Enterprise Bill [Lords]

Debate between Bill Esterson and Hannah Bardell

Wednesday 9th March 2016 Commons Chamber

[Bill Esterson]

I am going to make some more progress before I take any more interventions.

The larger retailers that open longer will have to find a way to reduce costs, which means removing the premium for shop workers. Given that the major retailers operate UK-wide, a change in pay and conditions in England and Wales will mean changes in Scotland and Northern Ireland as well. Premium pay on Sundays is viable across the UK because large retailers in most of the UK are restricted to six hours’ opening. The time and a half paid to many shop workers will be under threat to make up for staying open longer across the UK, which, of course, is why this is a UK-wide matter and why it is entirely appropriate that Members from across the UK have a vote on this very important proposal.

Removing time and a half would cost shop staff who work an average shift in Scotland £1,400 a year, which in anybody’s money is a very significant hit, particularly for those on low pay in the retail sector. The proposed changes in England in Wales would have a profound effect on workers in Scotland, and I am glad that the SNP recognises that Scottish workers will be hit. I was a bit surprised when the hon. Member for Livingston (Hannah Bardell) told us in Committee that, while her concerns focused on Scottish workers, the SNP welcomed the additional employee protections in the Bill, which she ascribed to

“the strong and principled action of the SNP”.––[Official Report, Enterprise Public Bill Committee, 25 February 2016; c. 322.]

We will come to how those protections will not do what the Government claim they will, but I am glad that the letter from my right hon. Friend the Leader of the Opposition and the leader of Scottish Labour, Kezia Dugdale, has had the desired effect. I welcome the SNP’s confirmation that its Members will vote against the Government, and I look forward to them joining us in the Lobby.

[Hannah Bardell]

Will the hon. Gentleman give way?

[Bill Esterson]

I don’t have a choice, do I?

[Hannah Bardell]

On a point of clarity, the hon. Gentleman can read the record for himself, as can members of the public and Members of this House, but we have been very clear. We engaged with all sides of the argument up until the point where we took a decision at our group meeting as part of a democratic process.

[Bill Esterson]

I am grateful to the hon. Lady for that intervention. All I will say is that I am glad that she and her colleagues came to the right decision in the end; it does not matter how they got there.

Enterprise Bill [ Lords ] (First sitting)

Debate between Bill Esterson and Hannah Bardell

Tuesday 9th February 2016 Public Bill Committees

[Bill Esterson]

That is an excellent point. Like my hon. Friend, I find myself performing some of the roles and responsibilities set out for the small business commissioner on behalf of my constituents. Having been owner of a small business, I have sometimes been able to point them in the right direction. We would expect the small business commissioner to be in a position to give advice, support and encouragement. Later amendments will look at how that might be achieved if that office is to be given additional responsibilities.

[Hannah Bardell (Livingston) (SNP)]

It is a pleasure to serve under your chairmanship, Sir David. Does the hon. Gentleman share our concern? We are aware that the Government have targets for prompt payment but, as some Governments do, they have occasion to miss those targets. If the commissioner does not have the power in that jurisdiction, he or she cannot bring the Government and other larger organisations into line.

[Bill Esterson]

I thank the hon. Lady for her intervention, with which I agree. We will deal with that point in more detail in the next set of amendments, although it does have an impact on the appointment and dismissal process, as she rightly points out.

We want the commissioner to be effective. We want him or her to be able to help with late payments and to look at what other functions might make good additions as the office evolves, and that includes the point made by the hon. Lady.

The Federation of Small Businesses, the Institute of Directors and the British Chambers of Commerce often offer good advice, legal services and access to discounted business products such as insurance, and they are also good at helping businesses with disputes, but they are member organisations. Not every small business has a lawyer or accountant who is able to offer the full range of services. Many small businesses will need the office of the commissioner—just as an advice service was available under the previous Labour Government for businesses that had nowhere else to go—to provide advice, support, encouragement and dispute resolution directly, rather than just signposting elsewhere.

If the Minister expects the small business commissioner to signpost to those excellent organisations, she will need to ensure they can cope, because they might face a deluge of additional work. They have raised that concern with me, and no doubt also with the Minister. She will need to ensure that every business that approaches the small business commissioner wants to go to a membership organisation, where, of course, they will have to pay a fee—because I suspect that the Institute of Directors, the Federation of Small Businesses and the chambers of commerce will continue to charge for their services, as will solicitors, accountants and other professionals, if that is what the intention is when it comes to signposting. The small business commissioner will therefore also need to be in a position to develop his or her own capacity to help with disputes, whether related to late payment or not, to consider developing an advice and support function, and to look at areas such as procurement in the supply chain.

