

[Matt Rodda (Reading East) (Lab)]

Does my hon. Friend agree that there is a disturbing lack of assessment and evidence-based policy making on these important matters? The Government are ignoring the demands of many, including the official Opposition, for a full assessment of their new deal. Surely there should be some proper assessment of these important matters.

--- Later in debate ---

[Bill Esterson]

I absolutely agree. My hon. Friend is right to mention the lack of impact assessment or analysis of the proposed deal, which we are being asked to consider without being able to judge the line-by-line detail of what is in it. Somebody will have to remind me how many pages the new document is.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Two hundred and eighty-odd.

[Bill Esterson]

I will accept the hon. Gentleman’s comment from a sedentary position; does anybody want to go higher? The reality is that we do not have the information we need in order to make judgments, whether on the new deal or the consequences of no deal, and on these regulations. In the explanatory memorandum, the Government use the phrase, “It is anticipated”. What they are saying is that they do not know what the impact will be, and I am afraid that is a real problem. These regulations were drawn to the attention of the Secondary Legislation Scrutiny Committee.

[Kevin Hollinrake]

The hon. Gentleman may be familiar with the document we were given access to, which was held in the Treasury since November 2018. That contained an impact assessment of all kinds of different scenarios, and said that in all of them, the economy is expected to continue to grow. Does that give the hon. Gentleman some confidence that there is life beyond the European Union?

[Bill Esterson]

That is a slightly different point to the one we are discussing. We need to look at the detail. I am not sure whether that intervention was part of the hon. Gentleman’s pitch to be Chair of the Treasury Committee—others must judge—but I will touch on his point. The Secondary Legislation Scrutiny Committee speaks of the removal of treaty rights, and the fact that this is a policy change. That goes to the heart of the concern about what is being proposed, because when the withdrawal Act was passed, the Government promised that they would not use the Henry VIII powers in section 8 of that Act as a vehicle for policy change. They also said that it “almost goes without saying” that no change should be made to rights through delegated legislation, yet that is exactly what is being proposed.

The disapplication of the rights of EU, EEA, Swiss and Turkish nationals is clearly at odds with what was promised regarding section 8 of the withdrawal Act. That Act was not intended to address how, whether, and how quickly we should meet our obligations under the WTO, which is the reason the Government are giving for putting these regulations through. The purpose of section 8 of the withdrawal Act was to fix deficiencies in retained EU law—an explanation that, to be fair to Ministers, they have used to justify previous regulations in Committees in which I have responded on behalf of the Opposition. Why is that not the case on this occasion? Why is this not being addressed through primary legislation? Why is it not being done through an immigration Bill, as my hon. Friend the Member for Cardiff South and Penarth asked, and why is that Bill stuck in Committee?

If free movement of people is to end via primary legislation, as the Home Secretary said on 5 September, why is the same principle not being applied to the freedom of establishment and free movement of services, and what are the consequences for those individuals who are self-employed, or who own or manage businesses in this country? A large cohort of the people delivering services or running businesses depend for their lawful residence qualification on being regarded as economically active. They have the right to that definition and to qualify. Their rights are derived under the 2016 immigration regulations, which the Minister mentioned, but that is because they are in accordance with article 49 of the treaty on the functioning of the European Union. These regulations disapply article 49, and therefore the 2016 immigration regulations.

It makes no sense to decide immigration rights for those who are self-employed or are running a business separately from determining the immigration rights of other people, but that is what these regulations do, despite the assurances that were given when the withdrawal Act was passed. If there is nothing to worry about, where is the legal analysis? Where were the Minister’s comments about the legal opinion that the Government have obtained? Where is the analysis that these regulations will not adversely affect the immigration rights of EU or EEA nationals? Thousands of self-employed, business-owning or business-managing providers of services need the assurance that they will not be disadvantaged and that their right to stay will not be questioned or removed. Where is the legal protection? It is not referred to in the explanatory notes, and the Minister did not refer to it.

