Draft Construction Contracts (England) Exclusion Order 2022

Debate between Bill Esterson and Lee Rowley

Wednesday 29th June 2022 General Committees

[Lee Rowley]

Many thanks to the hon. Member for Sefton Central for his constructive questions and comments. I will try to take them in turn, although I will take the third one first. I was not in the specific consultation meetings, but as I understand it consultation was undertaken over a number of months. I mentioned in my speech some of the things that the hon. Gentleman has pointed out. I will cover those in a moment, including the need to ensure that the model and the cash flows work and that ultimately those companies further down the supply chain can still get the money they need for the services that they pay for.

The consultation covered a significant number of operators in both the water industry and the construction industry, ranging from Balfour Beatty to Build UK, the Civil Engineering Contractors Association, Costain, Deloitte and EY. There were roundtables with water companies covering Yorkshire Water, South West Water, Welsh Water and United Utilities. My previous comments were a fair reflection of the aggregate opinion, which is that they are content to progress and recognise that this has the potential to be an important new tool. They want to make sure that the contracts are organised in a way that minimises issues, but also recognise that there is risk and that that has to be priced in through the commercial transactions undertaken either when people or organisations join the SPV or contract into it.

[Bill Esterson]

The Minister mentioned the consultees and named some fairly large businesses. Were SMEs and those further down the supply chain part of the consultation? What were their responses?

[Lee Rowley]

A number of industry bodies were consulted, including Build UK and the Construction Leadership Council, which try to take a holistic look at the views of the industry as a whole. In my other role, as construction Minister, I work with them very closely and know that they try to ensure that they prioritise the views of all across the industry, not simply those who may speak with a louder voice, for whatever reason.

Let me turn to the other two points, which are important and I am happy to address them. We hope that the special purpose vehicle will be a tool that can be used to bring forward significant infrastructure improvements in the future, but the ultimate decision about how it would be set up in the one, two, three or n number of cases where this happens will be down to the organisations that want to go into those SPVs. The hon. Gentleman asked how likely the first-tier contractor is to be part of the SPV or its entity, but I cannot give him a number, a percentage or an expectation, because ultimately that will be down to the market to determine. However, experts and officials have indicated that, given historical precedent and what companies that play in this space are likely to do, they would expect those companies building this infrastructure, such as pipes or sewage improvements, to take an early interest in the discussions and the transactions. It is not unusual for such companies to be in similar financial structures early on in the SPV process, but that will ultimately be down to them.

That leads on to the second question, which is how do we make sure that there is not a problem of payment further down the supply chain. There are two broad answers to that. First, for those who are not first-tier suppliers, the same requirements apply around payment as they do today. The contracting that would be undertaken for tier 2 suppliers would be undertaken on the basis of the construction Act, and that Act and the scheme of construction contracts contain clear clauses about payment upon delivery, not payment when other organisations or entities choose. That is not changing.

What is changing is, in effect, the box before that. The SPV and the first-tier operator will need, either through being a group of one or through the SPV contracting to a tier 1 operator, to price in risk appropriately and organise themselves appropriately. They will also need agreement with their funders to ensure that they have cash available at the point at which they will need the working capital to pay tier 2 suppliers or whoever they are contracting, to ensure that the output is delivered.

That is fully transparent at this stage, and that is exactly what the DPC is designed to do—to allow private companies to go out and seek investment to cover the build element, including tier 2 suppliers, and then recognise that they will start to get a revenue stream at the point when the infrastructure is delivered. That is entirely the point of it. The revenue coming from the water companies will not start until delivery. That means that if this works, and we have confidence that it will, the risk to the public purse is minimised because companies pay on results, not on proposal, and because a set of companies and individual actors will be entering into a contract to ensure that they price the risk of delivery appropriately and deliver it to get a long-term revenue source from the Government. I hope that those answers resolve the points raised by the hon. Gentleman. I am grateful for his contribution.

To conclude, I reiterate that the creation of any exclusion under the construction Act is the exception.

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[Bill Esterson]

The Minister has said that there has not yet been an example of this disapplication, so we are not in a position to judge it. There are, however, two earlier examples of where the construction Act has been disapplied. Are those examples relevant or are they different and, therefore, not relevant?

[Lee Rowley]

The reason the Act was disapplied in 1998 and 2011 was, in effect, the private finance initiative. PFI has a different structure whereby the Government are still involved in contracting out the cost. The order, however, relates to the arrangement between two private parties—the water companies and first-tier building contractors—though admittedly for a piece of infrastructure that will be important to the citizenry of the United Kingdom. It will, however, be a different prospectus. I do not, therefore, think that we can draw conclusions from the previous disapplications. That is why we want to tread carefully, and why Ofwat is keen that we have some early pathfinders, so that we can learn and understand that the proposal works.

Oral Answers to Questions

Debate between Bill Esterson and Lee Rowley

Tuesday 29th March 2022 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

The spring statement did not

“address the complex challenges facing the manufacturing sector”.

It just is not

“tenable for thousands of businesses”

and it is

“kicking the can down the road”.

