Consumer Protection

Kelly Tolhurst Excerpts

Tuesday 11th June 2019 Commons Chamber

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

I beg to move,

That the draft Consumer Rights Act 2015 (Enforcement) (Amendment) Order 2019, which was laid before this House on 13 May, be approved.

Ensuring the safety of UK consumers is a key priority for the Government. It is vital that consumers can trust that the products they buy are safe. Responsible and law-abiding businesses also need to be confident that businesses which ignore their responsibilities will be held to account for breaches of product safety.

The UK enjoys a robust legal framework to protect consumers, and the Government are committed to maintaining and building on that. Indeed, we have taken decisive action to enhance the effective functioning of the product safety system. We launched the Office for Product Safety and Standards last year to enhance the UK’s product safety system and to provide strategic leadership and co-ordination of the system, taking a lead in response to national product safety incidents. The OPSS works closely with local trading standards teams to support them in tackling local issues.

[Yvonne Fovargue (Makerfield) (Lab)]

Does not the Minister agree that the cuts to local trading standards departments, which have seen them lose about 56% of their staff, have severely hampered their work in keeping the public safe?

[Kelly Tolhurst]

The hon. Lady is right about the role of trading standards and the pressures under which departments operate. The local priorities of local trading standards will always differ across the country. The beauty of the OPSS is that it takes a strategic role, which enables it to support local and national trading standards in dealing with nationwide issues. It also provides expertise and financial support for testing functions, when required.

We launched the OPSS last year to enhance the system. We work closely with local trading standards departments to support them in their work and in tackling local issues. The aim of this order is to strengthen the ability of the OPSS to carry out its role in leading the response to national product safety incidents and cases and in ensuring the cohesion of the product safety system.

The order does three things. First, it will enable the Secretary of State, and the OPSS on his behalf, to investigate potential safety issues related to consumer products regulated by the provisions of the General Product Safety Regulations 2005, using the investigatory powers listed in schedule 5 to the Consumer Rights Act 2015. Secondly, the order will enable enforcement authorities in the UK, including local trading standards, district councils in Northern Ireland and the Secretary of State, to use those same investigatory powers to investigate claims about gas appliances and personal protective equipment. Finally, the order makes a minor amendment to the Measuring Instruments Regulations 2016 and to the related reference in paragraph 10 of schedule 5 to the 2015 Act to correct a typographical error.

Potential safety issues relating to consumer products covered solely by the General Product Safety Regulations can already be investigated by enforcement authorities using the powers under schedule 5 to the 2015 Act. Such issues are generally investigated by local trading standards in the UK and by district councils in Northern Ireland in the local area where the incident has occurred. The order will enable the Office for Product Safety and Standards, on behalf of the Secretary of State, to investigate claims of unsafe products in the context of national incidents or cases, providing equivalent investigatory powers to those available to local trading standards and other relevant enforcement authorities. This means that the OPSS can provide the leadership and action needed to deal with national incidents and cases.

The order will provide the full range of powers contained in schedule 5 to the 2015 Act, which includes powers to require the production and potential seizure of documents, the inspection and purchase of products, the testing of equipment and the seizure and retention of goods. These are essential aspects of undertaking effective checks and actions in relation to unsafe goods. It is vital that our new national regulator has these powers across the broad spectrum of consumer products, which will enable it to provide leadership on cases and incidents of national importance.

The Secretary of State, and the Office for Product Safety and Standards on his behalf, may already exercise these powers in relation to the enforcement of sector-specific regulations such as on electrical equipment, lifts and so on. The Government want to ensure that the Secretary of State can lead across the wide range of consumer products, not just those that fall under sector-specific regulations. The order therefore allows the Secretary of State to investigate any type of product covered solely by the General Product Safety Regulations, should the need arise.

The order’s second purpose is to make sure that the Secretary of State, local trading standards in Great Britain and district councils in Northern Ireland can investigate safety issues concerning gas appliances and personal protective equipment. New regulations were introduced last year under the negative procedure, and this order now provides for the amendment of the 2015 Act by the affirmative procedure. It also enables enforcement authorities to use the investigatory powers in schedule 5 to the 2015 Act in relation to products covered by the 2018 regulations.

