ENABLE Funding Scheme
Kelly Tolhurst Excerpts(5 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
ENABLE Funding is a scheme administered by the British Business Bank which provides senior funding (effectively at commercial terms) to delivery partners and is designed to increase funding diversification for leasing and asset finance providers and peer-to-peer lenders, with the overall purpose of increasing the supply of debt to underlying small and medium-sized enterprises.
Since the scheme began in 2014, senior secured funding has been provided to various delivery partners and their receivable portfolios have been ‘warehoused’ in a special purpose entity. The aggregate sum of certain receivable portfolios reached a desired critical mass whereby a capital markets refinancing (or securitisation) can proceed, repaying the funding. The transaction is expected to complete before the end of the financial year 2019-20.
As part of the transaction, a credit enhancement in the form of a capped second loss guarantee will be agreed. The guarantee issued by the Department is capped at £66 million and the ‘second loss’ element means that the participating delivery partners will fund and suffer an agreed amount up to the first loss threshold should defaults in the portfolio occur.
The guarantee is not expected to last for more than seven years and in practice will likely be much shorter. The beneficiary is the securitisation vehicle (a newly incorporated entity) which will purchase the facilities as part of the transaction. The Department will receive a commercial fee in return for the guarantee.
As a matter of record, I will be laying a departmental minute today explaining the procedure followed and containing a description of the liability undertaken.
[HCWS29]
Oral Answers to Questions
Kelly Tolhurst Excerpts(5 years, 1 month ago)
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David Hanson (Delyn) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Average FTSE 100 CEO pay more than quadrupled from £1 million in 1998 to £4.5 million in 2012. Since then, the median average has fallen by £1.04 million. We have recently implemented a number of reforms to make further improvements to executive pay transparency and accountability through vehicles such as the UK corporate governance code.
David Hanson
The Government’s Green Paper on corporate responsibility was published more than two years ago, and since that time we have seen corporate pay issues in Carillion and only last month in Thomas Cook. Last week, the Business, Energy and Industrial Strategy Committee questioned the chief executive of Thomas Cook about corporate responsibility issues on pay. What precisely have the Government done to act on corporate pay since that Green Paper two years ago?
Kelly Tolhurst
I thank the right hon. Gentleman for his question. As I mentioned, CEO pay has fallen. There were reforms at the beginning of the year, to ensure that shareholders’ voices are heard more in the boardroom. There is a binding vote every three years on remuneration policy, and there is now an advisory vote every year. If it is not successful, pay has to be put before the next AGM. As he will know, the Investment Association now keeps a record, at the Government’s request, to ensure that we are tracking pay where there is shareholder dissent.
Mr Steve Baker (Wycombe) (Con)
Does my hon. Friend agree that the right way to control executive pay is to increase democratic control of capital, not by increasing the powers of the state but by dramatically improving the rights of shareholders?
Kelly Tolhurst
My hon. Friend is right, and that is what the Government’s reforms have done. As I outlined, shareholders have a vote every three years and an advisory vote every year. Through the reforms, we have also enabled employee directors, non-exec directors or employee councils to have representation on the board. Companies now have to explain their wider pay policy and how it affects the whole company.
Rachel Reeves (Leeds West) (Lab)
The chief executive of Thomas Cook was paid more than £8 million during his time as chief executive of a company that has now collapsed, costing 9,000 jobs in this country, with 150,000 customers having to be brought home at a cost to the taxpayer. When he gave evidence to our Select Committee last week, he said he would reflect on whether he will pay back any of his bonus. What will the Government do to ensure that bonuses can be and have to be clawed back after catastrophic failures of businesses like that?
Kelly Tolhurst
I thank the hon. Lady for the work she is doing on the Select Committee. Thomas Cook did have clawback and malus arrangements in place for the recovery of directors’ bonus payments in specific circumstances, as required by the UK corporate governance code. My right hon. Friend the Secretary of State has asked the Insolvency Service to fast-track an investigation, and it will report back. As the hon. Lady outlined, the CEO did advise the Committee on 15 October that he would consider voluntarily surrendering some of his 2017 cash bonus, but it must be pointed out that no bonus was paid to the ex-CEO in 2018.
Mr David Davis (Haltemprice and Howden) (Con)
The hon. Member for Leeds West (Rachel Reeves) highlighted the point that the biggest concern is not simply how much is paid to executives, but their being paid for failure, not for success. The current arrangements in British company law allow chief executives and other executives to be paid on the basis of share price and allow them to buy back shares, propping up the share price. This is a formula for payment for failure. Is the Department looking at that?
Kelly Tolhurst
I thank my right hon. Friend for raising this. Part of the reforms in January was to make organisations report back on the effect of share price growth on executive pay outcomes. We published some evidence before the summer from a review undertaken on share buy-backs, and there was no clear evidence to suggest that they did have a perverse outcome.
Faisal Rashid (Warrington South) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
All workers in the UK have the right to join a union and to participate in union activities. That right is protected under trade union law, and 23% of UK employees are union members. That is higher than some European countries, including France and Germany, and it demonstrates that union rights to recruit and organise through individual members and officials are sufficient.
Faisal Rashid
This week shocking reports have emerged about dire workplace conditions at Amazon. Those exploited workers desperately need a union, but workers at Amazon have had their shift patterns interrupted just to prevent them from talking to union officials on the way to work. When will the Government put an end to those draconian anti-union practices, and will the Secretary of State launch an investigation into reports of workers’ rights being violated at Amazon?
Kelly Tolhurst
I thank the hon. Gentleman for his question. It is the right of unions and employers to come to an agreement about representation in the workplace. The Central Arbitration Committee is available if that is refused. With regard to workers’ rights, the good work plan represents the biggest reform of workers’ rights in 20 years. We are determined to continue on that path, because workers’ rights are important to this Government.
Joanna Cherry (Edinburgh South West) (SNP)
Kelly Tolhurst
It will come as no surprise that I completely disagree with the hon. and learned Lady. The Prime Minister has been clear: not only will we maintain workers’ rights, but we will enhance them. Even in my role as a Minister over the past 12 years, everything has been focused on ensuring we are ahead of the European Union. We are committed. We have never, ever, not once ever put forward a position where we have shown we will row back on workers’ rights.
Laura Pidcock (North West Durham) (Lab)
Wow! What an answer. This is the situation for workers at Amazon: their bones are being broken; they are being knocked unconscious; and they are being taken away in ambulances. Where is the urgency to step in and stop what is happening to these workers? Are the Government going to demand an urgent inquiry, or do they wash their hands of these workers? At the heart of the issue at Amazon is a hostile environment for trade unions, which are often the only force that can resist exploitative practices. A Labour Government would legislate to enforce access rights for trade unions and a robust enforcement regime. Why are the Government sitting on their hands while the richest man in the world treats his workers so disgustingly on their watch?
