Draft Companies (Miscellaneous Reporting) Regulations 2018

Debate between Chris Stephens and Andrew Griffiths

Wednesday 4th July 2018 General Committees

[Chris Stephens (Glasgow South West) (SNP)]

Will the Minister give way?

[Andrew Griffiths]

I will make some progress, if I may. I think I have been quite generous in giving way.

The final part of the regulations relates to reporting by community interest companies. The Companies (Audit, Investigations and Community Enterprise) Act 2004 requires CICs to produce a community interest company report annually, including information about directors’ remuneration. The regulations clarify that small CICs must report on their directors’ remuneration. That obligation was inadvertently removed when associated provisions regarding small companies were repealed in the course of implementing the accounting directive in 2015. That was not part of the corporate governance reform package, but the regulations present a good opportunity to remedy the gap. It is uncontroversial and does not involve any change in policy—indeed, small CICs have continued to file the information.

I hope the Committee will support the regulations.

Insecure Work and the Gig Economy

Debate between Chris Stephens and Andrew Griffiths

Wednesday 20th June 2018 Westminster Hall

[Andrew Griffiths]

I completely understand the hon. Gentleman’s point. That is why we have recognised that those opportunities come with risks, and that some in the workforce need greater protections.

The UK’s flexible, dynamic labour market has allowed the economy to bounce back from Labour’s recession and has delivered record employment; unemployment is at the lowest rates for 40 years. However, we recognise that it has not worked for all. It was for that reason that Matthew Taylor was asked by this Government to examine the current labour market and employment law framework, to help us to understand the opportunities of future working practices as well as to identify areas where the labour market was not working for everyone.

That is why in February the Secretary of State for Business, Energy and Industrial Strategy made a commitment in the industrial strategy to take responsibility for the quality of work, which was the first time ever that a Government focused on quality as well as quantity of work. Our aim is to drive forward the change required to ensure that creating quality of work is given equal priority to the quantity of work that is created.

Our detailed response to the Taylor review was published on 7 February. In that response, we committed to take forward 52 of the 53 recommendations. Our response clearly demonstrates that we are progressing with our commitment to take firm action to protect the most vulnerable, the lowest paid and those who work in a non-traditional way.

For example, we have consulted on state enforcement to ensure that vulnerable workers get their holiday and sick pay; we have asked the Low Pay Commission to consider higher minimum wage rates for workers on zero-hours contracts; we are providing all 1.2 million agency workers with a clear breakdown of who pays them, and of any costs or charges that are deducted from their wages; we are ensuring that all workers get an up-front statement of terms and conditions from day one; we are making it easier for flexible workers to accrue employment rights, by extending the permissible breaks in continuous service; and we are creating a right to request a stable contract for all workers. To progress that work, we have very recently completed four consultations on employment status, agency workers, transparency and enforcement, which are necessary to deliver the change that this Government wish to see.

The hon. Member for Barnsley East asked whether we would give workers the same equal pay rights as other employees. The Government do not support or condone the use of Swedish derogation contracts to circumvent equal pay entitlements. Let me be absolutely clear on that. That is why we have consulted to gather views and evidence on our response. Options include repeal or regulation in relation to the use of the Swedish derogation. Before taking a final decision, it is right that we consider the views coming forward properly in that consultation.

The hon. Member for North West Durham (Laura Pidcock) accused the Government of ruthless whipping. As a former Whip, I take great exception to that. She raised the issue of zero-hours contracts, but the number of people reporting that they are employed on a zero-hours contract is down from 905,000 last year to 901,000. Some 6% of businesses use some form of a zero-hours contract. There are 1.7 million temporary workers in the UK, but 28.4% of them said that they did not want a permanent job.

My hon. Friend the Member for Chichester (Gillian Keegan) made a magnificent speech, and pointed out the challenges and the opportunities of the gig economy. She rightly said that 90% of gig economy workers are satisfied with the jobs they are doing.

The hon. Member for Glasgow South West (Chris Stephens), in his usual determined manner, said that there should be more people enforcing the minimum wage. I am delighted to tell him that the Government have continued to invest heavily in minimum wage enforcement. We have doubled the budget to £26.3 million, up from £13 million last year. As a result, we secured £15.6 million in arrears last year, covering 200,000 workers in this country who had redress thanks to the Government’s support.

