Oral Answers to Questions

Jo Swinson Excerpts

Thursday 8th January 2015 Commons Chamber

[Lilian Greenwood (Nottingham South) (Lab)]

8. If he will take steps to ensure that employees working on zero-hours contracts who are in practice working regular hours over an extended period have the right to a fixed-term contract.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

Under flexible working legislation brought in on 30 June 2014, all employees with 26 continuous weeks of service have the right to request flexible working from their employer. Employees on zero-hours contracts can request a change in their contracts, which could of course include a request to move to fixed hours.

[Lilian Greenwood]

Over Christmas, Radio Nottingham carried reports of a zero-hours worker at SportsDirect who was so worried about missing a shift that he went into work despite being critically ill. I have heard from constituents working in health and social care who dare not raise concerns about health and safety or quality of care for fear of losing all their hours. Is it not now absolutely clear that the only way to end that exploitation is to vote Labour on 7 May?

[Jo Swinson]

Unsurprisingly, I disagree with the perspective at the end of the hon. Lady’s question. I agree that there are serious issues with zero-hours contracts. Although they work well for many people, as backed up by Chartered Institute of Personnel and Development surveys, there are other examples—she highlights some from her constituency—where that type of contract is not used as it should be. That is why we are taking action through the Small Business, Enterprise and Employment Bill to ban exclusivity clauses and why we are going further, with the development of sector-specific guidance to show what the proper and responsible use of these contracts looks like.

[Ann McKechin (Glasgow North) (Lab)]

The Minister will be aware that in parcel and distribution services there is not only widespread use of zero-hours contracts but, as we have seen with the collapse of City Link, increased use of self-employed contractors, who have ended up with no rights to redundancy, with losing pay, and with being increasingly abused. How will the Minister regulate the sector so that we halt this race to the bottom in labour conditions?

[Jo Swinson]

The hon. Lady raises a genuine point. The Government do recognise this as an area of concern, particularly as regards different employment statuses. My right hon. Friend the Business Secretary announced a review of employment statuses so that there can be greater clarity about the issues and we can see whether we need to make changes to the way in which different employment statuses are currently set out. The review is ongoing and we expect it to report over the next couple of months.

[Kelvin Hopkins (Luton North) (Lab)]

9. What recent assessment he has made of the effect of the UK’s EU membership on businesses and the UK economy.

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[Joan Walley (Stoke-on-Trent North) (Lab)]

17. What position his Department took at the Competitiveness Council discussions on 4 December 2014 on the product safety and market surveillance package and the provision of mandatory origin marking on consumer products manufactured or imported.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The UK’s position on the product safety and market surveillance package remains unchanged: we oppose the inclusion of mandatory country of origin marking in the consumer product safety regulation. The issue was briefly raised at the Competitiveness Council meeting on 4 December, but no formal discussion or decisions were taken.

[Joan Walley]

I thank the Minister for that reply, but I am disappointed. On the grounds of public health and putting British manufacturing on a level playing field, we desperately need to hold a consultation and do the necessary research to make the case for compulsory country of origin marking, so that when we turn over a cup or saucer we know exactly where it was manufactured. Why cannot the Government abandon their opposition to that deregulatory measure?

[Jo Swinson]

The hon. Lady is a long-standing campaigner on and advocate for that issue. I do not believe it is a product safety matter, but she is right to say that there is a genuine issue that businesses in her constituency and other parts of the country are concerned about. We are looking into the matter in more detail and we expect a UK study on country of origin marking to complete by next month. The Commission has announced its own study on origin marking, which we will consider closely.

[Grahame M. Morris (Easington) (Lab)]

18. If he will bring forward legislative proposals to prohibit firms from being asked to make pay to stay agreements to remain or become approved suppliers by large firms.

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[Mr David Heath (Somerton and Frome) (LD)]

As of last week, one could go into an Asda supermarket and buy four pints of milk for 89 pence. Milk, with all the work and care that goes into its production, should not be cheaper than plain water. Is it time to look again at the remit of the grocery code adjudicator to give her the opportunity to look at whole supply chains, especially when they greatly disadvantage primary producers?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The grocery code adjudicator’s remit is set out clearly in primary legislation, but it is important that the Government keep these issues under review. The Department for Environment, Food and Rural Affairs has engaged significantly with milk producers on this issue. My hon. Friend highlights a real problem concerning the sustainability of those who produce this vital resource.

[Mrs Mary Glindon (North Tyneside) (Lab)]

T4. What does the Minister have to say to members of the Alliance for Inclusive Education, who consider that his requirement for disabled students to contribute £200 towards their computer equipment funded by the disabled students allowance is unacceptable and discriminatory?

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[Ian Lavery (Wansbeck) (Lab)]

Most companies pay the national minimum wage, but increasingly we have seen more companies not wishing to pay it and developing numerous professional scams—making individuals pay for uniforms, non-payment of mileage, bogus employment and bogus apprenticeships. What will the Government do to police the national minimum wage effectively in respect of these companies?

[Jo Swinson]

The hon. Gentleman raises a very serious issues and alludes to today’s TUC report, which I look forward to reading in detail. We have expanded the resources available for the enforcement of the national minimum wage; we have increased the penalties; we have introduced the naming and shaming scheme; and we will continue to clamp down hard on those companies that break the law. Many of the practices he outlined, which would seem to be in the report, are already against the law. The pay and work rights helpline in Her Majesty’s Revenue and Customs will also help to clamp down on these employers.

[Jeremy Lefroy (Stafford) (Con)]

Just before Christmas, Alstom Grid announced its intention to construct a state-of-the-art factory and research facility in Stafford— a vote of confidence in this country’s skills, openness to investment and industrial strategy. Will my right hon. Friend join me in paying tribute not only to Alstom—soon to merge with GE—but to Staffordshire county council, which had the foresight to construct a state-of-the-art business park, in which Alstom will be the first investor?

Post Office Mediation Scheme

Jo Swinson Excerpts

Wednesday 17th December 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I congratulate my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) on securing this debate on the review and mediation scheme relating to the Post Office and Horizon. He set out his concerns clearly and eloquently and cares passionately about the subject. He has worked tirelessly over a long period of time on the matter, as have many other hon. Members present today. I appreciate hon. Members taking forward their constituents’ concerns. Today’s debate obviously follows on from the statement in the House of July 2013 and the important foundations laid and commitments made at that point.

I have listened carefully to the concerns expressed by hon. Members today and I recognise the real and genuinely distressing situations described and their concern for their constituents. I wanted to respond as thoroughly and fully as possible to the debate, so I was keen to get views on how the scheme was going from the working group. I contacted its chair, Sir Anthony Hooper, and received a letter back from him, copies of which I circulated to hon. Members present. I had placed it in the Library of the House yesterday, but, appreciating that not everyone would have noticed that that had happened, I thought it would be helpful to bring copies along today.

Sir Anthony Hooper is, of course, a Court of Appeal judge. He was appointed chair of the working group at the suggestion of the Justice for Subpostmasters Alliance. His appointment was welcomed by many hon. Members, including my right hon. Friend the Member for North East Hampshire, who I understand still has confidence in Sir Anthony as chair of the working group.

Sir Anthony Hooper has set out the confidentiality requirements clearly and, as such, was not able to have a discussion. He said that he could give only limited information—that was not Post Office Ltd, as the hon. Member for North Durham (Mr Jones) suggested, but the Court of Appeal judge. Sir Anthony has provided details of the number of cases and the progress made. So far, the scheme has received 150 applications, with 10 cases resolved before the scheme started, four applications rejected outright and a couple of cases resolved after investigation. The rest of the cases are working their way through the scheme and are at different points on the timeline. So far, 24 cases have been recommended for mediation by the working group, of which only two have not gone to mediation because the Post Office has not been happy to mediate—

[Mike Wood]

Will the Minister give way?

[Jo Swinson]

I will give way after the next sentence or two. I understand the concerns expressed by hon. Members, but two out of 24 is nothing like the figure of 90% that has been put forward. A basic principle of mediation is that both parties agree to it voluntarily, so that it can be entered into in the proper, constructive spirit.

[Andrew Bridgen]

Will the Minister give way?

[Jo Swinson]

I will give way to the hon. Member for Batley and Spen (Mike Wood) first. I will tally up the interventions.

There would be no point in entering a mediation if one of the parties was adamant that it could not reach any possible positive outcome. Most of the cases recommended for mediation, however, are going to mediation.

[Mike Wood]

Is the Minister happy that the mediation process, which started on one basis, is now being interpreted on a completely different one by the Post Office? As a result, the vast majority of cases listed as going through the process will be excluded and never get to mediation. Is the Minister happy about that?

[Jo Swinson]

I do not accept the premise of the question. The scheme was set up and it was agreed that any case could apply to the scheme, even those cases in which the individual had pleaded guilty to a charge. The working group, which is made up of representatives of the Justice for Subpostmasters Alliance through Second Sight, the Post Office, and its chair Sir Anthony Hooper, will consider the report from Second Sight about whether a case should go to mediation. As a result of the process, the cases then go to mediation, but it was never anticipated that every single case would do so. There is the point at which the working group considers it.

[Andrew Bridgen]

rose—

[Mr Arbuthnot]

rose—

[Jo Swinson]

I will give way to my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) first, then to my right hon. Friend.

[Andrew Bridgen]

I do not know what the Post Office has been saying to the Minister, but it has been saying a different story to the MPs on the working group. We have heard examples of people losing everything in their life, but is she aware that one of the criteria for refusing mediation is the Post Office stating that the claim by a sub-postmaster for compensation is too high? In other words, if sub-postmasters have suffered a huge loss, the Post Office is using that as a criterion to exclude them from mediation—because their claim is too large, because they have lost too much.

[Jo Swinson]

At present, we are talking about only two cases in which that has happened—the Post Office has refused mediation in only two cases. Perhaps there is some degree of confusion, but Sir Anthony Hooper, the independent chair of the working group, provided that information. If hon. Members wish to challenge it, I will happily go back to Sir Anthony about the information provided. I have to work, however, on the basis that that Court of Appeal judge is providing me with accurate information. I hope hon. Members appreciate that.

I will now give way to my right hon. Friend the Member for North East Hampshire.

[Mr Arbuthnot]

To be clear, I have not lost faith in Sir Anthony Hooper as the chair of the working group. I have never said, however, that 90% of the cases have been rejected. I have said that the Post Office has recently argued that 90% of the cases should be rejected, and that that is where the breach of faith and the lack of straightforward dealing lies.

--- Later in debate ---

[Jo Swinson]

This is slightly difficult territory, because the working group discussions are confidential. I do not go to those discussions or know what is said in them. I cannot find out what is said in them. Indeed, every party involved in the discussions is bound by confidentiality. So I do not know whether the information mentioned by my right hon. Friend is in fact accurate. That said, I point to the information that we do have from Sir Anthony Hooper, which is that even if what my right hon. Friend says is true and the Post Office has argued for some of the cases not to be mediated, none the less it has gone into mediation on them. In a sense, the point is slightly academic, although I understand the concern on the part of hon. Members. I also take on board and take seriously the comments made by more than one hon. Member about the attitude of senior staff from Post Office Ltd to groups of MPs.

[Mr David Jones]

Looking beyond the issue of mediation, it is clear from what we have heard in the debate that a large number of people have had their life ruined because they adopted accounting practices on the basis of advice given to them by the Post Office. In other words, as I said in an intervention, the Post Office itself was counselling on procuring false accounting. Has my hon. Friend the Minister considered referring that matter to the prosecuting authorities?

[Jo Swinson]

My right hon. Friend is right to recognise that the accusation is a serious one—if true, it would be incredibly serious. It is difficult to know whether that is the case, which is why full investigation is needed. The hon. Member for North Durham made a clear challenge, and a fair one, about ensuring that we get some action and resolution on the issue. The point that I push back on is that many of the cases are incredibly complex, understandably so, because they are dealing with systems and many transactions—

[Mr Kevan Jones]

You’re the Minister, do something!

[Jo Swinson]

In order to do something, what is required is independent investigation that is done thoroughly and forensically—

[Mike Wood]

Will the Minister give way?

[Jo Swinson]

I will finish the point, if hon. Members will allow me.

The hon. Member for North Durham said “do something”, and in such a situation what I would normally propose doing is to get a team of forensic accountants to go through every scenario and to have the report looked at by someone independent, such as a former Court of Appeal judge. We have a system in place to look at cases therefore, but if particular cases can be mediated, that is an ideal solution. If any information comes to light during the course of the mediation or the investigations, that suggests that any of the convictions that have taken place are unsafe, there is a legal duty for that information to be disclosed to the individuals convicted and to their legal representation. I fail to see how action can be taken without properly looking in detail at every single one of the cases through exactly the kind of scheme that we have set up.

[Albert Owen]

I understand the difficulty of getting involved in the mediation, but will the Minister tell senior managers of the Post Office that they need to look at some of the specific accusations made against their staff of giving certain information to people who have ended up in court and in jail?

[Jo Swinson]

Absolutely. That is a serious accusation, and many serious issues have been raised in the debate and in correspondence that Post Office Ltd needs to look at and to respond to, perhaps to reassure itself that such things did not occur, or to look into whether they were the case and, if so, to take appropriate action. We do not for a second take lightly the issues raised today, but I caution against the expectation of some swift and easy magic solution. We have to look at the details and the facts, and that has to be done forensically. That is why Second Sight, the team of forensic accountants, has been employed and why we have someone of the calibre of Sir Anthony Hooper to oversee the process.

[Mike Wood]

Will the Minister give way?

[Jo Swinson]

I will give way, but time is short.

[Mike Wood]

The Minister rightly sets great store by the involvement of Second Sight, but—

[Nadine Dorries (in the Chair)]

Order. If the Minister wishes to wind up, there are only a few seconds to go.

[Jo Swinson]

I will take away the points made by hon. Members in the debate. I am sure that the issue is one that we can return to in future.

UK Company Supply Chains

Jo Swinson Excerpts

Tuesday 16th December 2014 Westminster Hall

[Chris Williamson (Derby North) (Lab)]

It is a pleasure to be serving under your chairmanship this morning, Mr Crausby.

I congratulate my hon. Friend the Member for Wansbeck (Ian Lavery) on securing this vital debate, and him and my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) on their excellent work in highlighting the appalling abuse in the tobacco fields of North Carolina. The exploitation of the workers there shocked me. One hears about the American dream, but those workers were clearly not living the American dream; they were living what can only be described as an American nightmare, as my hon. Friend the Member for Wansbeck pointed out.

Depressingly, such exploitation is happening all around the world, not only in the most powerful nation on the planet, the United States of America. Exploitation is happening not only in developing nations, but in so-called highly developed western democracies. It is also happening, as my hon. Friends mentioned in their contributions, in what is, per capita, the richest nation on earth—Qatar.

I visited Qatar earlier this year with a delegation led by the construction workers’ union UCATT—the Union of Construction, Allied Trades and Technicians—and by the Building and Woodworkers’ International. We went to look at the impact of the World cup, the transformation taking place in that country and the terrible abuses to which construction workers and migrant workers across the piece are being subjected there. Again, I was absolutely shocked. When my hon. Friend the Member for Wansbeck was talking about the squalid circumstances in which the tobacco workers in North Carolina were living, it struck a chord, because that was precisely the kind of thing that I witnessed in Qatar. The working conditions, too, were appalling.

At one level, we can look at Qatar and say, “An amazing transformation is being made in that nation.” I visited what I believe to be the largest construction site anywhere in the world and it is incredible what is being done in the country, but there is absolutely no excuse for the kind of exploitation that migrant workers are being subjected to in order to make the transformation. Money cannot be the reason why people are being exploited, because Qatar is the richest nation on the planet, as I said. Nevertheless, it is subjecting workers to terrible working conditions, such as the heat of the day, and terrible living conditions.

When we arrived in Qatar, 1,200 workers had already lost their lives since the World cup had been awarded to the country. At an attrition rate of that level, 4,000 construction workers will have lost their lives before a ball is kicked in the World cup. That cannot be right and cannot be allowed to go on. There can be no excuse. What saddened me most of all was the fact that British companies are implicated in such exploitation.

On our trip, we visited Balfour Beatty, which at the time was carrying out some work in Qatar. A senior Balfour Beatty representative to whom we spoke told us, when we put it to him that workers were being subjected to such terrible exploitation, “You mustn’t look at this through western eyes. These people like to live together—in these appalling squalid circumstances.” He did not say the last bit, but that is what the circumstances in which they are living are like.

People are brought to Qatar by disreputable recruitment agencies, who lie to them about how they will be able to earn riches beyond their dreams, to send money back to their families and in effect to be set up for life. They are charged up to £1,500 for the privilege of getting there, but when they arrive they are told, “The salary you were told you were going to earn is not true. We will rip up that contract that you thought you had signed and give you this one. You can’t go back to your home country, by the way, because we will have your passport off you.” So people are trapped and, before they start to earn anything, they have to pay back the recruitment agency up to £1,500. They were told that they would earn a huge sum, but they are only earning about £30 a week. Those are skilled people—skilled tradesmen—who at best are earning about £30 to £35 a week. That is completely wrong and it is disgraceful that British companies are involved in that process.

My hon. Friend the Member for Ogmore (Huw Irranca-Davies) hit the nail on the head when he talked about how the senior representatives in companies say, “We didn’t know anything about it.” I took it upon myself to get the House of Commons Library to provide me with a list, as best they could, of all the British companies operating in Qatar today. I have written to each and every single one of them demanding to know what steps they are taking to stop that exploitation.

