Retail Sector

Debate between Drew Hendry and Andrew Griffiths

Wednesday 6th June 2018 Commons Chamber

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

It is a delight to get to the Dispatch Box at last, Madam Deputy Speaker, and I hope that you will indulge me and allow me to answer some of the important points that have been made in this excellent debate. I thank the Opposition for bringing it forward. It is clear that there is strong agreement across the House that the retail sector is vital to our economy, our local communities and the many thousands of constituents who rightly rely on the sector for their livelihoods.

I will quickly address some of the points raised by right hon. and hon. Members in this debate. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), in an interesting speech that particularly focused on Brexit for a change, raised the issue of austerity but forgot to remind the House that, as a result of changes to lift the lowest paid in society out of paying tax and as a result of the biggest increase in the national minimum wage and the national living wage for 10 years, those on the lowest pay are now £3,800 a year better off—that is thanks to the policies of this Government.

The hon. Gentleman understandably raised an important point about the pay of the youngest in society. I share his desire to ensure that young people are fairly paid, but he forgot to mention that unemployment among 16 to 24-year-olds is persistently higher than among those aged 25 and over—12.1% compared with 3.1% across the country. The unemployment rate for 16 to 17-year-olds is 26.9%. Increasing pay would make it more difficult for young workers, whose priority is to get their first years on the job ladder, to secure work.

[Drew Hendry]

Will the Minister give way?

[Andrew Griffiths]

I know the points the hon. Gentleman will make, so I hope he will forgive me if I do not allow him to intervene. Time is pressing.

The hon. Member for Ellesmere Port and Neston (Justin Madders) made an interesting speech in which he talked particularly about the loss of banks. Although I share his concern, he will know the Government have invested some £370 million in the post office network, which now provides both business and retail banking. I am sure he values the contribution that that is making to the important post office network across our communities.

The hon. Member for Bishop Auckland (Helen Goodman) had a shopping list of questions, which is apt in a debate on retail, but, as with all shopping lists from the Labour party, it had a huge price tag attached. She asked for Boxing day to be a bank holiday for retail workers, but she forgot to mention that that would cost employers an extra £1.2 billion.

The hon. Lady raised the issue of competition policy and the banks being able to share premises. As I understand it, there is no competition policy issue that would prevent banks from sharing premises—they would obviously have to be careful about sharing data and personal information. If she has other concerns, I will be delighted to talk to her. Perhaps she could drop me a little note on her concerns.

My hon. Friend the Member for Torbay (Kevin Foster) made an interesting speech, particularly on “Love Your High Street,” which he is championing. I hope he will be getting free beer at the Peaky Blinders bar after he mentioned it. He made a particular point on the need to revitalise our high streets and change the way they are purposed, and I absolutely agree.

My hon. Friend the Member for Stirling (Stephen Kerr) raised the sad loss of The Boozy Cow and The Fat Cyclist Café, which are a great loss to us all. He also raised the important issue of the need for innovation in our town and city centres.

The hon. Member for Great Grimsby (Melanie Onn) again raised the Grimsby town deal, about which she cares passionately. She also raised the issue of coffee shops and said that surely we cannot eat any more cake—there are hon. Members present who might disagree. My hon. Friend the Member for North East Derbyshire (Lee Rowley) made some particularly important points, for which I am grateful.

Let us reflect on the recent structural changes in the sector and on the announcements we have had of late. There has been a shift in consumer behaviour, and we need to be aware of that shift. The move towards new technology is a great innovator and it provides great opportunities, but it also provides great challenges. I commend my hon. Friend the Member for Mansfield (Ben Bradley) for his campaign for free parking, which is an excellent proposal. He is standing up for his local residents.

My hon. Friend the Member for Redditch (Rachel Maclean) mentioned Labour’s yellow brick road, and on the folly of the Labour party, I point to the problems of Cannock Chase District Council, which is now trying to charge hard-working independent retailers £85 just for having an A-board to advertise their shops. That is the Labour party getting in the way of private business, as usual.

Many Members mentioned the key issue of business rates. The Government are aware of the wider business rates concerns and are looking to address them. We undertook the last fundamental review of business rates in 2016, announcing reforms worth £9 billion. A further £4.3 billion package was announced at the spring Budget in 2017, including £110 million to support 16,000 small businesses. I hope that Members from across this House will join me in celebrating Small Business Saturday later this year to try to support small high street retailers.