[Chris Stephens]

Will the Minister confirm that 25% of the posts at the national minimum wage compliance unit are still lying vacant?

[Andrew Griffiths]

I do not think that is right. I will write to the hon. Gentleman, but I assure him that those figures are wrong.

The hon. Member for Batley and Spen (Tracy Brabin) asked what the Government have done about pregnancy and maternity discrimination—a subject that is dear to my heart and that of the hon. Member for North West Durham. In response to Taylor, we are working to improve the guidance and advice on pregnancy and maternity rights and employers’ obligations. We also committed to review redundancy protection within the next 12 months. The hon. Member for Batley and Spen asked about shared parental leave for self-employed people. As she recognises, it is under review. I cannot commit to that today, but once again she makes that point loud and clear.

The Taylor review considered not only the plight of agency workers, which many hon. Members raised. In his 2018-19 strategy, the director of labour market enforcement published recommendations to support those workers. In response to Matthew Taylor’s recommendations on agency workers, the Government have already committed to take action and improve transparency on pay and on the rate workers will receive on taking up assignments. Quite simply, it is not right that individuals do not receive the advertised rate of pay.

I have mentioned the issue of the Swedish derogation. We are also considering extending the Employment Agency Standards inspectorate’s remit better to protect agency workers from emerging challenges in the labour market. We are looking at whether it should include umbrella companies, about which we all have concerns. I am sure the hon. Member for Barnsley East understands that I cannot pre-empt the results of the Taylor consultation. It is clear that Members on both sides of the House agree that agency workers’ employment rights need special consideration and protection.

The Government are committed to ensuring that the UK is a great place not just to grow a business, but to work. We understand that being employed is not enough if the employee is at risk of being exploited or mistreated by their employer. We have consulted on options for what would be the most radical shake-up of our employment law in decades and we will take the necessary action to protect workers across the United Kingdom.

National Living Wage: Under-25s

Debate between Chris Stephens and Andrew Griffiths

Thursday 3rd May 2018 Commons Chamber

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

It is a great honour and privilege to respond to this debate, and I congratulate the hon. Member for Glasgow East (David Linden) on securing it. I am pleased to be able to contribute to it as the Minister responsible for the national minimum wage and for the national living wage, of which the Government are hugely proud. There have been age-specific minimum wage rates in one form or another since the national minimum wage was introduced by the Labour Government in 1999, and lower pay rates have always been in place for younger workers because the priority for them is to secure work and gain experience. A higher minimum wage for young people could adversely affect employment levels for that group by dissuading employers from taking on less experienced workers.

It was remarkable that, in the 17 or so minutes for which the hon. Gentleman spoke on this issue, he failed to mention the facts—the actual unemployment rates among young people—even once, so let me bring them to his attention. Unemployment is higher among young workers than among older workers. Specifically, between December last year and February 2018, unemployment among those aged 25 and over was at a record low of 3%, yet among 18 to 24-year-olds the unemployment rate was 10.3%, and more than one in four 16 and 17-year-olds are unemployed. The hon. Gentleman says that we should focus on individuals rather than on statistics, but those statistics clearly show the impact that his policy would have on those young people’s ability to get into work.

[Chris Stephens]

The Minister highlights the UK Government’s appalling record on youth employment. Can he explain to me—we have asked this question repeatedly—why the Conservative Government took the decision to introduce an additional age tier to the national minimum wage rates, and why the age of 25 was picked?

[Andrew Griffiths]

The Government have always listened to the expert advice. In particular, we listen to the Low Pay Commission, which is made up of employers, academics and experts in the field and trade union representatives and is specifically devoted to protecting the rights of workers, including young workers. It is the commission that says that this policy is right and that sets the lower rates after considering all the facts.

--- Later in debate ---

[Andrew Griffiths]

I recognise the hon. Gentleman’s point, but it would be even more difficult for Katie were she not to have a job. That opportunity, that experience, that foot in the labour market is hugely important. The hon. Gentleman would deny Katie the opportunity to get vital work experience and make her way in the jobs market.

We are rightly more cautious about young people when setting the pay floor, and a lower minimum wage for younger workers is in keeping with international comparators. The hon. Gentleman referred to two countries, but let me clarify something and educate him a bit. Just under two thirds of OECD countries that have a statutory minimum wage have special rates for young people. Minimum wages are adjusted for young workers in France, Ireland, Belgium and Luxembourg, among many others. He may want to look into that.