Finally, the intention underpinning the enforcement of the Measuring Instruments Regulations has always been that the enforcement authorities should have access to the investigatory powers in schedule 5 to the 2015 Act. This order corrects a typographical error in the relevant provision in both the regulations and schedule 5.

The order will provide the ability for the OPSS to lead and co-ordinate responses to national product safety cases and incidents, enhancing protection for UK consumers. It improves the Secretary of State’s ability to investigate claims of unsafe consumer products, and it helps to prevent injury and loss of life.

[Dr David Drew (Stroud) (Lab/Co-op)]

The Minister probably knows what I am going to say about school notice boards. She and her colleagues have been very helpful. Could she confirm that the order will make it quicker and easier to look at such products, which at least need investigation?

[Kelly Tolhurst]

I thank the hon. Gentleman for his intervention. I note his passion for the safety of notice boards in schools. He is correct. The essence of the order is that the Office for Product Safety and Standards will be able to act quickly and effectively in investigating and in using the full range of powers open to us to make sure we take the necessary action to protect consumers.

Enhancing protection for UK consumers is at the heart of my Department’s priorities, and the order improves the Secretary of State’s ability to investigate claims about unsafe consumer products and helps to prevent injury and loss of life. The order gives greater protection to law-abiding businesses, as it helps to stop unfair competition by preventing the placing of unsafe products on the UK market, and it makes sure that, where there is a national product safety incident, the Secretary of State can provide the necessary support and leadership to investigate.

The order enables the Secretary of State, local trading standards and district councils to investigate the safety of gas appliances and personal protective equipment regulated by the 2018 regulations. It is a further step in making sure that the Office for Product Safety and Standards can fulfil its regulatory role in the area of product safety, and it is a further step in the Government’s commitment to protecting consumers and maintaining fair markets for law-abiding businesses.

--- Later in debate ---

[Kelly Tolhurst]

I welcome the contributions from all Members, because we all care about consumer safety and it definitely lies at the heart of what I have been doing in my time at the Department. I wish to comment on some of the points made and answer some of the questions that were posed.

First, I respect the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss) and her thoughts on Whirlpool, but I did inform the House in oral questions this morning—I do not know whether she heard—that the Government have notified Whirlpool of their intention to issue a recall notice, which is part of the regulatory process. Although I have much respect for the hon. Lady, I totally disagree with her characterisation of the Government’s view on taking forward the concerns relating to Whirlpool and of the Office for Product Safety and Standards’s role in that process.

[Yvonne Fovargue]

There are still millions of people who have not contacted Whirlpool and about whom Whirlpool knows nothing, so does the Minister not agree that the recall process would have been so much easier had there been at the time of sale a central register that could be used only in the event of a recall of dangerous white goods?

[Kelly Tolhurst]

The hon lady raises an important point. The process we have followed has meant that the Office for Product Safety and Standards carried out a review. We obviously want to move on to the next stage, and this is a great example of what the Office for Product Safety and Standards is able to do. The statutory instrument describes a specific element of that, mainly relating to the investigatory powers. We are doing further work on consumer protection as we bring together—we hope, in the near future—a consumer White Paper on strengthening enforcement and a host of other things, on the back of the Green Paper that was announced last year.

On the Secretary of State’s powers to investigate, local trading standards in Great Britain and district councils investigate claims about potentially unsafe products in their local areas. National incidents are designated under the Office for Product Safety and Standards’s national incident management plan triage process. We want the OPSS to lead on national incidents and to have the same investigatory powers as local trading standards. The Secretary of State already has equivalent investigatory powers to investigate any products regulated under specific legislation, such as cosmetics and electrical equipment, but not cots and DIY tools. This order aligns the Secretary of State’s powers with those that are already available to trading standards and ensures the consistency of the powers that could be used by the OPSS. The circumstances under which the Secretary of State would exercise those powers is where the OPSS’s national incident management plan triage process concludes that the nature of the product warrants such action.

With regard to the OPSS and its communication with our trading standards, I have to tell the House that the relationship between national trading standards, local trading standards and the OPSS is one of continuous communication and working together. We would not be able to influence and to have such a great enforcement system without those organisations working together. Yesterday, I met trading standards professionals across the enforcement landscape. A key part of my role has been making sure that I keep in touch with representatives of national and local trading standards. I wish to put it on record that trading standards officers do invaluable and exceptional work throughout the country. They work incredibly hard and are very much the unsung heroes.