Kelly Tolhurst
The hon. Lady makes allegations about a particular organisation. She is welcome to write to me further about those allegations, but I remind her that sufficient workplace laws are in place. We have the Health and Safety Executive, for example. If she has evidence of certain employers breaking the law, I would expect it to be passed on to the relevant agencies. As I outlined, our Prime Minister is committed to ensuring that we keep step with the European Union and go further. I believe the actions the Government have taken over recent months prove that.
Gareth Johnson (Dartford) (Con)
Eddie Hughes (Walsall North) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government are wholly committed to women’s participation in the workforce, including by supporting new mothers to return to, and thrive in, work. That is why we recently consulted on a broad range of proposals to help families to balance their work and home commitments. We have also announced our intention to extend redundancy protection to new mothers returning to work.
Eddie Hughes
I thank the Minister for that answer. What support are the Government giving to new mothers who, sadly, have experienced stillbirth?
Kelly Tolhurst
First, I pay tribute to my hon. Friend and Members across the House who participated in Baby Loss Awareness Week and the emotional debate in the House. The Government have committed to introducing parental bereavement leave and pay, which will apply to parents who lose a child under the age of 18, including parents with stillbirth. We plan to lay the regulations to implement the policy in January, ready to come into force on 6 April. That will support new mothers facing these tragic and difficult circumstances.
Gareth Thomas (Harrow West) (Lab/Co-op)
Discrimination against new mothers and pregnant women is still widespread in our country. When are the Government going to take it seriously?
Kelly Tolhurst
I point out that discrimination in the workplace is illegal; it is unlawful. I have just outlined that we have announced our intention to extend redundancy protection for those mothers who return to work.
Mark Pawsey (Rugby) (Con)
Vicky Ford (Chelmsford) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Good-quality flexible working is important to all employees and is central to good work. Workers’ rights matter. Over 97% of employers offer some form of flexible working, and our recent consultation looked at how further to increase the prevalence of flexible working by advertising jobs as flexible and by requiring large employers to publish their policy.
Kerry McCarthy (Bristol East) (Lab)
Liz Twist (Blaydon) (Lab)
Kelly Tolhurst
I thank the hon. Lady for her question and I am more than happy to meet her to discuss her constituency in further detail if she would require. There is no programme of closures and the Post Office is working extremely hard, where post offices do shut for any, sometimes unpredictable, reason, to find replacements. We do have outreach services that are available when there is a lack of service, but I am happy to speak with her further about that.
Greg Clark (Tunbridge Wells) (Ind)
I welcome the Secretary of State to the Dispatch Box and hope that she will have distinguished tenure at this important time. She will know that the recommendations of the independent review of the Financial Reporting Council, conducted by Sir John Kingman, were widely endorsed and are urgently required. I was concerned that the statutory implementation of those recommendations was not included in the Queen’s Speech. Can she assure me that she is not going to miss a golden opportunity to make these reforms and give a big boost to our standing in the world?
Karen Lee (Lincoln) (Lab)
Kelly Tolhurst
I am not sure whether the hon. Lady is aware that we undertook one of the biggest recalls that has happened this year: the recall of Whirlpool tumble dryers. She will know that I have updated the House on the progress we have made on that. Since 12 June, when I announced the recall, we have had more than 90,000 contacts, with people getting in touch about recall. So we are continuing to improve and work on recall.
Paul Masterton (East Renfrewshire) (Con)
More than half a dozen post offices in East Renfrewshire have closed over the past couple of years and not one has been able to be replaced, because it was not a viable business proposition for retailers. Does the Minister think that increased fees under the banking framework agreement will be enough to build the sustainability of the post office network?
Kelly Tolhurst
I thank my hon. Friend for that question. I am happy to discuss particular issues in his constituency. I believe that the new banking framework and the increase in remuneration that postmasters will be receiving as part of that framework will make a significant impact for postmasters. But he is right to say that we must not stop there. I am working hard, with the Post Office and the National Federation of SubPostmasters, to make sure that we have a post office network that is fit, relevant and viable.
Tommy Sheppard (Edinburgh East) (SNP)
Emma Dent Coad (Kensington) (Lab)
Kelly Tolhurst
I thank the hon. Lady for her question, but I have to disappoint her because my answer to it is no.
Kirstene Hair (Angus) (Con)
I was delighted to hear that Seagreen wind farm off the coast of Angus was successful in its bid in the UK Government contract for difference auction. It will be the most powerful wind farm throughout the United Kingdom and will have the ability to power up to 40% of Scottish homes. Would the Minister like to come to Angus and see the impact it is already having on our local economy? The local port has already secured the contract for the operations and maintenance base.
Product Safety, Metrology and Mutual Recognition Agreement (Amendment) (EU Exit) Regulations 2019
Kelly Tolhurst Excerpts(5 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the Product Safety, Metrology and Mutual Recognition Agreement (Amendment) (EU Exit) Regulations 2019 (S.I., 2019, No. 1246).
It is a pleasure to serve under your chairmanship, Sir Gary. Since the referendum decision to leave the EU, the Department for Business, Energy and Industrial Strategy has undertaken significant work on withdrawal arrangements, preparing for a range of potential outcomes, including no deal. The regulations amend no-deal legislation made earlier this year, predominantly as a result of the article 50 extension. We need to make changes to have an effective and up-to-date system for product safety and legal metrology on exit. The safety of consumers is a key priority for the Government, and I know that priority is shared by Members of all parties.
The instrument will ensure that the drafting in previous regulations will function as intended, and so help to maintain the continuity of product safety protections if the UK leaves the EU without a deal. Primarily, we are making the changes needed to reflect the change from a March to an October exit, but we are taking this opportunity to extend certain transitional arrangements, already agreed by Parliament in respect of products from the European economic area, to certain imports from Switzerland in the event of the UK leaving without a deal.
On the back of our ongoing engagement with stakeholders, the regulations include some minor fixes that they identified and brought to our attention since the previous no-deal product safety regulations were made. The focus of the instrument is not to introduce significant policy changes, but to clarify and simplify the current position. It will not change the system or the approach we take in the UK’s rigorous and robust product safety regime. Instead, the changes the instrument makes will ensure that the UK’s product safety and legal metrology framework continues to deliver the protections we want.
I turn now to the detail of some of the amendments that the regulations will introduce, starting with the updates to the no-deal product safety legislation already agreed by Parliament. The regulations will amend three previous regulations. First, they will amend a number of product schedules in the Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019, which were laid in March 2019. Secondly, they will amend the Pressure Equipment (Safety) Regulations 2016. Thirdly, they will amend the Conformity Assessment (Mutual Recognition Agreements) Regulations 2019.