Pricing young people out of the labour market by setting their minimum wage too high would be detrimental to the workers whom the policy was intended to benefit. That said, the Government set only the minimum pay threshold, and I commend businesses that choose to pay their younger workers higher rates of pay, and in some cases pay them the higher national living wage. Indeed, in April last year, 88% of 16 and 17-year-olds, 90% of 18 to 20-year-olds and 92% of 21 to 24-year-olds were paid above their age-applicable minimum wage. Those are the facts, whether the hon. Gentleman likes them or not. As a matter of fact, 86% of 21 to 24-year-olds were paid at or above £7.50 an hour, which was the national living wage for the over-25s.

[Chris Stephens]

The Minister is doing his best to do a pantomime villain routine, but he seems to be confusing himself. Will he clarify whether he is suggesting that under-25s are better off working in the public sector? Will he confirm that in his Department the under-25s get the same rates of pay as the over-25s?

[Andrew Griffiths]

I will confirm to the hon. Gentleman that not once in this debate has the Scottish National party mentioned the impact that such a change would have on businesses.

Draft National Minimum Wage (Amendment) Regulations 2018

Debate between Chris Stephens and Andrew Griffiths

Wednesday 21st March 2018 General Committees

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

I beg to move,

That the Committee has considered the draft National Minimum Wage (Amendment) Regulations 2018.

It is a pleasure to serve under your chairmanship, Mrs Moon. The Government are committed to building an economy that works for everyone. Through the national minimum wage and the national living wage, we continue to ensure that the lowest-paid in our society are fairly rewarded for their contribution to the economy. Raising the minimum wage is one way that our industrial strategy creates an economy that boosts productivity throughout the UK, and provides good jobs that increase people’s earning power.

This morning’s employment figures are a testament to the success of that policy. We have a record employment rate of 75.3%, and our unemployment rate of 4.3% is the joint lowest in more than 40 years. The Government are increasing the tax-free personal allowance to £12,500 by 2020, both to ensure that workers keep even more of their income, and to take more of the lowest-paid out of paying tax altogether. Between 2016 and 2017, thanks to the Government’s introduction of the national living wage, the lowest-paid 5% of full-time workers saw the biggest increase in pay.

I am proud to introduce the latest set of inflation-busting increases to the national living wage and the national minimum wage, which will give more than 2 million low-paid workers a well-deserved pay rise next month. I am particularly pleased to announce that the biggest increases in the national minimum wage rates—the largest for more than a decade—are for younger workers.

The regulations increase all national minimum wage hourly rates, including those for workers who are entitled to the national living wage. The national living wage rate for people aged 25 and over will increase by 33p to £7.83, and the rate is on course to reach 60% of median earnings by 2020. The increase means that a full-time worker in receipt of the national living wage will receive an annual pay rise of more than £600.

The rate for 21 to 24-year-olds will also increase by 33p, which means that people in that age group will be entitled to a minimum rate of £7.38—an annual increase of 4.7%. The annual earnings of a full-time worker in that age group will also increase by £600 a year.

People aged between 18 and 20 years old will be entitled to a minimum of £5.90 per hour, which is an annual increase of 5.4%. People aged 16 or 17 years old will be entitled to a minimum of £4.20 per hour, which is an annual increase of 3.7%. Apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £3.70, which is the largest annual increase of all the hourly rates—5.7%. We estimate that more than 2 million workers will get a pay rise. Finally, the accommodation offset will increase from £6.40 to £7 per day.

I place on record my gratitude for the work of the independent Low Pay Commission. It brings together businesses and workers to form a consensus on the rates, and advises the Government accordingly. It is asked to recommend the highest possible increase in the national minimum wage, without damaging the employment prospects of low-paid workers by setting it too high, and to recommend a national living wage rate that will ensure that it reaches that 60% of median earnings by 2020, subject to economic growth being sustained. It has carried out extensive research, consultation and analysis, which have informed the rates recommendations in its 2017 report. It recommended each of the increases that I have announced.

We recognise, though, that as the minimum wage rises, so does the risk of non-compliance. The Government will ensure that every worker in the UK who is entitled to the national minimum wage or national living wage receives it.