I note from previous regulations passed in these Committees that on other occasions it has suited the Government to apply a principle of reciprocity. For example, I was responding for the Opposition on the matter of intellectual property regulations when the Government chose to allow EU and EEA firms the right to continue to have full access to our intellectual property regulations, and there was no guarantee that our firms would have those rights in return. Reciprocity was not a barrier on that occasion, but it seems that it is here, when the Government want to remove the rights of self-employed or business-owning or managing EU or EEA nationals.

[Matt Rodda]

This is a particularly worrying point, and I welcome my hon. Friend’s analysis of the situation. The Government seem to have one rule for big business and a very different one for small businesses, which are the lifeblood of our economy. Surely they should be equally fair to both types of business.

[Bill Esterson]

That is right. As my hon. Friend points out, these regulations relate to the self-employed or those running small firms, who do not have legal protections. That relates to the point about where the legal assurance is. He is right that large firms are able to ensure protection, give assurance and make applications to enable individuals to live and work in this country.

On the question of whether the regulations are about delivering WTO most favoured nation compliance, the Government do not have to act so quickly: as with IP rights, they could wait and see whether the EU and EEA grant reciprocal arrangements. After all, Government Members who support no deal—I cannot remember whether anybody in the Committee is in that category—have often argued that, in the event of no deal, the EU would continue with the existing arrangements and reciprocate because it would be in its interest to do so. I wonder whether the Minister goes along with those Members, who almost certainly all belong to the European Research Group. Whether he does or not, why are not the Government waiting to see the response of the EU and the EEA on the matter of reciprocal rights?

I come back to the central point: that EU, EEA, Turkish and Swiss nationals were promised under section 8 of the European Union (Withdrawal) Act 2018 that it would not be used for policy changes—especially those affecting rights. I remind the Minister that section 8 was designed to rectify deficiencies from minor changes—what we are concerned with is not minor, but is a policy change—and where there would be a failure of retained EU law to operate effectively. Compliance or otherwise with WTO provisions is not a matter of retained EU law and should not be addressed in that way. It was never intended that it would be done in that way.

Let us remind ourselves of the impact. More than 3 million EU nationals live in the UK and so do tens of thousands of Turkish and Swiss citizens. Among their number countless thousands will be affected by the regulations. That will affect their confidence about doing business, and it could affect the confidence of those who trade with them. That may mean contractors having to stop working in the UK, which will affect customers and suppliers. There could be legal proceedings against contractors for breach of contract, or sudden retendering because of the loss of non-UK contract holders’ rights. It did not seem to me from the Minister’s remarks as if the Government had considered those potential economic and business consequences.

There are questions about legal remedy and compensation through bilateral investment treaties. Before a number of east European countries came into the EU, we were party to bilateral investment treaties with them. Once we leave the EU those treaties will come back into force, and once those agreements are back in force they will enable companies in those countries to take legal action against the UK Government. Have the Government considered that potential challenge to the legislation? What steps are being taken to ensure that it is not a problem or threat for the UK?

I turn back to the question of the economic benefits of having in this country the relevant businesses and their owners, and self-employed workers. In the event of no deal and the regulations being enacted, what steps will the Government take to protect the investment that those companies bring and make sure they are not undermined by the regulations? At the moment, the response to the regulations of the3million and the businesses that my hon. Friends have referred to is concern about whether it is desirable for businesses and self-employed people from the EU or EEA to stay in this country. If that protection is not in place and that assurance is not guaranteed, those people will be hit, and there will be a knock-on effect on UK jobs and our economy—to return to the earlier comments of the candidate for the Chair of the Treasury Committee, the hon. Member for Thirsk and Malton.

The Secondary Legislation Scrutiny Committee raised concerns and the3million says that the provisions are not what was promised, and undermine promises made by the Government:

“We were repeatedly promised that we would be treated no less favourably and nothing would change to our rights. These regulations do the opposite and remove our right to bring nationality discrimination claims. The proper place to consider the issues of immigration is in the immigration Bill. Not here.”