When people are working incredibly hard, they are entitled to live in decent accommodation. In Qatar, not only do they work long days, but the labour camps are miles away from the construction sites; before people even start their day’s work, they have a one or two-hour bus journey and they have another at the end of the day. I was absolutely shocked. Yes, the conditions were squalid and filthy, but people have also not even got mattresses to sleep on, and there were eight, 10 or 12 people to a tiny room.

I could not believe what I was seeing—people did not even have mattresses. They were sleeping on bunk beds of hard, solid planks of wood. After a long, hard day of grafting in the heat of the day—I used to work in the construction industry so I know what a hard job it is, although we did not work those hours or in that kind of heat—they go home to appalling filth and squalor and they cannot even get a decent night’s sleep because they have to sleep on a hard plank of wood. Then the representative of Balfour Beatty tells us, “You mustn’t look at this through western eyes.” That kind of colonial mentality still seems to pervade these British companies.

The other point my hon. Friends referred to was the lack of trade union recognition in the tobacco fields. We put that to the Qatari authorities. It is vital that there should be freedom of association and the right to form a trade union in order to secure workers’ rights, and we want to see that. In fact, we could do with much greater trade union membership in this country, with the Government encouraging that rather than continually attacking the unions and their attempts to secure workers’ rights over here. My hon. Friend the Member for Ogmore talked about the cockle pickers—would they not have benefited from being members of a trade union? They certainly would not have been put at risk of losing their lives.

It was Ted Heath who once talked about the “unacceptable face of capitalism.” Here we have just that in the examples highlighted by my hon. Friends and what I saw in Qatar. That is the unacceptable face of capitalism and British companies are implicated in it. When I wrote to those companies, all bar one of them—I think—came back to me and effectively said, “It’s nowt to do with us, guv—we don’t employ these workers directly.” They were washing their hands of the issue in a kind of Pontius Pilate approach. They say, “You can’t blame us,” but they are happy to take the profits from this huge transformation.

It is incumbent on the Government today—I hope that the Minister will do this when she responds to the points made by my hon. Friends—to explain what they are doing about the British companies implicated in exploiting workers across the globe. From the United States of America to Qatar and beyond, that must stop and the Government have a huge and important role to play in making it stop. When we have asked questions about that, we have heard encouraging words from Ministers. They have said that human rights are sacrosanct and that they will certainly bring pressure to bear on the Governments—and, I hope, the companies—who are implicated.

However, there is a twin pressure. While on the one hand we hear welcome talk from Ministers who say, “Human rights is important and we’re going to bring pressure,” on the other hand, when we are talking about places such as Qatar, the rewards are immense because the contracts run into many billions of pounds. I know that representatives from Qatar have been here and have had meetings with the Mayor of London and, as I understand it, with Ministers too—I do not know what they spoke about, but I understand that they are keen to secure work in Qatar—so I wonder whether the Government are speaking with a forked tongue. I hope that they are not, because it is really important that their response is about not just rhetoric, but action. That is what I want to hear.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

indicated assent.

[Chris Williamson]

I am pleased to see the Minister nodding her head. I hope that, when she gets up, she will tell us about some of the positive actions that the Government have taken and those that they propose to take to ensure that we do not have, as my hon. Friend the Member for Ogmore said, the continual race to the bottom. British companies and the British Government should be about a race to the top. We should be setting standards. We have a proud tradition going back many years of standing up for human rights, so it is really important that the Government step up to the plate in all the circumstances highlighted, including those I highlighted in Qatar.

I want to close with a quotation from Thomas Piketty’s best-selling book in America, “Capital in the Twenty-First Century.” He said:

“Capitalism should be the slave of democracy, not the other way around.”

I could not have put it better myself. That is essential, because if capitalism is not the slave of democracy and it serves only the richest and most powerful people around the world, what is the point of it? If it is only about exploiting ordinary working people, I would say let us throw it aside and have a socialist state in every nation. However, I am not actually asking for that. Capitalism can work, but we need to make it work—we need to make it the slave of democracy. In conclusion, when we hear from the Minister, I hope that she will give us some indication of how the Government will ensure that workers are protected and that capitalism is indeed made to be a slave of democracy, not the other way around.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a great pleasure to serve under your chairmanship, Mr Crausby. It is also a great pleasure to respond to this thoughtful and powerful debate. It is customary on such occasions to say that this has been a good debate, but it really has been striking, particularly the number of examples of individuals who are suffering in the most horrific conditions. Sometimes the discussion of business issues and human rights becomes abstract, and bringing it back to individuals is helpful.

I congratulate the hon. Member for Wansbeck (Ian Lavery) on securing this debate and on sharing his personal testimony and experience of the individuals he has visited. He is right that this is an issue on which there is a moral duty. Of course there are business benefits from improving human rights, as the hon. Member for Ogmore (Huw Irranca-Davies) and others have said, and it is important that we make that business case, but the hon. Member for Wansbeck put his finger on it when he said that this is a moral duty. We are all human beings, and human rights are universal. Whatever we do and whatever our role, whether we are working in business, politics or the media, we have a responsibility to other human beings and to ensure that human rights are upheld.

The Government are taking a range of action, of which I am proud and which I warmly welcome and champion, from narrative reporting to our work with different sectors, including the retail sector, to ensure that they are improving their practices. We have also amended the Modern Slavery Bill to address supply chain reporting, to which I will return. At EU level there is also non-financial reporting, and of course we support these issues at the United Nations through the business and human rights action plan, which we were the first country to create. We can take international leadership on this issue, but that does not mean that there is any room for complacency.

It is also important to recognise that, although the issue is simple in terms of morality and what is right, it unfortunately is not simple to work out how to stop human rights abuses. Various Members have mentioned that some companies sometimes offer the excuse, “We didn’t know what was going on,” but it is true that it can be difficult for companies to get to the bottom of every part of their supply chain. There is a role for sharing best practice and for helping companies to understand the best way to get that information. There is a dividend or benefit from taking the issue seriously and creating what the hon. Member for Ogmore described as a race to the top. We need to do that.

Earlier this month I was in Geneva for the UN forum on business and human rights. It was the third time the forum has taken place, which shows how international business is taking this issue more seriously. The feedback I received from the 1,900 delegates was that the forum was much more constructive and positive both for business groups and for non-governmental organisations than in the previous two years, which is a sign of progress. I met a group of UK businesses that have signed up to the UN global compact, which commits them to reporting annually on the actions they are taking on a range of issues from working conditions to environmental impacts and human rights. Businesses turning up to the UN forum on business and human rights are probably already fairly committed to taking the issue seriously, but it is good that the forum shows that a large number of UK companies are doing so.

[Anas Sarwar]

It is good to hear about that international co-ordination to ensure that multinational companies are rightly reflecting on this issue, but that principle should also apply across Government here in the UK. Is the Minister therefore disappointed that the Department for International Development has withdrawn its funding for the International Labour Organisation?

[Jo Swinson]

I will happily speak to colleagues in DFID and write to the hon. Gentleman with a fuller answer. A range of international organisations play a hugely important role, and obviously the Government always need to consider the best way to further our overall objectives. I will certainly write to him on the specifics of that point.

There were many NGO representatives in Geneva who were rightly passionate about ensuring access to justice for victims of human rights abuses. I spoke a little of my personal commitment to this issue. Indeed, one of my political heroines when I was growing up and deciding to study business was Anita Roddick. She was a pioneer in proving that business has a social responsibility that needs to be taken seriously. I remember reading her book, “Business as Unusual,” which I found incredibly inspiring on the role that business can play. Business should be, and often can be, a force for good in our society. It ought to be a way of taking humanity forward, rather than ultimately being responsible for exploitation. Capitalism goes wrong when that happens, as some Members mentioned, but business is able to be a force for good.

As I said, many UK businesses are taking this issue seriously, but some are perhaps not taking it as seriously as they should. The examples we have heard today back that up. The hon. Member for Wansbeck talked very powerfully about the squalid conditions in North Carolina. We are used to talking about such issues in other parts of the world, but we would not necessarily expect it to happen in a country such as America. That juxtaposition of such wealth with such poverty and disregard for rights is awful, particularly when he talked about the example of a seven-year-old girl or someone who had part of their finger cut off without even being able to get hospital treatment.

The hon. Member for Ogmore rightly focused on the responsibility of big companies such as supermarkets and their power to drive change. He is right that, if something is incredibly cheap, it is not always the result of wonderful business efficiency. Sometimes that might be the case, but sometimes it means that someone, somewhere is being exploited, and he is right to point that out.

The hon. Gentleman also addressed the comparability of reporting so that people can compare apples with apples, rather than with oranges, which is a useful analogy in the context of our conversation about the food industry. This is an important issue, and at the event in Geneva there were some interim results from an interesting, in-depth study by The Economist on business attitudes to human rights. One of the early indications is that, when business leaders were asked what would make the biggest difference to their behaviour, they talked about some kind of benchmarking tool so that companies can be compared. Such a tool needs to be developed with care because these are genuinely complex issues, but UK companies such as Aviva are leading the way. There is an exciting project to create a human rights benchmark so that companies across the country, and internationally, can be compared so that we may have a proper analysis of their human rights records.

The hon. Member for Derby North (Chris Williamson) relayed stories about his experiences in Qatar, and they are a hugely powerful account of disgraceful behaviour, particularly in such an incredibly rich country. What I found most breathtaking about his speech was Balfour Beatty’s reported comment that we must not look at this issue through western eyes. I was blown away by that comment. Human rights are universal. Whether someone is in squalid conditions and having to work ridiculous hours here or in another part of the world, we should be concerned and acting to change the situation—responsible UK companies will act to change the situation.

I appreciate the hon. Gentleman’s action on writing to UK companies, and I know that he wants action from the Government, which is why we are introducing the reporting requirement on supply chains so that companies have to say what they are doing on slavery and trafficking. I am delighted that that amendment has been made to the Modern Slavery Bill. I have met campaigners on that issue over the past couple of years, and there is a strong case for introducing the requirement to drive transparency and change behaviour.

The hon. Member for Foyle (Mark Durkan) mentioned the voice of business, and there is a strong voice within the business community, which wants to see progress on these issues and is supportive of many of these measures. This is a complex issue, which is why the solution cannot be easily described in a soundbite; it is about proper engagement with business, and it is about taking the UN guiding principles that were developed by Professor Ruggie over a significant course of time and therefore have the buy-in of key players. He and his team are still very involved in trying to make that a reality. The UK has published its action plan, and a handful of countries have now published their own action plans, but we must ensure that we use that leadership to do what we need to do in our own country and to encourage other countries to do the same. I fully believe that in 20 or 30 years, this will be seen as a key and obvious business issue, but we are now at the stage where it has to be established. We have made great progress compared with 10 or 15 years ago, but there is still a lot more to do. I welcome today’s debate.

National Minimum Wage

Jo Swinson Excerpts

Tuesday 16th December 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a great pleasure to serve under your chairmanship, Sir Alan. I congratulate the hon. Member for Barnsley Central (Dan Jarvis) on securing the debate, particularly after his less happy experience on Friday 28 November. I appreciate his frustration about Fridays. I have a vivid memory, from fairly early in my time as an MP, of spending an annoying Friday supporting a Bill promoted by the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) on climate change and having the same experience of a couple of Members talking it out. The hon. Member for Barnsley Central mentioned the excellent Bill promoted by my hon. Friend the Member for Brent Central (Sarah Teather), which would have helped very vulnerable people, and I still hope that we will be able to find a way to take action on those issues. Of course, the opportunity to debate the Bill promoted by the hon. Gentleman was also a casualty of that experience. The procedure for dealing with private Members’ Bills on Fridays is something that I would be keen to see changed.

The hon. Gentleman started by talking about his constituent, Catherine. That is absolutely appropriate, because in discussions about the minimum wage it is easy to get caught up in the numbers of pounds and pence per hour. That is, of course, important, but it is also vital that we remember the individuals at the end of each payslip, who are working on a low wage that represents a minimum or floor.

The hon. Gentleman was right to set out the history of the minimum wage. He highlighted the difficulties that existed before 1997, and the fact that some factory workers earned £1.22 an hour. In 1996, I was 16, and in my first job in McDonald’s, I was paid £2.70 an hour. One of my good friends from school worked in a greengrocer on Saturdays, and she earned £1.90 an hour for lugging around sacks of potatoes.

The introduction of the national minimum wage was absolutely necessary, and the hon. Gentleman is right that it is an historic achievement that should be celebrated. Neither of us was in the House at the time, but my Liberal Democrat colleagues supported the national minimum wage. There perhaps was not agreement from everyone in the House, but the positive thing is that times have moved on and there is now wide acceptance of the national minimum wage’s importance. The Government are strong in our belief and commitment that the national minimum wage is a vital part of the employment protections and basic minimum standards in the labour market. Many business organisations are also strong supporters of the national minimum wage. Recent reports by organisations such as the CBI talk about the importance of supporting household budgets from a wider economic perspective.

The minimum wage level is always likely to be the subject of much discussion and interest, and we clearly need to find the right rate that helps as many low-paid workers as possible, but we must ensure that we do not damage employment prospects by setting the level too high. This year the Government accepted an above-inflation rise in the national minimum wage. In October, workers saw the biggest cash increase in their pay packets since 2008, which helps more than 1 million workers on the national minimum wage and means that anyone working full time on the national minimum wage gets an extra £355 a year in their pay packet. Of course, those workers are also helped by the increase in the tax threshold, which has taken more than 3 million low-paid individuals out of paying income tax and helped ensure that people’s money goes further because they keep more of what they earn.

[John McDonnell (Hayes and Harlington) (Lab)]

I apologise to my hon. Friend the Member for Barnsley Central (Dan Jarvis) for being late. I was in the main Chamber. We seem to miss out young people in these debates. I am not sure whether he referred to the figures: for an 18 to 20-year-old the national minimum wage is £5.31; for a 16 to 17-year-old it is £3.79; and for apprentices it is £2.73. That must be a disgrace.

--- Later in debate ---

[Jo Swinson]

The hon. Gentleman addresses both the youth rates and the apprentice rate, and the hon. Member for Heywood and Middleton (Liz McInnes) also raised that issue. I share those concerns, particularly on the apprentice rate. We want to encourage people to take up apprenticeships, and under this Government there has been a great increase in their number. Two million apprenticeships have started since the general election, but both hon. Members are right that £2.73 an hour is a very low rate. It is worth bearing in mind that the average pay for apprentices is upwards of £6 an hour and that most employers of apprentices pay well above the minimum rate, but there is also a concerning level of non-compliance with the apprentice minimum wage. Of course, there never used to be an apprentice minimum wage at all—it was introduced by the Government because apprentices were previously not covered by the national minimum wage. Although that was a step forward, there is still a real issue here.

Earlier this year, my right hon. Friend the Business Secretary stated that he is minded to seek a significant increase in the apprentice rate. He suggested that it might be combined with the £3.79 rate for 16 and 17-year-olds, which would provide a boost of more than £1 an hour. We have asked the Low Pay Commission to consider that carefully, and we look forward to hearing its views on the proposal as part of its overall report in February 2015.

The hon. Member for Heywood and Middleton mentioned bogus apprenticeships, under which people were taken on but not given the training that should go alongside an apprenticeship. The reason for the lower apprentice rate is because employers rightly have to support the development and upskilling of apprentices with training and qualifications. Where that is not happening, national minimum wage law is being broken, even if the apprentice rate is being paid. I encourage anyone who is concerned that they are not being paid the right amount to contact the pay and work rights helpline on 0800 917 2368. I will never tire of saying that number because I want people who are not properly paid the national minimum wage to get in touch and make a complaint. Her Majesty’s Revenue and Customs will investigate every complaint, and we have increased the resources available for enforcement. I am determined that people who do not properly pay the national minimum wage are brought to book and that those who have been underpaid are given the arrears that they are due. That would discourage employers who might be tempted not to pay properly.

The hon. Member for Liverpool, Walton (Steve Rotheram) mentioned prosecutions. I understand his point, but prosecution is not the only way to address non-compliance. The number of prosecutions is not high. We are talking single figures every year since 2007, and there are sometimes no prosecutions in a given year, but the number of prosecutions was in single figures when his party was in government, too. The reason for that is pretty compelling: the most important thing is that people who have not been paid the national minimum wage get the arrears that they are due. If they go through the civil process through which HMRC takes employers, people will get their arrears paid and a penalty will be paid to HMRC—there is effectively a fine for the employer—which delivers a better result for the employee. Of course, prosecution is appropriate in the most extreme circumstances where employers have been wilfully and continually not paying the national minimum wage, but given the costs of bringing a prosecution and the interest of ensuring that people get their arrears, the civil process is the right way to go about it.

[Steve Rotheram]

The Minister is absolutely right about trying to get the best deal for the person who has been short-changed. There is no argument about that, but the message needs to be sent out to unscrupulous employers who continue to underpay that they will be prosecuted. That is the only way that we will stop them, not by good will, nor by appealing to their better nature, but by saying, “If you continue to underpay your employees, we will prosecute.”

[Jo Swinson]

We may have a difference of opinion. I agree that there should be very tough consequences for employers who do not get it right. We have ensured that the fines are in place, increased the maximum penalty to £20,000 per worker—that is currently going through Parliament in the Small Business, Enterprise and Employment Bill—and introduced a naming and shaming scheme that is far more comprehensive than the previous scheme, the criteria of which were almost impossible to meet. We now regularly list employers that have not properly paid the national minimum wage, and we name them publicly so that in their local area people can be aware that those companies are not paying the national minimum wage, which affects the reputation of those businesses.