[Chris Stephens (Glasgow South West) (SNP)]

The Minister knows from my written parliamentary questions that 25% of posts in the national minimum wage compliance unit at Her Majesty’s Revenue and Customs are vacant. Can he tell us whether those posts will be filled by HMRC?

[Andrew Griffiths]

The hon. Gentleman raised that issue just a few days ago—in a Westminster Hall debate, I think. He will know that the Government have doubled their investment in enforcement of the national minimum wage. There is, of course, always a turnover of staff, but we intend to have the compliance enforcement unit up to its full potential as soon as possible. We are actively taking steps to tackle non-compliance, sending a clear message to employers that minimum wage abuses will not go unpunished. We have invested £25.3 million in that this year—almost double what was invested in 2015. The Government have also invested £1.5 million in an awareness campaign to highlight the rights and responsibilities of workers and employers.

We have seen a jobs miracle in this country. More than 400,000 more people are in work than were a year ago, showing that the labour market remains a key strength of the UK economy, and proving that the UK can accommodate a higher minimum wage. The economy has grown continuously for more than four years, and UK businesses have created a record number of jobs. I pay tribute to the workers and employers who made that happen.

According to the Resolution Foundation, the national minimum wage and the introduction of the national living wage have contributed to the elimination of extreme low pay. The Government estimate that more than 2 million workers will directly benefit from the uprating of the national minimum wage and the national living wage next month. Raising the minimum wage is just one part of the “good work” agenda that underpins our vision for a more productive and motivated workforce. Between April 2015 and April 2017, the wages of the lowest-paid have been increasing fastest, thanks to the national living wage, with the wages of those in the fifth percentile of the earnings distribution growing by almost 7% above inflation. That is faster than at any other point in the earnings distribution.

The Prime Minister committed that this would be a Government that worked for everyone. It is right that the lowest-paid workers in our society are fairly remunerated for their contribution to the economy. I commend the regulations to the House.

Hospitality Sector: Tipping

Debate between Chris Stephens and Andrew Griffiths

Wednesday 7th March 2018 Westminster Hall

[Chris Stephens]

I have not, but it seems to me that if 208,000 workers are not being paid the national minimum wage and 56,000 workers are in accruals, who have been owed the national minimum wage, and if we compare those figures with the 4,504 full-time equivalents chasing Department for Work and Pensions social security fraud, we see that more resources should be put into ensuring that the national minimum wage is complied with. I think that the Minister is anxious to intervene.

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

Let me enlighten the hon. Gentleman. The Government have actually doubled the amount of money that we are putting into enforcement of the national minimum wage. We have increased that to £25 million, and in the last 12 months we have helped to secure £1.2 million of wages owed to people who had been unfairly treated by their employers.

[Chris Stephens]

I thank the Minister for that clarification. However, the facts speak for themselves. Written answers from the Government only a few months ago have told me that the national minimum wage compliance unit has no plans to fill the current vacant posts. I am happy to provide the House of Commons Library with that answer.

The Minister says that there has been increased investment, but the 208,000 workers who are still waiting to be paid the national minimum wage may have a different view, so let me ask him what representations he is making to Her Majesty’s Revenue and Customs to enforce the national minimum wage appropriately in the hospitality sector and what representations he is making to ensure that HMRC is fully staffed and equipped for enforcement of the national minimum wage in that sector. The Low Pay Commission estimates that 1.9 million workers in the UK are currently on or just above national minimum wage rates. That figure is expected to increase, by the year 2020, to 3.4 million workers earning the national minimum wage or just above it, so we need strong action from the Government to enforce the national minimum wage.

On the issue of tipping and gratuities itself, as the hon. Members for Bristol North West and for Hornsey and Wood Green (Catherine West) have outlined, the Government need to get a grip on what credit card payments mean for the workforce—what that means for the worker in practice needs to be made clear to consumers and others. In my view, it is certainly a breach of consumer protection regulations if consumers are being told that tips from credit card payments are going to staff when they are not. I think that the hon. Member for Hornsey and Wood Green has identified such a practice, and I hope that it will be brought to the attention of the House of Commons Commission. It concerns me; I think that if there are facilities in this place where that is happening, hon. Members have a duty and responsibility to ensure that the House of Commons Commission is aware of those allegations and they are fully investigated.