--- Later in debate ---

[Nadhim Zahawi]

I have a lot to cover, but I will happily take the hon. Lady’s intervention later. The Government’s plan on citizens’ rights confirms that EEA and Swiss citizens resident in the UK by exit day would be able to apply to the EU settlement scheme until at least 31 December 2020 to secure their status in a no-deal scenario. The EU settlement scheme is live and performing well. More than 2 million applications have now been received, and the scheme will continue to run in a deal or no-deal scenario. EU citizens resident in the UK by exit day will continue to be able to access benefits and services on exactly the same basis after the UK exits the EU as they do now. I sincerely hope that colleagues will refrain from scaremongering. It is deeply irresponsible for hon. and right hon. Members to do so.

The hon. Member for Sefton Central asked important questions, which I will attempt to address. He asked about the impact assessment for the regulations. An impact assessment has not been prepared because the impact has been approved de minimis in line with the better regulation framework.

[Bill Esterson]

How will you know if you don’t do one?

[Nadhim Zahawi]

Let me make some headway.

The only area in which the directly effective rights of establishment or free movement of services have been identified to have a direct impact on UK businesses is in the case of satellite decoders, where we expect the impact to be minimal. The directly effective rights of establishment and free movement of services impact the immigration regime applied to Swiss and Turkish nationals. Changes to the regimes will be delivered by primary immigration legislation, so let us not conflate those two things.

The hon. Gentleman also asked how we know that the EU will not reciprocate. Why are we doing this now? These rights are no longer reciprocated once we leave the EU. They are directly effective rights that are applicable only to member states. However, this does not preclude us from agreeing an ambitious free trade agreement with the EU.

The hon. Member for Cardiff South and Penarth said that the regulations are necessary to protect the Government’s freedom to regulate in a no-deal scenario and asked what regulations the Government are planning that would contravene or depart from those rights. We anticipate that the immediate practical impact of the regulations on the ability of EU, EEA, EFTA, Swiss or Turkish nationals to establish or carry on business or provide services in the UK will be limited, because UK law is currently expected to be compliant with these rights. Were there to be any legislative changes that depart from these rights—which I think is his point— after we have left the EU, they would be subject to the scrutiny of Parliament in the normal way and so would be considered at the appropriate time.

I want to return to the hon. Member for Sefton Central, who asked how the Government can be sure that there are no other direct impacts. The Government have prepared as thoroughly as possible. I hope he would agree that we have consulted as thoroughly as we can, and that the only exception is the satellite decoders.

Several hon. Members spoke about the submission from the Public Law Project. Allow me to address it. It is important that we get this on the record, because emotions are running high and the atmosphere is febrile in this place. I think I have addressed the issue of the impact assessment. The hon. Member for Sefton Central said that these go beyond the powers conferred on Ministers by the Henry VIII powers in section 8 of the withdrawal Act, a point that pretty much comes from the Public Law Project notes that were circulated today. I will share with the hon. Gentleman the correct position. The powers delegated to Ministers by Parliament via the EU withdrawal Act specifically allow changes to be made to existing Acts of Parliament by secondary legislation, through so-called Henry VIII powers. In its report on Henry VIII and delegated powers, the House of Lords Constitution Committee noted that

“the distinction between Henry VIII and other delegated powers is not in this exceptional context a reliable guide to the constitutional significance of such powers, and should not be taken by Parliament to be such.”

Section 8 powers to prevent, remedy or mitigate deficiencies in the EU law retained under the Act that arise from the UK’s withdrawal from the EU are used here to address deficiencies in retained EU law relating to certain provisions on freedom of establishment and free movement of services in the event that the UK leaves the EU without a deal. Section 8 is used to address any inoperability of such rights and to ensure that UK law continues to function effectively and with legal clarity.

--- Later in debate ---

[Bill Esterson]

I made the point that section 8 of the withdrawal Act is designed to address deficiencies in retained EU law—that is not in question. The problem is that it is not being used for that; it is being used for changes in policy and to affect people’s rights. That goes way beyond the scope, as does addressing WTO deficiencies. That is not what was ever envisaged or stated by the Government when they passed the withdrawal Act.