The Secretary of State mentioned the Retail Sector Council, which I am chairing, and the hon. Member for Sefton Central (Bill Esterson) asked whether we were working with USDAW. I should point out to him that USDAW sits on the RSC and is making a great contribution, and we are grateful for its support. The RSC will look at the issue of business rates, as per our manifesto commitment.

We all recognise the importance of retail and the contribution it makes, not just to the UK economy, but to our communities up and down the country, and the people it employs. I reassure the House that we will continue to work with the unions, the retail sector, local government and everyone else concerned to make sure that the retail industry across the UK has a bright future.

Question put and agreed to.

Resolved,

That this House notes that 21,000 jobs were lost in the retail sector in the first three months of 2018 due to store closures and company administrations, with more announced since; further notes that the retail sector is one of the largest employers in the UK and contributed £94.6 billion to the UK economy in 2016; regrets that the Government’s industrial strategy contains only three references to the retail sector; further regrets that the Government has presided over the biggest squeeze in wage growth in a generation, is failing to provide certainty around future trading arrangements after Brexit and has failed to ensure a fair business rates system; and calls on the Government to urgently publish a strategy for the retail sector.

Oral Answers to Questions

Debate between Drew Hendry and Andrew Griffiths

Tuesday 1st May 2018 Commons Chamber

[Andrew Griffiths]

Absolutely. We have a competitive workforce here. The economy is thriving, partly because of the contribution made by the people to whom my hon. Friend has referred. I particularly commend her for the work that she has done in relation to the soft fruit seasonal workers scheme.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

The Federation of Small Businesses says that the right of EU staff to remain in the UK is vital. In Scotland, 45% of tourism and leisure businesses rely on EU staff for their workforce. They fear that they will not be able to recruit for their future needs, and their fear is heightened by the possibility that the immigration skills charge—which is currently up to £1,000 a year—will be applied. Can the Minister categorically assure employers that they will not be subjected to any charge for EU workers post-Brexit?

[Andrew Griffiths]

We will set out in due course the system and the scheme that will operate post-Brexit. I can, however, assure the hon. Gentleman that I regularly meet representatives of the Federation of Small Businesses, and we will ensure that the workforce is there for those businesses.

[Drew Hendry]

The Scottish Affairs Committee, the Home Affairs Committee in its report, and the Economics Committee in the House of Lords all see the sense of a differentiated immigration system for Scotland. Can the Minister confirm that he, too, accepts that there is a clear case for a policy that recognises the different needs of businesses in Scotland?

[Andrew Griffiths]

This Government well understands the needs of businesses both throughout the UK and specifically in Scotland. As the hon. Gentleman will know, the Home Office will shortly present further details of the scheme that is to be introduced.

Corporate Governance and Insolvency

Debate between Drew Hendry and Andrew Griffiths

Tuesday 20th March 2018 Commons Chamber

[Andrew Griffiths]

As my right hon. Friend will know, we have not hung about in relation to improvements within the corporate governance structure. We will soon lay a further statutory instrument which will enhance even further the corporate governance measures we have introduced. The consultation will take place within the normal rules of a consultation, and we hope to bring forward proposals as a matter of urgency.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I thank the Minister for giving me advance sight of his statement. On engagement, will the Government consider proposals to force chief executives and company directors to engage directly with small business owners or groups of affected individuals? In the recent instances involving the Global Restructuring Group and the Royal Bank of Scotland branch closures, there has been a refusal on the part of directors to meet those affected. As my hon. Friend the Member for Glasgow North (Patrick Grady) pointed out, a lot of the problems that this consultation seeks to address could have been avoided simply through early engagement with those in charge.

With prohibitive costs often preventing individuals from pursuing legal options after being affected by insolvency, will the Government’s strategy look at ways of ensuring that legal recourse is available to those who will already be in financial difficulties as a result of insolvency? On contract and pensions protections, small businesses should not be the ones to suffer when a failed large company goes bust, and it should not only be in high-profile cases that the Government step in to protect pensions. What measures will this strategy take to ensure that small and medium-sized enterprises are protected when contracts or payments are halted due to a large company collapsing, and that any protection for creditors is mirrored by protection for workers and pension holders? These proposals are aimed at improving the range of options available following a company becoming insolvent. However, a proactive approach could help to prevent that from happening in the first place. Does the Minister agree that one way to ensure this would be for organisations to take profit warnings seriously and not to continue to hand out contracts to firms that issue them?