Will the Minister advise us of the steps that he is taking to tighten the regulations in relation to customer credit card payments? I ask because it seems to me that that is a device to ensure that money is not going into workers’ pockets and that the so-called tips are actually an admin fee, as the hon. Member for Bristol North West outlined.

--- Later in debate ---

[Andrew Griffiths]

I point out to the hon. Lady that for many people who are employed on them, zero-hours contracts are exactly what they want. I recognise that is not the case for everybody, but all the consultations show that for many people zero-hours contracts provide the flexibility that they are looking for. That is not to say there may not be an argument for some sort of enhancement or bonus for those workers’ flexibility. That is why, following Matthew Taylor’s report, we asked the Low Pay Commission to look at whether those on zero-hours contracts who have to offer such flexibility should receive an enhancement on their wages as a repayment for it.

[Chris Stephens]

The Minister is, rather suspiciously, discussing much of the content of the Workers (Definition and Rights) Bill, such as shift changes and zero-hours contracts. He has promised me a meeting, but I do not yet have an invitation to see him to discuss these matters. When should I expect to receive an invitation?

[Andrew Griffiths]

I am sure that, as we speak, an invitation is winging its way through the ether to set that up. It is always a delight to talk to the hon. Gentleman, and I am keen to talk to him about his Bill. Perhaps this is the perfect point for me to address some of the issues that he raised in his thoughtful speech, particularly the enforcement of the national minimum wage laws.

The Government have doubled our investment in enforcement of the national minimum wage to £25.3 million a year. That means we have recruited an additional workforce, and around 400 people now work on the enforcement of the national minimum wage. Recruiting additional tax staff takes time, and new vacancies appear. We are committed to continuing the high level of staffing to support those who are being denied the national minimum wage or the national living wage that they are owed. I am delighted to say that last year we assisted 98,000 people in recovering the payments they were owed —up from 58,000 in the previous year—and I am sure the hon. Gentleman will welcome that.

[Chris Stephens]

I did say in my contribution that the minimum wage compliance unit hired 399 people. The Minister has just said that it hired 400, so I am glad that one person has been taken on. Seriously, though, does the Minister not share this concern, which many of us have? The National Audit Office says that 208,000 people are not being paid the minimum wage, but if it was not for the investment that he says the Government are making, that number could have been a lot higher—400,000 or 500,000 people.

[Andrew Griffiths]

I absolutely agree. I take that as the hon. Gentleman welcoming the doubling of the investment in the enforcement of the national minimum wage.

I know that everybody is keen to hear my response, but before I go on I will deal with one further point that the hon. Member for Ellesmere Port and Neston made, which was about unpaid interns. I absolutely agree that people being employed to do work under the auspices of unpaid internships is—let me be very clear—illegal. That is why in the past couple of months HMRC has written to firms that are advertising unpaid internships, reminding them of their obligations. This is no way to avoid paying the national minimum wage. If we find that firms are doing it, they will be prosecuted for non-payment of the national minimum wage.

--- Later in debate ---

[Andrew Griffiths]

As the hon. Lady will know, at the end of last year Unite the union, of which she has said she is a member, worked alongside the Association of Licensed Multiple Retailers to produce a new code of practice. That was a joint collaboration, and I pay tribute to both the industry and Unite the union for working in such a proactive way to develop a voluntary code of conduct. I also recognise that a voluntary code of conduct works only if everybody sticks to it. As we have heard, there are still companies that are not sticking to it.

The agreement between the unions and the ALMR about the principles that underpin good tipping practices is clear, and it provides great guidelines for how to distribute tips fairly among all workers, not just those at the front of house. We must remember that those working in the kitchen or cleaning tables are just as much a part of the service experience as those waiting on tables and interacting directly with diners, so I understand the need for the tronc system where tips are spread more widely among staff in some circumstances.

Since 2015, we have seen another change, which is that employers are noticing. Poor employers who misuse tips now face tough scrutiny—not only in Westminster, but under the harsh media spotlight. I am encouraged that newspapers raise the issue on a regular basis and highlight the points made by the hon. Member for Bristol North West.

Hon. Members asked when the Government would formally respond to the consultation on tipping. I have listened to the calls for further action from the Government; many would like to see an outright ban on employers making deductions from tips or levying table charges. It is an extremely serious issue, and the Government reserve the right to take action or to legislate if necessary. The evidence that we have heard clearly indicates that the Government need to look at it very closely and to take action if necessary.

