Consumer Rights Bill
Jo Swinson Excerpts(9 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I beg to move, That this House agrees with Lords amendment 12J.
Mr Speaker
With this it will be convenient to debate the following:
Lords amendments 12K to 12P.
Lords amendment 12Q and amendment (a) thereto.
Lords amendments 12R and 12S.
Jo Swinson
It is a veritable alphabet soup of amendments, Mr Speaker.
On 24 February in the other place, the Government agreed with amendments tabled by Lord Moynihan to introduce light-touch regulation of the online secondary ticketing market, alongside a statutory review of the market. The Bill has therefore returned to us for further consideration. It sets out a simple, modern framework of consumer rights that will promote growth through confident consumers driving innovation and more competitive markets. Consumers, knowing their rights are protected if things go wrong, will have greater confidence to take up new products and switch suppliers, which will help to create a competitive and thriving economy.
The Bill contains important new protections for consumers alongside measures to lower regulatory burdens for business. All this together will make markets work better, which is good for consumers, good for business and therefore good for growth. It will have an impact across all sectors of the economy and address many of the concerns we hear daily in our own constituencies.
Chapter 1 gives consumers a new right to a refund on faulty goods within 30 days. Chapter 2 protects consumers in law for the first time when they buy digital content, while schedule 5 means business will get more notice of routine inspections by trading standards. These represent an important package of reforms that businesses and consumer groups have been waiting for and preparing for. Once the Bill receives Royal Assent, we will alert business to the forthcoming changes well ahead of the Act coming into force.
Since December, there has been one outstanding issue to resolve before the Bill can be sent for Royal Assent—how to address issues in the online secondary ticketing market. This is the market where fans sell tickets they can no longer use to fans who missed out on tickets the first time round. It is a much safer and more convenient environment for fans to buy and sell tickets than dealing with shady individuals in the backstreets around venues.
There are some concerns, however, about how this relatively young market is working, as I explained when we last considered this issue in January. I know that many hon. Members have been following this area very closely, and I appreciate the keen interest in this issue. I know that several members of the all-party parliamentary group and of the Select Committee on Culture, Media and Sport are in their places today, and I pay tribute to their extensive work on this issue over a number of years.
The Competition and Markets Authority has also been active in this area. I warmly welcome its announcement last week that it has secured further protection for consumers. This work makes an important contribution to our parliamentary debates. To deal with them, there has been general agreement across the House on two central points: we agree on the importance of a safe and secure environment for fans to buy and sell tickets; and we agree on the need for event organisers, the marketplaces themselves and enforcers to play their part in combating fraudulent practices in the resale market.
We were not, however, able to support an amendment made by the House of Lords in November. While that amendment aimed to increase transparency in the market, we were concerned about privacy and unintended consequences for the secondary market. We did not think that that amendment would allow the secondary market to continue to thrive or to be a proportionate and appropriate response to concerns that had been raised. Since December, we have been working intensively with all the relevant stakeholders to see if a compromise could be reached—a compromise that allows fans to resell tickets they cannot use, but one that also tackles some of the known issues in the market.
Philip Davies (Shipley) (Con)
The Minister in the House of Lords said that the Government were accepting these amendments on the basis that people would still be able to sell on their tickets at any price they could command, and that the sports bodies concerned could not blacklist anybody who decided to do that. Will the Minister confirm that that is the Government’s position and the basis on which they are accepting the amendments?
Jo Swinson
I am certainly happy to confirm that position. There is already protection in the unfair trading regulations, and any unfair terms can be challenged in law, so they should not be included. There would be many circumstances in which the terms surrounding the cancellation of ticket reselling would be deemed to be unfair. My only caveat would be that, in some circumstances, such terms might be appropriate. If, for example, a particular category of ticket aimed at a particular sector such as a youth audience were sold at a discount and it was important to increase access to such events for a particular group, some restrictions on resale could be justified and the terms deemed to be fair. I hope that my hon. Friend the Member for Shipley (Philip Davies) will reassured by what I have said.
On 24 February, the other place agreed to add provisions to the Bill to protect consumers in the secondary ticket market. Those addressed the concerns I raised during our last debate and, importantly, they achieved cross-party welcome and support. The provisions cover four main issues. First, they put on a statutory basis the review that I announced here on 12 January. They also give more details on what the review will cover and how it will be conducted. It will be a full review of consumer protection measures in the secondary ticketing market.
As I explained during our last debate, this will be an independent review and it will be presented to Parliament. The review will start this summer and be presented to Parliament within a year of the duty coming into force. The review will look at the current law, including any new provisions, and assess how best to protect consumers. It will be an invaluable opportunity to gather evidence on how the market works and how consumers can best be protected when operating within it.
Secondly, there is a requirement that online ticketing marketplaces report criminal activity on their sites. Where they are aware of such activity—for example, fraud—they must report it to the police and the event organiser. This new requirement addresses an issue many hon. Members raised during the Bill’s passage. There is criminal activity and fraud in this market, as there can be in any market, and we should be concerned about that.
Philip Davies
The Minister is being typically kind in giving way. What measures exist to prevent people from setting up online sites offshore, and how would the law apply to an offshore internet site that was selling on tickets in a secondary market?
Jo Swinson
The hon. Gentleman has identified challenges that exist in regulation of all kinds that applies to the internet and to foreign sites and companies. I do not think that those challenges can be the basis for an argument against trying to make the market fairer. We have built a consensus with the key players in the industry, and have arrived at proposals that they believe to be workable. We have a secondary ticketing market that works very successfully for many consumers in this country, and because there are existing, established providers, it is unlikely that there will be a sudden exodus of tickets to sites abroad. Consumers will also be aware of the protections from which they benefit when using sites in the United Kingdom. The legislation will cover sites with which they are already familiar.
There is no benefit in making crimes “doubly” illegal, but it is important for us to improve reporting and enforcement, and the new requirement to report fraud will help in that regard.
The final two changes that we are making address the issues of transparency and consumer protection directly. To improve transparency, those who sell tickets online must give buyers some basic information. That information, when applicable, consists of the face value of the ticket, the seat number, and any restrictions relating to the person who can use the ticket. When those in the secondary market, event organisers or certain other connected persons are selling the tickets themselves, they must make that clear. The provision is complementary to, and supplements, existing law. It ensures that buyers will be given some of the most important information that they will need in order to make an informed choice.
Crucially, the list of information that must be provided does not include the name of the individual seller, so individual consumers will not have to give their names when they sell online. As was pointed out when we considered the earlier amendments in January, that is an important way of protecting sellers from identity theft. We are providing a finite list of the most important pieces of information that a consumer will need to make an informed purchasing decision, thus ensuring that there is compliance with relevant EU law.
I know that some Members—including the hon. Member for Shipley (Philip Davies)—fear that the new information will allow event organisers to cancel tickets or blacklist sellers. That might, of course, be unfair on fans, and give those event organisers unfair control of the market. We share those Members’ concern, which is why our provisions build in consumer safeguards. An event organiser will not be able to cancel a ticket or blacklist a seller merely because the ticket is resold or offered for resale, unless there is a term in the original sales contract that allows for that, and, perhaps more important, the term itself is fair. Terms that prohibit resale are not always fair, and those that are not fair do not bind the consumer. Similarly, terms that seek to prohibit resale at or above a particular price are not always fair, and not always binding on the consumer.
The combination of transparency and consumer safeguards will allow the secondary market to flourish. It will ensure that no one, including event organisers, has a monopoly on resales, or an unfettered ability to set prices in the secondary market. The new system of light-touch regulation will make buyers and sellers confident about using the market. It will make the market more dynamic, and will benefit consumers further by creating competition in relation to price and quality of service. The review that I mentioned earlier will ensure that that outcome materialises in practice. If other issues arise, or if the new legislation has any unintended consequences, the review will pick that up.
The hon. Member for Shipley has shown great interest in the Bill, and has brought a great deal of energy to our debates.
Jo Swinson
It is indeed a compliment, and I hope that the hon. Gentleman takes it as one.
If the hon. Gentleman’s amendment were passed, chapter 3B would cease to apply two years after coming into force. The Government share his fear that regulation of the resale market could threaten the current online ticket marketplaces. That is why chapter 3B makes it clear that tickets cannot be cancelled or their sellers blacklisted merely because the tickets are offered for resale, unless certain strict conditions are met. The consumer protection that amendment 12Q seeks to introduce is already part of these provisions. Striking this down after two years would neither help nor protect consumers.