[Mrs Hodgson]

I agree with the Minister on that point, but I want to highlight the points that I was making about the funding of national trading standards. [Interruption.] She has just assured me that she is coming on to that point.

[Kelly Tolhurst]

The Government took a great step when they formed the OPSS in January 2018. The OPSS was given additional funding of £12 million a year to build national capacity for product safety. The expertise—the scientific-based research— that it will be able to undertake will aid and assist local trading standards in carrying out their own functions. This is very much a working-together situation. We have committed £190,000 to behavioural insights to date and invested £498,000 on social science research. Over the next three years, £4 million will be spent on upgrading the scientific facilities in Teddington, and £750,000 of support has been provided in 2018-19 for testing and training trading standards, and there is another £500,000 funding for trading standards to carry out product safety testing, and that will increase next year. We have also trained more than 250 trading standards authorities, which included training 800 people. Such training enables local trading standards to have free access to the technical British standards, which really equips them and supports them in identifying compliance issues.

Let me move on now to the issues raised by the hon. Member for North Ayrshire and Arran (Patricia Gibson). She was very concerned about funding, and as I have tried to outline, the OPSS will take a strategic role in supporting local trading standards. The statutory instrument ensures that we have a clear enforcement strategy, which gives the OPSS and the Secretary of State the powers that they need.

[Patricia Gibson]

Forgive me if the Minister has said this already and I have missed it, but given that the powers of the OPSS are to be strengthened, will there be an increase in personnel to support trading standards, and will the OPSS itself receive additional money—apart from the £12 million that it received when it was set up?

[Kelly Tolhurst]

The OPSS is ready. It is taking on not extra work, but an extra power, which it is quite ready to take on. I have already outlined what it has done in the case of Whirlpool.

I understand the concerns of the hon. Member for Washington and Sunderland West (Mrs Hodgson), and she is a great campaigner in this area. She will know that work is ongoing with regard to secondary ticketing. That matter is not related to this SI, but I am more than happy to speak with her directly outside the Chamber to give her some more assurances if that is what she wants.

I almost forgot the contribution of my hon. Friend the Member for Worthing West (Sir Peter Bottomley). I am grateful to him for raising those issues. We are looking at strengthening consumer protection, full stop. Perhaps we could meet. I have not spoken to him about this issue, but I am more than happy to meet him, so that we can investigate the matter further with the OPSS if necessary.

Without this order, we will not be maximising the potential of the new regulator. The British public would ultimately have less protection from unsafe and non-compliant products. Law-abiding businesses would have less protection in maintaining and growing their businesses and the UK economy, and that is not what this Government want. We are committed to making the UK product safety systems the best in the world, and ensuring that our regulators have the right tools to protect our people is a further step to achieving that goal Therefore, I commend this statutory instrument to the House.

Question put and agreed to.

Smart Data: Consultation

Kelly Tolhurst Excerpts

Tuesday 11th June 2019 Written Statements

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

Today I will be placing a copy of a consultation document entitled: “Smart Data: Putting consumers in control of their data and enabling innovation” in the Libraries of both Houses. This outlines the conclusions of the Smart Data Review that was announced in the Modernising Consumer Markets Green Paper and consults on future action by the Government.

The consultation sets out our vision for an economy where consumers’ data works for them and not against them. Data needs to be smart: easily and instantly accessible to consumers and be able to be safely and securely transferred to third party services who can use this data to provide innovative services for consumers. This is what we mean by smart data.

The consultation focuses on introducing new smart data initiatives to improve consumer outcomes and promote innovation in regulated markets. The key proposals we are consulting on include:

Accelerating the development of innovative data-driven services through the establishment of a new cross-sectoral smart data function to support, manage and govern the delivery of smart data initiatives

Introducing an open communications initiative in the telecoms market to require communications businesses to provide consumers’ data to third party providers at the consumer’s request to increase switching and stimulate innovation

Establishing a vulnerable consumer challenge to encourage data-driven innovation to improve outcomes for vulnerable consumers

Introducing strong data protection requirements and a cross-sectoral approach to regulation of third-party providers using smart data to build trust and minimise burdens on business.

These initiatives build on the approach in open banking, which is enabling consumers to ask their bank to share their current account transaction data securely with third parties. We have seen an explosion of new services that seek to make life easier for consumers—for example, through bringing together their current accounts into one platform or finding new ways to help consumers build an accurate credit score.