In response to the hon. Gentleman’s plea for more prosecutions, I would say that, in the cases that are named, in most circumstances the underpayment is not necessarily a malicious act by the employer. That does not make it right, and it does not make it okay, but very often someone has put the wrong digits into a computer program so somebody is not been paid the right pence per hour. There may be mistakes on the accommodation offset allowances or mistakes on the apprentice rate. Of course, if we increased the apprentice rate to the lower age rate, we would simplify the system and make it easier for employers to get it right. That is not an excuse, as employers have a responsibility to get it right, but I would not necessarily contend that those circumstances should also result in a criminal prosecution. Our tough penalty regime, increased fines and the reputational consequence of naming and shaming are the right way to address underpayment. We are increasing the resources available to HMRC to address this issue.

[Jim Shannon]

There might be an individual working for a firm who is getting less than the minimum wage. They might be concerned but there is a fear factor in pursuing the issue. That goes back to what the hon. Member for Liverpool, Walton (Steve Rotheram) said in his intervention. Is that part of the reason why we have a low prosecution rate? People fear losing their job for making a complaint. Would it be better for complaints to be tied to the company, not the individual?

[Jo Swinson]

I hope I can provide a lot of reassurance on those points. The hon. Gentleman is right that there is a fear factor, which is why it is important for people to recognise that they can make complaints in confidence. It will not necessarily be clear which member of staff has made a complaint. The HMRC investigator will not just go along to a company and say, “Can you show me the records for this particular member of staff?” The investigator can ask to see the records for all members of staff. That has two benefits. The first is confidentiality, but secondly, of course, if one member of staff is not being paid the minimum wage properly, it is possible—indeed, likely—that other members of staff are also not being paid properly.

To put the issue in context, the hon. Member for Strangford (Jim Shannon) suggested that the reason why there are not as many prosecutions as he might like is that people are not coming forward. Actually, since HMRC began enforcement back in 1999, more than 229,000 workers have received arrears worth more than £54 million. In the last year alone, £4.6 million in arrears was delivered to 22,600 workers, a significant 17% increase in the number of workers helped compared with 2009-10. The amount of arrears per case is also rising. HMRC is learning how to ensure that it does not just look at one person in the business; now it routinely looks much more widely at lots of workers within the same business. That is important to ensure that enforcement works.

We are the fastest-growing G7 economy at the moment, and that strong growth is reflected in our employment statistics, with more people in employment than ever before. That is good news, but hon. Members have raised issues about the type of employment and whether it is just insecure part-time employment. It is worth recognising that our figures from the Office for National Statistics show that full-time work made up three-quarters of the growth in employment since the election and 85% over the last year. The growth in the labour market is significantly of full-time work, but of course there are issues around the insecurity of work, which the Government are taking steps to address. We understand those issues too.

We will return to this matter, rightly, many times in this House. I pay tribute to the Members present today, who in their different elements have been campaigning on the issue. The hon. Member for Stockton North (Alex Cunningham) is particularly assiduous in the care sector, where HMRC has done a significant investigation and is seeking to follow up. That is an area where HMRC found a lot of non-compliance. We need to stay on the case of industries where there are greater problems, because lack of compliance is much less widespread in other industries.

[Dan Jarvis]

I am slightly concerned that the Minister might not address the fundamental issue that I raised in my speech, which is that the low pay challenge for the country has changed. Record numbers of people in low-paid work are struggling to make ends meet. I would be grateful if she critiqued the model that I proposed; I am thinking specifically of the five-year target and more powers for the Low Pay Commission. Will she respond on those two points?

[Jo Swinson]

Certainly; I am happy to. I understand where the hon. Gentleman and his Opposition colleagues are coming from when they call for a five-year target, but there are significant problems with that approach. Announcing an ambitious-sounding minimum wage level would not necessarily take into account future economic conditions, which could be a problem in two ways. If the economy did not perform as strongly as expected, job cuts could be the consequence of an ambitious target. Equally, if the economy did much better than anticipated, we might find that the target ended up holding back wage growth. We need to get the balance right.

My right hon. Friend the Business Secretary has said clearly that it would be helpful for the Low Pay Commission to be able to provide more forward guidance, so that it is no longer the case that once a year, business suddenly learns what the next rates will be without any idea of how things will go forward. It is worth bearing in mind what the Low Pay Commission has said about the period that we are entering now and whether we should be expecting further rises above inflation in the national minimum wage. That will be of great comfort to the many people who, like the constituent of the hon. Member for Barnsley Central, work for the national minimum wage.

On the taskforce suggestion that the hon. Gentleman made, a sectoral approach can be helpful, but there is a danger of distracting the Low Pay Commission from setting the basic rate of minimum wage. It is already considering the impact of the national minimum wage on pay, employment and competitiveness in the low-paying sectors, and it sets that out in its annual report. Members of the commission go out personally to visit lots of different organisations and employers across the UK in a range of sectors. In its recommendations, the commission manages to reflect back what it has considered after examining all the evidence.

However, there is an issue with the Government and others encouraging higher pay. The national minimum wage is not just what people are paid. It is just that: a minimum, a floor. It is right that we should set a basic level. Some employers will not be able to afford to pay more than the minimum wage. If somebody wants to come to any of our constituencies and set up a business, and they cannot afford to pay more than the minimum wage but they will provide jobs, we would probably welcome that. However, there are many businesses that probably can afford to pay more than the national minimum wage and currently choose not to. That is where we would like to encourage behavioural change.

I am heartened to see many employers making a virtue of the fact that they are living wage employers, for example, or making commitments about pay levels. We should encourage employers to compete with each other on such issues—with falling unemployment, that will be more possible in the months and years to come—because we should not just accept a situation in which it is expected that someone on the national minimum wage will stay there. We want basic jobs to be created with that wage floor, but we also want people to be able to progress from a national minimum wage job through the ranks. As their skills and the length of time with their employer increase, their wage should also. We will continue to encourage employers to pay more than the minimum wage where they can.

I know that hon. Members here will continue to campaign on the issue, and I thank everybody for such a constructive debate. I am, thankfully, not talked out.

Question put and agreed to.

Inequality

Jo Swinson Excerpts

Thursday 27th November 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I congratulate the right hon. Member for Oldham West and Royton (Mr Meacher) on securing this debate. I am grateful that we have the opportunity to discuss this important matter, and I thank the Backbench Business Committee for allocating the time. On many aspects there is substantial agreement across the House.

The right hon. Gentleman was right to say that concern about the issue is not the preserve of the political left. The Government—not just my party, but my coalition partners—have understood that concern. The very concept of rewarding failure shows that markets are not working as they should. From every political perspective, we want to make sure that people are properly rewarded for doing well and are not rewarded for failure.

There is concern that levels of directors’ pay have ratcheted upwards. At the same time the link to company performance and wages at other levels in the company has grown much weaker. That is damaging to the long-term interests of business and it is right that we are acting to address this market failure. That is why we have taken decisive action to restore the link between top pay and performance in UK public companies.

The reforms that we introduced, which came into force last October, create a more robust framework for the setting and reporting of directors’ pay. They have boosted transparency so that what people are paid is clear and easily understood, and have empowered shareholders to hold companies to account through binding votes. They restore a stronger, clearer link between pay and performance, and address the important issue of rewards for failure. Our reforms require companies to report the ratio of average percentage change in employee pay compared with the percentage change in the chief executive’s pay, allowing shareholders to understand whether pay increases apply proportionately to all employees or only to those at the top. They also mean that companies must report on how the pay and conditions of employees informs the remuneration policy for directors, whether they have sought the views of their work force, and how the work force was consulted.

During the debate concern has been expressed about the pay ratio galloping ahead and hugely increasing. Although I recognise those concerns, it is important to set some of the figures in context. The hon. Member for Hartlepool (Mr Wright) mentioned a ratio of 143:1, which I believe is from a report from the High Pay Centre back in August. It is worth noting that subsequent to the initial release of that figure, the High Pay Centre and The Guardian, which had reported it, had to retract the figure because it was found to be a miscalculation. The figure suggested now is 130:1. Another research organisation, Manifest, has suggested that it is 121:1, compared to a peak of 151:1 in 2007. I am not for a moment saying that that is a level that many people would find acceptable, but the trend is not going ever upwards. There seems to have been a peak in 2007 and the ratio is now falling, which I hope hon. Members will recognise and welcome.

[Mr Iain Wright]

I am glad the Minister has put that clarification on the record. She is galloping away somewhat, rather like executive pay over the past 30 years. May I bring her back to the Government’s reforms? In respect of binding votes, how many companies have had to change their pay policy as a result of shareholders voting against it?

[Jo Swinson]

I will talk about the particular reforms in a moment. There are two ways in which the Government’s reforms can have an impact on executive pay and, therefore, company behaviour when agreeing directors’ remuneration. One way, obviously, is to have a binding vote that a company could lose, and as a result the pay policy would not go forward. The other way—it is an important one—is that companies, because they know they will face a binding vote on executive pay, will be incentivised to have more detailed discussions with investors and shareholders in advance of the annual general meeting. I would not want us to get into a situation in which we thought that it was only if lots of votes were won that the reforms were not successful, when actually it might be a sign that there is much more engagement, which in itself would be a sign of success.

[Mr Meacher]

Does the Minister accept that, despite the good intentions of the Business Secretary’s reforms, the fact that they have not actually been exercised suggests that we need to go significantly further and that that is probably because of the excessive influence of very wealthy fund managers and, in particular, because the work force has no say at all? Does she believe that the work force should have some say in executive pay?

[Jo Swinson]

I certainly think that the points the right hon. Gentleman made about involving the work force are important. That is why our reforms require that it be set out how employees have been involved and consulted. It is not a prescriptive approach, but it requires that to be taken into consideration. Indeed, the Government have tried in other ways to influence corporate governance. For example, the work we have done on employee ownership has supported different types of ownership and engagement models, through various changes to the tax system and the provision of materials on how to make it easier for companies to convert to employee ownership models, so that employees can be much more involved in the running of their companies. We know that that can have real business benefits, because employees buy much more into the success of the company. That also starts to deal with some of the productivity issues that the hon. Member for Hartlepool mentioned.

[Mr Wright]

The Minister is making a very important point, and I really agree about the need to ensure that employees have a say in the running of their businesses, because that improves the value of those companies. Could that be formulated within corporate governance? Does she agree with the notion of having employees on remuneration committees?

[Jo Swinson]

I think there is a difference between recognising and supporting business benefits, and prescribing in legislation or regulation exactly how companies should go about doing that. There is a lot of agreement on the advantages for companies, but I do not think there is much agreement with the idea that the best way is for the Government to be very prescriptive, stating, “This is exactly what companies must do, and this is the only way to do it.” There are different ways in which companies can achieve that level of engagement successfully. It might be through employee representation on the board or remuneration committee, but there are other ways in which that can be done. We should enable companies to find the way that works best for them.

We are monitoring the impact of the reforms we are undertaking in the context of the 2014 reporting and annual general meeting season. We want to understand how companies have interpreted and applied the regulations, what trends can be observed in the remuneration packages that have been put forward and how shareholders have responded. We intend to publish the key findings from that work shortly, along with any policy conclusions that flow from them. We have always said that the policy will remain under review, because we want to see how what we have implemented works in practice.

Of course, it is useful for the Government to take on board and consider interesting proposals made in the House, in the context of looking at how our reforms are actually working. We know from the evidence already available that companies are increasingly responding to shareholder expectations on remuneration. There are positive signs of restraint on levels of directors’ pay and a substantial number of companies have simplified their remuneration policy, linking it much more closely to measurable performance over longer periods of time—that is crucial—to try to get away from the short-termism culture.

There have been reports in the media about rising pay, but often they reflect the impact of previously agreed pay awards. What matters most in assessing the impact of the reforms is what pay is being awarded under the new regime. The latest evidence shows that the median total remuneration awarded to FTSE 100 CEOs fell by 5% in 2012 and by a further 7% in 2013. Some 35% of those CEOs and 30% of the executive directors did not receive a salary increase at all last year. The median salary increase for FTSE 100 executive directors overall was 2.5%. Only 16% of companies gave their directors a salary increase of more than 3%; in the previous year that figure was 25%. The trend shows that pay is coming down, but obviously we will want to look at all the evidence that comes forward before publishing those findings and having a clearer picture.

The right hon. Member for Oldham West and Royton talked about the importance of engaging investors in the process. That ties in closely with the work my right hon. Friend the Business Secretary is doing on long-termism, particularly the Kay review, because investment funds, pension funds and so on have a crucial role to play as active investors. Important campaigning bodies have certainly achieved some success in getting much more engagement from those investors, so that they can properly hold to account the decisions on pay.

On the specifics of pay ratios, overall ratios certainly give us a picture of how things are across the economy, but I suggest a degree of caution about using a ratio between the top and the bottom for paid employees within a company. We considered that very carefully when we introduced the reforms. We decided not to mandate that ratio, as set out in the motion. Transparency is welcome, but we have to guard against potentially misleading information when that is broken down between the top and the bottom.

Obviously, that will depend on what sector the company is operating in and the type of staff working for it. For example, a large investment bank that outsources all its unskilled work could end up having quite a low ratio for pay between the top and the bottom, but a large retailer with a large number of relatively unskilled employees would have a much bigger ratio. The retailer could none the less be paying above the living wage and treating its employees pretty well. It might look as though it is the investment bank that should be polishing its halo, but perhaps that is because it outsources its unskilled work to be done in less favourable conditions. Therefore, we have to be slightly careful about unintended consequences, because some factors could mask what is actually happening. Comparing top and median pay might give a more realistic and meaningful figure. The hon. Member for Hartlepool is right to point out the Liberal Democrat policy in that area—he is undoubtedly an avid reader of Liberal Democrat policy documents, as I encourage all hon. Members to be.

The hon. Member for City of Durham (Roberta Blackman-Woods) raised a number of issues that are very important as part of the discussion on inequality and pay policy, particularly the pay gap for women. At the end of last week we heard the positive news that the pay gap is closing. However, we need to be cautious about celebrating that too much when we still have such a significant pay gap. Let us welcome the fact that it is being reduced, but also recognise that our aim has to be to eliminate it.

The hon. Lady’s concerns about part-time work are also important. There is far too much stigma within the workplace about how valuable somebody can be if they work part time. Very important work is being done by organisations such as Timewise to highlight the fact that people in very senior roles can work part time and do their jobs perfectly successfully, so we should be able to deal with some of those issues.

The hon. Lady also mentioned the living wage. We obviously have the national minimum wage, which is a floor, or a basic standard. Of course, this year we saw the first above-inflation rise in the national minimum wage since 2007, which is very welcome. That gives full-time workers a £355 increase each year. We want that to continue, if possible, without negatively impacting on employment. My right hon. Friend the Business Secretary has asked the Low Pay Commission to look at considering above-inflation rises in the national minimum wage, and we hope that, with a growing economy, that can be sustained. Of course, at the same time we have focused on helping people on low pay by cutting income tax by £800 a year, taking 3.2 million people on the national minimum wage out of paying income tax. We have done a significant amount, but we want to continue by encouraging employers to pay above the national minimum wage and to recognise that it is a minimum. Very profitable and successful companies should recognise their responsibilities to their employees, which might mean that they should be paying more. I welcome the fact that many employers are now turning into a positive the fact that they pay more than the minimum wage and badge themselves as a living wage employer. Of course, they will then be able better to compete for talented staff and get business benefits.

The hon. Lady is right about happiness and well-being. In 2010, the Prime Minister said that the Office for National Statistics would be collecting data on well-being and happiness. That was not met with universal acclaim in some sections of the press. I seem to recall that the Daily Mail was not necessarily delighted by the suggestion. I, for one, was delighted, having set up the all-party group on well-being economics and long campaigned for the importance of recognising that people, yes, care about their income and the size of the economy, but also care about the health and happiness of themselves and their loved ones. The more we recognise that in our policy making and in what we measure, the better.

The hon. Lady said that she did not know what had happened to that work, so I will update her. The ONS has been collecting the information, and about 250,000 people a year are questioned. As a result, a rich databank is being built up that can be broken down in interesting ways across different geographical areas, and between men and women and different age groups, so as to be able to assess the impact of policies and see what is happening in different parts of the country in different groups.

We recently announced the setting up of a “what works centre”—a research think-tank that the Government are supporting to analyse how different policies impact on well-being. From a BIS perspective, one of the key strands of this work is about well-being in the labour market and the workplace and what drives it. We recently published research that we have undertaken on that. A range of factors impact on workplace well-being. Obviously, pay is one, but there are also things such as the variety in someone’s job, whether they feel that they get to use their skills, whether they have a degree of autonomy, how they go about their job, and their sense of fairness in the workplace, which very much ties into this debate. I am glad to say that very many businesses are also engaged in this agenda and recognise that continuing to engage with the well-being of employees leads to better business performance.

We recognise that this is a very significant issue, and we have taken action. We do not want to see rewards for failure. A ratio cap as set out in the motion could, in its purest sense, have unintended and perverse consequences. Early signs of the response to our executive pay reforms are encouraging, and we will review their impact and publish the findings. We will continue to work to ensure that pay policies become fairer, and also support low-paid workers by cutting income tax. I know that we will return to this topic in the House. I thank the right hon. Member for Oldham West and Royton and the Backbench Business Committee for giving us the opportunity to discuss it today.