Those are the words of three businesses that are asking for help. So how about this: first, cancel the 10% increase in national insurance payroll tax; secondly, cut energy bills by up to £600 per household; and, thirdly, set up a £600 million energy-intensive industries contingency fund? Our plan is following the evidence from the business community of what is needed. Why will this Government not help businesses that are crying out for support?

[Lee Rowley]

The hon. Gentleman highlights the importance of manufacturing, which we have already talked about in these questions. This Government are a champion of manufacturing—[Interruption.] I am so glad that all Opposition Members agree with me. If they really do, they would recognise that ensuring a strong manufacturing base is incredibly important. The Labour party can provide no lessons, on the basis that it decimated manufacturing before 2010.

Support for New Adoptive Parents

Debate between Bill Esterson and Lee Rowley

Monday 21st March 2022 Westminster Hall

[Lee Rowley]

I am grateful to the hon. Gentleman for his characteristically incisive intervention. My answer is that we continue to look at all the different elements of how we can structure support for new parents, whether birth parents or adoptive parents—not that that should matter in any way, shape or form—and to work through the most appropriate interventions possible. There will be opportunities later in this Parliament to look at this issue again. I am keen for people to continue to highlight their challenges and personal situations.

I hope I have articulated in my contribution so far the challenge of working through the intentions of every single element of different policies brought in for very good reasons at different times, but the fundamental point is that this particular benefit, which this petition seeks to extend, was ultimately brought forward for a different purpose from what is being talked about here. That does not take away from any of the important points being made by colleagues and the petitioners at large.

I would like to draw to a close, if I may—

[Bill Esterson]

Before the Minister does, will he give way?

[Lee Rowley]

I would be delighted.

[Bill Esterson]

The Minister has made the point, which I accept, about how, for health reasons, benefits for parental leave and maternity benefits were decided on for employment and self-employment. The principle seems to have been established for adoptive parents in employment, too. What I have not followed from his argument—I waited until the end to ask, to see whether he fleshed it out—is the rationale for saying that the principle has not also been established for adoptive parents in self-employment.

[Lee Rowley]

The principle is that while we recognise that the world of work changes—the hon. Member for York Central highlighted the moving parts around the Taylor review and other things around how work is changing—there is a difference between employed work and self-employed work. The cohort of self-employed, who we want to support, grow and help, is very diverse, and there are groups within it who have additional flexibilities as a result of self-employment. Some have the ability to work around their personal lives in terms of their work issues and the rest of it, and we accept that there is a group that does not. It is a question of recognising that the cohort is very diverse.

One reason for the recommendation and advice to local authorities about being able to give consideration to support for specific circumstances is to acknowledge the diversity within that cohort and to try to ensure support where people need it. However, it is also a recognition that this diverse cohort has different groups and different people with different needs.

In terms of the overall position, I recognise that there are strong feelings here and that there are significant views on this issue, both in the Chamber and in the Public Gallery.

Oral Answers to Questions

Debate between Bill Esterson and Lee Rowley

Tuesday 22nd February 2022 Commons Chamber

[Lee Rowley]

I pay huge tribute to my hon. Friend for all the work he has done on Britishvolt, as a passionate advocate for his constituency. This will bring new skills, jobs and opportunities to Blyth Valley, and I congratulate him on it.

[Bill Esterson (Sefton Central) (Lab)]

Yesterday, the Prime Minister said that he wanted British workers to be more like German workers. Let us be more like Germany: it has increased the number of manufacturing jobs by 1 million since 2010, whereas this Government have presided over a fall of 93,000 jobs. The difference is that this Conservative Government do not have a plan, whereas in Germany there is a plan for manufacturing. The Labour party has a plan in our country, too, so if Ministers really want to support manufacturing, why do they not use Labour’s plan to make, buy and sell more in Britain?

[Lee Rowley]

I am not sure that Members on these Benches will take any lessons from a Labour party that decimated manufacturing between 1997 and 2010. Before the pandemic in 2019, we had seen an increase in employment in manufacturing, and the expansive and multiple investments in manufacturing announced in just the past few months—at Nissan, Stellantis and Britishvolt—demonstrate this Government’s commitment to manufacturing for the long term.

Topical Questions

Trade Bill (Sixth sitting)

Debate between Bill Esterson and Lee Rowley

Committee stage & Committee Debate: 6th sitting: House of Commons
Tuesday 23rd June 2020 Public Bill Committees

[Bill Esterson]

The hon. Gentleman may want to withdraw that comment. I am not sure whether it was a bit close to the mark, but I know it has not gone over the mark; otherwise, you would have pulled him up, Sir Graham. The problem with what the hon. Member has just said is that the defect levels handbook says that US producers are allowed to include up to 30 insect fragments in a 100g jar of peanut butter.

[Lee Rowley (North East Derbyshire) (Con)]

Will the hon. Gentleman give way?

[Bill Esterson]

The hon. Gentleman needs to get used to the idea that when someone takes an intervention, they have to answer that intervention before they take another one.