As announced by the Prime Minister yesterday, we are also signalling our agreement with the recommendation of the digital competition expert panel’s recommendation to establish a new digital markets unit to promote, among other things, data mobility and data openness across all sectors. As we take forward proposals on smart data, we will work closely to co-ordinate and integrate the recommendations as appropriate.

[HCWS1612]

Post Office Network

Kelly Tolhurst Excerpts

Tuesday 4th June 2019 Written Statements

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

I wish to provide an update to hon. Members on the steps that the Government are taking to ensure the long-term sustainability and resilience of the post office network.

The Government set the strategic direction for Post Office Limited, to maintain a national network accessible to all and to do so on a sustainable financial basis and allow the company the commercial freedom to deliver this strategy as an independent business.

We recognise the Post Office’s distinct social purpose and the important role post offices play in communities across the country, which is why our 2017 manifesto committed to safeguard the network, protect existing rural services and work with the Post Office to extend the availability of business and banking services to families and small businesses in rural areas.

Between 1997 and 2010 the post office network reduced in size by 37%, resulting in the loss of over 7,000 post offices. Since 2010 we have invested over £2 billion in the network. This funding sought to increase the viability of the network by making it more accessible, modern and tailored to customers’ needs while reducing the long-term burden on the taxpayer.

The Government have no programme of post office closures. Post Office Limited has opened over 400 branches since April 2017 and the Government are committed to ensuring the long-term sustainability and resilience of the network. We not only place a contractual commitment on Post Office Limited to maintain a network of 11,500 branches, but also stipulate stringent access criteria to ensure that this large network is accessible to citizens across the country. More than 93% of the UK population live within one mile of their nearest branch, with more than 99% within three miles.

There are now over 11,500 branches and the post office network is at its most stable since 2013, having changed in size by under 1% over this period. This overall change accommodates a level of churn in what is an extremely diverse network, as branches close and are replaced, and Post Office Limited is therefore used to working quickly with local stakeholders to provide replacement services.

Government subsidy ensures that branches serving our rural communities that need additional support receive it so that they can stay open. In order to provide value for money for the taxpayer the subsidy to the post office has reduced. This fact reflects the progress that the business has made: returning to profit after 16 years of losses, providing a stable network and reducing its reliance on the taxpayer.

Beyond 2021, Government remain committed to ensuring the long-term sustainability of the network and will work with Post Office Limited to achieve this.

It is crucial that running a post office is attractive and sustainable for postmasters, and they should be fairly remunerated for the services they provide. Post Office Limited’s successful renegotiation of the banking framework with 28 high street banks, announced on 15 April, secured a significant increase in the overall fees they receive from the banks. As a result of this, they will double and, in some case, treble the rate that agents receive for processing deposits from October 2019. For example, in a main post office branch, postmasters will receive £8.16 for processing a £8,000 cash deposit, compared with the £3.12 they currently receive.

98% of the post office network is franchised and postmasters are vital to the delivery of the network. The remuneration for delivering post office services should be combined with a successful retail offer in order for postmasters to thrive in today’s competitive retail environment.

The Government have rightly moved with the times as many of us now prefer to access services online. Whilst this has an impact on the Post Office, we cannot ignore people’s desire to transact with Government digitally from the convenience of their own homes. However, we are also committed to ensuring that its services are accessible to all citizens and the post office network does and will continue to play a key role in this.

We are committed to working with Post Office Limited and our postmasters to develop the business and offer, in order to maintain the delivery of services that our constituents want and need, so that the Post Office remains at the heart of communities across the country.

[HCWS1592]

National Minimum Wage Naming Scheme

Kelly Tolhurst Excerpts

Tuesday 4th June 2019 Commons Chamber

[Stephanie Peacock (Barnsley East) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the suspension of the national minimum wage naming scheme.

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

Enforcement of the national minimum wage and the national living wage is a priority for the Government, and we take tough action against the minority of employers who underpay. Last year, employers were ordered to repay over 220,000 UK workers a record £24.4 million of arrears. We have more than doubled the budget for minimum wage compliance and enforcement since 2015, and it is now at a record high of £27.4 million.