A change in exit day created confusion for the personal protective equipment sector about which regulations to follow. As originally drafted, there was provision for a period between exit day and 21 April 2019 during which particular provisions applied. The new SI will make changes that provide legal clarity for the industry, now that the date has passed. For cosmetics, the regulations will clarify the drafting in relation to the use of data from animal testing that was carried out before such testing was banned. That historical data can be used now, and these regulations retain that position. Let me be clear: there is no intention to change our position on new animal testing, which is rightly banned and will remain so. A further provision ensures that the UK will be able to update the list of prohibited and restricted substances to show what can or cannot be included in cosmetic products, and subject to what conditions. The power to update the list has been transferred to the Secretary of State and would be used only following scientific evidence. This change will ensure ongoing protection for consumers.
The SI restores the position before the unintentional removal of the option for pressure equipment materials to have their manufacturing processes of base materials certified by a competent body. This reinstatement will ensure continuity and certainty for business. The instrument also makes minor amendments to clarify certain provisions to ensure that no-deal legislation works as intended if the UK exits the EU without a deal. Those changes occur in relation to outdoor noise, recreational craft, toys, electromagnetic compatibility measuring instruments and accreditation. An example is an amendment to the electrical equipment provision to change a reference to “safety component” to a reference to “electrical equipment”.
A further important provision in the instrument expressly implements the UK’s obligations as an EU member state with regard to certain goods being imported from Switzerland. That builds on the main Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019 and the subsequent Conformity Assessment (Mutual Recognition Agreements) Regulations 2019. The end result is that, if we leave without a deal, the transitional provisions for goods entering the UK from the EU and the EEA will be extended to certain goods from Switzerland. That will provide further clarity and continuity for business by making it easier to import certain products from Switzerland by allowing UK importers to put their details on accompanying documentation, rather than the product itself, for 18 months after exit, and by extending the recognition of authorised representatives established in Switzerland to those appointed in relation to noise emissions from equipment used outdoors, in line with the existing EU-Swiss mutual recognition agreement.
An impact assessment has not been prepared for the instrument, because the impact for business is expected to be low. It is limited to familiarisation costs to understand the operability fixes and drafting improvements made to the legislation. It has been confirmed that those costs fall below the £5 million de minimis threshold.
The Department did not undertake a public consultation, given that the provisions relating to EU exit are limited to making changes to no-deal legislation to ensure that it operates effectively on exit. However, our ongoing engagement with stakeholders has proved useful in highlighting some inconsistencies in the previous drafting. We recognise that wider consultation would have been helpful, but the objective of the instrument is to ensure that there is no reduction in consumer protections in respect of product safety after EU exit. Some of the minor changes improve clarity for business, and we welcome and are encouraged by its engagement with the development of the legislation.
I recognise that our product safety exit SIs are unique, particularly in their size and breadth, which has presented challenges to Parliament’s scrutiny of them. We have learned lessons and are grateful to the Joint Committee on Statutory Instruments for its comments and input throughout the scrutiny process, including comments highlighted in its report on the drafting inconsistencies in the SI that related to the coming-into-force date. The report draws special attention to defective drafting in the instrument, which is “acknowledged by the Department” and which was flagged up in our voluntary memorandum to the JCSI. It accepted our argument that the commencement provision should still work and that the mistake is unlikely to have had substantive consequences.
The amendments made by the instrument ensure that the drafting of previous regulations functions as intended, which will help to maintain the continuity of product safety protections if the UK leaves the EU without a deal. As I am sure hon. Members recognise, it is essential that the UK has a functioning product safety framework in the event of no deal. Approving the instrument will also contribute to maintaining a positive trading relationship between Switzerland and the UK.
Kelly Tolhurst
It is nice to be back in Committee opposite the hon. Member for Sheffield, Brightside and Hillsborough debating statutory instruments, as we have many times. I thank her for her constructive questions, as always. I confess that I missed her second one, so I am happy for her to repeat it, but I will answer the others.
The hon. Lady is absolutely right that we debated the big 600-page product safety statutory instrument, but I must highlight that a third of that—200 pages—was made up of long annexes that were transferred. There was synergy in the subjects that were brought together in one instrument because of cross-cutting issues.
The hon. Lady asked why the urgency, given the existence of the Benn Act. As we have made clear—as the Prime Minister has made clear—we intend to leave the European Union on 31 October. We have used these powers less than 35 times in a legislative programme of more than 600 instruments, which is not very much.
If this legislation were not in place, the UK’s product safety regime would simply not work as effectively if the UK left without a deal agreed by both sides. The cosmetics changes in the instrument enable us to implement changes in UK law regarding chemicals in cosmetics that have been banned or restricted. If we were to leave the EU without that ability, the UK could be at risk of the dumping of products that would not be satisfactory in the EU and that we would need to restrict over here.
Grahame Morris (Easington) (Lab)
I hope the Minister will forgive me for seeking some clarification on the scope of the SI. I listened intently to her comments on chemicals and cosmetics and on the issues to do with Switzerland. On product safety, does the statutory instrument cover the safety of imported domestic electrical appliances? Is that within its scope? Specifically, there have been issues with tumble dryers being responsible for many domestic fires, and a major product recall of imported dryers has been widely publicised. Does that come within the scope and purview of the SI?
Kelly Tolhurst
I thank the hon. Gentleman for his question. The SI that we are debating relates to amendments to the bigger SI, which covered some of the areas to which he referred. These are amendments to the current regulations, so yes, his comments are relevant in the broader scope of things. He will hopefully be aware that, as the Minister with responsibility in this area over recent months, the issues with tumble dryers, fridge freezers and so forth have been at the forefront of my mind, particularly as we have been scrutinising the legislation coming forward and these amendments. The hon. Gentleman is right to address that.
It is crucial that we have functional legislation if we leave the EU without a deal. The SI ensures that previously laid instruments can serve their intended function. It is vital that we protect consumers by making these changes. We can better ensure that we continue to be in step with the latest scientific advice, thus reducing the risk of cosmetic products with chemicals that are banned at EU level being dumped on the UK market. Without this legislation, there could be additional burdens on business, as some of the provisions address burdens or barriers to trade that could be problematic if not amended.
Additionally, the instrument explicitly implements provision in the existing EU-Swiss mutual recognition agreement and allows importers of certain goods from Switzerland to place their contract details on a document accompanying the product, rather than on the product itself, for a period of 18 months if we leave the EU without a deal. The SI will provide continuity and certainty for business, and maintain consumer confidence in the safety and accuracy of products as the UK exits the EU. I urge the Committee to approve the regulations.
Question put and agreed to.
Draft Statutory Auditors, Third Country Auditors and International Accounting Standards (Amendment) (EU Exit) Regulations 2019
Kelly Tolhurst Excerpts(5 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Statutory Auditors, Third Country Auditors and International Accounting Standards (Amendment) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Mr Sharma. Since the UK’s 2016 referendum decision to leave the EU, the Department for Business, Energy and Industrial Strategy has undertaken a significant amount of work preparing for a range of potential outcomes. The best outcome is for the UK to leave with a deal, and we continue to put forward serious and credible proposals for that. Although we remain confident, we must and will continue the work of preparing for no deal.