[Andrew Griffiths]

I thank the hon. Gentleman for his detailed and important questions, many of which related to small businesses. As the Minister with responsibility for small businesses, I take those questions extremely seriously. It is not just large corporate collapses, such as that of Carillion, that affect the thousands of small businesses in the supply chain. The collapse of a small business can affect other small businesses as well. We have all seen cases in our constituencies of small businesses losing money because of phoenix businesses that go into liquidation, change their name and reappear. It is the same people selling the same products, fleecing people time and again. We are giving the Insolvency Service the ability in this consultation to investigate companies that have already been dissolved, and that will go a long way towards sending the clear message to directors who think they can get away with fleecing small businesses in that way that the Insolvency Service will come and get them.

The hon. Gentleman talked about pensions. It is important that directors should clearly understand, through this White Paper and through the consultation, as well as through the Department for Work and Pensions White Paper, that there will be consequences if they fleece their pension fund, that there will be fines and penalties and that they could spend time in prison if they have been found to be fleecing their pension fund in an unacceptable way.

The hon. Gentleman also talked about the need for small businesses to be treated in an ethical way. In the spring statement last week, the Chancellor demonstrated a clear recognition and understanding that small businesses were being fleeced, particularly in relation to late payments. He said that he would consult on how we could end the “scourge of late payments”. If we could do that, we would see £14 billion taken from the pockets of big businesses and put into the pockets of small businesses. Also, when insolvencies such as that of Carillion do happen, payments will stay in the bank accounts of the company that had gone bust not for 128 days but for only 30 days.

GKN: Proposed Takeover by Melrose

Debate between Drew Hendry and Andrew Griffiths

Thursday 15th March 2018 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this important debate on a strategic issue. He raised the long-term aspects of GKN ownership, and gave a warning about the short-term or illusory interest that might be shown towards shareholder gain. He also gave a warning about the relative sizes of the companies and reflected on GKN’s sheer breadth of manufacturing interest in aerospace and automotive.

The hon. Member for Redditch (Rachel Maclean) rightly raised concerns about possible local jobs losses due to the takeover; she indicated that it is very important that pensions protections should be put forward, and I will come back to that subject later in my speech.

It is certainly worth underlining the need to invest in young people and in the future by investing in science, technology, engineering and maths skills. It would be remiss of me not to say that that should very much include girls and young women. It should be noted that GKN has committed to young people and STEM subjects. The hon. Lady clearly is not convinced by the proposed takeover by Melrose.

The hon. Member for Birmingham, Northfield (Richard Burden) mentioned the range of assurances that are required about jobs and research and development, which I will come back to. He certainly seems to have no confidence in Melrose. He rightly raised the concern of other local politicians who are involved, including the council leaders and the Mayor. Importantly, he touched on the need for urgent reform of the takeover rules. Perhaps that needs to be looked at a bit more urgently. He also touched on the German model. We know that German manufacturing has been extraordinarily successful because it has been able to take a more long-term view and make long-term investments.

My hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) got straight to the nub of the issue with what she said about the UK Government’s strategic positioning and industrial strategy. She rightly warned that without the proper resources and investment in manufacturing, the industrial strategy is very much at risk.

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

On that point, let me reassure the hon. Gentleman that the Government are committed to supporting the sectors that he talks about. We are investing £1.95 billion in aerospace and £1 billion in automotive research.

[Drew Hendry]

I am grateful for the Minister’s intervention. It is good to know that that is the intention, but as hon. Members around the Chamber mentioned, that investment could be lost with GKN. Members will be interested to know what assurances he can give that that money will actually stay in the UK’s economy.

My hon. Friend the Member for Paisley and Renfrewshire South clearly pointed out the grounds on which the Minister could intervene—I understand that he has difficulties in terms of what he can say about national security and financial stability—and mentioned the uncertainties of Brexit as context for the need to ensure that investment and stability are maintained. Importantly, she also mentioned that the chief executive of the Pensions Regulator wrote to raise his concerns about the long-term prospects for GKN’s pension scheme.