The ability to explore the options as the office develops will be restricted if the small business commissioner is, in reality, restricted by his or her relationship with the Department for Business, Innovation and Skills. We want the small business commissioner to have the chance to be as effective as possible, and an important part of developing that effectiveness will be the way in which the small business commissioner is set up and his ability to operate as independently as possible. Otherwise, the question will remain whether the small business commissioner has the teeth to deliver for business and do the job of enabling enterprise to flourish.

The amendments to make the small business commissioner a Crown appointment are based on the legislation that set up the office of the Information Commissioner. The Information Commissioner is a public body, sponsored by a Department—the Ministry of Justice. In the case of the small business commissioner, we propose that BIS would sponsor the small business commissioner, so that he would not simply be part of the Department, answerable only to the Secretary of State. The Information Commissioner reports directly to Parliament. The office cannot be abolished by the Secretary of State; the individual office holder cannot be removed by the Secretary of State. The office’s decisions are supervised by the courts, not the Department. That is the level of independence afforded by a Crown appointment, and that is what is needed for the small business commissioner to be as effective as possible and to deliver for small businesses and enterprise.

The Australian model, for example, is not an appointment by a Minister; it is an appointment by the Governor-General, the Queen’s representative. That is the direct equivalent of what we are proposing. Three significant steps in the right direction were taken in the other place on this matter. The first was the designation of the small business commissioner as a corporation sole. The second was the amendment to have the small business commissioner appoint his own staff. The third was the new requirements on the Secretary of State to consult on any proposal to abolish the role. That is certainly a sign that we are moving in the right direction. It is a heartening indication that there is a shared sense that the small business commissioner needs to be free to act in the interest of small business. [Interruption.] I am fascinated to know what the Minister thinks is interesting, having heard what she has just said—she is very welcome to intervene and tell me. She is going to wait until her response.

Late payments and unfair payment terms are a long- term problem and they call for a long-term solution, with a role that is absolutely protected from the outset. These amendments to strengthen the independence of the small business commissioner offer that protection. The current commitment to establishing the role—the commitment to championing the interests of small businesses—is laudable. By strengthening the independence of the small business commissioner, our amendment would capture that commitment and change the conditions of appointment, removal and abolition of the post, which, as they stand, may leave the small business commissioner vulnerable in future.

That is a level of protection that remains even if the small business commissioner’s role sets him on a collision course with the Government of the day, as happened with the Information Commissioner over NHS IT programmes and the citizen information project. The Information Commissioner disagreed with the Government and did so publicly. We need that protection for the role of the small business commissioner—a clear statement in the legislation that says, “This post is here to stay and it will stand independent of Government, no matter the political priorities or budget constraints of the day.”

Establishing the small business commissioner as a corporation sole is a step in the right direction, but a corporation sole is more about the continuity of the post. It allows the post to pass without interval from one office holder to the next. It lays powers and legal status with the office, not the office holder, securing a level of continuity as the post passes from one person to the next. It gives the office holder some guarantee of independence, but the level of independence needed for the small business commissioner is not guaranteed purely by virtue of a designation of corporation sole.

Removing the ability of the Secretary of State to abolish the role is the key. If the small business commissioner is not appointed by, cannot be removed by and cannot be abolished by the Secretary of State, then he really achieves independence. This is the distinction between a corporation sole and a Crown appointment, and that is why our amendments are so important.

Enterprise Bill [ Lords ] (Second sitting)

Debate between Bill Esterson and Hannah Bardell

Tuesday 9th February 2016 Public Bill Committees

[Bill Esterson]

That is a fair point. I will come back to some of the challenges and our concerns about the portals. Many small businesses do not use the web, so encouraging greater digital use is one of the many challenges for the Government.

There is great concern about retentions. The amendment has cross-party support, and hon. Members who spoke made their points extremely well. Often, between 2.5% and 5% of moneys are retained under the cash retention system, so it is massively difficult for small businesses to be as effective as possible. The hon. Member for Kilmarnock and Loudoun made a point about businesses not taking part in apprenticeships and not investing in the future as a result of the scale of retention.

[Hannah Bardell]

Does the hon. Gentleman agree that it is important that the review and these proposals are added to the Bill before Report?