The Committee may be aware that around the turn of the year I laid regulations before Parliament to address deficiencies arising from the withdrawal of the United Kingdom from the European Union in the fields of accounting and audit. They did not implement new policy but did grant new powers and responsibilities to the Secretary of State and the Financial Reporting Council. Continuing that process requires further regulations now. Although the fundamental elements of current UK accounting and audit regulation will remain the same after exit, legislation has had to be amended to ensure its effective working once the UK has left the EU.
The accounting and audit directives set out the requirements on the accounts and audit of most incorporated businesses, as well as a framework of standards. The directives also set out the responsibilities of the competent authorities for accounting and audit. Meanwhile, under the EU’s international financial reporting standards regulation, standards are set for accounting by parent companies of groups, which apply if those companies issue shares that are admitted to trading on regulated markets. Another regulation—the audit regulation—sets additional requirements on the statutory audit of those businesses defined as public interest entities: banks, building societies, insurers and issuers of shares or debt securities on regulated markets.
To the extent that those EU regulations are not repealed, they form part of retained EU law under the European Union (Withdrawal) Act 2018. Our aim is to ensure that the framework for accounting and audit regulation works effectively following the UK’s withdrawal from the EU, and the regulations take further steps to help facilitate that.
Under the audit directive, the European Commission has powers to grant equivalence to third countries for their audit regulatory framework, and adequacy to third countries’ competent authorities for their framework on audit regulatory co-operation. These measures facilitate international trade and investment. The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019 transferred those powers to the Secretary of State and provided powers to set out the criteria and procedure for assessment, equivalence or adequacy status decisions in the future, which will be granted by regulations under the negative procedure. These regulations ensure that, irrespective of whether a withdrawal agreement is reached, the Secretary of State can make regulations after our exit from the EU to set out the framework for future assessment of equivalence and adequacy by the UK regulator. They will also enable us to grant equivalence and adequacy status to some third countries that have had their applications under consideration in the EU since March of this year.
The regulations also complete the process of extending powers to the Financial Reporting Council—the UK’s competent authority—making the final consequential amendments needed to extend the FRC’s ability to regulate third-country auditors to include European economic area auditors and Gibraltarian auditors. They also put beyond doubt that those EEA auditors who have already registered as statutory auditors in the UK will retain their status after exit.
The regulations also make an important change to the audit exemption framework. In common with the exemptions in the accounting framework for subsidiaries, the subsidiary audit exemption will not be available unless a subsidiary has a UK parent. This instrument corrects an error in the previous audit SI affecting the frequency of audit inspections required for auditors of public interest entities.
On accounting standards, the instrument revokes some EU regulations relating to the adoption or amendment of the IFRS within the EU. Without revocation, the regulations would be brought into domestic law by the EU (Withdrawal) Act. However, the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 have already made provision for what will be the international accounting standards for the UK at exit day. The revocations remove any duplication and potential confusion. They also reflect changes in EU adopted international accounting standards issued or identified since the earlier accounting SIs were made.
The Government have carried out a de minimis impact assessment of the instruments as the overall costs to business are expected to be small. It confirmed that the additional impact on business of the changes in the SI is a cost of approximately £930,000, which derives from the amendment to the subsidiaries audit exemption. Only limited sectors are affected by each of the changes. Such limited impact is counterbalanced by what was actually an overall beneficial effect of the changes in the first audit EU exit SI, which was assessed as saving businesses approximately £2.96 million per year.
In conclusion, the regulations aim, wherever possible, to provide continuity for businesses operating in the audit sector and to ensure that UK companies continue to benefit from global trade and investment. If the UK leaves the EU without an agreement, the measures contained within the regulations will be critical in ensuring that the audit regulatory framework in the UK works effectively. I therefore commend the draft regulations to the Committee.
Bill Esterson
Thank you, Mr Sharma.
Now, to the matter at hand. We are faced with regulations and, as ever, the Minister did her best to make them appear to be a matter of minor change, but the House of Lords Secondary Legislation Scrutiny Committee said the
“range and magnitude of the changes are significant: the Regulations make changes to 15 items of legislation and include a sub-delegation of powers to UK regulators and extend a ministerial power of direction.”
The Minister did mention that.
Bill Esterson
Well, the Minister mentioned the ministerial power of direction; I am not sure that she spoke about just how far reaching the changes are. The Lords Committee expressed its
“concern about the scale of the challenge facing financial services firms in adjusting to these changes.”
Yet when we turn to paragraph 10 of the explanatory memorandum, we find that no consultation was carried out with the financial services sector on these far-reaching changes, which will affect financial services firms. Sadly, that problem has bedevilled such statutory instruments, more than a few of which the Minister and I have considered, including the one she mentioned.
There is also a link to the 2013 report from the Parliamentary Commission on Banking Standards, which was chaired by members of the Minister’s own party. It was jointly chaired by a Member of the House of Commons—the then chair of the Treasury Committee, Andrew Tyrie—and a Member of the House of Lords. They found great concerns about the robustness of our audit regulations and called for wide-ranging changes. Those changes have not happened. The relevance of those points centres on the scandals surrounding companies the collapse of which related to a lack of audit, such as British Home Stores, Patisserie Valerie and Carillion.
The link to the regulations is important, because the Government are proposing to adopt the IFRS system, which is run by a private entity in Delaware in the United States and overseen by the European Commission. I wonder how the Government propose to accept arrangements whereby, once we have left the European Union, the European Commission will have oversight of our financial reporting standards. The Government are making a major change to those standards, tacked on to the regulations. Such a significant change clearly should be fully scrutinised, should have been the subject of consultation, and is very difficult for us to support.
I did some consultation of my own. I asked the Institute of Chartered Accountants in England and Wales for its assessment of the regulations. It confirmed the concerns I have just outlined regarding the Government’s proposed elimination of the exemption for EU companies with a UK-based subsidiary. It wants the Government to say what the timescales will be, because it is not clear from the regulations.
Beyond those concerns from the ICAEW, the proposed amendment is not just minor or technical. The controversies that I mentioned regarding audit mean that if such changes are to be made, they should be subject to much wider consideration. The consideration recommended by the 2013 report from the Parliamentary Commission on Banking Standards gives us a good place to start.
There are some significant concerns about the proposed changes, which are significant changes. It is simply not the case, as far as I can see from the commentary that I have received, that there will be no significant impact on the private, voluntary or public sectors. The lack of an impact assessment yet again is concerning. The Minister will no doubt say that the Government are preparing responsibly for Brexit, with or without a deal, but I am afraid that the lack of an impact assessment, the lack of consultation and the way in which standards have been tacked on to a set of regulations that are actually of a very different nature show that today’s statutory instrument should not have been introduced in its present form. For those reasons, we will oppose the regulations.