Philip Davies
The Government have set great store by the review they are going to carry out after the election and after the legislation has been introduced. Surely a sunset clause of two years will give that review much more power, because it will mean that by the end of the review the Government will have to make specific proposals to implement its recommendations, rather than just a review taking place and dying?
Jo Swinson
My hon. Friend clearly takes that view. However, I think that two years after the legislation has come into force is not very long at all. It would be very shortly after the review had concluded and the Government had issued their response. Indeed this would already have pre-empted the outcome of the review by saying it should be sunsetted, because if the review finds that the new provisions are working well, it will be required to take action to make that continue. The review might recommend removal of the provisions, but in that scenario we would also want the benefit of the advice on the best timing in which to do so, rather than some arbitrary date being imposed. However, what I would say to reassure my hon. Friend is that if such action was required as a result of the review, the Government could use primary legislation to repeal chapter 3B without needing a sunset clause.
Finally on amendment 12Q, we should take a step back and look at how it could impact on the market. I am sure I do not need to remind this House of the disruption caused by changing the law too often. Changes and reforms are necessary and important, but there are costs to business in implementing a new regime, and to have it repealed wholesale after two years would incur significant costs.
We must also consider the major events we host in this country. Amendment 12Q would mean that fans of some such events benefit from the new regime, but others do not. For example, fans buying and selling tickets for events such as the world athletics championship in 2017, possibly the biggest athletics event we will have hosted since the Olympics, would lose out. That would not be fair on those fans.
In conclusion, we believe the provisions agreed in the other place create a proportionate, light-touch regime to protect consumers and the secondary market. I encourage Members to support them and allow this important Bill to move to Royal Assent.
Ian Murray (Edinburgh South) (Lab)
I am delighted that this issue has now come back to this place, as we have always believed that the Consumer Rights Bill gives an opportunity to provide real protection against rip-off practices, particularly in the secondary ticketing market.
We all know that healthy, fair and competitive markets are vital to building an economy that works for both consumers and businesses. We also know that well-informed consumers make for better customers and better-informed citizens get better outcomes in dealing with both the public and private sector. Ticket touting is a classic example of a market where a group of traders are colluding to restrict supply and so push up prices, ripping off consumers by overcharging them and as a result shattering the dreams of many fans. We have argued this throughout the passage of the Bill and, while we are pleased that Ministers are now in agreement, they have been dragged here kicking and screaming to make these changes.
I was delighted that in the last sentence of her speech the Minister agreed with the Lords amendments, but it has taken her three years to do so. That sums up this Administration. They rail against good ideas from Opposition Members, charities, non-governmental organisations, trade bodies, trade unions, the public and others, and then they are eventually embarrassed into having to bring forward the very provisions they have railed against. We have witnessed that with regularity, first on allowing the Groceries Code Adjudicator to fine people, and also on giving tied landlords a better deal with pubcos and better enforcement of the national minimum wage to name just a few, and they even had to be dragged kicking and screaming to do something about zero-hours contracts.
Now we have the secondary ticketing issue, where the Minister and the Government are arguing against their views of just a few weeks ago. On 21 January 2011 the Culture Secretary told Parliament:
“Ticket resellers act like classic entrepreneurs”
and that concerns about touting represented
“the chattering middle classes and champagne socialists”.—[Official Report, 21 January 2011; Vol. 521, c. 1186, 1187.]
That is obviously not the case now.
On Friday 6 February 2015 the Daily Mirror quoted the Culture Secretary as saying unscrupulous websites have every right to hoover up sought-after tickets for football matches and pop concerts and flog them at five or 10 times the asking price. He said:
“There’s nothing wrong with a healthy second market”
and went on to say
“I don't have any problem with it.”
He obviously does now.
Mike Weatherley
I thank the shadow Minister for his intervention. The review must be balanced. Obviously, I am pushing for more regulation, because I feel that the free market has fallen down, but we should consider experiences around the world. There are states in America that have repealed secondary ticketing laws, and we need to look at why. Was it because the legislation was badly drafted? Norway and Denmark have laws under which tickets cannot be sold above face value, but they have never been enacted. Is that because, as someone mentioned, trading standards teams do not have enough teeth to implement such measures? All of that needs to be in the review; that is absolutely essential. There are so many aspects to the review that it will be quite an exciting one.
To summarise, and to misquote E.M. Forster on democracy, two cheers for the amendment, but not quite three. However, I am really pleased that we will enact this law before the end of this Parliament, and before I step down. This is very much a good step forward.
Jo Swinson
I congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson) and my hon. Friend the Member for Hove (Mike Weatherley) on their tireless work on this issue. They should be pleased with the outcome that they have managed to achieve. I want to address two points that came up in the debate. The first was the question, “Why now?”, and the second was about the CMA.
On the question of why now, my hon. Friend the Member for Shipley (Philip Davies) seemed to suggest that we had voted for something and will now be voting against it, or some such thing. The amendments that we are considering differ in two respects from the ones that we considered in January. First, on privacy, the amendments in January stipulated that the name of those selling tickets would have to be a piece of information that was made transparent. We thought that there were privacy concerns about that. Secondly, there were concerns about compliance with EU law—the technical standards directive—and that could unfortunately have rendered all the provisions unenforceable. That was because of the de facto price cap in the amendment put forward by the hon. Member for Washington and Sunderland West. For those reasons, although we understood the concerns brought forward, we could not accept the amendments in January. Of course, those concerns have now been addressed; that is why we are able to accept the Lords amendments today.
Last week’s announcement by the CMA has been mentioned. The CMA in no way sought to usurp the work done in this House. It had done a long-running piece of enforcement work against four sites. The announcement covered the transparency elements of amendment 12J, but the amendment puts things on a statutory footing and should be very welcome.
The CMA does, of course, have significant power. To address the concern raised by my hon. Friend the Member for Shipley, it would be able to stop an organiser cancelling tickets. The CMA has shown that it is willing to act in this market should there be any concern that tickets were being cancelled, and I am sure that it would be happy to do so in future. On the international point, as the provisions apply to marketplaces and sellers targeting the UK, enforcement action can take place elsewhere. Indeed, the CMA recently pursued successful enforcement action against several websites, including viagogo, which is of course based in Switzerland. That shows that we have the enforcement to back up these consumer protections, which are proportionate, and which do not give rise to the privacy concerns that we had before. They will help to make sure that the secondary market can genuinely thrive and work better for consumers.
Question put, That this House agrees with Lords amendment 12J.
International Women’s Day
Jo Swinson Excerpts(9 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)
It is a great pleasure to respond to this important and enjoyable debate and to follow the hon. Member for Feltham and Heston (Seema Malhotra). I join her in congratulating the wide range of groups and organisations that do so much to campaign for the rights of women and girls, particularly on the subject of representation, which is key to this whole agenda.
We have heard excellent speeches today from Members on both sides of the House, although not quite enough men have contributed to the debate. I hope that in future years more of our male colleagues will be tempted to take part, and I offer my sincere thanks to those hon. Gentlemen who have taken part today.
Bob Stewart
One of the reasons I came to listen to the debate today was that I want to applaud women. In my experience—I am talking about my military experience—they are not just equal; they are sometimes at a higher level. Women are fantastic at running operations rooms, for example. They are better than men at doing that. Also, I often used to choose a woman, rather than a man, to run a negotiation or a mediation. On international women’s day, we should not only applaud women for being equal but emphasise the fact that they can be much better than men at doing some things.
Jo Swinson
My hon. Friend makes the case for having diversity within teams so that a wide range of skills can be brought to any given task.
We need to strike the right balance in these debates between celebrating progress and harnessing energy for change. It is right that we should celebrate the great progress we have seen in the past five years. We have seen a huge increase in the number of women on company boards, for example, and the first woman bishop. Also, the First Secretary of State and Leader of the House of Commons, my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), has done excellent work to propel up the international agenda the issue of preventing sexual violence in conflict. We have seen changes in employment law to extend the right to request flexible working and to introduce shared parental leave. Tax threshold changes have taken 3 million people out of taxation, 58% of whom are women, and there has been new legislation to criminalise forced marriage, to expand the definition of domestic abuse and to introduce new stalking offences. And of course, there are more women in work than ever before.