[Nadhim Zahawi]

The deficiencies in retained directly effective rights concerning freedom of establishment and the free movement of services, including a lack of reciprocity, which there cannot be in this case, arise as a result of the withdrawal of the UK from the EU. That is the whole point. The provisions in the regulations are being made as a direct consequence of the UK’s exit from the EU.

Finally, the hon. Member for Sefton Central mentioned the3million’s campaign on our doing this here through secondary legislation, rather than primary legislation. The regulations do not represent a significant policy change, as he suggests. They simply do not. If colleagues prefer to scaremonger, that is their prerogative, but I do not agree with them. I think it is a mistake to do that. It is a time to behave responsibly. The regulations do not impose any new restrictions on EU, EEA, EFTA, Swiss or Turkish nationals or on EU, EEA, EFTA, Swiss or Turkish-based businesses at the point at which we exit the EU, and we do not expect disapplying these rights to have a direct impact on the ability of EU, EEA, EFTA, Swiss or Turkish nationals to establish or provide services. The hon. Gentleman will know better than I do that successive Governments have implemented EU obligations via both secondary and primary legislation, so I hope he will reconsider his position.

I will end, Mr Hanson, because I want to get you over the road to the hospital to see your granddaughter. I thank Members for their valuable contributions to this debate. I compel them to think twice before they scaremonger. The hon. Member for Glasgow Central should talk to her colleagues in the Scottish Parliament on this.

Government Plan for Net Zero Emissions

Bill Esterson Excerpts

Tuesday 8th October 2019 Westminster Hall

[Sarah Newton]

I am going to make a bit of progress because so many Members want to speak and I want them to be able to do so.

Businesses have an important role to play, and it has been great to see businesses come forward with their own net zero targets. The water industry, for example, has committed to carbon neutrality by 2030. To give hope to the citizens who are so worried about climate change, that information should be captured so that people can see what all sectors of our society are doing. To level up the expectation on all businesses to take action, the Government should require goods for sale to include climate impact on their labelling. That requirement could cover food, electronic goods, and so on. It would help consumers to make smarter choices when shopping and ensure that companies measure the carbon footprint of individual products. It will add a cost to business, but that is why we must create a level playing field by insisting on the provision of that information. We do not want businesses who do the right thing to be undercut by those who do not. Information is power and it will enable every workplace and home to make smarter choices.

To co-ordinate that activity I want the Chancellor of the Duchy of Lancaster to be given overall responsibility for net zero in the Cabinet Office. We should raise the status of the Environment and Clean Growth Inter-ministerial Group to a Cabinet Sub-Committee. The Treasury could introduce a new net zero test for every Budget and spending review, to ensure that all new Government spending and investment is aligned with the target, or at least is not harming decarbonisation efforts. The Government could ask the Office for Budget Responsibility to scrutinise whether the targets are being met.

[Bill Esterson (Sefton Central) (Lab)]

In the Liverpool city region, the combined authority and the Mayor, Steve Rotherham, are doing exactly what is needed to take people with us to hit that net zero carbon target. That includes plans for an ambitious tidal barrage on the Mersey, hydrogen trains—hopefully built by Alstom in Widnes—and an offshore wind array. They also oppose fracking. Is that not the way to hit the net zero carbon targets?

Draft Statutory Auditors, Third Country Auditors and International Accounting Standards (Amendment) (EU Exit) Regulations 2019

Bill Esterson Excerpts

Monday 9th September 2019 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma, and to make the most of this limited opportunity to sit in Parliament. Before I go into the SI, I could not help noticing that the Government still have a majority on this Committee. The Government have nine Members, and the Opposition only eight. I wonder why that is, because the Government have lost their majority in the House of Commons over the past few weeks. Will you confer with the Clerks, Mr Sharma, as to whether the Government should still have a majority on the Committee?

[The Chair]

I am advised that it is not up to this Committee; it is up to the Selection Committee. I am sure the message will go back to it for future consideration if the situation is the same.

[Bill Esterson]

Thank you for taking that point on board, Mr Sharma. I realise it was not a decision you could adjudicate on, but it is an important point because this is yet another example of how the Government operate and ignore the democracy of the House of Commons at every available turn. They should have arranged not to have a majority in this Committee. [Interruption.] The hon. Member for South East Cornwall can intervene and challenge me on that point if she does not agree, or if she thinks that a party that is 43 or 45 seats short of a majority—

[The Chair]

Order. I think the point is noted.