Oral Answers to Questions

Jo Swinson Excerpts

Thursday 27th November 2014 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

8. What steps she is taking to ensure equal pay for men and women.

[The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)]

It is good to see that over the past year the gender pay gap has fallen significantly to 19.1%—its lowest ever level. However, we are determined to build on this, and our aim must be to eliminate the gender pay gap. We are promoting pay transparency through the Think, Act, Report initiative; transforming the workplace to ensure flexible working and shared parental leave; and, through the Your Life campaign, encouraging girls and young women to consider a wide range of careers, including well-paid careers in technology and engineering.

[Chi Onwurah]

On Monday, the headline in Newcastle’s The Journal was “Women pay high price for the long slump”, highlighting the fact that in the north-east the gender pay gap is rising; in Newcastle, it stands at 16%. Why is the Minister’s Government making women pay for the financial crisis caused by the banks, and what is she going to do about it?

[Jo Swinson]

The hon. Lady is rather interesting in her portrayal of the circumstances that led up to the financial crisis, particularly regarding the part that her party’s Government might have had to play in that situation. I have pointed out that this Government are absolutely determined to eliminate the pay gap and to make sure that it continues to fall as it has over the past year. We also have more women in work than ever before. We have created 2 million extra jobs over the course of this Government’s time in office, and unemployment has been falling across the country, including in the north-east of England.

[Alex Cunningham]

The Minister talks of grand initiatives, but the hourly rate of pay for women working part time is a third less than that for their full-time counterparts. Given that 42% of all working women now work part time, does the Minister think that it is time for big companies to publish the average hourly pay for men and women in their work force to expose this continued pay gap?

[Jo Swinson]

The hon. Gentleman raises several issues. It is true that, for men and women, part-time work is often paid at a lower rate. Of course, as he points out, many women are working part time. This is an important issue where we need generally to value much more the contribution made by people working part time. Organisations such as Timewise are doing some wonderful work that tries to remove the stigma around working part time by highlighting people at very senior levels who are doing so. He is right that transparency is a really important tool in making sure that this can be tackled. That is why we have the Think, Act, Report initiative to encourage companies to think about and act on the issue, but also, crucially, to report on it.

[Jake Berry (Rossendale and Darwen) (Con)]

My hon. Friend talks about encouraging more women into engineering. In Rossendale and Darwen, we have a high-tech engineering work force. What steps are the Government taking to encourage women to take up these fantastic jobs in engineering, which tend to be some of the highest paid in my constituency?

[Jo Swinson]

The hon. Gentleman is right to highlight this as a hugely important issue. Only 7% of engineers are women, and these jobs, as he rightly says, are often very well paid. As the Perkins review set out very clearly, we urgently need more engineers in terms of our overall economy and skills, and we therefore need more women to fill that gap. We have announced a £30 million fund to increase the supply of engineers and encourage more women into the area, £10 million of which is specifically earmarked for our Developing Women Engineers programme. We are working with the Royal Academy of Engineering and with organisations such as the Institute of Physics, because making sure that girls take the subjects that open up an engineering career to them is also really important in making sure that this happens.

[Gloria De Piero (Ashfield) (Lab)]

We all praise companies such as Friends Life, Genesis Housing and PricewaterhouseCoopers which annually publish their gender pay gap because they want to reduce it, but there are too few examples of that. Can we therefore achieve cross-party consensus and will all the parties back Labour’s proposal—we will bring it to the House next month—to require all big companies to publish annually their pay gap?

[Jo Swinson]

The hon. Lady is quite right to say that there is cross-party agreement that this issue needs to be tackled. The 2010 equality strategy set out very clearly that we would pursue the voluntary approach and then assess how it was working and come to a conclusion about what needed to happen next. The hon. Lady will be aware that my party published proposals—I am delighted that her party has subsequently agreed with them—to implement section 78 of the Equality Act 2010. I am sure that the issue will be very much discussed in the approaching election and that all parties will want to set out very clearly how they propose to tackle the pay gap.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

3. What discussions she has had with charities and pressure groups on a charter for women or a women’s bill of rights.

--- Later in debate ---

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

4. What steps the Government have taken to support parents with child care responsibilities.

[The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)]

We have increased free early education hours for three and four-year-olds, and in September we extended it to 260,000 two-year-olds. From next autumn, almost 2 million people could benefit from the new tax-free child care scheme, worth up to £2,000 a child. From April, couples will be able to choose how they manage their child care responsibilities, as we have introduced shared parental leave.

[Mr Sharma]

When Labour left office, 99% of schools provided access to breakfast and after-school clubs, but since the Government removed the ring fence more than a third of local authorities report that the provision has been scaled back in their area. Does the Minister now agree that that was a mistake, and will she back our plan to legislate to give parents a guarantee?

[Jo Swinson]

The hon. Gentleman is right to raise the issue. After-school and breakfast clubs can be hugely important in enabling parents to manage their responsibilities. It is also important that schools have the ability to make choices about the services they offer. We have introduced legislation to make it easier and reduce the bureaucracy for schools deciding that that is indeed what they want to do. That should help to ensure there is greater provision of these important services.

[Guy Opperman (Hexham) (Con)]

I have been to Diandjims nursery at Prudhoe in Northumberland and seen the transformational effect of the free child care provision of 15 hours per week for two-year-olds. The lives of parents are transformed, because they can go back to work or get back into employment following the birth of their child.

[Jo Swinson]

My hon. Friend raises an important example of the policy in action and working to deliver for hard-working families in his constituency. There are many such examples up and down the country. The policy is incredibly important for making sure that people do not have to choose not to work for economic reasons, which is why we are committed to taking it further.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Ministers trumpet tax-free child care, but the fact is that it will not have helped even one family that is struggling with child care costs during this entire Parliament. In fact, those who are struggling the most have had their support via child care tax credits cut, so why do Ministers not implement the policy sooner? While they are at it, why do they not adopt Labour’s commitment to providing 25 hours a week of free nursery education for all working families?

[Jo Swinson]

The hon. Lady will be aware that support through working tax credit for child care will rise to 85% under universal credit. She is right that we are introducing tax-free child care, which is coming in next autumn. The legislation to make that happen is going through the House, and I am delighted that it is happening. I have outlined the additional early education hours that the Government have delivered, including, crucially, making it available for two-year-olds for the first time. We know that it has significant benefits, and it has helped many working parents.

[Michael Fabricant (Lichfield) (Con)]

5. When she last met the Secretary of State for Business, Innovation and Skills to discuss the effects of the purchasing policies of UK retailers on the rights of women and girls.

[The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)]

I regularly meet the Secretary of State for Business, Innovation and Skills to discuss a range of issues, including supply chain transparency and human rights. I assure my hon. Friend that, following significant work by my hon. Friend the Member for Cardiff Central (Jenny Willott), the British Retail Consortium is working with his Department to produce guidelines on this area for their members.

[Michael Fabricant]

I am grateful to the Minister for her answer. The recent episode of the Mauritian T-shirt illustrates so clearly how very important this issue has become. What steps is she taking to ensure that other companies follow the example of some well-known partnerships that show how well they can source their supplies?

[Jo Swinson]

My hon. Friend raises an important issue. Transparency is key so that investors and indeed customers are able to look at such matters and hold companies to account. We have introduced a requirement for a strategic report, which means that human rights need to be reported on, and further non-financial reporting will be helpful. Of course, the measures in the Modern Slavery Bill will make the UK a world leader in this area.

[Mr Speaker]

Very briefly—Fiona Mactaggart.

[Fiona Mactaggart (Slough) (Lab)]

I am very grateful for the measures in the Modern Slavery Bill. Will the Minister meet companies to make sure that they understand their responsibilities, because the Bill could end this exploitation of workers in UK supply chains?

[Jo Swinson]

First, I pay tribute to the hon. Lady, who has done so much work on this particular issue. I am glad that she welcomes the measures brought forward in the Modern Slavery Bill. We are engaging with business on these issues. Indeed, next week I am going to a United Nations event, where there will be many very senior representatives from different businesses who are looking at these exact issues. As I have said, we are also working specifically with retailers on the British Retail Consortium guidance.

Furniture and Furnishings (Fire Safety)

Jo Swinson Excerpts

Tuesday 25th November 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a great pleasure to serve under your chairmanship, Mr Crausby, in this important debate. I thank my hon. Friend the Member for Pendle (Andrew Stephenson) for raising this issue in the House. The debate is particularly timely because, as he noted, the Department has recently held a consultation on the issue; at the moment, we are considering the consultation responses and thinking about our next steps. I will simply caution in advance that although I will try to respond to some of the issues he has raised today I will not be able to set out a definitive view on exactly what those next steps will be, as that matter is still very much under consideration. However, as I say, that makes today a good time to have this debate, because all the points and arguments he has raised can be considered as part of that process.

I recognise that there are a number of manufacturers in my hon. Friend’s constituency who are clearly knowledgeable about and deeply invested in this matter, not just financially but in terms of the wider safety issues. It is useful that he can bring his expertise to this debate, having spoken to them as their constituency Member. As he set out, in the proposals that we have consulted on we are aiming to achieve better safety and environmental benefits; if there is a benefit to business in the form of savings, that is also helpful. I think we all share those objectives, and I understand the concerns he set out with regard to them. The end result that not just he and I but probably the entire industry want to achieve is a robust, safe system that is not overly burdensome, but in which everyone can none the less have confidence, and excess chemicals do not need to be used. The challenge for all of us is to work out the best path to that; that was the purpose of our consultation on the issue.

In general terms, we have an excellent record on fire safety in the UK, and as the Minister with responsibility for consumer affairs, I am keen to ensure that our enforcement regime and fire safety rules remain fit for purpose. Earlier this year, my hon. Friend got in touch with the Department about imported furniture products that do not properly comply with fire safety regulations, and the concern that some of that furniture might not always have the anti-flammability properties and protections needed for UK safety standards. Not only does that lead to significant safety concerns, but such importers are able to undercut UK businesses that have very high standards and are scrupulous about adhering to our important safety rules.

The matters we are discussing are important and serious. As I explained in my responses to my hon. Friend’s earlier inquiries to the Department, we have been through many of the issues carefully with trading standards, which is responsible for enforcing the rules on safety. It is true that non-compliant imports do find their way into the UK in a range of ways. Trading standards is obviously involved clearly and closely in stamping down on that, and it has expressed concern about various issues with enforcement and fabric treatment, including some in the UK, in terms of treatment companies processing fabrics not to an acceptable standard. Many reputable companies do a brilliant job, but there are concerns about some where that is not the case.

To help to improve enforcement practice, we are funding a £25,000 project led by Rhondda Cynon Taf trading standards, which is working with five other trading standards departments around the UK to look at compliance of upholstered furniture with the fire safety regulations. They will gather important evidence about enforcement and deliver a series of recommendations to help us to target that enforcement effectively throughout the furniture supply chain.

A second relevant issue, which has been discussed in the other place, is the Consumer Rights Bill. My colleague Baroness Neville-Rolfe announced that there will be an independent review of product recalls across a range of product safety legislation to consider what information systems exist to inform consumers about product recalls and how well they work in practice. That gives a flavour of how we are looking to improve the enforcement regime, which is a key part of ensuring that the regulations work. However, that depends on the basic safety rules in place, which brings me to the review of fire safety regulations covering furniture and furnishing.

The regulations have generally been a big success, as my hon. Friend the Member for Pendle said. They have ensured that as the furniture market has grown to provide more choice and variety at a range of prices that ordinary people can afford, furniture has stayed safe. He mentioned the statistical report that was commissioned in 2009, which showed excellent safety benefits from the regulations; they have saved around 54 lives a year and prevented nearly 800 casualties and over 1000 fires. UK domestic furniture is probably the safest from fire in the world, which is a record we all wish to maintain.

The regulations are 26 years old, and we recognise that technology and manufacturing processes change and move on, so four years ago, shortly after the election, the Department for Business, Innovation and Skills started a project to look at the rules in depth to ensure that they are still fit for purpose in the context of technological and manufacturing change. It became clear that, as well as modernising the rules, there were several other big issues to address. One was concern about the high use of certain types of chemicals used as flame retardants to meet our stringent flammability tests. They include the most common brominated flame retardant used in furniture, deca-BDE, which has been banned in the USA and is restricted under REACH, the EU regulation on registration, evaluation, authorisation and restriction of chemicals.

Concerns were identified about how the current test is working, and about the fact that it might not always do what it sets out to do: to prove that the cover fabric being tested will form a barrier to protect the foam or filling underneath. The consultation we launched in the summer had two main aims. We wanted to see if we could find a way to reduce the reliance on dangerous flame retardants, and to find a new test that would not have the problems that we had identified with the current test, particularly because it fails to take account of how fabrics actually perform in furniture in the finished product. If savings can be generated for business, all well and good, although I am sure that hon. Members always want safety to be uppermost in our minds when discussing such issues.

[Andrew Stephenson]

I am heartened by much of what the Minister is saying. She cited what has been done in the USA in banning the use of certain chemicals. There have been reports, and evidence has been produced in the USA, particularly in California, showing a significant increase in the number of domestic fires. I hope that as the Department for Business, Innovation and Skills moves forward with the proposals, it will look at examples in other countries where banning some chemicals has, unfortunately, undermined consumer safety and led to more fires.

[Jo Swinson]

Clearly, that outcome is the opposite of what we want to achieve. We are analysing carefully the consultation responses, and are happy and keen to look at evidence from around the world, where changes have been made to rules on chemicals, on the impact on consumer safety. If my hon. Friend has specific information, I would be happy to receive it from him.

When we undertook the consultation, we looked at the match test, which is a key test to assess the ignitability of cover fabrics. I want to make three points about the proposal, but we are still considering the responses. We proposed to make the test set-up much more like the way furniture in the home is constructed. Currently, the cover fabric is laid directly next to a highly flammable foam filling—a kind of foam that is now illegal for use in furniture, to which my hon. Friend alluded—and that is believed to be a worst-case scenario. Most modern furniture has a lining material between the cover and the filling, so the test conditions are different from the finished product. My hon. Friend suggested that the current test is a worst-case scenario, and that if something passes it, it will be fine, but in practice, when fabrics are placed over linings, they may not always be fitted tightly, so air may be present between the fabric and the lining, which means that it may be more ignitable. There is a danger that something could pass the existing test, but when the fabric is in situ in a piece of furniture it may not comply with what was being tested. We must understand that, and the proposal was to have a test that represents much more how a piece of furniture would be used in the home.

The proposed test includes other materials that are now commonly used in furniture below the surface, such as webbing and fibreboard. They are not tested independently at the moment because it is assumed that if the cover passes the match test, it will stop a flame getting into the furniture and setting something on fire. However, our research work to investigate the existing test method suggests that that is not always the case in practice, which is why we want to correct that by introducing a test for other materials. It is important to note that that is intended as a one-off, so the material will be tested, and when it has passed, it will be published in a list of extra materials that can be classified as exempt, whereas the cover fabrics would still have to be tested regularly. We are trying to make the test more realistic and comprehensive.

The third point is to try to make the enforcement challenge for trading standards easier. The problem with the current set-up is that it does not allow for all the variations that can occur in testing because of the interactions between covers that are treated with flame retardants and the foams used in the tests, and the chemical differences that arise because the foam interacts directly with flame retardants on the cover fabrics. Those variations may mean that while doing enforcement activity, trading standards can find covers that have been passed when they should have failed. My hon. Friend pointed out that the variations in fabrics is an issue that make this a challenge. Trading standards has said that the proposed test will be easier to enforce because the pass or fail will be clearer, with a smaller grey area.

As my hon. Friend is aware, the consultation closed just over a month ago. We received a substantial number of responses, and we are continuing to digest everything that has been put to us. I think we all agree that furniture safety is essential. It is great that we have a good record in the UK, and we want it to continue. I understand his concerns and those that various parts of the industry have raised through their Members of Parliament or in the consultation. I am considering them very carefully because we want to get this right. Not every ministerial decision comes with the responsibility that people’s lives are at stake, but this is one about which I feel keenly. It is complex and there is a significant need to weigh up the different factors to ensure that we get the right course of action.

I have set out what we want to do on the enforcement side, but the fire safety rules are vital to ensure that the enforcement operation can work. My basic aim is to ensure that any changes that we ultimately make improve the safety regime and deal with some of the difficulties that have been identified with the current tests. That is an area of genuine concern. We must ensure that we understand the concerns that have been raised, and that we move ahead with new regulations that everyone can have confidence in and that will provide the safety that everyone wants.

We will listen to the views of my hon. Friend and those who responded to the consultation, and work closely with fire services, trading standards, test houses and the industry to ensure that that happens. I am grateful to my hon. Friend for raising all these concerns. I am sure he will follow the next steps with great interest.

Question put and agreed to.

Oral Answers to Questions

Jo Swinson Excerpts

Thursday 20th November 2014 Commons Chamber

[Julie Hilling (Bolton West) (Lab)]

20. What steps the Government are taking to (a) enforce payment of the minimum wage and (b) encourage firms to pay the living wage.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The Government are taking tough action on employers that break minimum wage law. We have made it simpler to name and shame employers that do not pay the national minimum wage properly, and have increased the financial penalty that employers pay for breaking the law. The Government will always support and encourage businesses to pay higher than the national minimum wage, where they can.