However, we should not kid ourselves that it is all fine, because it is not. It is not okay that three quarters of company directors in the FTSE 100 are male. It is not okay that girls and women face a continual stream of sexist insults and abuse, as documented by the Everyday Sexism project. It is not okay that there is still a 19% gender pay gap. It is not okay that two women a week are killed as a result of domestic violence. It is not okay that 40% of teenage girls report being coerced into having sex. It is not okay that a pregnant MP who dares to aspire to a Cabinet role should be subjected to a sexist diatribe by various sections of the media. And it is not okay that three quarters of MPs are men. So we still have a lot more to do.
In the debate today we have heard not only celebration but a call to arms for the tasks and battles ahead. My right hon. Friend the Member for Basingstoke (Maria Miller), the former Minister for Women and Equalities, has undertaken excellent work to ensure that revenge porn is properly criminalised and that action is taken in that regard. She made the case for a House of Commons Select Committee on women and equality, as has the all-party parliamentary group for women in Parliament. That is long overdue. There seems to be an obvious gap in our Select Committee structure and, although this is not a matter for the Government, I hope that the powers that be in the House will give the matter serious consideration when the new Parliament convenes in a few weeks’ time.
We have also heard that more progress is needed on finding ways of celebrating women around Parliament, including perhaps through portraits. We heard many good suggestions from various contributors, and I am sure that Mr Speaker and others will look at them with interest in Hansard.
We heard from the hon. Member for Islington South and Finsbury (Emily Thornberry) about a range of issues. She talked movingly about how women, whatever they decide, will always feel that they have made the wrong decision. It reminded me of a piece I heard on Radio 4’s “The News Quiz”, where Sandi Toksvig, in an answer, said, “Of course women cannot get it right, can they? If they have no kids, they are heartless. If they have children and stay at home, they are lazy. And if they have children and go out to work, they are selfish.” In response to silence from the other panellists she then said, “It’s not a joke. It’s just a rant.” I very much enjoyed that rant, and she was just stating a point of fact: women are judged for whatever they decide to do. We should be much more accommodating in recognising that people make different decisions.
The hon. Lady also talked about how women are still doing two thirds of the unpaid work, and I wholeheartedly agree that that is one of the major barriers to equality. It is one of the reasons why I am so enthusiastic about the changes we have made to introduce shared parental leave, because I do not believe we will be able to get equality in the workplace until we get more equality at home. Interestingly, Sheryl Sandberg points out in her excellent book “Lean In” that one of the important choices a woman makes for her career if she wishes to have a family is what the partner she chooses to do so with is like, because the attitudes he takes will have a massive impact on how she is able to juggle career and family responsibilities.
My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) talked about women in business, giving a huge range of examples of successful business women, many of whose websites and shops I have to confess to using. I appreciate what they do from both a business perspective and a consumer perspective. I also pay tribute to the work my hon. Friend has done for business women in her constituency and more widely, particularly with the all-party group.
My right hon. Friend the Member for Cardiff Central (Jenny Willott) talked about the importance of many women with young children setting up businesses, and using that as a catalyst to make the change, and that of course can lead to great success. She also mentioned the important issue of how we set expectations early as to what girls and boys should be interested in, and whether they take on scientific or more domestic roles. She discussed how the toys they use at an early age can have an impact. That is so important because, as the recent Department for Work and Pensions campaign “Not just for boys” shows, we have a massive shortage of women in many sectors such as science, engineering and technology, and it is important that we address that. I have to say that #notjustforboys is a pretty good hashtag, but it does not compete with one of the best hashtags ever, #dinosaursforall. That is about a campaign set up by women who are very frustrated that Marks & Spencer has launched a new range of clothing, in conjunction with the Natural History museum, that has dinosaurs all over it and, surprise, surprise, it is marketed only at boys, because girls could not possibly be interested in dinosaurs. Tell that to my niece Charlotte—she would certainly disagree. Although these sometimes appear to be more light-hearted examples, the messages we send to children are very important in terms of what they grow up thinking they can and cannot do.
The hon. Member for Slough (Fiona Mactaggart) spoke movingly about the recent documentary on the rape in India, and I agree with her that it is to the credit of the media in this country that they do showcase these issues and highlight these problems. She is absolutely right to say that we must demolish these rape myths—the victim is never to blame. She also talked about older workers and said that she is looking forward to the report from Ros Altmann, as am I. We are recognising some of the specific challenges that older women might face, particularly carers. That goes back to the point made by the hon. Member for Islington South and Finsbury, who said that women tend to do two thirds of the unpaid work, because older women often have those caring responsibilities. That is why we have recently launched a £1.6 million project to run pilots with local authorities on how we can get carers into employment and make sure they are properly supported. I hope the results of those pilots can show us some good evidence about how we might take further projects forward. The hon. Member for Slough is also absolutely right to say that women need to be around the Cabinet Committee tables and in those positions of power. This is about power, and much as I dearly love my male colleagues, who do a fantastic job in standing up for their women constituents, we need diversity of representation if we are truly to get the action we need on this wide range of issues.
My right hon. Friend the Member for Meriden (Mrs Spelman) talked a lot about the international elements of international women’s day and highlighted the HeForShe campaign, which I agree is hugely important; men do have a vital role to play in this. Like her, I found the way Emma Watson kicked off that campaign absolutely amazing. Listening to the power of the speech given by that young woman, I thought she was a credit to the entire country in setting out the case so brilliantly.
The right hon. Member for Cynon Valley (Ann Clwyd) talked about FGM and was absolutely right to highlight this abhorrent crime. We are taking strong action on that. We have set up a specialist unit to deal with FGM—we held the girl summit last year—and to take global leadership. However, in no way do we think that this is not a problem in the UK—it is, as well as in other countries. That is why we are introducing a mandatory requirement for all health care and social care professionals and teachers to report FGM to the police. The lack of prosecutions is a problem, but that mandatory reporting will enable the evidence to be gathered. I hope and believe that situation will change in the future.
It was wonderful to hear from my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) about the original Beijing conference and Platform for Action that she attended, along with the drafting process of 189 Governments having to agree the text. That sounded interesting and it showed that Members of the House have obviously been working on this for a long time. [Interruption.] It is 20 years since that Beijing conference, but there is much more to do.
Mrs Gillan
The Minister is making good progress in her wind-up. It really brought it home to me when I said to my researcher that I did this back in 1995 and she said, “Oh, I was four then.”
Jo Swinson
Indeed. Interestingly, my right hon. Friend said that the text prepared then is still incredibly relevant. That is not only a testament to excellent drafting, but, in a sense, it is slightly depressing. She raised a specific issue about human rights protection, its extension and the armed forces case, and I will endeavour to write to her with more detail on that specific legal point.
My hon. Friend the Member for Erewash (Jessica Lee) spoke movingly about her constituent, and the legacy that young Jessica has left from her campaigning. My hon. Friend also spoke about support for Girlguiding UK, which I agree is a fantastic organisation, and its campaign to get girls’ voices heard in the forthcoming election is to be commended. I believe my hon. Friend is the only contributor today who has announced that she is standing down, so may I say that it should be noted that in just five years she has made an excellent contribution to this House? It is sad that she has decided to stand down. She will be missed, but I am sure she will continue with her contribution and campaigning in other guises.
In conclusion, I have certainly found it a huge privilege to serve as Minister for Women and Equalities. I have been supported by some wonderfully passionate and dedicated officials at the Government Equalities Office, and I wish to put my thanks to them on the record. It is absolutely right that we celebrate progress, but whatever the outcome of the election, whatever the colour of the Government in office and whoever is the Minister for Women and Equalities—I dearly hope to be able to continue this work—there is still a huge amount to do. We must continue to be impatient and create that change.
Insolvency (Practitioner Fees and Court Cases)
Jo Swinson Excerpts(9 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I am today laying regulations requiring insolvency practitioners to provide additional information to creditors about their fees and expenses. Insolvency practitioners are given strong powers by legislation to administer insolvencies. They take decisions and actions that can have a significant financial impact on those affected. Their fees are paid out of the assets in cases. It is important that there is confidence in the way that they charge fees.