[Bill Esterson]

Thank you, Mr Sharma.

Now, to the matter at hand. We are faced with regulations and, as ever, the Minister did her best to make them appear to be a matter of minor change, but the House of Lords Secondary Legislation Scrutiny Committee said the

“range and magnitude of the changes are significant: the Regulations make changes to 15 items of legislation and include a sub-delegation of powers to UK regulators and extend a ministerial power of direction.”

The Minister did mention that.

[Kelly Tolhurst]

I did.

[Bill Esterson]

Well, the Minister mentioned the ministerial power of direction; I am not sure that she spoke about just how far reaching the changes are. The Lords Committee expressed its

“concern about the scale of the challenge facing financial services firms in adjusting to these changes.”

Yet when we turn to paragraph 10 of the explanatory memorandum, we find that no consultation was carried out with the financial services sector on these far-reaching changes, which will affect financial services firms. Sadly, that problem has bedevilled such statutory instruments, more than a few of which the Minister and I have considered, including the one she mentioned.

There is also a link to the 2013 report from the Parliamentary Commission on Banking Standards, which was chaired by members of the Minister’s own party. It was jointly chaired by a Member of the House of Commons—the then chair of the Treasury Committee, Andrew Tyrie—and a Member of the House of Lords. They found great concerns about the robustness of our audit regulations and called for wide-ranging changes. Those changes have not happened. The relevance of those points centres on the scandals surrounding companies the collapse of which related to a lack of audit, such as British Home Stores, Patisserie Valerie and Carillion.

The link to the regulations is important, because the Government are proposing to adopt the IFRS system, which is run by a private entity in Delaware in the United States and overseen by the European Commission. I wonder how the Government propose to accept arrangements whereby, once we have left the European Union, the European Commission will have oversight of our financial reporting standards. The Government are making a major change to those standards, tacked on to the regulations. Such a significant change clearly should be fully scrutinised, should have been the subject of consultation, and is very difficult for us to support.

I did some consultation of my own. I asked the Institute of Chartered Accountants in England and Wales for its assessment of the regulations. It confirmed the concerns I have just outlined regarding the Government’s proposed elimination of the exemption for EU companies with a UK-based subsidiary. It wants the Government to say what the timescales will be, because it is not clear from the regulations.

Beyond those concerns from the ICAEW, the proposed amendment is not just minor or technical. The controversies that I mentioned regarding audit mean that if such changes are to be made, they should be subject to much wider consideration. The consideration recommended by the 2013 report from the Parliamentary Commission on Banking Standards gives us a good place to start.

There are some significant concerns about the proposed changes, which are significant changes. It is simply not the case, as far as I can see from the commentary that I have received, that there will be no significant impact on the private, voluntary or public sectors. The lack of an impact assessment yet again is concerning. The Minister will no doubt say that the Government are preparing responsibly for Brexit, with or without a deal, but I am afraid that the lack of an impact assessment, the lack of consultation and the way in which standards have been tacked on to a set of regulations that are actually of a very different nature show that today’s statutory instrument should not have been introduced in its present form. For those reasons, we will oppose the regulations.

--- Later in debate ---

[Kelly Tolhurst]

I will happily provide my hon. Friend with any advice that we have available. I point out to hon. Members that these regulations constitute an amendment to, and an extension of, the statutory instrument that was laid before and passed by this House at the beginning of the year. They particularly focus, as I outlined in my opening speech, on aspects to do with subsidiaries. They also correct an omission of three words, which it was important to do to ensure that the regulations expressed the true intention behind the original statutory instrument.

I emphasise that as part of the Department’s role in preparing for EU exit and making sure that we are in the best possible place to leave the European Union, with or without a deal, we have engaged continuously with stakeholders. Quite rightly, as Ministers, we have challenged our officials within the Department and our stakeholders, when we have had the opportunity to do so.