As part of our enforcement approach, we name employers who have breached the legislation, which raises awareness of national minimum wage enforcement and deters others who may be tempted to break the law. To date, the Government have named almost 2,000 employers who have underpaid the national minimum wage. The Government are reviewing the naming scheme to ensure that it continues effectively to support minimum wage compliance. This is in response to a recommendation made by the director of labour market enforcement, Professor Sir David Metcalf, last year.

In December 2018 we accepted both of the director’s recommendations relating to the naming scheme, specifically to review the scheme’s effectiveness and to consider how to provide further information under the scheme in future. The Government have sought to learn from other naming schemes and other regulatory approaches. We have also discussed the evidence with the director of labour market enforcement and have conducted further analysis to understand the impact that any changes to the scheme would have on the number of employers named.

Naming and shaming remains an important part of our enforcement toolkit, and the review will be concluded in the coming weeks. Any changes to the scheme will be communicated through the national minimum wage enforcement policy documents.

[Stephanie Peacock]

Thank you, Mr Speaker, for granting this urgent question, which finally forces a Minister to admit to the House that the Government have quietly dropped one of the few policies they had to protect vulnerable workers. The naming scheme had exposed nearly 2,000 employers who illegally underpaid nearly 100,000 workers by millions of pounds, including household names from TGI Fridays to Marriott hotels, but the last such list was almost a year ago.

As we now know, the Government have privately decided to suspend the scheme, despite the Department’s official guidelines maintaining that the scheme still operates. The Minister claims this was based on a recommendation of the director of labour market enforcement, made over a year ago, yet the director made no such recommendation to suspend the scheme; he simply called for an evaluation and specific improvements. The Government accepted those recommendations, so why have they not simply implemented them and continued with the scheme in the meantime? Can the Minister confirm that as this review has “no set completion date”, this policy has been effectively halted? Can she tell us what progress the review has made in the last year? What evidence has it taken, what research has been commissioned, what work has her Department done, and what proposals will come to the House and when? Or is the so-called review in reality just an excuse to let bad employers off the hook?

This is the latest in a long list of policies that would help working people, from fair tips to equality for agency workers, that have been delayed or dropped by the Government. Time and again, they crack down on the vulnerable and back down before the powerful. When will this capitulation to rogue employers over working people finally end?

[Kelly Tolhurst]

I have to say that the hon. Lady is incorrect: the scheme has not been dropped. Given the impact that being named can have on a business, it is right that we properly consider the effectiveness of the naming scheme. We want to make sure that our enforcement approach balances the need to crack down on the most terrible employers, who purposely and persistently break the law, with the need to be fair to and educate employers who try to do the right thing.

We are in no way going soft on employers. Last year, we issued record financial penalties to more than 1,000 non-compliant employers to the value of £17 million. That was part of our commitment to support workers’ rights. Our good work plan sets out a vision for the future of the UK labour market and includes an ambitious programme of work to implement 51 of the 53 recommendations Matthew Taylor made in his review of modern working practice.

I must point out, however, that it was this Government who gave the lowest paid workers the biggest increase in the national living wage in 20 years.

[Vicky Ford (Chelmsford) (Con)]

I was reading the report from the Resolution Foundation, an independent organisation, and it says that the proportion of low-paid workers in Britain has dropped to its lowest level since the 1980s, thanks to the national living wage. Why on earth would we not name and shame employers if they were not complying with such an important part of the Government’s policy?

[Kelly Tolhurst]

I thank my hon. Friend for outlining that piece of work. It is right that naming and shaming rogue employers is a key part of our enforcement. We have doubled the budget since 2015 for enforcement of the national minimum wage, and one of the key things that I am particularly interested in is making sure that we go after those individual employers or big organisations that are deliberately trying not to pay workers the minimum wage.

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

I thank my hon. Friend the Member for Barnsley East (Stephanie Peacock) for securing this important urgent question. One of the proudest achievements of the last Labour Government was the introduction of the national minimum wage, safeguarding workers from exploitative pay practices. Sadly, from the Trade Union Act 2016 to their failure to address exploitation through zero-hours contracts or bogus self-employment, this Conservative Government cannot be proud of their record on workers’ rights. The admission today that the naming and shaming scheme has been effectively shelved only adds to that woeful record.

