Oral Answers to Questions

Greg Clark Excerpts

Tuesday 30th January 2018 Commons Chamber

[Sir Robert Syms (Poole) (Con)]

10. What steps he is taking to support businesses affected by the liquidation of Carillion.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

I have set up a taskforce bringing together small and medium-sized businesses, the Government, local government and trade unions to assist with the impact on small and medium-sized enterprises and the supply chain. The taskforce has delivered a range of supportive measures, including assistance from Her Majesty’s Revenue and Customs for those experiencing difficulties and more than £900 million of support from UK lenders.

[Diana Johnson]

I thank the Secretary of State for his answer, but, with 30,000 small firms thought to be owed money by Carillion due to late payments and fees, will he look at the idea of project bank accounts that hold money in trust in ring-fenced bank accounts to make sure this situation does not arise again? The Specialist Engineering Contractors Group wants Britain to follow what is already happening in Australia, where such project bank accounts are used in all large public and private building contracts.

[Greg Clark]

I will indeed look at that, and it has been one of the recommendations of the taskforce. It is important that we learn all the lessons and apply them quickly, and this is one such suggestion.

[Mr Speaker]

Sir Robert Syms—where is the fellow? I call Antoinette Sandbach.

[Antoinette Sandbach (Eddisbury) (Con)]

The local authority pension fund forum has called for a review of accounting standards, having received opinion that there are substantial legal flaws in international reporting standards. The opinion states that the standards do not enable anyone to make a meaningful assessment of a going concern, which is a highly relevant issue for Carillion. Will the Secretary of State support such a review?

[Greg Clark]

The day that Carillion went into insolvency I wrote to the Financial Reporting Council, and I spoke to its chairman, to ask it to investigate the auditors and those who are regulated as accountants. The FRC has agreed to do that, and it announced yesterday that the investigation is under way. I would expect it to learn the lessons for any changes to the regulations that it applies.

[James Frith (Bury North) (Lab)]

Will the Minister confirm whether the advice to firms that have lost money as subcontractors of Carillion is that they take out a loan? Does he think it is acceptable that those firms should be charged interest on taking out a loan, rather than getting the money they are owed for jobs they completed as supply chain businesses of Carillion?

[Greg Clark]

On the first day of the insolvency, I had in the representatives of all the supply chain organisations. The first request they made was that we get the banks in to make sure that they treat leniently their customers who were caught up in the insolvency. The banks agreed to do that, and they put funds aside to support and assist those customers. Each bank has made commitments that it will apply leniency to any terms and conditions faced by those businesses.

[Michael Fabricant (Lichfield) (Con)]

My right hon. Friend has almost answered my question, because I was going to say that cash flow is as important as profitability. The problem with lack of cash flow is when the banks become too heavy and foreclose on smaller firms.

[Greg Clark]

That is exactly the point that the businesses made. That is why I asked the banks to attend in person to meet those businesses, and it is why the banks gave those commitments and guarantees. It is important for Members with constituents who may be affected that the banks have made that commitment and have made a promise that they will deal individually with anyone who is so affected. The measures are on each bank’s website, but any colleague should come back to me if they experience a problem.

[Rachel Reeves (Leeds West) (Lab)]

This morning, at a joint Select Committee hearing on Carillion, we were told by the chief executive of the Financial Reporting Council that, before and after the collapse of BHS, he had asked for greater powers to regulate companies and take action before things go badly wrong. He told us that there was a lack of Government interest in making the necessary changes. In the light of the collapse of Carillion and the threat to thousands of jobs and suppliers in the supply chain, are the Government interested in taking action now?

[Greg Clark]

I do not agree with the hon. Lady. I engaged the FRC immediately, and it is very important that we and the FRC learn the lessons. We will apply whatever is appropriate that comes from those inquiries.

[Mr Speaker]

The hon. Member for Poole (Sir Robert Syms) says that he was not told of the grouping. If that is so, it is a discourtesy—I hope it is not so. Maybe it got lost in the post. Let us hear from the fellow.

[Sir Robert Syms]

The collapse is really bad news for many smaller businesses, many of which will have their capital wiped out. What discussions has the Secretary of State had with banks about forbearance in keeping those businesses going so that there is proper competition in this market for the future?

[Greg Clark]

I apologise to my hon. Friend if he did not receive notice of the grouping—I am sure that is my error.

On engagement with the banks, each of them has responsibilities to its customers to help them through difficult times. The banks have explicitly committed to help them with any cash flow difficulties that they experience, and I expect the banks to deliver on it.

[Alison Thewliss (Glasgow Central) (SNP)]

18. Scottish training firm TIGERS—Training Initiatives Generating Effective Results Scotland—is working hard with the Scottish Government, Skills Development Scotland and the Construction Industry Training Board to place 126 apprentices who used to be placed in partnership with Carillion. What is the Secretary of State doing to encourage small businesses to step forward to fill that gap and ensure that all apprentices can complete their training?