[Diana Johnson]

The Sunday Mirror has reported that Greencore, which has a factory in Hull, is recruiting 300 Hungarians to undercut local jobseekers and is resisting a 6p an hour pay increase. It is part of a growing trend of low-paid work that removes people from the official jobless figures, but not from poverty. An estimated 300,000 workers earn less than the national minimum wage. How can Ministers claim to be serious about promoting the living wage, when they fail to enforce the minimum wage properly?

[Jo Swinson]

The hon. Lady is right to highlight the importance of businesses and employers paying the national minimum wage properly. We absolutely agree. We have invested extra money in enforcement and are helping more employees. Indeed, last year, £4.6 million of arrears was secured for workers who had not been properly paid. We have also increased the penalties and the resources to enforce the penalties, and we are now naming and shaming companies that offend.

[Mr Bain]

Two weeks ago while campaigning in my own constituency for the living wage, I met a mother who told me that her son had been offered part-time work paying just over £2 an hour. With the Office for National Statistics showing yesterday that the proportion of jobs not paying the minimum wage has increased under this Government, does the Minister not regret failing to adopt the proposal from the Opposition to increase the fine for non-payment to £50,000 so that we could have proper enforcement of the minimum wage in this country?

[Jo Swinson]

The key is not only increasing the fine to £20,000, but enabling that fine to be levied per worker rather than per employer. The fine, which is of course linked to the amount of arrears, covers all but three cases found over the last year. None of the others would have reached the £20,000 maximum. We will be fining employers more when they break the law, because those responsible employers who abide by the law deserve to know that those who break the law will be properly punished.

[Ann McKechin]

Seatruck, which operates domestic ferries between Aberdeen and Lerwick and Ullapool and Stornoway, pays its Estonian national seafarers as little as £3.66 an hour, while it benefits at the same time from the tonnage tax scheme operated by this Government. Is it not about time that we tackled the people who are undermining the national minimum wage, particularly for seafarers, by ensuring that regulations are tough enough to capture this group of people?

[Jo Swinson]

The hon. Lady raises the issue of seafarers, which has been raised by other hon. Members. I know that my predecessor, when I was on maternity leave, was dealing with this issue, and we continue to look at it. I reiterate to all hon. Members who have constituents concerned about not being paid the national minimum wage that Her Majesty’s Revenue and Customs will investigate every single complaint made to the pay and work rights helpline on 0800 917 2368. If people will please report instances of where the national minimum wage is not properly being paid, we can investigate and enforce it to ensure that people get what they deserve.

[Mr Speaker]

Wow! It is always useful to have a bit of information.

[Julie Hilling (Bolton West) (Lab)]

When many large employers are making vast profits but charging the taxpayer by paying their employees the minimum wage, and when families are hit by the cost of living crisis, why will the Minister not follow Labour’s lead and our plans to incentivise employers to pay a living wage through “make work pay” contracts?

[Jo Swinson]

I do not think the proposals put forward by the Opposition stack up. Providing only a small incentive for only a 12-month period is unlikely to change behaviour, but it is important to encourage employers to pay more than the minimum wage where they can. It is important that we are cutting income tax by £800 for low and middle earners so that they can keep more of their hard-earned cash. That is why this Government will continue to build the stronger economy we need so that people can properly prosper.

[Henry Smith (Crawley) (Con)]

6. What steps he is taking to raise awareness among businesses of export support services.

--- Later in debate ---

[Andy Sawford (Corby) (Lab/Co-op)]

12. If his Department will undertake an assessment of the main causes of insecurity in the workplace.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The workplace employment relations study, which the Department funds, shows that employees’ views on job security are related to their individual circumstances and also the underlying economic conditions of the time. Job satisfaction increased between 2004 and 2011, but, unsurprisingly, insecurity rose during the recession. However, the additional 1.4 million people in employment since 2010 will have improved that situation.

[Andy Sawford]

The Minister will know that many of those people are in very insecure employment. Will she investigate the experience of workers at the former Aquascutum factory in Corby? It briefly became The Clothing Works, under a man named Roger Gawn who has now been disqualified as a director, and has now become Korisby Ltd. Workers there tell me that they are waiting for up to eight weeks’ pay. One of them got in touch with me the other day and said that when they raise this with the new bosses, they are told, “Get on with it or leave.” How can that be right?

[Jo Swinson]

I do not know the specific facts of that case, but I am happy to look into it because, from what the hon. Gentleman says, that does not sound right. I will be happy to make sure that the appropriate authorities can look into the matter, investigate and take any action that is necessary.

[Mr David Nuttall (Bury North) (Con)]

If my hon. Friend’s Department did carry out such an assessment, does she not agree that it might well find that the biggest risk to the security of British business is the election of a Labour Government, which would mean more spending, more borrowing and higher taxes?

[Jo Swinson]

I certainly agree that that would be a particular risk to British business. I wonder whether my hon. Friend might also agree that another risk to British business would be on the question of whether or not Britain left the EU.

[Kevin Brennan (Cardiff West) (Lab)]

Has the Minister seen the recent campaign by the Union of Construction, Allied Trades and Technicians about the activities of umbrella companies, where workers are often having to pay for their own holiday pay through deductions and also national insurance employer contributions. What action is she going to take to ensure that job security and workers’ security is increased by acting on umbrella companies?

[Jo Swinson]

The hon. Gentleman raises an important point. Work is already being undertaken by the Treasury on the tax-specific issue of what happens with umbrella companies. He may be aware that last month my right hon. Friend the Business Secretary announced an employment status review so that we can look in more detail at the different types of employment status and at how that system is working, between worker and employer, and with the use of self-employed contracts and umbrella companies. We are looking forward to the results of that review, which will be covering these issues.

[Dr Julian Huppert (Cambridge) (LD)]

13. What steps he is taking to support the technology cluster in Cambridge.

--- Later in debate ---

[Mrs Madeleine Moon (Bridgend) (Lab)]

18. What steps he is taking to prevent employers deducting money from staff salaries for toilet breaks.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The Government would strongly encourage all employers, as a matter of good management practice, not to make deductions in pay for necessary and unavoidable interruptions to work. Employers who do not pay for toilet breaks may find themselves in breach of the Equality Act 2010 or of individual employment contracts.

[Mrs Moon]

I thank the Minister for that reply. A young constituent of mine was alerted, having just been sent details of his salary to his mobile phone. He was not told what the deductions were for. When he inquired, he was told they were for toilet breaks. The company tells me it makes ad hoc deductions for breaks away from the work station. Does the Minister agree that this is unacceptable, and if ad hoc deductions are made, they must be detailed and explained?

[Jo Swinson]

Absolutely: workers have rights to rest breaks, which there is a requirement for under law, and if deductions are made from pay, they have to be very clearly outlined—and if they take somebody below the national minimum wage, the employer could find themselves in breach of that law. I very much encourage the hon. Lady’s constituent to seek advice from the pay and work rights helpline on 0800 917 2368, and I am very happy that she has raised this issue and awareness of it in the House.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Will the Minister update the House on how many businesses to date have taken up her Government’s unpopular and much derided shares for rights scheme, taking away people’s rights at work in exchange for shares?

[Jo Swinson]

There is an interesting link between the issue of toilet breaks and that question, but in answer to the point about the employee shareholder policy, there is no requirement for companies to inform the Government when they have undertaken that model of employment, and therefore accurate figures would not be available to answer the hon. Gentleman’s question.

--- Later in debate ---

[Martin Horwood (Cheltenham) (LD)]

T2. Does the Secretary of State share my concern that the family brand name Weetabix is closing its packet printers Vibixa in my constituency, with inevitable consequences for more than 100 employees and their families, after the company was denied the sales force that could have widened its customer base? Does he agree that when a profitable company closes a profitable subsidiary, it should offer the best possible redundancy terms to its employees, some of whom have served Weetabix for more than 35 years, and not something barely above the statutory minimum?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I share my hon. Friend’s concern. I am sure that everyone’s thoughts will be with those individuals who face this very difficult decision at this time of year. He is right to highlight the fact that the statutory minimum is indeed just that; it is a minimum, a floor. It is not the best scenario. One would not expect a profitable employer that cares for its staff to go for the minimum when it can afford to pay more to recognise long-standing service.

[Graham Stringer (Blackley and Broughton) (Lab)]

T3. The position of chief scientific adviser to the President of the European Commission has been abolished. Professor Glover has held that position with distinction for the past four years. One cannot have evidence-based decision making without scientific advice, so will the Government make the strongest representations to the European Commission to reinstate the position?

[Bob Blackman (Harrow East) (Con)]

T5. Every day in my constituency, 200 eastern European men assemble outside the local B&Q superstore on Honeypot lane. They tout their services aggressively for casual labour to people visiting the superstore, take money in cash and have no deductions for tax or national insurance for the work they do. What steps can be taken to ensure that people are employed properly and that the necessary deductions are made to support state aid?

[Jo Swinson]

Clearly, we are concerned about such scenarios, where people not only evade taxation law but do not have proper employment rights. I will happily look into the specific case that my hon. Friend raises and see how we can ensure that the rules are properly enforced.

[Diana Johnson (Kingston upon Hull North) (Lab)]

T4. Is the Minister responsible for employment relations, consumer affairs and equalities, and the only woman in the Department, ashamed that since her Government introduced tribunal fees we have seen an 84% fall in equal pay claims, putting barriers in the way of justice at a time when the gender pay gap is increasing? So much for the sisterhood.

[Jo Swinson]

Although I share the hon. Lady’s desire for gender equality, I have to put her right on a couple of points. I am not the only woman in the Department: Baroness Neville-Rolfe plays an important role in the other place. The gender pay gap is falling and fell significantly in the figures announced only yesterday. That is good news, but of course more needs to be done. That is why we are ensuring that we support women in the workplace through initiatives such as “Think, Act, Report” and through our reforms of flexible working and shared parental leave. It is this Government who are introducing such initiatives, which her Government failed to do.

[Andrew Griffiths (Burton) (Con)]

T6. The decision of this House on Wednesday to vote to scrap the pub tie caused £350 million to be wiped off the share price of pub companies yesterday, and it continues to fall today. That of Punch Taverns in my constituency fell by 17% in one day. Jobs and businesses are at risk. What discussions is the Department having with those companies and what help is the Secretary of State offering? If he is not offering help, why not?

[Sheila Gilmore (Edinburgh East) (Lab)]

T7. The Secretary of State has frequently said that he wants fairness for people on zero-hours contracts. Will he now, even at this stage, reconsider the amendments he opposed in this House this week, which would have given greater protection to people on zero-hours contracts, including care workers?

[Jo Swinson]

We had extensive debates on these issues in Committee and on Report. The Government have introduced legislation that will now go to the other place to ensure that exclusivity clauses are banned. We have also made a commitment to introduce sector-specific guidance to promote best practice in the use of these contracts. That is action from this Government where the hon. Lady’s Government failed to act.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

With several hundred job losses already announced in the north-east of Scotland as projects come to maturity in the North sea and costs rise, what are the Government doing to encourage further investment and exploration and to underpin many vital jobs across the UK?

Small Business, Enterprise and Employment Bill

Jo Swinson Excerpts

Wednesday 19th November 2014 Commons Chamber

[Bill Esterson]

My hon. Friend rightly brings me back to zero-hours contracts and the problems and difficulties they create for people. Working a very low number of hours causes enormous hardship and difficulties: the difficulty of working an uncertain number of hours that can go up or down; the difficulty of claiming benefits to cover some of the gaps when going on and off benefits; and the difficulty in trying to navigate a system deliberately put in place by the Government to restrict what people, who are in work mostly, are paid in social security. I am glad he has made that point.

The use of agency workers, typically from eastern Europe, by companies in this country to undercut local staff is wholly unfair on the migrant workers who work for very low rates of pay and wholly unfair on local staff who are pushed out of the picture by being undercut. That is disastrous both for them and for the workers who are brought in. The knock-on effect is very damaging to the local economy too, because often any money earned, even in such low amounts, is sent back home and not spent locally and circulated around the local economy. The agencies have to be stopped. I am glad that it is Labour policy to take action to reduce the abuse perpetrated by such agencies. My hon. Friend the Member for Edinburgh South (Ian Murray) made the point very well: good businesses want to pay decent wages, but they are undercut in so many ways that they find it difficult to do so when unscrupulous employers exploit the system. Agencies’ use of overseas staff on low rates of pay is just one of the ways in which that happens.

The Bill introduces a penalty for employers who do not pay the national minimum wage. The problem is that there will be no improvement in enforcement. I mentioned the cuts in the number of staff at Her Majesty’s Revenue and Customs.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

indicated dissent.

[Bill Esterson]

The Minister shakes her head. Is she telling me that I am wrong when I say that the people who used to work in this sector for HMRC in my borough and have told me they have lost their jobs and that they are not telling me the truth?

[Jo Swinson]

I am not telling him that his constituents are not being truthful in relation to their circumstances, but I am saying that the Government have invested more money in the enforcement of the national minimum wage. HMRC has employed more compliance officers in this area of work. I am sure that on behalf of his constituents he would wish to take up his concerns with the Treasury, but national minimum wage enforcement work has received additional investment from the Government.

[Bill Esterson]

I am glad the Minister has made that point. The reality is that those who used to work for HMRC would be very puzzled to hear it. Many staff working at HMRC, whose numbers have fallen in the past four-and-a-half years, would be puzzled by it, too.

The lack of improvement in enforcement is a worry, which is why our proposal to give the responsibility and power to local councils is so important. We propose the real deterrent of a £50,000 fine—the Government have not come forward with anything on that scale—and the aspiration of £8 an hour for the national minimum wage. That would move things forward significantly, while at the same time encourage the payment of a living wage.

All these low pay issues—the people who have to put up with low hours on zero-hours contracts, as my hon. Friend the Member for Central Ayrshire (Mr Donohoe) pointed out; the part-time nature of many of the jobs created in recent years, which the Government are so keen to trumpet; the way in which the minimum wage is undercut; the lack of a living wage; and the fact that people are £1,600 a year worse off—show why it is so important for proper action to be taken. The national average for the number of people in work on low pay is one in five. In my constituency, two in five are paid less than a living wage. For my constituents, the issue of low pay is absolutely crucial. They are crying out for an improvement in the way the economy is balanced, so that far more people benefit from economic recovery and we see a reversal in the year-on-year fall in living standards they have suffered under this Government.

There are very high numbers of people on low pay, which—the point was made in an earlier exchange—has led to low tax receipts. That explains why the apparent improvement in the number of those in employment has not been linked to a reduction in the deficit. The deficit is now going up again, despite the draconian cuts in public spending.

--- Later in debate ---

[John McDonnell (Hayes and Harlington) (Lab)]

I apologise for arriving halfway through the Front-Bench spokesman’s introduction and for having to leave soon to chair another meeting.

If the Government cannot support the amendments, perhaps they could consider the spirit in which they have been tabled. I refer in particular to amendment 8 and the annual report into the effectiveness of enforcement. I have raised this issue in the House before, and while the Minister was on maternity leave I met the Minister who stood in for her to discuss the failure to pay the minimum wage in the shipping industry, particularly on ferries to the Channel Islands. Condor Ferries is still paying £2.65 an hour. Its ships sail around the Channel Islands, so they are close to, and come to, our shores, but we still cannot get around the current legislation to ensure enforcement. An annual report could give us shared knowledge of where the minimum wage is not being paid and how we can work together to overcome the difficulties. Problems continue, and even if the amendment cannot be accepted, at least the Government could provide us with a regular report into the enforcement challenges.

On amendment 9, in January I helped to launch the fast food campaign, with the Bakers, Food and Allied Workers Union, to lift living standards, pay and the quality of employment within the fast food sector. It covers all fast food joints operating in this country, such as McDonald’s, KFC and Costa, most of which pay the minimum wage and virtually all of which operate zero-hours contracts. I have not met a fast food worker yet who has voluntarily moved to a zero-hours contract. The right hon. Member for East Yorkshire (Sir Greg Knight), who is not in his place, mentioned end-of-the-pier shows, but the entertainment sector uses fixed-term contracts, rather than just zero-hours contracts, because the latter are so capable of exploitation, victimisation and bullying, as we have found in the fast food sector in particular.

We have stood outside McDonald’s and we have tried to meet the management of McDonald’s, Costa and others to arrange discussions between the trade union, which is recruiting members in that sector, and management, but they have refused to meet and get involved in those negotiations. Recruitment has gone on and there has been some direct action. The fast food campaign will be demonstrating outside this place on Friday lunchtime to expose what is happening in the sector.

I welcome the exclusivity clauses in the Bill—they are really helpful—but even with their introduction, as amendment 9 points out, without the capability to enforce them, they will be almost meaningless. At the moment, the cost and other restrictions over who is entitled to go to an employment tribunal mean that many fast food workers and others on zero-hours contracts will never get their day in court. The amendment is not particularly challenging; it would simply require regulations making it open and transparent how people can enforce their rights. At the moment, it is almost inexplicable to people how they can be enforced.

I think that amendment 10(c), which refers to

“imposing an obligation on an employer to offer a fixed hours contract when a worker has worked regular hours for a continuous period”,

would be welcomed within the sector. Over the past year, I have been working on the fast food sector and have found people being employed on the most exploitative zero-hours contracts. We heard examples of individuals being phoned up and told to race to work to get the hours. My dad was a Liverpool docker in the 1930s. We are going back to the days when the ganger could select individual workers for the day. It means that although some will be selected, others will not, perhaps because of their trade union involvement.