The national minimum wage is effective only if it is adequately enforced. The Government have stated that the naming and shaming element of minimum wage enforcement is vital, alongside other measures such as fines. Has the Minister made any assessment of the impact of the scheme’s suspension on minimum wage avoidance in the last year? Has the Department continued to identify those employers underpaying during that period, and what action has been taken?

The Minister will also be aware that the director of labour market enforcement also criticised the Government not so long ago in respect of their utilisation of the enforcement mechanisms available to them. The director also asked about additional resource, so it would be helpful if the Minister could identify what funding has been made available to enhance enforcement capacity at Her Majesty’s Revenue and Customs.

Not only is enforcement of the minimum wage important, but the level at which it is set is crucial. I know the Chancellor of the Exchequer thinks that poverty is a figment of our imagination, but the fact is that in 2017 more than 1.5 million people had less than £10 a day to live on, according to the Joseph Rowntree Foundation. Labour is committed to ending the scourge of low pay. We will introduce a real living wage of £10 an hour and end the unfairness of lower rates for those under 18. Will the Minister take this opportunity to improve her Government’s record on poverty and workers’ rights and commit to doing the same?

[Kelly Tolhurst]

The hon. Lady says that the Government have nothing to be proud of, but I am absolutely proud to serve in a Government who have put so much focus on enforcing the national minimum wage. As I have already mentioned, this year we increased the national minimum wage by the biggest amount in 20 years, up 4.9%.

It is simply not true to say that we have shelved the naming and shaming scheme. It is absolutely right for me, as the Minister responsible, to evaluate the scheme and make sure that any naming and shaming scheme is meaningful, adds value, acts as a tool to aid employers to make sure that they are able to comply with the national minimum wage legislation, and enables us effectively to communicate exactly what the breaches are and why, and the detriment to the individual worker. We remain absolutely determined to stamp out low pay.

We currently have larger numbers of people in work than ever before, and it is absolutely right that those individuals should get the hourly rates to which they are entitled. As I said in my opening remarks, we doubled the enforcement budget to £27.4 million in 2019-20. That was up from £13.2 million in 2015-16. We are committed to continuing that enforcement. I will not make excuses for reviewing the naming and shaming scheme, because we want to add value and make it more effective, and we want to make sure that we aid employers, help workers to understand their rights and offer routes to recourse.

[Rachel Maclean (Redditch) (Con)]

I entirely agree with the Minister: I, too, am proud of the record that has meant £2,750 more has been put into the pockets of my Redditch constituents since the introduction of the living wage. Will the Minister update us on the progress towards having a single organisation that looks after workers’ rights, which will be valuable in the seeking of redress?

[Kelly Tolhurst]

I thank my hon. Friend for raising that point. She is absolutely correct that in our good work plan we announced our intention to consult on a single labour market enforcement body. Our good work plan was a major step forward for the Government. I should point out to Opposition Members that the good work plan is the biggest reformation of workers’ rights for 20 years. It is this Government who are doing it and I am proud to be part of it.

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

The Government’s wage policy simply is not delivering for those who need it. Under the Tories, FTSE 100 chief executive pay has gone up by two thirds; when will the Minister finally deliver for those who are not rich and match the Scottish living wage? Incidentally, the Scottish living wage is now paid by 1,300 employers in Scotland—more than a quarter of all the living wage employers in the UK. Outside London, that means a wage of £9.55 an hour paid to all workers, including those aged under 25 whom the Tories have left behind. If the Minister cannot commit to that, she should devolve powers so that the SNP Scottish Government can. Given that nearly 370,000 workers on national minimum wage contracts are being underpaid, will she commit to implementing in full the recommendations in the Low Pay Commission’s report on non-compliance and enforcement, including on naming rounds for those who do not comply?

[Kelly Tolhurst]

First, let me point out to the hon. Gentleman that we are not dropping the naming and shaming scheme. He was right to mention corporate governance and the issues around executive pay, which this Government take seriously and we are taking steps to address. He will know that the Low Pay Commission recommends national minimum wage levels to the Government. He mentioned the under-25s, but let me point out to him that almost nine in every 10 18 to 24-year-olds are paid above their wage bracket.