[Greg Clark]

The hon. Lady raises an excellent question, and I want to pay tribute to the CITB, which has been working closely with its Scottish colleagues, for a magnificent response. It has been able to not only contact but offer continuity to all the apprentices—I think I am right in saying that—to give them the ability to continue their training. That was a formidable, agile response to an urgent situation, and it deserves the praise of the House.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

In July last year, the Government were warned by the Federation of Small Businesses and the Specialist Engineering Contractors Group that Carillion was transferring risk to its subcontractors. They highlighted that Carillion’s payment period was doubled from 65 to 120 days, that Carillion made money on the back of early payment by charging fees, and that regulation 113 of the Public Contracts Regulations 2015, which relates to 30-day payment, was not being enforced. Will the Secretary of State outline what actions, if any, he took on receipt of that information?

[Greg Clark]

The lessons and the scrutiny of what went wrong in Carillion, both on the part of its directors and its scrutineers, and in the oversight that took place across the whole of the public sector in terms of contracting, need to be looked at and will be looked at, including by Select Committees of this House. Whatever actions are required from that, we will take.

[Rebecca Long Bailey]

So it is clear that no action was taken and that subcontractors were being mistreated again and again. But that is not all: the FSB and SEC Group also highlighted how retention moneys and project funds due to suppliers were not being protected from Carillion’s potential insolvency. As a result of the Government’s inaction, microbusinesses are now owed on average £98,000, small firms £141,000 and medium-sized firms £236,000, and large businesses are owed on average £15.6 million. Will the Secretary of State therefore explain to the House and all the businesses affected why the Government took no action last July and why many are on the verge of bankruptcy today?

[Greg Clark]

Retentions and project bank accounts have been the subject, in response to those and other concerns, of a consultation on specific measures, which closed very recently. That came out of the recommendations that were made. Part of the taskforce that we have established includes these representative bodies, and they know that they have my commitment to take all the necessary actions to learn the lessons and protect any future concerns against things that could be learned from this case.

[James Cartlidge (South Suffolk) (Con)]

2. What steps he is taking to ensure that low-paid workers are remunerated appropriately.

--- Later in debate ---

[Gavin Robinson (Belfast East) (DUP)]

Q6. What steps he is taking to support the aerospace sector.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

The Government enjoy a strong partnership with the aerospace sector through the Aerospace Growth Partnership. Since 2010, the sector’s turnover has grown from £24 billion to £34 billion, and exports have almost doubled. Following the excellent and wholly justified ruling of the United States International Trade Commission on Friday night, I am delighted that Bombardier in the hon. Gentleman’s constituency will be able to look forward to a bright future.

[Gavin Robinson]

Hear, hear! I was overjoyed on Friday night when Bombardier unanimously won its case with the United States International Trade Commission. In paying tribute to the Secretary of State and to the Minister responsible for the aerospace industry, I ask that they stand resolute against any appeal that may be lodged and ensure that the C Series, now that it is finally ready for take-off, is the true success we know it can be.

[Greg Clark]

I will indeed. I pay tribute to the hon. Gentleman for the stalwart way in which he and his colleagues stood up for their constituents and, indeed, the supply chain that covers the whole United Kingdom. Right from the beginning, this has been a joint endeavour between us, the Canadian Government, the company and everyone with an interest in the success of Bombardier.

[Vicky Ford (Chelmsford) (Con)]

Does my right hon. Friend agree that the future of our space and aerospace industries is key to our economic future and that practical measures like the new Space Industry Bill will open up new opportunities?

[Greg Clark]

I do indeed. Space is one of the fastest-growing sectors of the economy, and we are world leaders in it. Through the Bill, we will ensure that we have the right regulatory regime to underpin that.

[Sir Vince Cable (Twickenham) (LD)]

Since the aerospace sector requires long-term planning and investment, does the Secretary of State not share my alarm at the threatened takeover of the leading tier 1 supplier GKN by a turnaround company specialising in maximising shareholder returns over five years maximum? Is this not a national security issue?

[Greg Clark]

The right hon. Gentleman is a previous occupant of my post, so he knows that the powers that the Secretary of State has over these things have to be exercised in a quasi-judicial way. Therefore, I should not, and cannot, comment on that case. However, he will know, because he has written to me, that I have spoken to both chief executives, and I am keeping it under close review.

[Luke Graham (Ochil and South Perthshire) (Con)]

It is good to hear my right hon. Friend talk about the importance of aerospace. Will he consider the aerospace initiative that is being proposed in Kinross-shire in my constituency as part of the Tay cities deal, and will he or other colleagues meet me to discuss it?

[Greg Clark]

My colleagues and I will be very happy to meet my hon. Friend to develop the full potential of aerospace in his constituency.