One Costa worker who turned up at a public meeting I arranged had been told that he could not have hours the following week because he had not smiled enough that week. We raised that with Costa, but it was denied; the worker and his colleagues confirmed that it was true. That is the sort of exploitation that goes on. Unless we can get to a situation where we can be completely confident that a person has entered into a zero-hours contract completely voluntarily, people will be open to exploitation.

There is a sliding scale of what people want. Most people want permanent employment; others want to plan their lives over a limited period of time and would want some fixed-contract employment; and others—I think it will be a tiny minority, and not on the present scale—will want zero-hours contracts. The proposed new subsection (1A)(c) in amendment 10 therefore refers to regular employment for a continuous period. The proposed regulations could define that period of time; we could debate the practicality of that. The person should then have the opportunity of having a proper contract rather than a zero-hours contract.

I believe that the amendments are acceptable and advise everyone to vote for them, but even if they are not acceptable to the Minister, the Government need to take it into account the spirit of them. We should first ensure that we are open and transparent about the effect of the enforcement and share the problems of enforcement, so we know what the future agenda will be. Secondly, we must be completely clear that there are practical rights of enforcement. At the moment, I cannot explain to people how under the legislation as drafted we will be able to enforce their exclusivity. Thirdly, there is the issue of continuous employment, which I think needs to be tackled.

Again, all that is being suggested is that regulations should be brought forward to deal with these issues. If the Government are unwilling to accept the amendments, they could at least accept that there is an issue and that draft regulations could be brought forward, enabling the possibility of working on a cross-party basis to make some practical arrangements to protect workers from such forms of exploitation. Let me say finally that I would welcome people to join us on the fast-food demonstration at 12 o’clock on Friday.

[Jo Swinson]

I shall focus most of my remarks on the debate about the national minimum wage and zero-hours contracts, but I would like briefly to set out the effects of Government amendments 61 to 64, relating to the public sector exit payment measures. The measures are designed to enable the proportionate recovery of exit payments when a high-earning individual returns to the same part of the public sector shortly after their exit. The amendments are technical in nature and simply seek to clarify that the obligations can be placed on individuals who received exit payments when it is likely that they will swiftly return to the same part of the public sector.

[David Rutley]

I wanted the Minister to pause for a second on this issue, because it is important to recognise that this Government are taking action on something that has been going on for far too many years. Does she agree that taxpayers across the country who are concerned about these matters will understand that we have taken action so that high earners will not be taking an exit payment and then going off to another job in a few weeks’ time?

[Jo Swinson]

My hon. Friend makes an important point. This is a basic issue of fairness as well as value for money for the taxpayer. That is why this important measure is part of the Bill. The measure will allow the Government, for instance, to require a high earner who received an exit payment to make arrangements to repay the compensation before they are allowed to take up new employment in the same sub-sector of the public sector. In addition, the amendments clarify that obligations can be placed on the public sector body responsible for the exit payment and the subsequent authority that re-engages the individual as an employee, contractor, or office holder. The amendments are in line with the Government response to the consultation on these measures, which was published on 28 October. I am sure all hon. Members will agree that these amendments are an important clarification, and I look forward to support for them.

Turning to the more substantive issues, I thank hon. Members for tabling the amendments in this group and for the constructive and positive debate we have had. The hon. Member for Hayes and Harlington (John McDonnell) was unable to stay, but I thought his contribution was particularly good when he said that if we could not accept the amendments we could respond to their spirit. I very much hope to be able to do so. I shall set out why I do not think the amendments should be accepted as drafted, but I recognise the genuine concern expressed by hon. Members and we share the commitment to tackling the issues. The debate is really about the best way of doing that. It may not be through legislation, but I will explain how the Government intend to tackle the genuine issues raised.

--- Later in debate ---

[Ian Murray]

The Minister is always incredibly generous in giving way. She has explained how the reports go to the Low Pay Commission and are then reported back to this House, but our amendment asks that to be extended and to be linked to enforcement. It asks the Government to extend the living wage and to look at whether the financial penalties act as an effective deterrent. It thus goes much wider than the Low Pay Commission.

[Jo Swinson]

The evidence submitted in the reports is pretty comprehensive, so I think it does meet the requirements set out, particularly when combined with the assessment of the latest hourly earnings and the impact of the minimum wage and what it does to living standards and hourly earning. I think that the existing reporting requirements are adequate and that the amendment would bring about a duplication. I welcome the interest in the issue, however, and I welcome the fact that as well as those formal reporting requirements, we have had various debates—sometimes in Westminster Hall, sometimes here in the Chamber—on these issues. Furthermore, these topics are returned to frequently at BIS oral questions, and I expect that to happen tomorrow. It is right that we have these opportunities to discuss these issues because they are important.

Let me deal with some of the specifics that came up in the debate about enforcement of the national minimum wage. In particular, we heard the charge that the number of investigations had gone down and that this was some sign of failure, but I believe the picture is more nuanced than that. Since the national minimum wage was introduced and HMRC has been the enforcement body, that body has continually assessed how it undertakes enforcement activity and how it can be improved. It is true that the number of individual investigations has gone down, but that has been coupled with a much more efficient undertaking of investigations. In particular, HMRC often now has larger and more complex investigations as part of the risk assessment work being undertaken. Sometimes those cases take longer to complete, so there will be fewer overall cases. The number of people covered by each case, however, has been increasing.

In addition, when someone makes a complaint to HMRC about the national minimum wage, rather than just going in to investigate the particular worker, Joe Bloggs, and their circumstances, HMRC has the power to widen the investigation—not only to ensure that the anonymity of the complainant is preserved, but to recognise that if there are anomalies in one particular worker’s payment, it might well be the case for other workers within the organisation. It has the power to expand the investigation more widely. Although that has reduced the number of cases that have been completed, the number of workers helped and the amount of arrears recovered has increased, so that is a good thing.

The number of workers helped, for example, has risen between 2009-10 and 2013-14 by more than 17%. The average number of workers per case has nearly tripled, and the average amount of arrears per case has increased by 260%. I think that is a good news story on enforcement, particularly concerning the resources available for enforcement, about which the hon. Member for Sefton Central (Bill Esterson) was concerned. Some 144 officers have been involved in HMRC. As a result of the additional resource dedicated by BIS—the budget has increased by £1 million to £9.2 million—a further 26 individuals have just been hired. A team of 170 is now working to ensure that there is compliance with the enforcement of the national minimum wage. It is clear from the figures that that significant increase in resources has already been delivering, and it will continue to deliver.

[Bill Esterson]

I am pleased that the Minister has given us those figures, but if so many people are involved, why have so few employers been named and shamed under the Government’s policy? The numbers do not seem to stack up.

[Jo Swinson]

So far 30 employers have been named and shamed, and, as I said in Committee, there will be a further tranche of naming and shaming shortly.

The previous system was much more permissive in terms of the number of cases in which naming could operate. Until the new rules were introduced, only one employer had been named over a period of many years. We introduced those rules on 1 October 2013, but they did not operate retrospectively, and hence applied only to investigations that began on or after that date. The previous criteria apply to the many current investigations that began before 1 October 2013, and in those cases employers are much less likely to be named. Many other investigations began on or after 1 October 2013 and are still ongoing, so the final stage of the issuing of a notice of underpayment and the consequent ability to name and shame has not been reached.

As I think has been recognised, the numbers are already increasing, but given that this is a new scheme, it is inevitable that they will start small and become larger as cases work their way through the system.

[Mr Iain Wright (Hartlepool) (Lab)]

The Minister will recall that, in Committee, I raised the issue of umbrella companies, in which people who may be receiving relatively high wages are, for a variety of reasons, subject to spurious deductions that take their earnings below the national minimum wage. Does the Minister think that the HMRC enforcement team could look into that as well?

[Jo Swinson]

The enforcement team can look into any breach of the national minimum wage, and it can enforce notices of underpayment in the case of spurious deductions. That applies even to deductions that would not be problematic if someone were being paid significantly above the national minimum wage. Some contracts suggest that employees pay for their own uniforms if they are paid significantly more than the national minimum wage; that does not necessarily get employers into trouble with the law, but in some cases it does. Obviously it is necessary to ensure that HMRC’s calculations are right, and that it has all the necessary evidence. Sometimes it takes a little time to ensure that the whole process is followed correctly, which is why cases are still working through the system.

[Bill Esterson]

I do not remember whether the Minister gave these figures in Committee, but she said a few moments ago that 30 companies had been named and shamed. Does she accept that up to 300,000 staff are affected, and if she does, can she tell us how many of them are employed by those 30 companies?

[Jo Swinson]

I think that the hon. Gentleman is comparing apples with oranges. According to the most recent estimate, the number of employees who are paid less than the national minimum wage is lower than 300,000—about 236,000, I believe. I stress that that is an estimate. Obviously we do not have data on every single person in the country; such estimates are based on surveys. The figure of 30 companies is not an annual figure; those are cases that have been completed since the new rules came into force.

I can assure the hon. Gentleman that the vast majority of cases in which the national minimum wage law has been found to have been breached are being named and shamed once the notices of underpayment have been issued. Obviously there is still a job to be done: people must be informed about how they can ensure that their rights are being properly enforced. Let me say yet again that if people fear that they are not being paid the national minimum wage when they should be, they should ring the pay and work rights helpline, which is a free service and totally confidential. The number is 0800 917 2368, and I shall continue to take every opportunity to publicise it, because it is important for people to know that they can receive advice on a confidential basis and then make a complaint if they decide to do so.

Local authorities have been mentioned. I think it right that HMRC works in partnership with authorities—with some success—to ensure that enforcement happens, but I also think it right for there to be a national enforcement body. The issue of social care has been raised, along with the issue of travel time, which is well documented. Travel time, other than the times involved in travel to and from work at the beginning and end of the day, needs to be included in the national minimum wage. We are well aware of that, and HMRC is enforcing it.

We know that there are issues in the care sector. That is why targeted enforcement was carried out, and why my colleagues at the Department of Health have been working closely with local authorities to produce guidance to ensure that they contract providers who can provide quality care, along with fair terms and conditions for their work force. Authorities should not be pricing contracts at a level that prevents their basic national minimum wage obligations from being met.

Amendments 9 and 10 concern zero-hours contracts. We have already discussed the question of whether or not they are sometimes a good thing. It was the former Member of Parliament for Sedgefield, Tony Blair, who said, on 3 October 1995,

“There will be an end to zero-hours contracts.”

However, the Labour Government did not deliver that, perhaps because there are people for whom such arrangements work well, as we heard from the TUC during the evidence session in Committee.

While there are undoubtedly problems with zero-hours contracts, and I do not wish to dismiss them, I think it important to introduce some perspective to the debate. Last year the Chartered Institute of Personnel and Development conducted a survey to establish what was happening on the ground, and produced a report. It found that zero-hours contract workers were just as satisfied with their jobs as the average United Kingdom employee, that they were happier with their work-life balance, and that they were less likely to feel that they were being treated unfairly by their organisations.

[Mr Iain Wright]

Does the Minister think that the significant increase in the number of zero-hours contracts over the last four years is a positive or a negative development—or is it just a sign of a flexible employment market?

[Jo Swinson]

It certainly is a sign of a flexible employment market, which is good for the UK economy. It ensures that we are able to have a stronger economy and increased prosperity. As for whether a zero-hours contract is a good thing, that depends on individual circumstances. There are plenty of people for whom such contracts work well and plenty of people who are happy with them, but I entirely recognise that there are plenty of people who are not happy, and that there are employers who are not behaving as they should.

Some of those issues arose in the consultation on exclusivity, which is why we inserted the clauses that we are discussing. Other issues arose from it as well, and we agree that those too need to be addressed. The Opposition tabled amendments 9 and 10, and I welcome their contribution to the debate. We have argued that it is better to ensure that we can work with industry, sector by sector, in producing guidance on what constitutes responsible use of zero-hours contracts, so that employers are clearer about how they should be using them and employees can know what it is reasonable for them to expect.

[Ian Murray]

If the Minister thinks that there is no problem with zero-hours contracts, can she explain why the tax take from income is flat but unemployment has fallen by 500,000?

[Jo Swinson]

Various issues affect the tax take and employment, not least the amounts that people are earning, For instance, if people are working for fewer hours, they will pay less income tax, because there will be more people within the tax threshold. That said, we are proud of the fact that we have raised the threshold. I campaigned hard for that in the last Parliament, and I am delighted that we have delivered it.

The hon. Gentleman accused me of saying that there was no problem with zero-hours contracts. Of course we accept that there is a problem with them. That is why we have produced legislative proposals, which, despite the promises of the former Labour party leader Tony Blair, his party did not manage to do when it was in government.

Amendment 9 is intended to ensure that zero-hours contract workers have a route to redress to enforce the rights in clause 145. I recognise the serious point that the hon. Gentleman is making, but, as I reassured him in Committee, that is already possible through the order-making power in new section 27B. His amendment is therefore unnecessary.

Small Business, Enterprise and Employment Bill

Jo Swinson Excerpts

Tuesday 18th November 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 2—Pubs code: market rent only option for large pub-owning businesses—

‘(1) The Pubs Code shall include a Market Rent Only Option to be provided by large pub-owning businesses in respect of their tenants and leaseholders.

(2) A Market Rent Only Option means the right of the tenant, or leaseholder, of a pub owned by a large pub-owning business, to be offered such tenancy or lease in exchange for an independently assessed market rent paid to the pub-owning business and, for the avoidance of doubt, not thereafter being bound by “a tie”, meaning an agreement meeting, in whole or in part, Condition D as defined in section 63(5) of this Act (obligation to buy from the landlord, or from a person nominated by the landlord, some or all of the alcohol to be sold at the premises).

(3) For the purposes of this section, the definition of Condition D in subsection (2) is to be interpreted to include an obligation to buy or contract for goods and services other than alcohol.

(4) For the purposes of this section, the definition of a “large pub-owning business” is a business which, for a period of at least six months in the previous financial year, was the landlord of—

(a) 500 or more pubs (of any description); and

(b) one or more tenanted or leased pub.

(5) The Pubs Code may include provisions to permit a brewery which qualifies as a large pub-owning business to continue to require that specified brands produced by that brewery (required products) are sold within its tenanted or leased pubs—provided that such tenants and leaseholders are free to purchase such required products from any supplier.

(6) The Pubs Code shall contain provisions requiring that the offer of a Market Rent Only Option to a tenant—

(a) at the point of lease, tenancy contract or other agreement renewal, or at rent review or five years from the date of the previous rent review;

(b) when the large pub-owning business gives notice of, or imposes, (whichever is the earlier) a significant increase in the price at which it supplies products, goods or services (falling under subsections (2) or (3)) to the tenant;

(c) when a large pub-owning business implements, or gives notice of, a transfer of title;

(d) when a large pub-owning business goes into administration; or

(e) upon an event outside of the tenant’s control, and unpredicted at the time of the previous rent review, that impacts significantly on the tenant’s ability to trade.

(7) The terms of an offer under subsection (5) shall include provision for a 21 day period of negotiation, commencing from the tenant giving notice of an intention to pursue a Market Rent Only Option, in which the large pub-owning business and the tenant may seek to negotiate a mutually agreeable Market Rent Only settlement.

(8) Following the negotiation period under subsection (7) there shall follow a 90 day period of assessment. In this period—

(a) an independent assessor shall be appointed with the agreement of both parties by joint private instruction and on the basis of an equal apportionment of costs; and

(b) under arrangements and criteria that the Adjudicator shall establish, such an assessor shall be—

(i) independent of both parties; and

(ii) competent by virtue of qualification and/or experience.

(c) if the business and tenant cannot agree on an appointee then a person shall be appointed, on the application of either party, under arrangements established by the Adjudicator;

(d) the appointed assessor shall then assess the market rent for the property operating as a pub with no “tie” as defined in subsection (2) and submit to both parties the resulting sum for such a rent; and

(e) at the time of the three month assessment period, the tenant shall have the right to pay no more than the sum determined under paragraph (d) to the pub-owning business and, if previously one party to a “tie” as defined in subsection (2), shall no longer be bound by it.

(9) The Pubs Code shall contain such measures as ensure that—

(a) the Market Rent Only Option is conducted in accordance with timing provisions and procedures, in accordance with RICS guidance, as specified in the Pubs Code; and

(b) large pub-owning businesses are prohibited from acting or discriminating against any of their tenants who choose the Market Rent Only Option.

(10) The Secretary of State shall confer on the Adjudicator functions and powers in relation to the Market Rent Only Option, that include—

(a) determining what constitutes a significant increase in price, as mentioned in subsection (6)(b) in the event of a dispute between tenant and business;

(b) adjudicating in disputes concerning the process or outcome of the market rent assessment; including the power to set the market rent if the Adjudicator deems the process or decision to have been flawed; and

(c) receiving, investigating and adjudicating in relation to complaints made under subsection (9)(b).

(11) The Secretary of State shall make provisions for the implementation of the following measures in this section by regulations amending the Pubs Code. Such regulations shall be made under negative resolution procedure. The Secretary of State may make provisions changing the types of agreement that fall under subsection (2) by regulations. Such regulations shall be made under negative resolution procedure.”

Government amendments 29 to 41.

Amendment 5, in clause 6, page 47, line 19, leave out “tied” and insert “tenanted, leased or franchised”.

Government amendments 42 to 58.

[Jo Swinson]

I am glad to be able to get on to the debate on part 4 of the Bill, which is about pubs. There was considerable debate in Committee on the measures to introduce a pubs code adjudicator and a pubs code, and I am sure that we will have another lively debate today. As my right hon. Friend the Minister for Business and Enterprise has already mentioned, there is considerable interest in this matter in all parts of the House, and it is important that we have good scrutiny of the Bill.