After commissioning an independent review by Professor Elaine Kempson, we consulted interested parties on what measures should be put in place to address shortcomings in the current fee regime. Where insolvency practitioners’ fees are based upon time costs, they will be required to provide an up-front estimate of their fees for creditor approval, before they can take their fees. Insolvency practitioners will not be permitted to draw fees in excess of the approved estimate unless creditors give further approval. This will therefore act as a cap on fees.
These measures will increase transparency for creditors as they will have a much clearer indication of what the likely fees and costs of dealing with an insolvency will be. The provision of clear information, setting out what work will de done and what it will cost to undertake that work, will also give creditors more knowledge when agreeing fees and better equip them to challenge fees where they appear unreasonable.
The measures will give insolvency practitioners the opportunity to demonstrate to creditors what they do and the value they deliver in return for their fees.
Together with the measures contained in the Small Business, Enterprise and Employment Bill currently before Parliament strengthening the oversight regulation of insolvency practitioners, these steps should provide creditors with greater confidence in the insolvency regime through increased transparency and accountability.
The statutory instrument that will be laid today also amends how courts deal with insolvency cases. The new provisions will allow the High Court to transfer simple cases to the county court at central London so that the High Court can focus on more difficult complex cases. This will improve efficiency in the system.
[HCWS325]
Oral Answers to Questions
Jo Swinson Excerpts(9 years, 8 months ago)
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Mrs Emma Lewell-Buck (South Shields) (Lab)
1. What steps she is taking to tackle homophobic bullying.
The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)
Homophobic bullying is absolutely unacceptable, and we are committed to eliminating it. That is why we have announced £2 million of grant funding to support schools to address the issue more effectively. That complements the £4 million that the Department currently provides to charitable organisations to tackle all forms of bullying.
Mrs Lewell-Buck
Is the Minister aware that Mr Gay World, Stuart Hatton, lives in my constituency? He recently launched a fantastic anti-bullying campaign called “So What?”. His message is simple: some of us are straight, some of us are gay, so what? With Stonewall reporting that nearly a quarter of lesbian, gay or bisexual pupils miss school because of homophobic bullying, his message is sorely needed. Labour’s shadow Ministers are backing Stuart’s campaign. Will the Minister?
Jo Swinson
I very much welcome the hon. Lady setting out her constituent’s campaign, and I will be happy to look at it as it sounds excellent. We all agree that tackling homophobic bullying must be a real priority for the reasons that she outlined in her question, and because of the impact that it has on LGBT young people, and indeed other young people, as this issue also affects those who are not LGBT.
Mark Menzies (Fylde) (Con)
Homophobic bullying in schools is completely unacceptable. Will the Minister ensure that Ofsted is getting the message through to head teachers and schools that they must do everything in their power to eradicate that wicked thing?
Jo Swinson
The short answer is yes, and the national professional qualification for headship contains information on how to tackle bullying, including homophobic bullying.
Graeme Morrice (Livingston) (Lab)
2. What estimate she has made of the number of women who have been unemployed for over one year.
Mr David Hanson (Delyn) (Lab)
3. What steps she is taking to deliver equal pay for men and women.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
The gender pay gap has fallen to its lowest level ever and has been entirely eliminated among full-time workers under the age of 40, but our goal must be to eliminate it entirely. We are tackling systemic pay inequalities through a range of measures: the Your Life initiative to get more girls into science, technology, engineering and maths; improved child care; extending flexible working; and introducing shared parental leave.
Mr Hanson
Forty four years after Labour’s Equal Pay Act 1970, sadly women earn on average 81p for every £1 that men earn. Tomorrow, my hon. Friend the Member for Rotherham (Sarah Champion) has a Bill providing for transparency in larger companies. Will the Government support it?
Jo Swinson
The Government’s position is not to support that particular Bill, but we are encouraging much more transparency through the Think, Act, Report initiative, to which more than 270 employers, covering 2.5 million employees, have signed up. Nearly half of them have done an equal pay audit in the last year and two thirds are publishing more information on gender equality. I agree that this is a hugely important issue on which we need to make more progress, and we are committed to doing so.
Mr Philip Hollobone (Kettering) (Con)
Which employment sector has the greatest gender pay gap, which has the least and what is the Minister doing to get representatives of the one to talk to the other?
Jo Swinson
That is a fantastic question, and I shall write to the hon. Gentleman with the specific statistics for different sectors. Sectoral differences are a significant part of the gender pay gap. We know that occupational segregation—the congregation of women in much lower paying sectors—is a significant driver of about one third of the pay gap, which is why the initiatives to get more girls studying STEM subjects are so important.
Chris Bryant (Rhondda) (Lab)
Will the Minister cheer on Patricia Arquette’s Oscar acceptance speech, in which she called for equal pay in the arts, particularly in the film industry?
Chris Bryant
If so—I see that both Ministers are nodding—what will Ministers do to ensure pay equality in the British film industry?
Jo Swinson
I wholeheartedly endorse the speech by Patricia Arquette—I have already welcomed it on Twitter because I think it needed to be brought to a wider audience. In the UK arts industry, as in all industries, it is important that there be greater transparency and support for women in the workplace in terms of promotion and seniority. That is what we will continue to promote.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I am sure that like me my hon. Friend is pleased that the Work programme is helping the long-term unemployed, both men and women, back into work. Will she confirm that the number of long-term unemployed people has fallen to its lowest in five years and that the claimant count in my constituency has fallen by 42%?
Mining in Goa (UK-listed Companies)
Jo Swinson Excerpts(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
It is a great pleasure to serve under your chairmanship, Dr McCrea.
I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing the debate and on taking us through a fascinating, if deeply worrying history of mining in Goa. He clearly has great constituency interest in the matter, as well as a personal one. He outlined details of the damage that can be caused to the natural environment in terms of deforestation, pollution and public health. The impact of corruption on the population is significant and, sadly, not unique to Goa.
Natural resources can be of huge benefit to countries and can be used to improve and develop the economies of those countries blessed with them, if managed well. They can transform poor countries. For example, in 2012, Nigerian oil exports were worth almost $100 billion, which is equivalent to more than the total net aid to the whole of sub-Saharan Africa. In 2007, Botswana became an upper middle-income country, although upon independence back in 1966 it was one of the world’s poorest countries. That success is largely due to well-managed mining revenues from diamonds.
Mining developments internationally therefore have the potential to boost economic growth dramatically and to provide a route out of poverty for resource-rich countries. However, there are also many examples of the temptation of such money leading to corruption and the kind of problems the hon. Gentleman outlined; natural resources can be more of a curse than a blessing for particular countries.
Extractives companies, whether listed or unlisted, are important partners for the Government. We want to make sure that developing countries can make the most of their natural resources to tackle poverty. We are committed to increasing transparency in the sector, encouraging strong, transparent and accountable institutions to regulate extractives properly and promote open markets and societies. We therefore need to facilitate an environment in which resource-rich developing countries and regions can attract responsible investment to help them transform the vast potential that natural resources offer into growth, jobs and development.
During the UK presidency of the G8 in 2013, we secured a commitment to working towards common global standards of extractives transparency. We want to level the playing field for business internationally and provide information for more citizens around the world, so that they can hold their Governments to account for how such resources are used. The G8 also launched eight partnerships, working with companies, Governments and civil society in resource-rich countries to improve transparency and build accountability and capacity to manage resources better. Our work through Department for International Development country offices is helping resource-rich developing countries to derive the maximum benefits from oil, gas and mining projects.
The problems the hon. Gentleman described impact significantly on the human rights of the population of Goa—on their rights to health, clean water and due legal process. As he will be aware, UK-listed companies are already required to report on the human rights implications of their operations. Those reports will be further strengthened under the recently agreed directive on non-financial reporting, which will be in place by 2017 and requires listed companies to include information on human rights in their strategic reports.
High standards of reporting on human rights issues are an inherent part of the UN guiding principles on business and human rights, which were adopted in 2011. In 2013, the UK was the first country to publish an action plan on business and human rights, which sets out the Government’s expectations of business to respect human rights at all times. In December, I was delighted to attend the third UN forum on business and human rights in Geneva, which had a constructive atmosphere with an increased business presence; civil society was very engaged in making the forum a success. UN action on this agenda is now in place and an increasing number of countries—although not yet enough—are producing action plans. We want to encourage work and progress on this agenda in countries around the world.