[Martin Whitfield (East Lothian) (Lab)]

7. Whether he has met representatives of the Keep Me Posted campaign.

--- Later in debate ---

[John Penrose (Weston-super-Mare) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

Since our last Question Time, it has been my pleasure to introduce my new colleagues, my hon. Friends the Members for East Surrey (Mr Gyimah) and for Burton (Andrew Griffiths), to the Department and to see our agenda progressing. We announced the automotive sector deal, supporting British innovators and manufacturers with a joint commitment of millions of pounds of investment from industry and Government. The Society of Motor Manufacturers and Traders said that the deal would place the UK at the forefront of electric, connected and autonomous vehicles. I am delighted to announce that Lotus Cars has announced its intention to invest significantly to expand its production, creating 300 new jobs at its plant in Norfolk. Production will increase fivefold in the years ahead.

[John Penrose]

Energy distribution network operators charge obscenely high prices on our energy bills and make absurdly large profits for running safe, low-risk monopoly businesses that get energy to our homes. Does the Secretary of State agree that Ofgem has been far too soft on these firms for ages, allowing them to get fat and lazy at customers’ expense? Will he join me in urging Ofgem to get a great deal tougher in future?

[Greg Clark]

I agree with my hon. Friend and welcome the decision by SGN, SSE and National Grid to refund excess returns to consumers—the others should follow suit. He is absolutely right, and in the next price control period, Ofgem should have a much tougher regime.

[Several hon. Members rose—]

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I shall try to be pithy, Mr Speaker.

GKN is a great British engineering company, forged in the first industrial revolution with strengths in defence, aerospace, automotive, batteries and the internet of things, which should place it at the heart of our future economy—high skills, high productivity and high wage—but the debt-driven hostile takeover threatens 6,000 UK workers, pension funds and the supply chain. The Secretary of State has said that he will not comment on individual cases, so may I ask him a general question? Does he believe that it is in the national interest for City investment houses to use debt to dismantle our industrial base?

[Greg Clark]

The hon. Lady understands the constraints that I have in any particular takeover. As a feature of our economy, it is very important that we have investment into our companies from those with the capital to do so. That is why we have a regime that limits the grounds for intervention, but there are certain grounds that I will have to consider during the time ahead.

[Mr Laurence Robertson (Tewkesbury) (Con)]

T2. Will the Minister join me in welcoming the news announced by the aerospace trade association—ADS—of record new aircraft delivery figures worth £29 billion to the UK in 2017, as well as the further announcement of an order by Emirates for an additional 36 Airbus A380s? How will the Government help to ensure that the UK aerospace supply chain is in a position to take advantage of those excellent opportunities?

--- Later in debate ---

[Chris Elmore (Ogmore) (Lab)]

T5. On 10 January, the First Minister of Wales sent a letter to the Prime Minister offering substantive funds for the tidal lagoon. When will he get a response and when will we have the tidal lagoon decision for investment across Wales?

[Greg Clark]

Officials are meeting their counterparts in the Welsh Government so that they can understand and explore the proposal that has been made.

[Maria Caulfield (Lewes) (Con)]

T7. As banks are closing on our high streets, two of my towns, Newhaven and Polegate, are not having any banking facilities left. Will the Minister consider expanding the facilities that post offices offer? Postmasters such as the one in East Dean in my constituency are keen to do more, but Post Office Ltd refuses to allow them to do so.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

T8. In the light of the possible barriers to resolving cross-border insolvencies in the UK post Brexit, what assessment has the Minister made of the need to reform the UK’s corporate insolvency framework to ensure that it is fit for purpose?

[Greg Clark]

We keep the insolvency regulations under constant review, in response both to Brexit and to lessons learned from our experiences domestically. I will work with the hon. Gentleman to make sure that his views are fed in.

[Neil Parish (Tiverton and Honiton) (Con)]

Consumers in the south-west are paying extra on their bills because energy network companies are charging too much. We need greater competition and more teeth in the watchdog to do something about it.

--- Later in debate ---

[Jack Dromey (Birmingham, Erdington) (Lab)]

The hostile takeover of GKN by Melrose threatens break-up, sale and closures. The Secretary of State has powers under section 58 of the Enterprise Act 2002 to intervene. Will he intervene to block this hostile takeover, which is not in the national interest?

[Greg Clark]

I have explained to other Members the importance of exercising these powers in the required way and of not giving a running commentary in this House.

[Alex Chalk (Cheltenham) (Con)]

Does the Minister agree that competitive rates of interest should be offered to businesses and subcontractors that are affected by the LARC collapse, and that the 8.64% offered to LARC Construction in my constituency is simply too high?

--- Later in debate ---

[Anna Turley (Redcar) (Lab/Co-op)]

Thank you, Mr Speaker. It is great to be back.

We have ambitious plans on Teesside to create 20,000 jobs on the former SSI steel site. The biggest issue holding us back is, obviously, the ownership of the site. Can the Secretary of State update us on what conversations he is having with the official receiver and the Thai banks to enable us to fulfil our potential, create jobs, and bring investment back to the site?

[Greg Clark]

I welcome the hon. Lady back to the House and commend her for her commitment to ensuring that we secure the best possible future for that site. I shall visit Teesside shortly to continue our discussions. There is great commitment on the part of both the Government and the local development corporation to finding the right solution. The ownership is not in the Government’s hands, but everything that can be done is being done.