Kelly Tolhurst
I thank the hon. Member for Sefton Central for his comments, but I must pick him up on one point. He questioned whether the Government respect democracy. We have sat across from each other numerous times in Committees this year, and I point out to him that respecting democracy is exactly what we are doing. The regulations ensure we are fit and ready for when we exit the European Union. That is respecting democracy and the 2016 democratic vote. I need to point that out, and it is exactly why my Department has been doing the work that is required for us to ensure that we are fit and ready to leave with or without a deal.
I remind the Committee that the regulations are part of what will enable us to ensure that the EU retained law that comes into UK law is fit and proper for when we leave the European Union. We are ensuring that we can communicate that to business, and that the current laws will continue to operate correctly in the UK. As the hon. Member for Glenrothes pointed out, the limitations in the withdrawal agreement set out what the Government can do when bringing secondary legislation through the House. He will note that the only change in the regulations is to ensure the smooth and effective running of regulatory systems when we leave.
Members also commented on the quality of audit and on their concerns about the performance of some UK companies. As the hon. Member for Sefton Central will know, we had the Sir John Kingman review of the Financial Reporting Council, and the Government are working through that and consulting where possible to make modifications and changes within the FRC. That ongoing piece of work by Government is not necessarily completely related to these regulations.
The hon. Gentleman will know that the IFRS is a high-quality, internationally accepted and supported set of financial reporting standards that is regarded as a benchmark throughout the world by listed companies.
Peter Grant
The Minister seems, rightly, to be recognising the importance of that organisation of experts. Why will the Government not listen to other organisations of experts in their consideration of the Brexit proposals?
Kelly Tolhurst
I am here to speak to the regulations that are in front of us. I assure the hon. Gentleman that the experts in the Department for Business, Energy and Industrial Strategy, as well as our stakeholders and partners across the sectors, have been spoken to. I challenge him to name the organisations that I have ignored or chosen not to speak to.
Peter Grant
The Minister will be aware that there are six recognised chartered accounting bodies in the United Kingdom. Can she name the ones that were consulted over these regulations, or is she saying that those organisations are not experts?
Kelly Tolhurst
As part of our ongoing engagement with stakeholders across all the Department’s responsibilities, we have regular dialogue with those organisations, whether it be on this statutory instrument or on any of the Department’s other business.
Sir Oliver Heald
Is it not correct to say that the hon. Member for Glenrothes has not pointed in detail to a single complaint about these regulations, and his speech is just a general waffle? Does my hon. Friend agree that as the Scottish National party receives £1.2 million in Short money to do research on things like this, we should have a rebate?
Kelly Tolhurst
My right hon. and learned Friend is quite right. The hon. Member for Glenrothes has not mentioned the particular point that we have made more expressive, as the ICAEW asked us to do, in these amended regulations. That is a clear example of where we have listened to the professionals in the industry and chosen to respond to their requests as clearly as we can.
Luke Graham
I will perhaps try to articulate some of the points that the hon. Member for Glenrothes was trying to make. The regulations are designed to ensure that international accounting standards are still operational in the UK on EU exit day, incorporating the aspects of EU law that we are meant to incorporate. Essentially, the regulations fill in the gaps.
I ask my hon. Friend two things. First, if she does not have it with her today, will she make available the gap analysis that the Department undertook—between the IFRS, the IAS and the UK generally accepted accounting practice—to make sure that there are no gaps, and that the regulations are sufficient to satisfy all the professional bodies around the UK?
Secondly, has there been consultation with the International Accounting Standards Board, which is the governing body for IFRS? My hon. Friend is quite right to say that bodies in the UK have been consulted; it has been made explicit that the ICAEW has been consulted. It would be good to know whether the Institute of Chartered Accountants of Scotland has also been consulted, because, as a United Kingdom, we have a united internal market.
I would be quite happy to receive the answers to those questions as a follow-up, because I know that there is a lot of detail in the regulations. Opposition Members have completely failed to raise specific points that constitute a substantive opposition to this statutory instrument.
Kelly Tolhurst
I will happily provide my hon. Friend with any advice that we have available. I point out to hon. Members that these regulations constitute an amendment to, and an extension of, the statutory instrument that was laid before and passed by this House at the beginning of the year. They particularly focus, as I outlined in my opening speech, on aspects to do with subsidiaries. They also correct an omission of three words, which it was important to do to ensure that the regulations expressed the true intention behind the original statutory instrument.
I emphasise that as part of the Department’s role in preparing for EU exit and making sure that we are in the best possible place to leave the European Union, with or without a deal, we have engaged continuously with stakeholders. Quite rightly, as Ministers, we have challenged our officials within the Department and our stakeholders, when we have had the opportunity to do so.
Bill Esterson
That is interesting, because I have a briefing note from the ICAEW here. It raises concerns, which I went through earlier, about regulation 4, on the loss of EEA subsidiary exemption, and regulation 6, on EEA qualification for auditors; I did not spend as long on that earlier. I mentioned some other concerns that had been raised with me by professional bodies. It does not seem, from anything that the Minister has said, as though she has had those discussions with the ICAEW. It does not seem to me as though she has had that note from the ICAEW, or those concerns have been raised with her. Perhaps she could clarify the situation for me. Did she receive those concerns from the ICAEW before this meeting?
Kelly Tolhurst
I can confirm that officials in the Department have been speaking to the ICAEW. As I outlined in my response to my hon. Friend the Member for Ochil and South Perthshire, we have made something explicit in these regulations on the back of our conversations with the ICAEW. Those conversations are ongoing and will continue, as I laid out in my opening speech, because we are to bring forward the assessment framework in a further statutory instrument.
The hon. Member for Sefton Central asked how we would cope with the fact that the European Commission was no longer making these opinions or decisions. The statutory instruments that we have made give these powers to the Secretary of State, thereby enabling parliamentary scrutiny of decisions and the ability to delegate responsibilities.
The hon. Gentleman is quite right that we have had many conversations about impact assessments in our debates on statutory instruments as part of the EU exit programme. He will notice that a de minimis assessment took place, because the level of impact was below £5 million. As I outlined in my opening remarks, the overall benefit from the statutory instruments will be a reduction of £2 million per year.
The hon. Member for Glenrothes asked why we are bringing this forward now, and why we did not do it in the original statutory instrument earlier in the year. The regulations before us were not needed for exit day, but because we have had the opportunity to extend our leaving date to 31 October, we have been able to consider them prior to exit day.
As the UK exits the EU, we are committed to maintaining the integrity of the UK system for regulatory oversight of audit. The regulations contribute to that by clarifying and building on the approach to oversight of the audit profession following our withdrawal from the EU that we began to set out in the original regulations at the start of the year. Like those regulations, this statutory instrument does not introduce a change in policy, as I have explained. The fundamental elements of the current statutory audit legislation will remain the same after exit. These regulations make only a small number of further amendments that are necessary to ensure that audit legislation remains operable in the UK following our withdrawal from the EU.