The UK is showing leadership on the issue; indeed, this evening, I will be launching the UN guiding principles reporting framework, which provides, for the first time, a comprehensive standard for reporting so that companies can be held to account by shareholders and customers. The reporting framework applies to all sectors, including extractives. Newmont Mining is one of five companies that have committed to applying the framework straight away.
The combination of enhanced disclosure in the strategic report and the UN guiding principles reporting framework, which sets the standard for that disclosure, will mean that from 2017 listed companies will be more effectively held to account for the human rights impacts of their operations. For that reason, I am proud of the work this Government have done on human rights.
We are also leading the way on extractives transparency. Back in May 2013, we made a commitment that the UK would sign up to the extractives industry transparency initiative, or EITI. In October, after a lot of work by a multi-stakeholder group, we formally gained candidacy status and will now proceed to produce the first reports. UK corporations have engaged constructively with civil society and Government, and their approach is a real example of how progress can be made. The whole process of EITI is designed to build trust and dialogue, and to put information into the public domain, which then prompts public debate. That can be a useful tool for holding companies to account. To give an example, in the Democratic Republic of the Congo, which is not necessarily renowned for its good governance, the EITI process was the first time different stakeholders sat down around the same table to discuss mining sector management. That kind of dialogue and co-operation can also help to prevent conflict.
Many extractive companies listed or headquartered in the UK are active in supporting EITI; for example Rio Tinto and Shell are part of the multi-stakeholder board I have mentioned. The UK’s intention in signing up to EITI is to show that it is not just for developing countries. We want to show that it is not a case of the UK simply telling other countries what they need to do; we recognise that we need to lead the way. That gives us a much stronger argument in our international discussions on the issue.
In addition to EITI, there is also chapter 10 of the accounting directive, which requires listed and large extractives companies to report the payments they make to all Governments. The Government committed to early implementation of those provisions, and our regulations came into force in December 2014. The Financial Conduct Authority, which the hon. Gentleman mentioned, has also changed its rules to require listed companies that are not registered here in the UK to report, implementing the requirements of the transparency directive. Companies will be required to report their payments to Governments from 1 January this year, six months ahead of the EU’s transposition deadline. We will start to see reports being published during 2016.
Bribery and corruption are barriers to trade and growth. The UK is a signatory to the UN convention against corruption and the OECD bribery convention. The Government published the first UK anti-corruption plan on 18 December last year, bringing together all the UK’s anti-corruption efforts under one cross-departmental plan. The Bribery Act 2010 came into force in July 2011, so a company that carries on business in the United Kingdom can be prosecuted for bribery anywhere in the world. On the other hand, other companies can trade on the honesty and integrity that the Bribery Act implies, bringing a benefit for business.
I am aware of the issues the hon. Gentleman raised about Vedanta in particular. It is important that companies listed in the key financial centre of London, which are therefore UK companies, are held to high standards. Quoted companies have to include information about environmental risk in strategic reports. Of course, some corporate governance failures will not necessarily be addressed purely through shareholders holding companies to account; that is one important route of accountability, but some failures may be so serious that the company and directors are exposed to criminal liability. For example, if a commercial organisation fails to put in place adequate procedures to prevent bribery, it could be criminally liable under the Bribery Act.
It is important to be clear: we expect all UK businesses to comply with all applicable laws and to respect internationally recognised human rights wherever they operate. It is no excuse if an offence is committed in another jurisdiction—a company should not feel that it can get away with behaviour and practices in a distant part of the world that it would not even attempt to get away with here.
Trust and transparency are incredibly important, which is why we have prioritised them as part of our corporate governance framework. Wide-ranging reforms in the Small Business, Enterprise and Employment Bill will enhance corporate transparency and increase trust in UK business. Central to that is implementing a publicly accessible central register of information on the people who ultimately own and control companies—the persons of significant control. We are proud to be leading globally in this space, and are encouraged by the growing international momentum on these issues. For example, the soon to be adopted fourth money laundering directive will require all EU member states to hold company beneficial ownership information in a central register.
It is absolutely right that the hon. Gentleman has raised these serious issues. It is a positive thing that a particular problem in a particular area of the world, or with a particular company and its practices, can be highlighted in this place and a spotlight shone on such activities. He has done that today through this debate on mining in Goa. I hope I have set out that the Government take these issues incredibly seriously and are aiming to be a world leader in transparency and accountability—in extractive mining companies and much more widely—as well as in encouraging businesses to take their human rights responsibilities seriously.
There is no room for complacency. We must continue to promote these issues. There will always be money to be made somewhere in the world by exploiting human rights, but that is unacceptable and we in the UK should have no truck with it whatsoever. That is why it is so important to empower citizens in Goa and elsewhere to encourage the development of strong corporate governance, and to make sure that UK-listed mining companies are able to lead the way on these matters.
Question put and agreed to.
Oral Answers to Questions
Jo Swinson Excerpts(9 years, 9 months ago)
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Michael Connarty (Linlithgow and East Falkirk) (Lab)
4. What steps he plans to take to safeguard the universal service obligation for the delivery of mail.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
The universal service obligation is not an optional extra—it is a fundamental duty enshrined in law and only Parliament could change that. In addition, it is the responsibility of the postal regulator, Ofcom, to ensure services are available throughout the UK at an affordable and uniform price, six days a week.
Michael Connarty
I thank the Minister for that reply, but is it not time that we looked at how Ofcom carries out its remit, possibly through a judicial review of that remit? Ofcom has been dragged reluctantly to review the actions of the cherry-pickers such as Whistl, which wants to pick mail up in the 8% of the UK’s geographical area that covers 42% of the mail thereby undermining the ability of Royal Mail to deliver, yet Ofcom attacked the standard of wages and conditions of the Royal Mail workers rather than deal with the problem of cherry-picking of the universal service obligation, which could be irrecoverably damaged.
Jo Swinson
There is agreement on both sides about the importance of the universal service obligation, and I do not think there is any evidence that the regulator is failing to fulfil its duty. It looked in detail at the case the Royal Mail put forward last summer and concluded that the market is operating as it should at the moment. It is committed to a further review later this year, and is also looking at the issue of access pricing. These issues are continually under consideration because the USO is so important.
Ian Murray (Edinburgh South) (Lab)
I am disappointed that you did not tell the House the middle names of this Minister, Mr Speaker, but perhaps we can look forward to that later.
It is nearly 18 months since the botched privatisation of Royal Mail. There are reports almost weekly of its being under pressure from the impact of Amazon’s increased use of its own delivery network, and from rivals which are cherry-picking the most profitable services. As the Minister has just said, Ofcom recently concluded that other firms did not have to match Royal Mail’s costly standards in the delivery of the universal service obligation. Given that Labour warned time and again that privatisation would ultimately threaten the USO, and given that the National Federation of SubPostmasters called it a “reckless gamble”, will the Minister look again at the USO, and give a cast-iron guarantee that it will be secure under this Government?
Jo Swinson
This Government have already given that cast-iron guarantee by legislating for it in the Postal Services Act 2011. Parliament has set it very firmly in stone. Unless the hon. Gentleman thinks that any future Labour Government would be minded to change the position, I hope that Members on both sides of the House can feel confident that the universal service obligation is secure.
As I said earlier, Ofcom, the regulator, has significant powers to obtain information from other operators in the market. It monitors operators’ plans regularly, and looks at the information every month. Operators must also inform the regulator of their future plans. That will remain under review, and a formal review will take place later this year. I think that what I have said should reassure the House that the universal service obligation is here to stay.
Mr Andrew Turner (Isle of Wight) (Con)
Will the Minister help me by explaining why postal collections that used to take place at 4 pm now take place at 9 am?
Jo Swinson
That is obviously a slightly different issue from the USO, but I can tell the hon. Gentleman that Royal Mail has reviewed the time of collections from post boxes in which fewer than 50 items of mail were being deposited each day, as part of an overall review of its service. In a positive move which I think Members should welcome, it has maintained all those collection points rather than decommissioning some of them, although collections will be less frequent. It has also ensured that there will be an alternative posting point within half a mile of post boxes from which there are fewer collections or an earlier final collection, from which mail will be collected later.
Grahame M. Morris (Easington) (Lab)
5. If he will take steps to increase apprenticeship places and support small businesses through greater use of Government procurement.