The hon. Member for Birmingham, Erdington (Jack Dromey) rightly talked about workers in his constituency, Airbus’s warning about taking a short-term approach and the need for a long-term strategic vision. He gave dire warnings from history about the severe jobs cuts at Dynacast and the FKI group. He, too, mentioned the GKN pension deficit. I must say that I am not as assured as he is about the pension fund. Whichever company is in control—GKN or Melrose—must ensure that it is properly funded so that people do not lose out. He underlined the fact that the Government have the powers, should they choose to use them in this case, and rightly talked about his pride in GKN.

The hon. Member for Caerphilly (Wayne David) concentrated heavily on the fact that Melrose is trying to buy a major player in an industry in which it has no experience. He warned about the potential loss of defence and intellectual property, which the Minister should consider very carefully. His point that this may be the last chance to look at that was poignant, and it should be considered. Several hon. Members mentioned that the benefits of automotive and aerospace are realised over decades. A long-term approach is not only required but demanded by the people who will depend on the jobs, by the companies that will need the skills and by the public purse, and therefore the public services, which will be funded by the tax that is paid. Again, the Government should concentrate heavily on that.

I share the concerns expressed by Members around the Chamber about the rights of workers in these companies and their jobs, and about the fact that we should seek to maintain industrial and engineering capabilities, jobs and skills. I underline again the concerns that were raised about the pension scheme: any diminution of the company’s ability to pay pensions would be deeply troubling. I will not go over the points that other hon. Members made, but that is critical: people who have given their lifetimes to working in the industry should not be abandoned when the time comes for them to draw their pensions. GKN has pointed out that its pension fund has been driven down by Brexit and currency fluctuations. Hon. Members’ national security concerns must also be taken seriously, especially given the intervention on that subject by the Minister’s colleague, the Secretary of State for Defence. The Government must carefully consider all the contributions we have heard in deciding whether they will intervene.

--- Later in debate ---

[Andrew Griffiths]

I thank my right hon. Friend, who as always makes a salient and sensible contribution to the debate. I agree with him wholeheartedly that the defence of our nation is the most important point in any of these decisions.

As hon. Members have heard, the Enterprise Act 2002 grants Ministers statutory powers to intervene in mergers that give rise to public interest concerns only on the grounds of national security, financial stability or media plurality. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) raised the issue of that financial stability. It is the financial stability of the country’s economy as a whole. This Government take very seriously our responsibility to protect national security in particular, and we are robust in assessing any possible public interest concerns and carefully considering when those powers should be exercised. If necessary, they will be exercised.

I appreciate that there has been much speculation about the potential use of those powers in this case. However, as we heard earlier, public interest interventions are quasi-judicial in nature. It is therefore important that Ministers act, and are seen to act, impartially, on the basis of an open mind and of the evidence available. For that reason, it is not appropriate for me to comment on their use in this individual case. As hon. Members might expect, my right hon. Friend the Secretary of State and I have taken a close interest in events. He has spoken to the chief executive officers of both GKN and Melrose to understand their intentions and to make it clear that he wants an open line with the companies, consistent with his potential statutory role in the process.

The bid, however, is primarily a commercial matter for the parties concerned, and we wait to see how things develop. GKN shareholders now have until 29 March to decide whether to accept the Melrose bid. It has become clear that, regardless of whether the takeover by Melrose is successful, GKN will not be the same company we know today. Beyond the potential sale of the Driveline, both GKN and Melrose have outlined plans to sell the powder metallurgy business and other non-core businesses. There remains the distinct possibility that, irrespective of which party ultimately controls GKN after the resolution of the bid, it will choose to sell all or parts of GKN’s current business to foreign companies.

On 13 March, Melrose wrote to the Business, Energy and Industrial Strategy Committee at its request, setting out the company’s position on pensions and post-offer undertakings. In addition to the conversations held between the Government and the parties involved, the hon. Member for Newcastle upon Tyne Central, who raised the question of Unite, will be pleased to know that the Secretary of State has been in close contact with the union.