The regulations will mean that the UK system for regulatory oversight remains coherent and understandable, and they will enable us to do more on this over the coming months, irrespective of the outcome of the EU exit negotiations. I regret that the Opposition have decided that they are not prepared to support the regulations, which would give business and stakeholders consistency and clarity about how the market will work as we leave the European Union. I commend the regulations to the Committee.
Question put.
Labour Market Reforms
Kelly Tolhurst Excerpts(5 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The good work plan sets out the Government’s vision for the future of the UK labour market and how we will implement the Taylor review recommendations. It forms an integral part of the modern industrial strategy and this Government’s long-term plan to boost the productivity and earning power of people throughout the UK and to develop better jobs for all. We are now delivering the next phase of the good work plan.
Flexibility has been a key factor behind the success of our labour market, but we are aware there are a small minority of employers who transfer too much risk to the individual, sometimes to the detriment of their financial security and personal wellbeing. The Taylor review termed this “onesided flexibility”. The Low Pay Commission found that this was particularly relevant for low-paid, vulnerable workers and has made recommendations to the Government. We are committed to tackling the problem and on 19 July we launched a consultation with proposals to:
Provide a right to reasonable notice of working hours—with the aim to give workers more certainty about their shifts and work patterns so they can have more control over their working lives.
Provide workers with compensation for shifts cancelled without reasonable notice—the Low Pay Commission found that the practice of cancelling shifts at the last minute, sometimes on arrival at work or partway through a shift was not uncommon.
Earlier this year, the Government also consulted on measures to prevent the misuse of confidentiality clauses in cases of sexual harassment or discrimination in the workplace. This followed unacceptable cases of their misuse as evidenced in the media, inquiries by the Women and Equalities Committee and individuals’ responses to our consultation. These cases highlighted the seriousness of abuse that has taken place and the impact this has had on the lives of individuals.
We have now published the Government response and will be legislating on the proposals we consulted on, and in some cases going even further. For example, for the first time, no provision in an employment contract will be able to prevent someone from disclosing information to the police or to regulated health and care and legal professionals. The proposals will increase clarity on the limitations of confidentiality clauses, increase protections for vulnerable individuals and ensure employers use confidentiality clauses appropriately.
The Government also recently consulted on proposals to extend redundancy protections for pregnant women and new mothers returning to work. We have now published the Government response to this consultation.
Any form of discrimination against pregnant women and new mothers is unacceptable and unlawful. Despite this, evidence from the Women and Equalities Committee, among others, suggests that new mothers are still being unfairly forced out of work. We are therefore taking action and are committing to extending the redundancy protection period that currently exists for pregnant women for a further six months once a new mother has returned to work. The Government response also looks at how we can increase awareness among pregnant women and new mothers of their maternity rights. As part of this the Government will establish a taskforce which will make recommendations on what improvements can be made to the information available to employers and families.
The reforms we have announced are the next important step in delivering on the Good Work Plan, ensuring we have a labour market that is fit for purpose. We recognise that the world of work is changing and are delivering the necessary reforms to ensure the UK labour market can adapt effectively, and support the needs of both workers and employers.
Copies of the referenced consultations and Government responses will be placed in the Libraries of both Houses and will be available electronically on the www.gov.uk
website.
[HCWS1788]
Furniture and Furnishings: Fire Safety
Kelly Tolhurst Excerpts(5 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Today, I will publish the Government response to our consultation on updating the Furniture and Furnishings (Fire) (Safety) Regulations 1988, which set fire resistance requirements for cover materials and fillings used to make domestic upholstered furniture.
The review aimed to ensure that our legislative framework maintains fire safety for consumers, reflects technological advances in furniture manufacturing practices, and facilitates a reduction in the use of hazardous flame-retardant chemicals as a means of making furniture fire resistant.
The consultation sought views on proposals to amend the testing regime. It also sought views on proposals for clarifying and amending the scope of the regulations, strengthening the traceability requirements to bring furniture into line with other product sectors, updating labelling rules, and extending the time period for trading standards to institute legal proceedings.
The Government are committed to protecting consumers from all safety risks, but we will not compromise on fire safety. During the course of the review, to ensure the highest standards, we sought the views of chief scientific advisers from relevant Departments across Government.
The Government will now develop a new approach to address the different sources and chemical risks posed by fire to upholstered furniture and furnishings. It will focus on safety outcomes (such as reduced risk of ignition, reduced risk of fire spread) and will be underpinned by a set of essential safety requirements which all upholstered furniture placed on the market must meet.
This approach is consistent with that taken for other consumer products. The (new) legislation will be supported by British Standards which will be developed by the British Standards Institution in partnership with a wide range of stakeholders, including industry, fire-safety experts and consumer representatives.
This new approach will continue to ensure that manufacturers place only safe products on the UK market. I will consult on the detail of this new approach in due course. In the meantime, the existing regulations will continue to apply.
[HCWS1759]
Registration of Overseas Entities
Kelly Tolhurst Excerpts(5 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government have today published their response to the report of the Joint Committee on the Draft Registration of Overseas Entities Bill.
The draft Bill was published on 23 July 2018 to enable pre-legislative scrutiny. The Joint Committee formed for the purpose of scrutinising the draft Bill was established in February 2019 and published their report on 20 May 2019. The report was supportive of the Bill and its intentions, concluding that it is “timely, worthwhile, and, in large part, well drafted”. The Government welcome the Committee’s report and thank the Committee’s Chair and members for their detailed scrutiny of the draft Bill. The scrutiny process has been valuable and the Government have accepted a number of the Committee’s recommendations and will be giving serious consideration to others to ensure that the legislation is as effective as possible in tackling the use of UK property for money laundering purposes by improving the transparency of property ownership.
A copy of this Government response will be laid before both Houses.
[HCWS1737]
Oral Answers to Questions
Kelly Tolhurst Excerpts(5 years, 4 months ago)
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Chuka Umunna (Streatham) (LD)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The implementation of strong customer authentication, which mandates two-factor authentication for some online payments, will introduce more secure payments for individuals and businesses. That was introduced by the second payment services directive. The Treasury published an impact assessment on the implementation of that EU directive in 2017.
Chuka Umunna
I am staggered that the Government are not doing more about this ticking timebomb for online retail, which is on track to cause major disruption. The British Retail Consortium estimates that 75% of retailers are unaware that it is coming into effect in September. It is the same for consumers. The implementation is forecast to lead to the failure of nearly a third of e-commerce transactions from September, due to poor access to a proper phone signal or wi-fi. Will the Minister ensure that no enforcement action will be taken for at least 18 months, to give our retail sector breathing space to adapt to the new rules?
Kelly Tolhurst
I point out that there was £309 million-worth of fraud in e-commerce in 2016 versus £13.6 million in 1998. The hon. Gentleman will know that the European Banking Authority published an opinion on readiness for implementation and the Financial Conduct Authority published a statement in June. They are working on mitigations past the September implementation date. They are working with industry and providers to make sure that the essence of the changes prevail, which is to make it safer for merchants and consumers.