Let me be clear: we are not ruling out legislating to solve the problem. Workers should be treated fairly, and I am clear that it is unfair for employers to pocket a huge proportion of the tips earned by staff. Furthermore, employers who play fair are disadvantaged compared with unscrupulous employers. It is a competitive market. We have heard the figures for how much unscrupulous restauranteurs and people in the industry can make as a result of that kind of scheme, which provides them with an unfair advantage in the marketplace among their competitors who are doing the right thing. I am very mindful of that, so we will remedy the situation if the industry does not act on the abuses that are sometimes reported.

Naturally, all options for Government action carry costs and benefits. It is important to get it right so any action is targeted and benefits the workers, while burdens on legitimate, well-meaning businesses are minimised. Employers should not be out of pocket, and I entirely accept that they may need to retain a small proportion of tips to cover the administrative cost of processing them, as I said earlier.

There are many examples of good employers who act entirely fairly about their staff’s tips and who recognise that treating workers fairly is part of running a productive and happy workplace. Ultimately, it is up to employers to make a compelling offer if they want to attract and retain the best staff.

I thank the hon. Member for Bristol North West for securing the debate and for the collaborative way in which he has raised these issues. I look forward to working with him on them in the weeks to come. It is right to call out abuses of tipping and the exploitation of workers in the hospitality sector, and more widely.

It is the responsibility of all employers to pay their staff fairly, and at least to pay them the national minimum wage. Hon. Members should be clear that if that is not happening, the Government will act if necessary. Our policy is that employers should not make unfair and unreasonable deductions from tips. We reserve the right to introduce further sanctions against employers who fail to comply with that basic principle of fairness.

[Chris Stephens]

On a point of order, Sir Roger. I wanted to wait until the Minister had finished, so I apologise to the hon. Member for Bristol North West (Darren Jones). Some allegations were made in relation to hospitality establishments in this place. Could you remind us of what action you or other hon. Members can take to raise that with the Commission?

Carillion: TUPE

Debate between Chris Stephens and Andrew Griffiths

Wednesday 21st February 2018 Westminster Hall

[Andrew Griffiths]

I can honestly tell the hon. Lady that the rapid response team are exactly that. They give a report to the taskforce, which she asked about and I will come to. The rapid response team are working alongside the special managers. When people are made redundant, the team have all the details of the people involved and are proactively doing that. In addition, they are going into Carillion offices and, without causing concern, proactively advising people about opportunities and jobs that are available, and helping those people to prepare should they be made redundant.

In addition, the team are offering help with job searches, help to identify transferrable skills and training to update skills. This is a Rolls-Royce service. I can say hand on heart that the rapid response team are really excellent. If the hon. Lady has specific examples, I would be delighted to take those up on her behalf and to ensure that if somebody has been missed, we get in touch with them as quickly as possible.

Finally, I would like to set out the support that we are giving to those businesses affected by Carillion. We recognise that while the mass and the attention is on Carillion, the impact in the supply chain is huge. As hon. Members, we will probably all have people working in the supply chain in some way. As the hon. Member for Wolverhampton South West mentioned, we have set up a taskforce; I think it was set up three days after Carillion went into liquidation. The taskforce includes representatives of small business and the TUC. She referred to a letter from Frances O’Grady; Frances sits on the taskforce, which meets at least weekly. We have the Federation of Small Businesses, the Department for Work and Pensions, the Cabinet Office, the Local Government Association and the Construction Industry Training Board. We are working across Government to address the challenges and to come up with solutions that will support affected businesses.

The Business Secretary and I are in regular contact with the construction industry and all of the relevant trade bodies. I meet them weekly to properly understand and respond to their concerns. Following the Business Secretary’s meetings in the aftermath of Carillion’s insolvency, when we called in the banks to ensure that they were providing the necessary support and help to the supply chain, the banks made nearly £1 billion available. That was from lenders such as HSBC, Lloyds, the Royal Bank of Scotland and Santander in the form of loans, credit facilities and further financial support, to ensure that the contractors in the supply chain that are affected get the help and support that they need.