Mr Alan Reid (Argyll and Bute) (LD)
I welcome the introduction of big fines for supermarkets that breach the groceries supply code of practice, but I urge the Government to bring forward the review. We need to extend the code to indirect suppliers such as dairy farmers, who are suffering greatly at the moment. They cannot wait another year. May we have the review much sooner, please?
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I thank my hon. Friend for that question. I know that my hon. Friend the Member for Somerton and Frome (Mr Heath) has also been raising this issue assiduously. It is one that Members across the House are, understandably, very concerned about. The Groceries Code Adjudicator is already proving to be a great success in her work with supermarket companies, by encouraging them to change their behaviour. We have ensured that she has, and will have, the power to fine as well as to launch investigations—the first, of course, was launched recently. The question whether the remit should be extended needs to be looked at, and I commit the Government to doing that.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Government procurement can be used to drive innovation and to support our small business sector. How can small businesses in my constituency find out what opportunities exist to help them?
Mr David Heath (Somerton and Frome) (LD)
A business in my constituency received a communication from Royal Mail the week before Christmas, saying that with effect from four business weeks later, the business reply and freepost service that it had used for 10 years was to be discontinued and it would have to re-register. The business was told that if the old address was used, there would be a 20p penalty per item and the item may not be delivered. It will cost the business £10 per customer and £10,000 in lost stationery. Is that reasonable? Should not the Royal Mail respond to my letter? Will the Minister intervene?
Jo Swinson
Royal Mail should certainly respond to the letter that my hon. Friend sent it, and I will happily take that up on his behalf. The issue that he raises goes wider. The change had been notified earlier to some customers but that may not have happened properly in this circumstance, and I shall be happy to look into it.
Insolvent Businesses (Supply of Essential Services)
Jo Swinson Excerpts(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
Rescuing struggling but viable businesses out of formal insolvency helps save jobs and improves the prospect of creditors recovering some of what they are owed. The Enterprise and Regulatory Reform Act 2013 introduced new powers to help insolvency practitioners secure essential IT and utility supplies to keep a business going while it is being rescued.
I have today laid an order to ensure that insolvency practitioners can retain the essential supplies they need to save viable businesses. There will be an impact on suppliers in the IT and utility sectors but I believe that by providing strong safeguards to ensure the supplier can have confidence they will be paid, we will ensure that the benefits of this measure far outweigh the costs. In particular:
The supplier will be able to seek a personal guarantee from the insolvency practitioner at any time to give them more certainty that the supplies will be paid for.
The supplier will be able to apply to court to terminate their contract on the grounds of ‘hardship’.
Guidance will be issued to insolvency practitioners to urge them to make contact with essential suppliers at the earliest possible time following their appointment to discuss their needs in relation to supply, to ensure that undue costs are not incurred.
The Government’s aim remains to ensure that a balance is struck between ensuring the rescue of viable businesses against the obligations placed on those suppliers that will be impacted by the order. The proposed changes will have effect in relation to contracts made after 1 October 2015.
The Government consulted on how those new powers should be exercised and whether the safeguards proposed were adequate to ensure that those essential suppliers bound to supply an insolvent business would be paid.
A total of 31 responses were received and I am very grateful for the time those respondents took to provide constructive feedback to the consultation. Almost all respondents expressed their support for the aims of the proposals with some suggesting ways to make the safeguards more effective. The draft order was amended in the light of comments received.
A summary of the responses received to the consultation can be found at www.gov.uk/government/organisations/insolvency-service.
[HCWS265]
Competition and Markets Authority: Contingencies Fund Advance
Jo Swinson Excerpts(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
The Department for Business, Innovation and Skills wishes to report that a cash advance of £13 million from the Contingencies Fund has been sought for the Competition and Markets Authority (“the CMA”).
The advance is required to meet an urgent cash requirement on existing services pending parliamentary approval of the 2014-15 supplementary estimate. The supplementary estimate seeks an increase in net cash requirement in order to settle material liabilities arising from an increase in the level of existing services and utilisation of a budget cover transfer from BIS to the CMA.
Parliamentary approval for additional resources of £13 million, will be sought in a supplementary estimate for the CMA. Pending that approval, urgent expenditure, estimated at £13 million, will be met by repayable cash advances from the Contingencies Fund.
The advance will be repaid upon Royal Assent of the Supply and Appropriation (Anticipation and Adjustments) Bill.
[HCWS227]
SportsDirect (USC Dundonald)
Jo Swinson Excerpts(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I congratulate the hon. Member for Central Ayrshire (Mr Donohoe) on securing this timely but unfortunately necessary debate. I do not think that any of us wish the situation to be as it is—particularly those who have, sadly, lost their jobs.
The concerns about the events leading up to and surrounding USC’s failure, particularly some of the allegations made about the company’s treatment of its creditors and employees, are valid and genuine, and I assure the hon. Gentleman that they are shared across the House. It is important that answers are found. As with any company failure, it is important to establish the facts of the case: what occurred in the lead-up to the administration of USC, the reasons for the failure and whether the company has been a victim of circumstance, as sometimes happens with companies, or whether the conduct of its directors has fallen below the standards that we rightly and reasonably expect. Those standards include treating creditors and employees of the company fairly and in accordance with the law.
Based on the information that we have been given, USC’s administration seems to have been due to the company’s failure to pay its rent and suppliers when they came due. On the specific questions asked by the hon. Gentleman about the winding-up orders and so on, I understand that, according to the administrators, a statutory demand had been issued to USC by a key supplier on 17 December 2014, payable by 31 December. That would have allowed the creditor to seek a winding-up order if the debt was not paid. On 6 January, the company gave notice of entering administration, and it did so on 13 January, but I am not aware that a petition for a winding-up order was made.
Mr Donohoe
As a local MP, the Minister knows something about Glasgow Rangers, but she might not know as much about USC. Is there an urgent need for a change in the law if, on the one hand, a creditor can seek a winding-up notice and, on the other hand, the company can frustrate that by making an application to the courts for administration?
Jo Swinson
This case raises many questions. We are making several changes to insolvency law, and particularly to the pre-pack regime, where there are particular concerns. The hon. Gentleman is right to say that I have some familiarity with Glasgow Rangers—indeed, Murray park, their training ground, is in my constituency. I confess that I am not a football fan, but my late grandfather was a very proud and longstanding season ticket holder and supporter of Rangers. He enjoyed many trips to matches on the supporters’ bus.
We all have to think about the context. USC was not just a small company on its own; it was just one part of a large retail group. The events are particularly concerning in that context.
Mr MacNeil
Given what the Minister is saying, does she feel that USC, and perhaps Mike Ashley, too, have been guilty of using loopholes to get round certain situations and to create part of these problems quite deliberately? Could employment law be tightened so that workers are not victims, as they have been in this case?
Jo Swinson
There are a couple of different issues within that question. We will need to wait to see the specific facts that come out of the investigation. Obviously, the administrators will provide information to the Insolvency Service, and they have to file a report within six months, although the general practice is to file such reports much more quickly. Indeed, we will be shortening that time to three months.
On whether there are loopholes, action has been taken on the pre-packs issue, which I will address in a moment. The hon. Gentleman is absolutely right that employment law is not negotiable. Employment law is not something that is optional or that a company can decide to take or leave; it is the law, and it needs to be followed. Enforcement is particularly important. A range of issues have been raised, including some of the issues surrounding zero-hours contracts, which I will also address.
One of the key questions is why USC, which was wholly owned by SportsDirect, was allowed to reach the point at which its key suppliers and landlords were not just threatening but taking enforcement action. SportsDirect purchased USC’s business through another company, Republic. We have been told that USC’s key suppliers have been left out of pocket, so it seems odd that they would continue to supply Republic. There are, therefore, a lot of unanswered questions.
The law is clear that employees should be consulted where 20 or more people are being made redundant at the same establishment, and it can be a criminal offence to fail to notify the Secretary of State of proposed redundancies. Tribunals can make protective awards where employees are not properly consulted.
Mr Donohoe
Will the Minister and her Department do that through the criminal courts in this case?
Jo Swinson
I am not going to give the hon. Gentleman that assurance in the Chamber today, but I reiterate that we will be looking very carefully at all the facts that emerge and at the picture created from the information that comes from the administrators. There is a wide range of both investigation and enforcement powers, and it is important that they are used wherever it is found that companies have not behaved properly, and particularly when directors have not behaved properly.