New clause 6 ensures that the definition of a tied pub does not inadvertently capture restaurant or hotel premises, which was a concern raised in Committee. We are aware of one fish and chip restaurant chain that could meet the conditions set out in clause 63, and it is possible that there are others. We all know a pub when we see one, and we all know the difference between a pub and a fish and chip restaurant, but defining that in legislation can prove difficult, particularly given increased food consumption in pubs, which is in large part the result of the hugely successful smoking ban making the experience much more enjoyable. That is a new way in which pubs have diversified, and indeed increased their income, but it makes separating them by legal definition more complex.

New clause 6 therefore provides the Secretary of State with a power to exempt a particular type of tenant or premise from the pubs code in secondary legislation, so that we can ensure that it is only pub premises that are in scope. For the avoidance of doubt, amendment 58 sets out that regulations created through the exercise of that power will not be subject to the hybrid instrument procedure.

There are two other big issues addressed by the amendments in this group. Our discussions today obviously follow many years of consideration by the Select Committee on Business, Innovation and Skills, which has, along with its predecessor Committees, looked in particular at problems in the tied pub sector—I think that there have now been four reports. I would like to pay tribute to the hon. Member for West Bromwich West (Mr Bailey), who I see is here, as well as to his Committee and its predecessors for all their work to ensure that the problems were heard, investigated, documented and addressed.

We heard concerns from Members on both sides in Committee about smaller companies and family brewers being covered by the statutory code and adjudicator. We also heard assurances, through the evidence submitted by smaller companies and family brewers, that they would continue to fund the voluntary regulation system, which I know many hon. Members feel strongly about.

[Richard Fuller (Bedford) (Con)]

The Minister says that there were concerns, but will she also acknowledge that the Government were defeated in Committee because of the strength of those concerns?

[Jo Swinson]

Absolutely. We have been considering how best to respond to those genuine concerns. This Government have no wish to overburden small business. Indeed, we have done a huge amount to reduce regulation on business, particularly small business. Of course, this is a small business Bill. We are trying carefully to strike the right balance between helping smaller pub-owning companies and helping individual tenants and small business people who are struggling with some of the difficulties documented in the Select Committee reports.

We have listened to all the concerns put to us and, on further reflection, have decided not to press amendments 29 to 33, 41, 43 and 44, which were designed to reinstate smaller pub companies within the scope of the statutory pubs code, albeit with lesser requirements. Instead, we will bring forward amendments in the other place to change the exemption to those companies that own fewer than 350 tied pubs. We think that strikes the right balance between preventing overburdening of genuinely small family brewers and ensuring adequate protection of tied tenants in a way that is proportionate.

The hon. Member for Chesterfield (Toby Perkins) made the point in Committee that a threshold of 500, which would have been set out in the Bill, would not have ended up capturing some groups that perhaps would have been expected to be captured. This change will ensure that the adjudicator’s attention, and indeed the costs of compliance with the measures, is focused on the largest companies in the sector and on the end of the market where most complaints originate.

[Richard Fuller]

I just want to clarify what the Minister said. I think that I might be seeing the deft hand of my right hon. Friend the Minister for Business and Enterprise, who seems to be the only one in the Department who understands small businesses. Can the Minister explain to the House what the big difference is between 500 and 350, or is she just grabbing at a number that does not look like 500, which she said in Committee was the right one?

[Jo Swinson]

The hon. Gentleman could recognise and welcome the fact that the Government have responded to the concerns he raised and have moved on the issue, but he has chosen not to, given his comments about colleagues in the Department, with which I wholeheartedly disagree. We must ensure that we consider those concerns, but they were raised not only by his colleagues, but by my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert), who was a member of the Committee, and by Opposition Members concerned about the issue.

[Toby Perkins (Chesterfield) (Lab)]

That is a fundamental part of this. The Government lost the vote in Committee, and now they say that the Bill will go right through to Third Reading as it is, but that they have some vague idea of doing something about the matter in another place. As we have been through Committee and are now on Report, that does not give this House much opportunity to debate whether we are happy with these eventual changes.

[Jo Swinson]

We have between now and 4 o’clock to have that discussion. What I have clearly set out is in line with what the hon. Gentleman wanted in Committee, which was for smaller companies to be excluded. As I have said, he made the very reasonable and rational point that there were some companies—this deals with the intervention from my hon. Friend the Member for Bedford (Richard Fuller)—that had in excess of 400 tied pubs, for example, and it might seem strange to people that such companies would not be covered. We listened in Committee and now propose that the threshold should be 350 tied pubs, rather than 500. I think that it is a positive thing that the Government have listened to the views of hon. Members and responded accordingly.

[Toby Perkins]

For the benefit of the House, can the Minister clarify how many businesses she believes will now be brought into scope that would not have been previously?

[Jo Swinson]

Three further businesses would fall into that category. It is obviously a fluid issue, because companies buy and sell pubs all the time, so that might change in future.

[Sheryll Murray (South East Cornwall) (Con)]

I am grateful to the Minister for listening to the will of the Committee. It is reassuring that the Government listen when amendments, such as the one that I tabled, receive cross-party support. Will she please clarify whether, when she talks about tied pubs, she is referring to tied pubs excluding managed pubs—in other words, short-term tenancies and leases excluding managed houses?

[Jo Swinson]

The definition is as set out in the Bill. Where a pub is directly managed, it does not meet the definition of a tied pub. I hope that gives the hon. Lady the reassurance she seeks.

As I have said, the Government have listened and recognised that the largest number of concerns originate at the end of the market with the largest pub companies, which is why we will focus the pubs code adjudicator on those companies. We recognise that there are concerns about other parts of the market, but clearly the House can return to those issues in future if it so wishes. We think that focusing the adjudicator’s attention in that way will resolve the vast majority of the issues that we have identified in the market.

We have listened to the concerns about smaller pub companies and family brewers. Of course, later this afternoon we will discuss another issue about which hon. Members from various parties have expressed strong views. It is clear from the number of hon. Members who have put their name to new clause 2 that there is a strong desire in the House for the statutory code to go further and to introduce the market rent only, or MRO, option.

We ran a consultation on that whole issue. As I pointed out in Committee, and as was said on Second Reading, it was one of the most popular consultations the Department has run in a very long time.



It received a huge number of responses because tenants, individuals and campaign groups take a great interest in the issue. Many representations were made on whether there should be a market rent only option and there was support from many quarters for that approach, but we recognise that there could be uncertain outcomes from such an approach. We would not want unintended consequences to harm the sector and the people we are trying to protect—

[Greg Mulholland (Leeds North West) (LD)]

Will my hon. Friend give way?

[Jo Swinson]

I will finish my sentence, then I will give way to my hon. Friend, who has such a strong record of campaigning in this area.

We recognise that many hon. Members worry that the pub companies need the very real threat of tenants going free of tie before they will offer their tenants a good tied deal. I can commit today that the Government will bring forward amendments in the other place to respond to this. Following the many Select Committee reports and the campaigning by my hon. Friend the Member for Leeds North West (Greg Mulholland) and others in all parties in the House, we have listened to those strong representations and we plan to add to the Bill a power to introduce a market rent only option after two years if a review concludes that the measures have not delivered sufficiently for tied tenants.

[Greg Mulholland]

I thank my hon. Friend for all the work she has done. I will respond to that last point when I make my speech. She commented on the popularity of the consultation; two thirds of all who responded backed the market rent only option. None supported what the Government are proposing—a parallel rent assessment—so what was the point of the consultation?

[Jo Swinson]

The point of a consultation is to explore the issues and, if necessary, to make changes to the Government’s proposals in response. That is exactly what we have done. The parallel rent assessment responds to some of the concerns expressed in the consultation about the initial ideas that we had outlined. It is right that the Government should be flexible enough to respond to a consultation. If the Government go into a consultation with a set of plans and come out of the consultation with exactly the same set of plans, that means either that the plans were perfect—sometimes that may be the case—or that the Government refuse to listen. That was the point of the consultation on this issue.

My hon. Friend makes the point that there was great support in the consultation for a market rent only option. He is right. The Government recognise that. Although I appreciate that he will be disappointed that that will not culminate in the Government accepting his new clause 2, it gives a great fillip to campaigners who have worked on this issue and shows that the Government are serious. We think that the parallel rent assessment approach that we have outlined will deliver the “no worse off” principle, which we should all be able to agree is what we want for tenants. We will make sure that with the further power, the market rent only option is still on the table if, for any reason, the parallel rent assessment proposal does not deliver the intended outcome.

[Toby Perkins]

I will not dwell on the fact that the Minister is suggesting that a consultation is a success if the Government change their view and conclude that something that no one was asking for is the right answer. The industry is desperate for certainty. If we come out of the process proposing another review in two years which might change the whole landscape yet again, does the Minister agree that we will have failed to give the industry the certainty it requires?

[Jo Swinson]

We recognise that a significant number of companies appreciate the beer tie. For many tenants and companies it is a model that works well, as Members on all sides would agree. Therefore, we do not want to undermine it. There is a danger that that could happen under the market rent only option. Equally, I understand that many people advocate that as a market-based solution to deal with the issue. We are trying to forge a way forward that will have the confidence of the industry and will allow the market rent only option to be introduced two years after commencement of the Bill if a review finds that the parallel rent assessment is not working. It is clear that the “no worse off” principle is paramount and needs to be delivered. We believe that the parallel rent assessment will deliver that, but if it does not, we do not want to have to introduce another piece of primary legislation. We want the Government to be able to act swiftly.

[Anne Marie Morris (Newton Abbot) (Con)]

I have listened with interest to the discussion of issues relating to new clause 2 and I agree that it is good to hear that the Government have moved on these matters. However, two years is a long time into the future. Another Government will be in office and a review would be toothless unless we are very clear about the criteria for judging whether the Government’s current proposals have succeeded. I would be grateful if the Minister clarified she is proposing. It needs to be concrete and specific to have any value.

[Jo Swinson]

We are proposing a power for the Secretary of State to introduce the market rent only option following a review that finds that tenants are not sufficiently protected by the system that we put in place. An important point that should reassure my hon. Friend is that we are creating a pubs code and putting a pubs code adjudicator on a statutory footing, so there will also be a significant individual who is independent, who is an expert and who has great experience of dealing with disputes. If cases go to arbitration, the adjudicator may be involved in investigations as well. The pubs code adjudicator will have a substantial amount of information at his or her disposal. We will not be in the situation that we have been in up to now, where it would be more difficult to assess the position. The adjudicator will enable us to make that assessment and to have an independent voice to set out what may need to happen further.

[Andrew Griffiths (Burton) (Con)]

Does the hon. Lady accept that, in an industry that employs thousands upon thousands of people and creates millions of pounds-worth of wealth for this country, there will be incredulity that amendments are to be made within hours of the Bill leaving this House? We have had four BIS Committee inquiries into this and years to discuss the issues, yet the Minister comes scrabbling to the Dispatch Box just a few hours before we are due to vote on the measure. How can that give the industry any confidence?

[Jo Swinson]

I regret the fact that my hon. Friend is disappointed, but he was often disappointed in the Public Bill Committee when we were not able to accept his amendments on a range of issues that, if taken together, would have undermined the purpose of the Bill. I know that he speaks up for his constituents and he represents one of the larger pub companies that has its base in his constituency, so I understand where he is coming from. His view of what needs to happen to address the problems and injustices in the industry is very different from that of many, and perhaps most, Members of Parliament. We want to make sure that we get the details right. We want to listen to the House. That is what a responsible Government do.

[Richard Fuller]

Perhaps I was unchivalrous earlier when I said that the Minister does not understand business. It is clear that the Government are on the run. This is the second issue on which they are proposing changes. What role has the Secretary of State for Business, Innovation and Skills played in these last-minute shenanigans?

[Jo Swinson]

Yes, the hon. Gentleman was unchivalrous and I am not sure he rescued the situation with that intervention. My right hon. Friend the Secretary of State, my right hon. Friend the Minister for Business and Enterprise, who is my fellow Bill Minister, and I discuss these issues as the hon. Gentleman would expect, as we try to make sure that we give the right response to the concerns raised in Committee.

[Andrew Griffiths]

Will the Minister give way?

[Jo Swinson]

I would like to make a little progress, then I will give way to my hon. Friend.

We have set out in the Bill the parallel rent assessment process, which gives tenants the opportunity to request a parallel rent assessment so as to be able to ascertain—

[Sheryll Murray]

Will the Minister give way?

[Jo Swinson]

I have said that I will make some progress and then I will be happy to give way.

The parallel rent assessment process will enable tenants to get the information they need to assess the deal that they are being offered by their pub company—to look at the figures and decide whether they are being offered a good deal or would be better off under a free-of-tie option. Of course, the pub companies would hope that if, as they say, they are offering a genuinely good deal under the tied model, then very many tenants will be very happy to continue in that vein. However, if the parallel rent assessments show that they are worse off, or if there is a suggestion that the parallel rent assessments are not being properly and accurately completed, then the adjudicator has the power to ensure that the assessment is done again or, if necessary, to provide for a different rent to be set. The parallel rent assessment has the potential to revolutionise the experience of tenants, and it should reassure them that we are serious about this. If the pub companies do not reform and their behaviour continues as it has, we will be able to legislate further to introduce the market rent only option to ensure that tenants get a good deal.

I hope that my hon. Friend the Member for Leeds North West and those supporting his new clause will be reassured by this commitment. It is right that we give the new system a chance to deliver a fair deal, with an added power for Government to introduce a market rent only option should pub companies fail to do as they should. I think that that will focus minds. I am keen to listen to the debate that will take place on this issue.

[Sheryll Murray]

Will the Minister give way?

[Jo Swinson]

I will; I said that I would once I had made some progress. Perhaps that was not clear to my hon. Friend.

[Sheryll Murray]

I wanted to intervene on a specific point, but I am grateful to the hon. Lady for eventually giving way. Will she please confirm what dialogue she has had with the industry, since the Committee stage just a couple of weeks ago, about the new measures of which she is informing the House today?

[Jo Swinson]

This is not the first intervention that my hon. Friend has made, and I am obviously happy to respond to it. The industry has made significant representations in writing and had the opportunity to contribute at the public evidence session, which is an excellent, fairly new innovation in this House from which we all benefited in Committee.

[Andrew Griffiths]

Will the Minister give way?

[Jo Swinson]

I would like to finish my answer to my hon. Friend the Member for South East Cornwall (Sheryll Murray) before I take another intervention.

In Committee, we had the opportunity to hear from and to have these discussions with the industry, as well as with campaign groups—we must recognise that both sides are important in this. Since then, written correspondence has taken place, to which I have responded to deal with some of the issues raised. Of course, as Minister, I will continue to do so.

[Stuart Andrew (Pudsey) (Con)]

rose—

[Andrew Griffiths]

rose—

[Jo Swinson]

I give way to the hon. Member for Pudsey (Stuart Andrew), who has not yet intervened.

[Stuart Andrew]

Our concern is that a lot of pubs could close over two years. We want assurances that there has been lots of dialogue with the industry and with pub owners who are going through these difficult times to make sure that they are happy with the proposal that the Minister is now bringing forward.

--- Later in debate ---

[Jo Swinson]

During the process of developing this legislation, there has been significant dialogue and consultation on the whole area through the formal consultation that Government held, to which we had the response earlier in the summer. I have met, through various round tables, members of companies that own pubs, family brewers, and tenants’ groups.

[Andrew Griffiths]

Will the Minister give way?

[Jo Swinson]

I am being asked to give way before I have finished responding to the previous intervention.

[Mr Speaker]

Order. I appreciate Members’ interest in these matters, but it is a little unseemly for them to try to intervene on a Member—in this case, the Minister—who is already responding to an intervention. Timing is of the essence in these matters. Be patient—the Minister is a most gracious and accommodating Minister.

[Jo Swinson]

Thank you very much, Mr Speaker.

My right hon. Friend the Business Secretary, my hon. Friend the Member for Cardiff Central (Jenny Willott)—who did her job so brilliantly during the six-month period when I was on maternity leave—and I have had various face-to-face meetings and held round table and discussion events. I have met some of the individuals who have been through the PICAS and PIRRS— pubs independent conciliation and arbitration system and pubs independent rent review scheme—processes. We have had those meetings face to face. There has been significant correspondence—reams and reams of correspondence—between me, as Minister, but even more so, in terms of the level of detail and volume, between my officials and these companies and campaign groups. I therefore do not think that the hon. Member for Pudsey can suggest that there has not been consultation. Equally, it would be impossible for me to stand here and say that everybody is entirely happy with these proposals; that was never going to be possible. I am sure that even the BIS Committee would recognise that there are very strong views on this issue, often in contradictory directions. We are trying to find the right way forward that best protects tenants while not imposing unnecessary burdens on businesses.

I now give way to the hon. Member for Burton (Andrew Griffiths).

[Andrew Griffiths]

I thank the Minister for giving way, because this is a very important issue. Investors will be looking at her statements today. This could affect the viability and the profitability of businesses, together with thousands of jobs. She has announced a brand-new element—the introduction of the free-of-tie option but with a two-year wait. Can she confirm whether she has spoken to a single member of the industry about the implications for their business of that two-year delay—to one person, yes or no?