For those companies that may have lost money as a result of Carillion’s collapse, the most important thing is their ability to continue earning. While they may have lost sums as a result of Carillion’s collapse, by standing behind Carillion we have allowed certainty for those businesses. I assure the House that while there have been some concerns about the payment terms of up to 126 days that we saw with Carillion, the special manager has entered into an agreement that he will pay contractors still providing services to the Carillion network in 30 days. That will go a long way towards helping those businesses—small businesses, in particular—that are struggling for cash flow. Her Majesty’s Revenue and Customs is also helping businesses with its Time to Pay scheme.

The hon. Member for Ellesmere Port and Neston (Justin Madders) mentioned apprenticeships, which we have covered. The hon. Member for Glasgow South West (Chris Stephens) made a number of points, but most importantly referred to two things. He referred first to the contracts awarded to Carillion after the profit warnings. The first thing to understand is that issuing a profit warning does not mean that a business is on the verge of imminent collapse; if that were so, we would have seen the collapse of Tesco and of Marks and Spencer. It is exactly that: a profit warning to the City and to investors to say that the profits that the company is about to issue will not be as large as expected.

In relation to the award of contracts after those profit warnings, Carillion announced that it had won eight public sector contracts after its first profit warning in July last year. Three of those, for facilities management, were for defence establishments. They were actually awarded before the profit warning, but Carillion chose to make its announcements some weeks later.

Two of the remaining five contracts were awarded by HS2 Ltd to a joint venture including Eiffage, a major French construction firm, and Kier, as well as Carillion. The three companies bid together as a consortium, and as a result all shared responsibility for completing the work. After the profit warning, we asked each partner’s board for written assurances that if one partner failed, the others had a contractual obligation to pick up the work. Those assurances were given. Since the announcement of Carillion’s liquidation, Eiffage and Kier have confirmed that the contracts will continue uninterrupted and that the former Carillion employees working on those contracts have been offered jobs with those new partners.

Following the announcement of the profit warning, a further assurance came from external due diligence commissioned by HS2 Ltd. That revealed that at the time of the award in July last year, Carillion had the financial capacity to continue with its part of the contract. HS2 Ltd let the two contracts to the joint venture because it was confident that the joint venture arrangements were robust. That has proved to be the case.

The remaining three contracts were with Network Rail. They were not new contracts, but variations of contracts let some three years earlier, in 2014. Two were for electrification work. In a similar construct to the HS2 network, they were lets to joint ventures between Carillion and the electrification specialist, SPL Powerlines.

[Chris Stephens]

Some of the information that the Minister has given will be helpful for tomorrow’s Select Committee inquiry, and I thank him for that. When a company that is applying for a Government contract issues a profit warning, what checks do the Government put in place and what checks is a public body expected to put in place to ensure that that company is solvent? We now know that after the first profit warning, the alarm bells should have been louder than they were.

Taylor Review

Debate between Chris Stephens and Andrew Griffiths

1st reading: House of Commons
Wednesday 7th February 2018 Commons Chamber

[Andrew Griffiths]

I thank my right hon. Friend for reminding us that we have record numbers of people in work. Unemployment is at its lowest rate for 40 years. It is true to say that the labour market is tightening, but I see that as an opportunity. Businesses are realising that if they want to retain their best workers they need to offer the best possible arrangements for those workers. We are also clear that whatever the situation, we want to act to protect the most vulnerable workers in our society. That is what we are doing in the Matthew Taylor report: we are giving them the protection they need.

[Chris Stephens (Glasgow South West) (SNP)]

The Government’s response does not address the issue of bogus self-employment, which affects 1.8 million workers. The right to request is different from an actual right enshrined in law. Has the Minister looked at the contents of the Workers (Definition and Rights) Bill, in my name, which addresses many of these issues? Will the Government look at simplifying the definition of a worker to one definition, to eradicate bogus self-employment? Will they look to legislate to ensure that workers have a fixed and regular-hours contract? Will they address the issue of late-notice shift changes and cancellations, which affect those with caring responsibilities? What protections are there for workers under contractor liability where an employer ceases trading or absconds?

[Andrew Griffiths]

I thank the hon. Gentleman for that question. What I would say is that this is addressed in our response to the Matthew Taylor review. What he is talking about is the need for a better definition of workers’ status, be that employed, self-employed or worker. We are consulting to make sure we address those points, and I am very happy for him to be a part of that consultation. I am very happy to talk to him and to talk about his Bill, but we are clear that by having a definitive definition of people’s employment status we can solve some of the problems he highlights.