David Warburton (Somerton and Frome) (Con)
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
We are providing £12 million a year of new funding through the Office for Product Safety and Standards to strengthen national capacity for product safety enforcement. The OPSS provides specialist expertise, scientific advice, support and training for trading standards, and it leads on national product safety challenges to protect consumers.
Gerald Jones
I recently attended an Electrical Safety First event on the dangers of buying second-hand electrical goods. The reality is that many people buy second-hand electrical goods, sometimes not by choice, so will the Minister commit, in the light of the Whirlpool recall, to a public awareness campaign on how to buy and use electrical products safely?
Kelly Tolhurst
I thank the hon. Gentleman for raising that question. Last week we took part in a Westminster Hall debate secured by the hon. Member for Swansea East (Carolyn Harris). The OPSS is currently working with Electrical Safety First on various campaigns, to which we have an ongoing commitment. Consumer protection and consumer education are important.
Stephen Kerr (Stirling) (Con)
Given the difficulty of tracing the whereabouts of half a million potentially faulty Whirlpool tumble dryers, what discussions has the Minister had with the OPSS on developing a proposal for product registration at point of sale?
Kelly Tolhurst
Again, I thank my hon. Friend for his question. In last week’s Westminster Hall debate I committed to developing and testing the ability for mandatory registration of electrical products, which is something we are looking at. It was initiated in a discussion at the Consumer Protection Partnership last Thursday, and we are hoping to get outcomes in the near future.
Andy Slaughter (Hammersmith) (Lab)
The Government have known for four years that there were 5.5 million Whirlpool tumble dryers in homes across the UK that were liable to catch fire. Last month, the Minister gave notice that she intended to order the recall of those dryers still in use, but now she has agreed a voluntary recall with the company. Will she reconsider that and use the powers she has? If she does not, how will we know that Whirlpool is taking this seriously?
Kelly Tolhurst
I recognise the hon. Gentleman’s concern in this regard. He is absolutely correct to say that we issued a notice of intent to recall on Whirlpool. It submitted its proposal, which we assessed. We also took advice from an expert panel, comprising an independent QC and chief scientific officers from the Health and Safety Executive, the Home Office and the Department for Business, Energy and Industrial Strategy. We decided not only to accept the proposal, which has been published, but to issue a regulation 28 notice with regard to further information that needs to be shared with the OPSS, so that we can review the recall process.
Carolyn Harris (Swansea East) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I have recently written to online platforms to make clear the priority I place on consumer safety. The hon. Lady will know, after her Westminster Hall debate last week, that the Office for Product Safety and Standards is undertaking specific projects to tackle the risks of second-hand and online sales, including targeting those goods entering the UK via fulfilment houses.
Carolyn Harris
I appreciated the Minister’s letter this weekend on the online sales of second-hand recalled tumble dryers. Currently, it is possible to upload details of such products on to online platforms without recall notices, or model or display numbers. Her letter states that she has written to these online platforms, but it fails to say which ones. Will she commit to publishing these letters and any advice she has given, in the interests of clarity?
Kelly Tolhurst
I would like to reassure the hon. Lady that I have written to not just one online platform, but all the online platforms in relation to this. I would just like to clarify that some platforms have been advertising certain models and Whirlpool has used the same model number for a number of machines, so it is not correct to assume that all models will be subject to recall. As I have outlined, if any platform is selling products that are part of that recall, the organisations are being alerted and the products are being taken down as soon as possible.
Priti Patel (Witham) (Con)
Luke Hall (Thornbury and Yate) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Given my hon. Friend’s background, I know that he has a keen interest in the retail sector. In April, the increase in the national living wage meant that nearly 1.8 million workers received an above-inflation pay rise. The Government have stated our ambition to end low pay in the UK. The national living wage is on track to meet its target of 60% of median earnings by 2020, and we will announce its future target later this year. In setting a new target, we will work with the expert Low Pay Commission to carefully consider the impact on businesses and workers across all sectors.
Laura Pidcock
Given the reported use of food banks by staff in the Secretary of State’s Department, and given that the first ever indefinite strike action of outsourced workers in Whitehall is happening now, does the Secretary of State not see it as his duty at least to ensure that BEIS contractors are not breaking legislation? That includes potential breaches of regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003, whereby an employment business may not supply a temporary worker to a hirer to replace an individual taking part in official strike action. Can the Secretary of State please explain to the House what action he has taken on the issue following the Public and Commercial Services Union’s referral of the matter to the Met police, and letters sent to him and his permanent secretary on 10 July?
Ms Esther McVey (Tatton) (Con)
All forms of company are registered and incorporated with Companies House. While it is a great resource if used properly, it is open to misuse, abuse and fraudulent information. What steps will the Secretary of State take to ensure validation before companies are registered, so that the public can have faith in the register?
Whirlpool Tumble Dryers: Product Recall
Kelly Tolhurst Excerpts(5 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government’s No. 1 priority is public safety. We are committed to ensuring that the UK continues to have one of the strongest product safety regimes in the world.
I updated the House on 4 April and on 17 June. Following the publication of the review by the Office for Product Safety and Standards (OPSS) into the Whirlpool tumble dryer modification programme, I informed the House that OPSS had issued a decision letter placing a number of requirements on the company. Having reviewed Whirlpool’s response to the Government’s requirements, OPSS determined that it was inadequate.
Accordingly, on 4 June, OPSS notified Whirlpool of their intention to serve a recall notice in respect of as many as 800,000 remaining unmodified tumble dryers currently in use.
I am able to confirm that Whirlpool is now to issue a full product recall of all unmodified tumble dryers from consumers’ homes.
Whirlpool has agreed to undertake a number of actions required by OPSS, and which have been reviewed by an expert panel, consisting of an independent Queen’s counsel and three chief scientific advisors from the Home Office, health and safety executive and the Department for Business, Energy and Industrial Strategy.
Under the recall, consumers with an unmodified, affected Whirlpool tumble dryer will be entitled to a new replacement machine. This will be delivered and installed, with the old one removed, at no cost. A refund based on product age or a modification will be available to those consumers who do not want to take up the offer of a replacement dryer. Whirlpool have agreed to implement additional quality assurance procedures for any new modifications in consumers’ homes.
Whirlpool will deliver a significant consumer outreach campaign with wide ranging publicity of the product recall. Whirlpool have committed to deliver improved identification of, and outreach to, vulnerable consumers. They guarantee that there will be no charges for the delivery, installation or removal of affected machines. Whirlpool have also committed, and will be legally required, to provide OPSS with effective and timely reporting of progress made in the product recall.
As part of OPSS monitoring of the programme, OPSS is receiving weekly data reports from Whirlpool and it continues to monitor the situation very closely.