[Jo Swinson]

I would like to correct the hon. Gentlemen’s characterisation of what is happening. He is saying that this is the market rent only option but with a two-year wait. To be absolutely accurate, it is a power for the Secretary of State to introduce the market rent only option after a period of two years if a review finds that that is necessary. That is not exactly the same thing. It is important to put that on the record.

Throughout this process, the Government have been engaging with companies and with individuals. The market rent only option was extensively covered and discussed within the consultation process. I have had very many such discussions with companies over the course of the past 18 months. As was put to us forcefully on various occasions, some large pub companies will not welcome this and are very opposed to it. At the same time, we recognise the issues that have been raised in successive BIS Committee reports about the tenants who are suffering and the need to do something about it. We think that our parallel rent assessment is a proportionate and sensible way forward that will deliver for tenants, but we are keen to make sure that if that does not happen we do not end up at this stage again; we need the ability to act swiftly to introduce a market rent only option.

[Toby Perkins]

Let me try to clarify this. In the last few moments we have discovered that there is to be a two-year review before fundamental change to the industry, leading to two years of uncertainty. Is the Minister saying that she has discussed a whole series of things over 18 months but has not spoken to anyone within the industry about the new development that she is presenting to us today?

[Jo Swinson]

I am saying that we have had plenty of negotiations and discussions about all the different options, but specific round tables have not been reconvened with the industry since the Committee stage. We know where the industry stands on this. My officials are in regular contact with the industry and with campaign groups, who have been making their cases fervently. Many Members represent tenants and also have pub companies and family brewers in their constituencies. Ministers have had many discussions with those hon. Members on behalf of their constituents who have raised these issues over the past couple of weeks since the Committee stage. Indeed, we also had such extensive debates in Committee. There has been plenty of consultation.

[Grahame M. Morris (Easington) (Lab)]

In relation to the Minister’s discussions with the Federation of Small Businesses, it estimates, according to the information that I have, that implementing the market rent only option would boost the economy by £78 million, and that over 90% of pubco tenants would have much more confidence to invest in their businesses, helping local economies to grow.

[Jo Swinson]

The hon. Gentleman makes a powerful point. As I have said, a range of different of views and issues have been raised and it is impossible to please everybody. Although some of the larger companies oppose the introduction of a market rent only option, organisations such as the FSB, as the hon. Gentleman points out, are campaigning to implement it.

[Julian Sturdy (York Outer) (Con)]

Will the Minister give way?

[Jo Swinson]

I will give way once more before I move on, because the hon. Gentleman has not intervened yet.

[Julian Sturdy]

The Minister says that she has been in consultation with the pub industry. I will phrase the question slightly differently: has any assessment been made of the impact the two-year review will have on pub closures?

--- Later in debate ---

[Jo Swinson]

The review was always built into the process, because we wanted to look at how the measure was working. What is new is the introduction of the power to introduce a market rent only option, and when that proposal goes before the other place, supporting documentation, such as impact assessments, will also be submitted. Clearly, different quarters have opposing views on what it will mean: some say it will be excellent for business, while others say it will result in concerns for business. People will not necessarily concur and agree about what the exact impact will be, but the Government will produce the documentation to go alongside that amendment when it is tabled in the other place.

The Government’s technical amendments—amendments 34, 35 and 55—deal with the particular issue of franchises. Clause 40 already makes it clear that tied pub agreements are in the scope of the pubs code where tenants pay some sort of fee, such as a turnover fee, rather than rent. Such agreements are often called franchise agreements and it is right that they are covered. The same potential for the abuse of a tie exists, and if franchises were not in scope there would be a sizeable loophole by which companies could evade the code.

Amendments 34 and 35 therefore ensure that franchises are covered by clause 42, which refers to rent assessment and rent review arrangements, which the Secretary of State may rule as void or unenforceable. Amendment 55 provides the Secretary of State with a power to define parallel rent assessments in regulations so that we can ensure there is appropriate flexibility in the approach to cater for franchise pubs. That will allow the final design of parallel rent assessments to take account of further engagement with the industry and public consultation, and through that we will ensure that those assessments are available to all tied tenants of large pub-owning companies.

Amendments 40 and 56 ensure that agreements where the tenant is tied for some or all alcoholic drinks are still covered, even when the tenant does not purchase those drinks from the pub-owning company. We are aware of some franchise agreements where the tenant does not technically purchase drinks from the pub-owning company. The tenant is still contractually obliged to sell those drinks on behalf of the pub-owning company and cannot source them elsewhere, so the amendments are important to avoid a loophole in the legislation.

The Opposition’s amendment 5 seeks to clarify that franchise agreements are in scope of the legislation. I absolutely agree with that view and hope the hon. Member for Chesterfield will be reassured by the Government amendments, which make that crystal clear and address the point by ensuring that no loopholes are being created.

Amendments 38, 39 and 47 to 53 seek to ensure that tied agreements are covered by the protections of the pubs code, whether the tenant occupies the pub under a tenancy or under a licence to occupy. This is another measure to ensure that all tied tenants are protected. Amendments 36, 37, 42, 46 and 54 are technical clarifications to ensure that the provisions of the Bill apply to pub-owning companies and any subsidiary companies they may own.

Finally, amendment 57 provides that all regulations under part 4, other than regulations under clause 61(1)(c), are subject to the affirmative resolution procedure, which, given the sensitivity surrounding the issues and the interest in them, is absolutely appropriate. I hope the Government amendments will be supported and that hon. Members on both sides of the House will be reassured by our commitment to make further changes in the other place in order to address any concerns.

[Toby Perkins]

It is always a singular pleasure for this House to gather to discuss what we can do to support our great British pubs, which are crucial institutions, bedrocks of our community and vital economic and social hubs, as well as really important employers, particularly of women and young people—two groups who are underrepresented in the workplace. Pubs and brewers also make an incredibly important contribution to the economy as taxpayers and employers, and our communities take tremendous pride in these institutions. The industry is watching this debate with tremendous interest and concern, in the hope that we in this place will do justice by everyone involved in it.

The Government are creating a spectacle by changing the Bill as we speak. These are incredibly important issues, but the Government’s attempts at debating this part of the Bill are rather like attempting to mount a moving bus: the moment we think we know what we are going to discuss, the debate suddenly focuses on something completely different. It is a complete and utter shambles.

--- Later in debate ---

I thank Members for listening to this contribution. I completely agree that small family brewers should get some reassurance that they will see in the other place what they were led to believe would be included in the Bill, but is not.

[Jo Swinson]

We have had a lively debate on the various amendments before us. The hon. Member for Chesterfield (Toby Perkins) made the point that today has the potential to be a great day for Parliament. Given all the detailed discussions we have had—that is what we do on Report—getting into the specifics on thresholds, family brewers and new clause 2, I think it is easy to lose sight of quite how far we have come and what a real change this Bill will mean for tenants who have been arguing for such a long time for action to be taken to improve their situation.

We have heard hon. Members make contributions of various lengths—significant, in some cases—and we have heard more make interventions, on both sides of the argument, about new clause 2, and we have heard speeches from those who powerfully oppose it. I want to respond to some of the specific points made by the hon. Member for Bedford (Richard Fuller) about family brewers and the Government’s proposed threshold of 350. He was right that earlier I confirmed that three companies would be included. An important fact to put on the record is that none of those three is a family brewer. Those who have been arguing for the exclusion of family brewers can rest assured that, with the reduction in the threshold from 500 to 350, that exemption will remain, as I think was the will of the Committee, which the Government have listened to and recognised should be reflected in the Bill.

I take issue with the suggestion that those companies are all small businesses. Of the three that will be included by changing the threshold from 500 to 350, one has a turnover of £758 million a year and some 16,000 members of staff. I do not think that it is accurate to say that we are necessarily talking about small companies in that sense. The hon. Member for Heywood and Middleton (Liz McInnes), who is new to the House, asked about the brewery JW Lees in her constituency. I am happy to confirm that with fewer than 350 tied pubs, it will not be affected by the measures.

In his comments about family brewers and the changes we have introduced, my hon. Friend the Member for Bedford indicated a certain lack of confidence that the commitments made here by the Government will be implemented. We have set those out in clear words, which will appear in black and white in Hansard if he chooses to read it tomorrow. The amendments will be made in the other place but this House will have the opportunity to vote on them as well. The situation is not necessarily good versus evil, as he outlined it. I began to worry that he was being a bit uncharitable towards me at one point, until he compared my right hon. Friend the Business Secretary to Saruman, who was a pretty evil and nasty piece of work. I do not think that comparison is warranted, but perhaps I should just be pleased that my hon. Friend did not reach for Sauron instead.

New clause 2, which was introduced by my hon. Friend the Member for Leeds North West (Greg Mulholland), seeks to introduce a market rent only option requiring pub-owning companies with more than 500 pubs of any description and one or more of those being a tied pub to offer their tied tenants the right to go free of tie. It is widely accepted in the industry that tied tenants should be no worse off than free-of-tie tenants. It is one of the key principles underpinning the Government’s proposals and goes to the very heart of the measures we have set out in this Bill. There was an attempt in Committee to take that principle out—a probing attempt, apparently, but none the less an attempt—by some of the Back Bench who have spoken today. It is a vital principle that underpins the impact that we are trying to have.

[Toby Perkins]

The hon. Lady to some extent predicted what I am going to say. People who listened to the hon. Member for Burton (Andrew Griffiths) might want to reflect on the fact that he attempted to introduce an amendment in Committee that would have removed the principle that tied tenants should be no worse off than tenants free of tie. It may be valuable for hon. Members to consider in that light everything else they have heard from him.

[Jo Swinson]

Indeed. I am glad that that amendment did not ultimately form part of the Bill, as that principle, which we have set out from the beginning, is crucial. We looked at various means of achieving it. One of the things we consulted on was whether the market rent only option should be included in the pubs code. We looked carefully at whether to introduce that. It might seem a straightforward way of strengthening the negotiating position of tenants, because if they are faced with a compulsory free-of-tie option alongside market rent only, pub-owning companies will arguably work much harder to offer a tied deal which represents a fair share of risk and reward.

The freedom to choose the supplier and the likely lower costs of supply could mean that free-of-tie agreements offer greater potential profits for tenants wanting to maximise the benefit of those terms. Those would be the most experienced and entrepreneurial tenants. It would not necessarily help others, whereas the parallel rent assessment will do that. It was interesting from the consultation, and almost unique in such a polarised policy area, that concerns were expressed by people on all sides of the debate about the impact of introducing that provision and the consequences it could have on the tied model as a whole. There would be some uncertainty and unpredictability, especially in relation to pub-owning companies and how they would respond.

The parallel rent assessments that we are introducing provide a way of making sure that the prime principle that a tied tenant should not be worse off than a free-of-tie tenant can be enacted and made real. That is why we are proceeding with the arrangement.

[Neil Carmichael (Stroud) (Con)]

If there is a market rent review in two years, will it be sufficiently rigorous to satisfy tenants?

[Jo Swinson]

I can give an assurance that the review will be rigorous and that, in response to it, there will not only be this power for the Secretary of State, but, if he finds that there is insufficient protection for tenants as a result of the parallel rent assessments and the system is not working as it should, a requirement for him to bring forward the market rent only option.

[Toby Perkins]

The Minister is attempting to straddle a very difficult line. She claims that we should believe that the measures proposed by the Government today are likely to work, but if not there is an alternative process that is her party’s policy for which she will argue going into a general election. Why do we not just do away with all that nonsense, give the industry some certainty, and support new clause 2?

[Jo Swinson]

The hon. Gentleman is right to say that it would be Liberal Democrat policy. Clearly, we are in a coalition Government rather than a Liberal Democrat Government, and people will make their decisions when it comes to the general election in which we will all be campaigning and voting in a few months’ time.

We have before us a Bill that will improve the lives of tenants and makes real the principle that a tied tenant should be no worse off than a free-of-tie tenant. The hon. Member for Bedford suggested an analogy with “The Lord of the Rings”. Perhaps I can posit an alternative scenario. I think that what we have had on this issue over the past few years is a rather intrepid fellowship—a group including MPs from all parties in all parts of the House, tenants, Select Committees, business groups, and campaigners. I will leave hon. Members to make up their own minds about who among them would be deemed to be hobbits, elves, dwarves or men—[Interruption]—and, indeed, who has been Gandalf at their head. The members of this intrepid fellowship have campaigned hard. In some ways, they probably feel that they have been on an epic journey, battling against the unfairness that has been repeatedly highlighted in Select Committee reports.

We need to recognise that the result of that campaign by all those individuals has been to achieve a great success. What we have is proposed legislation with a statutory code and a pubs adjudicator who can make that code a reality and ensure that if it is not abided by there can be arbitration, investigations, and ultimately, if necessary, penalties with real teeth. We also have the parallel rent assessments to make sure that the system bites. Now, going even further, we have the power to introduce the market rent only option if all that is ultimately unable to work. That is a huge success for campaigners who have worked on this issue for many years. I think that people should welcome what has happened.

I hope that my hon. Friend the Member for Leeds North West will recognise that success, see how far he has come, and think twice about putting his new clause to the vote. In the Bill before us, we have a solution to the issue identified in the Select Committee reports and a way to make sure that if that does not work we have the ability swiftly to implement a market rent only option. I commend this part of the Bill to the House.

Question put and agreed to.

New clause 6 accordingly read a Second time, and added to the Bill.

New Clause 2

Pubs code: market rent only option for large pub-owning businesses

(1) The Pubs Code shall include a Market Rent Only Option to be provided by large pub-owning businesses in respect of their tenants and leaseholders.

(2) A Market Rent Only Option means the right of the tenant, or leaseholder, of a pub owned by a large pub-owning business, to be offered such tenancy or lease in exchange for an independently assessed market rent paid to the pub-owning business and, for the avoidance of doubt, not thereafter being bound by “a tie”, meaning an agreement meeting, in whole or in part, Condition D as defined in section 63(5) of this Act (obligation to buy from the landlord, or from a person nominated by the landlord, some or all of the alcohol to be sold at the premises).

(3) For the purposes of this section, the definition of Condition D in subsection (2) is to be interpreted to include an obligation to buy or contract for goods and services other than alcohol.

(4) For the purposes of this section, the definition of a “large pub-owning business” is a business which, for a period of at least six months in the previous financial year, was the landlord of—

(a) 500 or more pubs (of any description); and

(b) one or more tenanted or leased pub.

(5) The Pubs Code may include provisions to permit a brewery which qualifies as a large pub-owning business to continue to require that specified brands produced by that brewery (required products) are sold within its tenanted or leased pubs—provided that such tenants and leaseholders are free to purchase such required products from any supplier.

(6) The Pubs Code shall contain provisions requiring that the offer of a Market Rent Only Option to a tenant—

(a) at the point of lease, tenancy contract or other agreement renewal, or at rent review or five years from the date of the previous rent review;

(b) when the large pub-owning business gives notice of, or imposes, (whichever is the earlier) a significant increase in the price at which it supplies products, goods or services (falling under subsections (2) or (3)) to the tenant;

(c) when a large pub-owning business implements, or gives notice of, a transfer of title;

(d) when a large pub-owning business goes into administration; or

(e) upon an event outside of the tenant’s control, and unpredicted at the time of the previous rent review, that impacts significantly on the tenant’s ability to trade.

(7) The terms of an offer under subsection (5) shall include provision for a 21 day period of negotiation, commencing from the tenant giving notice of an intention to pursue a Market Rent Only Option, in which the large pub-owning business and the tenant may seek to negotiate a mutually agreeable Market Rent Only settlement.

(8) Following the negotiation period under subsection (7) there shall follow a 90 day period of assessment. In this period—

(a) an independent assessor shall be appointed with the agreement of both parties by joint private instruction and on the basis of an equal apportionment of costs; and

(b) under arrangements and criteria that the Adjudicator shall establish, such an assessor shall be—

(i) independent of both parties; and

(ii) competent by virtue of qualification and/or experience.

(c) if the business and tenant cannot agree on an appointee then a person shall be appointed, on the application of either party, under arrangements established by the Adjudicator;

(d) the appointed assessor shall then assess the market rent for the property operating as a pub with no “tie” as defined in subsection (2) and submit to both parties the resulting sum for such a rent; and

(e) at the time of the three month assessment period, the tenant shall have the right to pay no more than the sum determined under paragraph (d) to the pub-owning business and, if previously one party to a “tie” as defined in subsection (2), shall no longer be bound by it.

(9) The Pubs Code shall contain such measures as ensure that—

(a) the Market Rent Only Option is conducted in accordance with timing provisions and procedures, in accordance with RICS guidance, as specified in the Pubs Code; and

(b) large pub-owning businesses are prohibited from acting or discriminating against any of their tenants who choose the Market Rent Only Option.

(10) The Secretary of State shall confer on the Adjudicator functions and powers in relation to the Market Rent Only Option, that include—

(a) determining what constitutes a significant increase in price, as mentioned in subsection (6)(b) in the event of a dispute between tenant and business;

(b) adjudicating in disputes concerning the process or outcome of the market rent assessment; including the power to set the market rent if the Adjudicator deems the process or decision to have been flawed; and

(c) receiving, investigating and adjudicating in relation to complaints made under subsection (9)(b).

(11) The Secretary of State shall make provisions for the implementation of the following measures in this section by regulations amending the Pubs Code. Such regulations shall be made under negative resolution procedure. The Secretary of State may make provisions changing the types of agreement that fall under subsection (2) by regulations. Such regulations shall be made under negative resolution procedure.”—(Greg Mulholland.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.