[Bill Esterson]

It is incredibly important that that happens as quickly as possible, but SNP Members are in the same position as us: we are ultimately dependent on the Government for this to work, so we have to take the Minister’s bona fides. She is now on the record as saying that she will take action. I made the point that the recommendation was first made 52 years ago and it has been made on numerous occasions since. The problem is that businesses do not understand why we are waiting and why the Government and Parliament are taking so long to act. It is probably not until we come to this place that we start to understand why.

The Minister said it is too soon. A similar point was made in the Lords, and Labour peers accepted similar comments from Baroness Neville-Rolfe. We will wait and see for now, but if the review is finalised in March, the Bill’s Report stage may happen at about the same time.

I leave this thought with the Minister: if there is the opportunity, will she consider tabling amendments to take that into account? Let us challenge her Department and officials to table such amendments on Report to satisfy Members on both sides of the House. With that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn,

Clause 1 ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 2

Small businesses in relation to which the Commissioner has functions

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Bill Esterson]

I beg to move amendment 42, in clause 3, page 3, line 29, at end insert—

“(5A) The Commissioner may assist small businesses by taking an active and direct role in resolving, mediating or facilitating the resolution of disputes.”

This amendment would give the Small Business Commissioner the power to take an active role in resolving, mediating or facilitating the resolution of disputes.

We are talking about the important topic of mediation and facilitating the resolution of dispute, which is sometimes known as alternative dispute resolution. The amendment looks to learn from what goes on in Australia and would provide the commissioner with the opportunity to insist on mediation as a better way of solving disputes between two business parties than going to court, for example.

In the foreword to the July 2015 BIS publication “A Small Business Commissioner”, the Minister said:

“In Australia, the Victorian Small Business Commissioner is having a real impact on the ground.”

She told us earlier about her meeting with him. One reason why that commissioner is having an impact on the ground is that he has so many more powers than is proposed in the Bill. One such power involves being able to insist on mediation and to ensure that unfair payment practices are dealt with on a case-by-case basis. That is not what is being proposed here. If the Minister really wants the United Kingdom’s small business commissioner to match the performance we see in Australia, she must give them the same tools and powers to do the job.

The staff of the New South Wales small business commissioner are formally trained in mediation. In Australia, attendance at mediation may be legally required by a court, and the small business commissioner may insist on mediation after the initial consideration of the complaint. Any decisions or agreements reached during mediation are signed by both parties and are returned to the small business commissioner, who can hold them to account if they do not keep their side of the agreement. Mandatory mediation is vital as far as the Australian model is concerned. The office of the Australian small business commissioner says:

“Mediation is so successful that most of all matters referred to us for mediation are resolved prior to having a court decide the matter… The mediation process is essential in minimising the costs of business and commercial disputes.”

Compulsory attendance at mediation in the Australian model is enshrined in the legislation that set up the New South Wales small business commissioner. Section 17 of the Small Business Commissioner Act 2013 states:

“If an application is made to the Commissioner for assistance in resolving a complaint or other dispute involving a small business and the Commissioner decides to deal with the complaint or dispute, the matter to which the complaint relates or the dispute may not be the subject of any proceedings before any court unless and until the Commissioner has certified in writing that alternative dispute resolution services provided by the Commissioner under this Act have failed to resolve the matter or dispute.”

There are various other requirements in other sections of the Australian legislation. At a national level, the Australian small business commissioner has similar powers. The Australian Government are undertaking to absorb the role into the proposed small business and family enterprise ombudsman, but the legislation is clear about mediation.

The value of mandatory mediation is not only in enabling the small business commissioner to see a complaint through to resolution but in ensuring that both parties follow a process that minimises cost and the risk of the complaint ending up in court. The balance of power must not be so weighted against the small business supplier that it is put off pursuing a complaint for the lack of cheap, accessible dispute resolution, something which we discussed earlier. This is about fairness, ensuring a level playing field, reducing costs, and producing commercially realistic solutions to disputes, including those involving late payment. I look forward to hearing the Minister’s response.

[Hannah Bardell]

Following on from the hon. Gentleman’s comments, we also welcome, as we did on Second Reading, the creation of a small business commissioner, but as we said then and as we believe now, it is important that the commissioner has real power and teeth to arbitrate and to take on issues when they are brought to them, rather than just to give advice. The Federation of Small Businesses has said that it is important that the commissioner is endowed with real powers to assist small business. It is important for the integrity of the office of the commissioner that it is regarded by small businesses as a route by which they can achieve a meaningful outcome. The current suggestion of a commissioner making recommendations or highlighting particular cases is simply not enough if they are to gain a reputation as a small business champion. All too often, such bodies do not have the power to bring companies into line. If we want a fair system across the board, further powers, such as those in the amendment, are important.