The actions taken by OPSS illustrate once again this Government’s commitment to ensuring the safety of consumers. No other European country has used the recall process in this way, and on this scale before for domestic appliance safety.
OPSS will closely monitor the recall and it will take further action should it be necessary to ensure public safety. It will continue to work closely with other Government Departments and key stakeholders to raise awareness of the recall.
The message for consumers who have an unmodified dryer is to stop using and unplug their dryer immediately and to contact Whirlpool for a replacement.
[HCWS1707]
Retail Strategy
Kelly Tolhurst Excerpts(5 years, 4 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
It is a pleasure to serve under your chairmanship, Sir David, and I congratulate the hon. Member for Blaydon (Liz Twist) on securing today’s important debate. Like her, I have a family history in retail and shopkeeping: my great-grandmother ran a corner grocery store, my great-grandfather was a bootmaker and my father used to run a DIY shop.It is interesting that we are having this debate, because he closed that DIY shop after the retail sector changed. The likes of B&Q finished off some of our small, independent DIY shops. I hope I have been able to bring some direct understanding to my role as a Minister in this area.
As the hon. Lady and other Members have pointed out, the retail sector employs more than 3 million people and contributed £94 billion of gross value added to the UK economy in 2018. The retail sector is at the heart of our communities and our country. I reassure Members that I am extremely passionate and determined about the retail sector and that I care vehemently about it, much as everyone who sits in the House of Commons—not just those in the Government—cares very much about it and values it, the jobs it creates and the value it delivers to our communities.
Retail has always evolved to meet changing consumer demands, and it will continue to do so. Indeed, it is already thriving in many areas. For example, we have the most developed e-commerce market in Europe, with 48% of the estimated total of €198 billion in 2018. We recognise the high-profile pressures in the sector, but there are also businesses that are expanding and developing, as outlined by the hon. Member for Sefton Central (Bill Esterson) with his great plug for his local retailer Smiths TV. Amazon, Lidl, Aldi, Ocado and JD Sports are all companies investing in UK retail, which is a good sign for the future. Primark, which recently opened the world’s largest fashion retail store in Birmingham, is proving that a high street business can still be successful without a significant online presence. We have seen sales increase by 4% and increased profits. Organisations such as Pets at Home are taking on the challenge of changing consumer demand. In its stores, it is bringing in veterinary services and grooming services and investing in the workforce and apprenticeships. Many retailers are grasping the challenge of a changing retail sector and ensuring they are able to deliver services on the ground that consumers want.
We have heard examples from Members about local growth. It has been great to hear examples of local authorities working proactively with their high street forums and the opportunities available to them to try to grow and really focus on meeting the needs of the local community through the local retail offer. However, to continue to evolve, we need to innovate. I was therefore excited to see the UK Digital Retail Innovation Centre open in Gloucester in May this year, following a funding award of £400,000 from Gloucestershire’s local enterprise partnership. It will be a national centre for testing and developing disruptive digital innovations and will help shape and inform the future of cities with a special focus on retail.
Alongside those successes, we have seen some high-profile names struggle, including Woolworths, Toys R Us and, more recently, Debenhams and House of Fraser. We have been used to seeing those iconic names on our high streets, but in some cases they are no longer there. I do not underestimate the impact of those changes, which can be hugely difficult for the individuals and families involved and for communities. Indeed, I know the hon. Member for Blaydon met Toys R Us staff from the metro retail park when the store closed down. Some of them had been working there for 20 years, and I commend her for the support she showed to her constituents.
There is no doubt the sector is facing significant pressures, whether from uncertainty in the business environment or from changes in consumer expectations and preferences towards online shopping. Those challenges are reflected in retail across the world, not just in the UK. Our retail sector is still one of the best in the world, and we are well placed to deal with the challenges. Retail has a long history of responding successfully to change, of turning challenges into opportunities and of turning pressure into innovation. The Government are, and I personally am, absolutely committed to supporting the sector as it responds to change and strives to continue to serve the public so well, as it has in the past, and as it will in the future.
I am pleased, as part of my portfolio, to serve as the co-chair of the industry-led Retail Sector Council, alongside Richard Pennycook, the chairman of the British Retail Consortium. There has been confusion over the idea that the council does not meet very often and is just focused on the troubles of the past, rather than looking to the future, but I assure Members that we not only have Retail Sector Council meetings, but a number of sub-groups heading up the workstreams and meeting regularly. A lot of work goes on outside those meetings to reach targets. The workstreams are focused on future challenges and how we can drive the retail sector forward. It is not just a talking shop; if it were, I can assure Members I would want no part in it. I spent many a year before becoming an MP in talking shops, and I do not particularly want to do that as an elected Member of Parliament and especially not as a Minister.
Bill Esterson
I am glad the Minister has mentioned the Retail Sector Council. I am curious as to what it has achieved. Perhaps she can tell us, because if it is not a talking shop, it will have made a difference, and there will be some outcomes, deliverables and differences made.
Kelly Tolhurst
The hon. Gentleman is quite right. As he will know, when the Retail Sector Council was set up last year, we set its priorities. The six workstreams and the priority workstreams have been agreed. We are working for outcomes. The beauty of the Retail Sector Council is that it is the retail sector coming together with Government to find solutions to the future challenges. It includes not only the bricks-and-mortar retailers, but the online retailers and the small independent retailers. In the council, the sector is working with Government to move forward and bring forward plans and proposals that will benefit and aid the sector.
Kelly Tolhurst
Absolutely, but the hon. Lady will know that all the sector deals are being driven by the sectors themselves with the support of Government and with strong leadership and great ideas. My wider hope for the retail sector is that we will see that deal delivered by the Retail Sector Council as soon as possible.
Costs to business is another workstream, and a number of Members raised them. As part of that workstream, the co-chair and I are meeting the Financial Secretary to the Treasury next week to discuss some of the preliminary findings on costs to business in the retail sector. A large survey of the entire sector was carried out. That area is of big interest to me in terms of how we levy taxation in the future. The skills and lifelong learning workstream is running in parallel with the costs to business workstream. Some of the early work on that is being led by Amazon and a small working group, and that is proving useful.
Alongside the work of the retail sector, the Department regularly considers a wide range of policies. My officials are working across Whitehall on policies that affect the retail sector. A number of Members have mentioned support for our high streets. Members may know that the high streets Minister, my hon. Friend the Member for Rossendale and Darwen (Jake Berry), has recently taken on a joint portfolio with my Department. As I am the retail sector Minister, we work closely on joined-up thinking on retail and high streets. We have the £1.6 billion action plan for high streets, which includes the £675 million future high streets fund. We are seeing 50 organisations move to the next stage in the development of the plans, which will enable local authorities and local populations to drive the development of their towns. We have the taskforce, which will work with local authorities across the country to deliver help for those that need to increase their retail space.
I will sit down now, because I recognise that the hon. Member for Blaydon may want to come in. I am happy to have another meeting with her on the other questions she asked.