Mr Gregory Campbell (East Londonderry) (DUP)
The Minister refers to wanting to look at the issue very closely without giving any commitments in this Chamber. Will she also give a commitment to refer Glasgow Rangers football club, and the potential issues there, to the sports Minister—particularly in respect of the constituency issue that has been raised?
Jo Swinson
I will happily talk to the sports Minister about those issues, and obviously there are specific issues for the Scottish Football Association to consider. Insolvency Service investigators are already in contact with the joint administrators of USC. That is at an early stage because the administration is fairly new, which affects the information that can be provided, but there is a legal duty to provide a confidential return to the Secretary of State about the directors’ conduct. Although the administrators’ view about that is certainly relevant, ultimately their assessment of whether there are grounds for disqualification is based on the Insolvency Service’s independent view and conclusions.
Directors can be disqualified for anything between two and 15 years. It is also worth noting that, in addition to director disqualification proceedings, the Insolvency Service can exercise its powers to investigate any UK company where it suspects misconduct. We are making it easier for disqualification proceedings to be brought where other laws have been broken—it is currently possible, but we want to make it crystal clear that it should be easier. Measures in the Small Business, Enterprise and Employment Bill explicitly state that, in deciding whether someone should be disqualified, the criteria that courts will be required to consider will be extended to include breaches of legislation. That could include health and safety law, immigration law or employment law.
Sandra Osborne
I have been listening to what the Minister has said. In my constituency, directors walked away from coal mines leaving £140 million of damage. I have been pursuing that matter with the insolvency people for two years and nothing has happened, so she will forgive me if I am slightly cynical about what she is saying.
Jo Swinson
I will be happy to look into the specific issues that the hon. Lady raises. Although the powers already exist, we recognise that making it more explicit that breaches of law can be considered in the disqualification process will make such cases easier. That is why we are changing the law. I will happily look separately at the specific case that she is pursuing.
I turn now to pre-packaged administrations, or pre-packs. They have been discussed in this House on many occasions, because there are understandable concerns about them. In a pre-pack, the sale of the viable parts of an insolvent company’s business is arranged before the administration starts and concludes shortly after the administrator is appointed. In the case we are debating, the administration has allowed the majority of the business, including more than 600 jobs across the UK, to be transferred to the purchaser, Republic, although unfortunately another 84 employees have lost their jobs.
It is important that we establish whether the pre-pack represented a necessary step to save an insolvent business, or if, as has been suggested, it was an abuse of the insolvency process. I reassure hon. Members that officials are looking at that as a matter of urgency. The changes that we are making, following the review of pre-packs by Teresa Graham, will mean that by spring there will be new checks and balances on pre-pack administrations where the sale is to a connected party, so that there is independent evaluation of whether that party is a viable business with a viable underlying business model that will not simply run into the same problems as the business in administration; there will also be evaluation of whether the sale represents the best value.
Mr Donohoe
May I ask to be kept posted, within reason, on anything that happens in the Department and whatever action or otherwise is taken by BIS?
Jo Swinson
I happily give that assurance. Obviously, certain elements remain confidential because of specific legislative requirements, but I am happy to keep the hon. Gentleman updated on the issue.
I will touch on the important matter of the employees and support for them, before coming to some of the specific issues raised about Mike Ashley. Obviously, whenever people are made redundant, support is crucial. That is why the Jobcentre Plus rapid response service is available and can provide everything from information to help with job search, identifying skills gaps and, ultimately, training to update skills or learn new ones to ensure that people can move back into employment. That is particularly important for those individuals.
In terms of redundancy payments, employees are guaranteed to receive their wages and other payments owed, subject to certain limits. That money comes from the national insurance fund.
Cathy Jamieson
Will the Minister say something about the position of those who are on zero-hours contracts and the particular difficulties that they will face?
Jo Swinson
I will certainly come to that issue. The redundancy payments service has begun processing claims—I understand something in the region of 30 claims have already been put in. It aims to pay 80% within three weeks of receiving the claim form and 93% within six weeks of receipt of the form.
Obviously, within the group of people who have been made redundant, there is a mix of those who were on fixed-hours permanent contracts and those who were on zero-hours contracts. However, it would not be accurate to say that somebody on a zero-hours contract has no right to a redundancy payment. The calculation for the payment tends to be made on the basis of an average of, I think, the 12-week period running up to when they were made redundant. I hope that will provide some reassurance to the hon. Lady’s constituents who may find themselves in that position. Guidance on redundancy pay for any employer affected is available on gov.uk.
Hon. Members have raised significant concerns about the behaviour of Mike Ashley, and I share those concerns. He seems determined to show that rules are for other people. We know that he bought nearly 10% of Rangers football club, and in doing so rather skirted the edges of the SFA’s rules on owning two clubs. Despite being blocked by the SFA from increasing his shareholding further, he appears to be looking to expand his influence. The rules that prevent the same person from owning two clubs are there for a good reason: to prevent conflicts of interest and to safeguard the integrity of the sport.
We are talking about a man who, according to media reports, forced through a £200 million bonus scheme at SportsDirect and subsequently withdrew his own participation amid speculation that he introduced the scheme simply to show his investors who was in charge. Some 90% of SportsDirect employees are reported to have zero-hours contracts, so they would not be eligible for the scheme. At least one worker was allegedly told that a zero-hours contract meant that she would not receive holiday pay. I cannot emphasise enough that that is against employment law.
There are serious questions to be answered about USC and many of its practices. I have outlined that the Insolvency Service has the power to receive information from the administrators and to investigate any company that it believes has questions to answer. I welcome the suggestion that Select Committees may also wish to ask questions.
I believe that zero-hours contracts have a place in a flexible labour market, but they are not a substitute for proper business planning. I fail to understand how a retailer can get away with employing the majority of its staff—up to 90% of the work force of 20,000 at SportsDirect—on zero-hours contracts. Apparently, SportsDirect operates some 420 stores, but it has a permanent work force of perhaps only a couple of thousand people. I do not see how a retailer can reliably open its stores every day if the workers on zero-hours contracts genuinely have the power to say that they will not take any given shift. A zero-hours contract should mean that the employer is free to offer work or not to offer work, and the employee is free to accept or decline that work.
I am at a loss to see how such use of zero-hours contracts can be deemed to be in any way responsible, and I think there are even questions about whether it is in line with employment law. Certainly, exclusivity clauses, which must be part of the way in which SportsDirect operates zero-hours contracts, will soon not be legal in such contracts as a result of the action we are taking in the Small Business, Enterprise and Employment Bill, and rightly so. Using zero-hours contracts to fill the gaps by requiring people to turn up for work but not giving them guaranteed hours is not a responsible use of such contracts.
Cases have been brought against SportsDirect by people such as Zahera Gabriel-Abraham. That case was settled out of court, but some of the media reports were concerning. The Guardian reported that
“the retailer will have to make clear in job adverts, contracts and staff rooms that it does not guarantee work, sick pay or holiday pay”.
I do not believe that that is the full story, because it is not for an employer to decide whether their employees get sick pay or holiday pay; it cannot simply opt workers out of their statutory rights. One of the barristers from Leigh Day summed it up well:
“Zero hours workers are not second class workers. They have the right to be treated fairly and with respect. They have the right to take holidays and to be paid when they take them. They have the right to statutory sick pay. They have a right to request guaranteed hours. Sports Direct will now have to make that crystal clear to staff.”
I hope that the reports do not suggest that those staff have not been getting sick pay, holiday pay or their other statutory rights. I encourage anyone at SportsDirect or anywhere else who thinks that they have not been receiving their proper rights to contact ACAS or the pay and work rights helpline on 0800 917 2368. Breaking employment law is absolutely unacceptable, and compliance will be properly enforced.
There are certainly questions to be answered about the matters in the USC administration and pre-pack sale, and the Insolvency Service will be looking at the information that it has received. The hon. Member for Central Ayrshire asked a wide variety of questions, and I appreciate that time is short—
Jo Swinson
I will happily write to the hon. Gentleman in full to pick up on any points that I have not addressed, and I will write further to keep him updated. I thank him for giving us the opportunity to debate these important issues.
Question put and agreed to.