[Bill Esterson]

That is interesting, because I have a briefing note from the ICAEW here. It raises concerns, which I went through earlier, about regulation 4, on the loss of EEA subsidiary exemption, and regulation 6, on EEA qualification for auditors; I did not spend as long on that earlier. I mentioned some other concerns that had been raised with me by professional bodies. It does not seem, from anything that the Minister has said, as though she has had those discussions with the ICAEW. It does not seem to me as though she has had that note from the ICAEW, or those concerns have been raised with her. Perhaps she could clarify the situation for me. Did she receive those concerns from the ICAEW before this meeting?

[Kelly Tolhurst]

I can confirm that officials in the Department have been speaking to the ICAEW. As I outlined in my response to my hon. Friend the Member for Ochil and South Perthshire, we have made something explicit in these regulations on the back of our conversations with the ICAEW. Those conversations are ongoing and will continue, as I laid out in my opening speech, because we are to bring forward the assessment framework in a further statutory instrument.

The hon. Member for Sefton Central asked how we would cope with the fact that the European Commission was no longer making these opinions or decisions. The statutory instruments that we have made give these powers to the Secretary of State, thereby enabling parliamentary scrutiny of decisions and the ability to delegate responsibilities.

The hon. Gentleman is quite right that we have had many conversations about impact assessments in our debates on statutory instruments as part of the EU exit programme. He will notice that a de minimis assessment took place, because the level of impact was below £5 million. As I outlined in my opening remarks, the overall benefit from the statutory instruments will be a reduction of £2 million per year.

The hon. Member for Glenrothes asked why we are bringing this forward now, and why we did not do it in the original statutory instrument earlier in the year. The regulations before us were not needed for exit day, but because we have had the opportunity to extend our leaving date to 31 October, we have been able to consider them prior to exit day.

As the UK exits the EU, we are committed to maintaining the integrity of the UK system for regulatory oversight of audit. The regulations contribute to that by clarifying and building on the approach to oversight of the audit profession following our withdrawal from the EU that we began to set out in the original regulations at the start of the year. Like those regulations, this statutory instrument does not introduce a change in policy, as I have explained. The fundamental elements of the current statutory audit legislation will remain the same after exit. These regulations make only a small number of further amendments that are necessary to ensure that audit legislation remains operable in the UK following our withdrawal from the EU.

The regulations will mean that the UK system for regulatory oversight remains coherent and understandable, and they will enable us to do more on this over the coming months, irrespective of the outcome of the EU exit negotiations. I regret that the Opposition have decided that they are not prepared to support the regulations, which would give business and stakeholders consistency and clarity about how the market will work as we leave the European Union. I commend the regulations to the Committee.

Question put.

Oral Answers to Questions

Bill Esterson Excerpts

Tuesday 16th July 2019 Commons Chamber

[Greg Clark]

I am fearful that I shall find myself in an invidious position, given the competing claims of west country Members. All I will say is that, on this day of the 50th anniversary of the moon mission, my hon. Friend will know that Newquay’s unique claim to be in pole position for a UK spaceport adds to the already considerable attractions of his constituency.

[Bill Esterson (Sefton Central) (Lab)]

During last week’s Westminster Hall debate, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Rochester and Strood (Kelly Tolhurst), was enthusiastic when she told us that Amazon was leading the retail task group. I dread to think who the Secretary of State might have in mind for tourism—Airbnb, perhaps?

It is Labour that is standing up for the crucial sectors in our economy, not the likes of Amazon, with its exploitation of workers and undercutting of other businesses, not to mention its sweetheart tax agreements. When will the Government stop the gimmicks, and deliver not only hospitality deals but the retail deals that are so badly needed by those vital sectors of the economy?

[Greg Clark]

That is a strange point for the hon. Gentleman to make, given that our tourism sector deal—the subject of this question—has been hailed by the industry as a pivotal moment for it. Of course it is right to engage with all retailers of all sizes, but colleagues who represent rural communities will know that the outlets, national and international, that web-based platforms such as Amazon give to small rural businesses are very important to retailing. It is vital for that perspective to be part of the deal.