I know that some hon. Members have concerns about GKN’s pension schemes. Individual cases are a matter for the independent Pensions Regulator, but the Government are aware that the parties are in discussions with the pension trustees, who have made their expectations clear. The hon. Member for West Bromwich West raised the issue of R&D investment; Melrose has told the Business, Energy and Industrial Strategy Committee that it supports R&D and will maintain the level of investment in R&D that GKN has spent in the past, which I think was 2.2% of sales between 2014 and 2016.

The hon. Gentleman also mentioned the question of how France and Germany could block takeovers. The reality is that they cannot. The UK’s takeover rules are based on EU takeover rules, which apply to all European countries and limit the ability of national Governments to block mergers unless they are based on national security, financial stability or media plurality grounds. France and Germany would also be unable to block a takeover of that kind due to EU takeover rules.

My hon. Friend the Member for Redditch (Rachel Maclean) is a doughty fighter for her constituents, and I know how passionate she is about this issue. She asked whether we are confident about the assurances Melrose has given about the UK headquarters. Under the takeover code, companies can make legally binding post-offer undertakings, and that is an important element. The hon. Member for Paisley and Renfrewshire South raised the question of pensions. Of course, it is a matter for the Pensions Regulator and it would be inappropriate for me to comment; however, the Government understand that the Pensions Regulator is in discussion with all parties.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—I hope I got that right—asked what assurances we can give that Government R&D investment will stay in the UK. I can tell him that Government grants to support R&D are awarded on the basis of R&D carried out in this country, so the conditions of any contract with Government would mean that those responsibilities would transfer to the new company.

[Drew Hendry]

I appreciate the Minister’s giving way in the limited time he has. I want to make it clear that my concern was that the investment, and therefore the resulting intellectual property, might be lost elsewhere.

[Andrew Griffiths]

I understand the point that the hon. Gentleman makes.

Finally, my hon. Friend the Member for Redditch asks what the Government are doing to further strengthen the codes. I will highlight that the Government are exploring proposals to strengthen our powers to scrutinise investment for national security purposes, which would bring our regime in line with those of other developed countries. The national security and infrastructure investment review that my hon. Friend talked about closed in January, and the Government will publish its firm proposals in a White Paper this year.

The Government will continue to monitor the situation very closely over the days and weeks ahead, and I can assure hon. Members that we will always act in the best interests of the country.

Oral Answers to Questions

Debate between Drew Hendry and Andrew Griffiths

Tuesday 30th January 2018 Commons Chamber

[Andrew Griffiths]

I absolutely agree with my hon. Friend: 4 million people have been taken out of paying tax as a result of decisions taken by this Government. The employment rate is 75.3%, which is the joint highest rate since comparable records began in 1971. We have record numbers of people in work, and unemployment is at its lowest for 40 years. This Government are on the side of the worker and the lowest paid.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Low pay stifles investment and holds back productivity. We in the Scottish National party believe that the economy is stronger when a real living wage is paid. The Minister’s own Department has rightly named and shamed 350 companies for failing to pay even the minimum wage. Does he therefore agree that the practice of companies paying no wages at all through unpaid work trials is morally repugnant? Will his Department support the ending of that shameful practice?

[Andrew Griffiths]

I should point out to the hon. Gentleman that more than 160,000 people in Scotland benefit directly from the national living wage. The Government are looking closely at employment practices. We engaged Matthew Taylor to look into employment practices and to come up with new ways to support people, particularly those in the gig economy. We very much value that work and will be coming forward with recommendations in the very near future.

--- Later in debate ---

[Andrew Griffiths]

We are always sensitive and aware of the impacts on the supply chain. We need a strong supply chain, but I point the hon. Gentleman to the Secretary of State’s previous answer on that issue.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Support for the small business sector will be even more urgent given the findings of the UK Government’s leaked Brexit analysis, which shows that in all current scenarios, businesses across all sectors and all parts of the UK will be hammered with between 2% and 8% reductions in GDP growth. Will the Minister confirm what planning his Department has undertaken in the light of those figures? Is he declining to publish because it is too embarrassing?

[Andrew Griffiths]

The hon. Gentleman will know that that issue is the subject of an urgent question later on in the House. I would hate to spoil his fun, so I will leave it to others.