Economy and City Link: Coventry
Jo Swinson Excerpts(9 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this debate at such an appropriate time. He called it to talk about City Link, obviously, but also about the wider issues relating to jobs in Coventry. I know that he has been a passionate supporter of businesses and workers alike in his constituency over the years.
We all agree that this is a worrying time for the individuals who were reliant on City Link for work, a significant number of whom were based in Coventry. There is a huge amount of sympathy for those who have lost their jobs through no fault of their own. The timing of the announcement has been mentioned. It is difficult for anybody to hear that bad news, but to hear it immediately before Christmas, when people hope to be celebrating with their families, is particularly difficult, so one cannot help but feel for those individuals.
That is why our focus is on ensuring that those who have found themselves out of work as a result of the City Link administration find new work as quickly as possible. We are helping the employees and subcontractors to do just that. We are also ensuring that City Link employees who are eligible for statutory redundancy payments get the money that is due to them as quickly as possible. The Jobcentre Plus rapid response service is available to employees and subcontractors at City Link. That is delivered at the discretion of each local district. That support is already being provided around the country. It can include things such as information, advice and guidance, help with job searches, CV writing, interview skills, identifying transferable skills or any skills gaps, and training to update those skills and to get certification to improve employability.
In Coventry, Jobcentre Plus is working with a local skills and employment company to provide extra support on employability and moving into work. Earlier this month, three sessions were held to support workers. In addition, the Coventry city council job shop and the local enterprise partnership’s growth hub are working closely with Jobcentre Plus to identify employers who have vacancies. It is positive that a number of local employers have expressed an interest in taking on City Link staff in Coventry. Although this remains a difficult time, it is encouraging to hear of City Link workers in Coventry who are already finding new work.
When the employer’s insolvency has led to dismissal, employees are guaranteed to receive—subject to certain limits—their wages and other payments they are owed, and that money comes from the national insurance fund. A dedicated team in the redundancy payments service is already processing those payments, and we will ensure that claims are processed as quickly as possible. Any City Link employees who want guidance on that redundancy pay can find that information at gov.uk.
Hon. Members mentioned those who are self-employed and could not necessarily work for any company other than City Link. They do not qualify for redundancy pay because of their self-employed status. We recognise that that issue is significant and has grown over recent years. We have protections for employees, a separate set of protections for workers that are not quite as enhanced, and then there are the self-employed. For many people, being self-employed works well, but some employers try to use different categories so that those people do not have the same level of employment rights. The Department for Business, Innovation and Skills is undertaking an employment status review to consider those issues in detail.
Mr Jim Cunningham
In one case that I am aware of, the individual is owed something like £90,000, which puts them in a terrible position.
Jo Swinson
Indeed, and individuals will be in different circumstances. As I said, for some people being self-employed works well depending on their circumstances, but the difficulty comes if that is used effectively to mask what is an employee-employer relationship. In addition to any concerns the Treasury might have, there are also issues about workers’ rights.
Mr Robinson
The point my hon. Friend and I are making is that those people are not allowed to work for anyone else. Generally, someone who is self-employed has the right to work at other places and build up other contracts. They can do other things and offload their risk. However, when they are obliged by their contract not to do that, we must consider that in the light of employment law.
Jo Swinson
I am not a lawyer so I will not give legal advice, but employment tribunals can consider the facts of any case in front of them. It is not simply what is declared in a written contract that determines the nature of an employment relationship; it is also about the facts of the case. Employment tribunals are able to interpret a case based on whether there is mutuality of obligation, and in previous employment tribunals, judgments on exclusivity clauses have been used to demonstrate that kind of relationship. I will not pronounce on any individual case, but there is flexibility in the employment law system for employment tribunals to consider individual facts. Because there is uncertainty about different types of employment—some of that is related to growth in zero-hours contracts and we are legislating to prevent the kind of exclusivity clause that has been outlined—we are undertaking that employment status review. I do not suggest that the solution is straightforward or simple, because a wide range of issues are being considered. Employment law and status have developed over many decades, and that review is an important piece of work.
The hon. Member for Coventry South mentioned the importance of quality jobs. Positive employment figures are a great good news story, but as the economy recovers we want to encourage employers to ensure that the jobs they create are quality jobs, and that where they can afford to they do not pay just the basic minimum wage. That safeguard and safety net is rightly there as a protection for the most vulnerable people in our labour market, but the minimum wage should not be a target. Responsible companies that are profitable and doing well generally want to pay above the minimum wage, and the Government encourage them strongly to do so.
On an investigation into City Link, the process after any company fails is that we ask whether it has been managed correctly, which is fair. We need to establish the full facts before coming to a judgment, as the hon. Member for Coventry North West (Mr Robinson) said. As a result, the administrators have a legal duty to report confidentially to the Secretary of State within six months of their appointment on the conduct of the directors. We are trying to reduce that time in legislation to three months. It is important to point out that we do not expect a report to take six months; they are often done earlier than that. Insolvency Service investigators are currently in contact with the administrators and expect to be able to identify any matters that should be investigated well before that final six-month deadline.
When the necessary information has been received from the administrators, the Insolvency Service is in a position to consider whether there are any grounds for bringing disqualification proceedings against the directors. The administrators’ view is a relevant consideration, although ultimately the assessment of whether grounds for the disqualification of directors exist will be based on the Insolvency Service’s independent view and conclusions. A director can be disqualified for anything between two and 15 years. It is important to set out that process. We need to wait for the information. On a point of clarity for the hon. Gentleman, the report that is produced on the directors’ conduct by the administrator is produced confidentially to the Secretary of State. That will be assessed by the Insolvency Service. On that basis, it will then decide whether further action should be taken.
We have discussed the importance of City Link, but the hon. Member for Coventry South set out wider issues in Coventry’s economy. We are dealing with the damaging City Link situation, but it is worth recognising that there is a lot to welcome in the local economy in Coventry and Warwickshire. It is one of the higher-performing local enterprise partnerships in terms of investment and jobs created through foreign direct investment. It is an important location for firms experiencing employment and growth. Last weekend, Newcross Healthcare Solutions announced plans to open a new base at the Middlemarch business park, where City Link was based, which will create 100 new permanent jobs.
Others have chosen Coventry recently, such as LeanNova Engineering, which is creating 60 jobs, and Sitel UK, which is set to create around 300 new jobs, with potentially more to follow. They sit alongside high-profile names such as Capita and Bupa, which are expanding within Coventry. That builds on Coventry’s major manufacturing and engineering base, including such major employers as Tata, Jaguar Land Rover, Aston Martin, BMW, Rolls-Royce and Alstom.
It is not just the Government and I who see signs of encouragement. Coventry’s success was highlighted in a Centre for Cities report published this week, which notes that Coventry has outperformed its west midlands counterparts over the past decade, achieving an 8% increase in jobs and a 22% increase in business stock, which is a third higher than the national average. It has the second-fastest growth in private sector jobs among UK cities. I appreciate the concern about other companies mentioned in the debate, but there are none the less reasons for optimism in the Coventry economy.
Mr Jim Cunningham
I do not disagree with the hon. Lady. Lots of good things are happening in Coventry. I made that point, but I also considered other areas where we have got to do better.
Jo Swinson
The hon. Gentleman is doing absolutely the right thing as a constituency MP. It is important that we celebrate what is going well in an area, but we must also continue to strive and see where we can do more and provide further support for local economies. That is why the Government continue to work hard to improve conditions in Coventry and the rest of the country. The regional growth fund of £410 million has gone to 63 projects in the west midlands. Eighteen of those are in Coventry and Warwickshire, which is worth about £160 million of direct Government investment, and which should leverage in a total of £1.4 billion of private sector investment and create or safeguard more than 10,000 jobs. It is important that that continues. We are working with local enterprise partnerships throughout the country, and the Growing Places fund, the city deals and the growth deals are helping local enterprise partnerships to support their economies.
We have had a good opportunity to hear from Coventry Members about the challenging City Link situation and the importance of ensuring that the conduct of the directors is properly considered. Those processes are in place. There are positive signs within the Coventry economy, but it is important not to be complacent and to continue to work hard. The Government intend to continue to work alongside Members of Parliament, the local authority, the local enterprise partnership and other stakeholders to ensure that we continue to build a stronger economy in Coventry and the rest of the United Kingdom.
Question put and agreed to.