US producers are also allowed to include 11 rodent hairs in a 25g container of paprika, and 3mg of rat or mouse droppings per pound of ginger. There are similar rules for cocoa beans, cornmeal, ginger, oregano and spices. I will give way if the hon. Member wants to tell me that is not what is in the defect levels handbook.

--- Later in debate ---

[Lee Rowley]

I am happy to explain what I think is the case. Those are the thresholds at which the United States undertakes automatic prosecution against companies. They are not, as he is describing, the thresholds for what the US necessarily accepts in its domestic food production. That is a misrepresentation, as my hon. Friend the Member for Witney suggested. If the Labour party wants to have a mature and open discussion about trade in the future, given that we have just got these competencies back from the European Union for the first time in 40 years, it would do well to acknowledge those key and important nuances, which it is currently glossing over.

[Bill Esterson]

What is interesting about that intervention is that the hon. Member is right to say there are prosecutions above those thresholds, because it is illegal to cross them. However, US producers are legally allowed up to those thresholds, which is one of the reasons why food poisoning is such a problem in the United States. The difference between the United States, the EU and the UK is that we do not allow any of them. We have zero thresholds in this country, and I want that to continue. I am sure that everybody in the Committee wants that to continue, but unless we take action to provide safeguards in the event of international trade negotiations, there is a threat that such changes can be implemented.

We heard oral evidence from the NFU and have received written evidence from the RSPCA and the British Poultry Council to back up what I have just said. British and European standards are the highest in the world.

Trade Bill (Fifth sitting)

Debate between Bill Esterson and Lee Rowley

Committee stage & Committee Debate: 5th sitting: House of Commons
Tuesday 23rd June 2020 Public Bill Committees

[Bill Esterson]

Just for the benefit of the hon. Member for North East Derbyshire who intervened, if he looks at the explanatory note to amendment 5, he will see that the amendment would apply the provisions of the Bill to trade agreements other than the EU roll-over trade agreements, so it covers trade agreements that go beyond those that were originally in the scope of the Bill. As my hon. Friend said, this is relevant, not only because of what the Queen’s Speech—

[Lee Rowley]

It is a series of hypotheses.

[Bill Esterson]

I do not think the hon. Gentleman is allowed to intervene when I am already intervening on my hon. Friend. He will get his chance to make a speech later. The important point is that we have tabled amendments precisely because of the need for the Bill to cover more than the narrow scope that clause 2 originally envisaged. My hon. Friend is right to highlight what was in the Queen’s Speech, but I want to remind the hon. Member for North East Derbyshire that it is actually in our amendments. They have been allowed by the Clerks and must therefore be within the scope of our debate.

Trade Bill (Fourth sitting)

Debate between Bill Esterson and Lee Rowley

Committee stage & Committee Debate: 4th sitting: House of Commons
Thursday 18th June 2020 Public Bill Committees

[Bill Esterson]

That is my understanding. I heard a reaction from one Member on the Government Benches that suggested that they did not agree with the assertion that there was a bias against the north. I represent a constituency very near to that of my hon. Friend the Member for Warrington North. I am glad that our mutual hon. Friend the Member for Harrow West raised that point, because one of the reasons given to firms in my constituency was that they were too far from London. I am afraid that that is what has been said by procurement officials in Government, and that cannot be right. My hon. Friend is right to raise the matter, and he is right that it has to be one of the answers. It covers the environmental aspects of amendment 25 and the small business and economic requirements of amendment 26, as well as those under amendment 27.

[Lee Rowley (North East Derbyshire) (Con)]

I hate to break up the party, but as a fellow northern MP I do not recognise anything that has been stated with regard to this issue, which is slightly broader than the scope of the discussion. However, given that we are on it, I would be very interested in getting more details from the hon. Members for Sefton Central and for Warrington North about why they think that their companies are being affected in that way. The companies in my constituency have not had the same experience.

[Bill Esterson]

I am very glad that the hon. Gentleman’s constituents’ companies have been successful in contracting with the Government, but the fact remains that in the experience of my hon. Friend for Warrington North, and in mine, that is what has happened.

[Lee Rowley]

May we have the documents? I would be very grateful to receive them separately, so that I can see the issues. I am sure that we are all extremely concerned about the things that are being asserted with regard to northern constituents and northern firms being unable to access those kinds of contracts. I would be very keen to see the written information.

[Bill Esterson]

The hon. Gentleman will know that commercial confidentiality would mean that I would have to ask first.

[Lee Rowley]

Will the hon. Gentleman give way?

[Bill Esterson]

No, not yet, because I have not finished answering the hon. Gentleman’s first question. He really needs to wait, rather than intervene. We can certainly discuss the point further. I have raised it at length with officials and with the Ministers’ colleagues, and it needs to be addressed. It may well be that officials were speaking out of turn. I am prepared to believe that, and I have not made a big issue out of it previously. The bigger point is that we are losing out on expertise, and we have lost out on the potential during this crisis for better procurement and supply of PPE and, in the case of the firm in America, of testing capacity and capability. That is not sensible and it is not where we need to be. I am happy to discuss the matter with the hon. Gentleman later, but I suggest that we move on.