[Huw Merriman (Bexhill and Battle) (Con)]

My constituency is one of the top 10 constituencies with the highest proportion of workers on the national living wage, so I welcome the fact that we have increased that wage by another £600 thanks to our excellent Chancellor and his Budget. I know that the Minister has come here to help the lowest paid make something of themselves, but may I say to her that it is essential that we make sure that employers do not get away with non-compliance, because it is unfair to other employers and to the employees who will not be protected. She is right to review the scheme, and she is taking great steps, but I urge her to keep the name and shame policy because there is no better way of shaming people into compliance.

[Kelly Tolhurst]

I thank my hon. Friend for his comments. Her Majesty’s Revenue and Customs will investigate any complaint that it receives about underpayment of the national minimum wage. We also have ACAS, which provides a helpline for individuals who feel that they are not being paid the national minimum wage. Naming and shaming is part of our toolkit of enforcement, but, as I have said, it is only one tool. I want to make sure that when we name and shame organisations, we understand what the detriment is and how much the detriment is. We need to make sure that, when we report these companies, we are reporting not just big names to grab a headline, but meaningful information that helps to advise and educate employers and, really importantly, educates workers so that they understand that, where there is a detriment, they can take action.

[Paula Sherriff (Dewsbury) (Lab)]

With record numbers of people struggling with in-work poverty, this Government should be doing everything they can to reverse this shameful record. Instead, they are removing schemes that expose exploitative employers. Will the Minister think again and not only reinstate the national minimum wage naming scheme, but use the scheme to enforce the law? Will she also provide a date by which she intends to complete the review?

[Kelly Tolhurst]

The hon. Lady knows that I have a great deal of respect for her, but she has not listened to what I have said. We have not dropped the naming and shaming scheme. I want a scheme that is valuable and meaningful, that aids compliance and enables workers to get their entitlement, and that makes sure that employers follow the law. I want to focus on enforcement, absolutely making sure that we penalise and reprimand any employer that is underpaying workers who are entitled to the minimum wage. Since the start of the scheme, we have seen 12 prosecutions. Last year alone, there were seven labour market enforcement undertakings and orders where the national minimum wage had been breached. I am committed to this scheme; this Government are committed to this scheme. We have a record number of people in work, and, this year, this Government have overseen the largest increase in the national minimum wage.

[Mr Philip Hollobone (Kettering) (Con)]

Can the Minister confirm that it remains Government policy to increase the national living wage to 60% of median earnings by 2020? If that does remain the case, will that not mean an extra pay rise for millions of workers?

[Kelly Tolhurst]

My hon. Friend is absolutely correct. We remain on target to reach our ambition of 60% of median earnings by 2020. That is something that this Government are looking forward to achieving. We are not stopping there. We are looking forward to seeing where we can continue to increase the wages for our lowest paid workers past 2020.

[Jo Swinson (East Dunbartonshire) (LD)]

Naming and shaming employers who fail to pay even the basic minimum is one of the strongest ways that society can send a message that such behaviour is unacceptable. The Minister talks about the impact on employers of being named, but I am more concerned about the impact on workers who are underpaid—some of the most vulnerable people in our society. Whether it is deliberate or otherwise, they feel that impact. I recall the opposition that I had to face from the Minister’s Conservative colleagues when I was in her role and introduced this scheme. Will she give the House an assurance today that the review will include no watering down of the scheme to let employers off the hook, and will she name the date when the next round of naming will happen?

--- Later in debate ---

[Kelly Tolhurst]

Given the hon. Lady’s previous role, I know that she understands well the portfolio, and the naming and shaming system. I reiterate that we have not dropped the naming and shaming scheme. I have tried to be extremely clear that I want the naming and shaming scheme to be meaningful, add value and give us proper information so that we can understand where there is detriment to workers and why. We will still name individuals, but I want employers to comply with the law and workers to get what they are owed. That is not just about naming and shaming; it is also about ensuring that the information that we are publish aids education and helps to stop any detriment to employees. Not all employers are wilfully paying under the national minimum wage, and we have a duty to educate businesses so that they are easily able to comply with the law.

[Sir Desmond Swayne (New Forest West) (Con)]

Why was it necessary for the Minister to suspend the scheme while she reviewed it to make it more meaningful and useful?

[Kelly Tolhurst]

I decided to do that because I wanted to ensure that I was naming and shaming with meaningful information. I will not make excuses for making sure that we are delivering and reviewing a policy, or for carrying out what the director of labour market enforcement asked us to do.

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

So can the Minister confirm that those sleazebag employers who rip off the lowest paid in our country are actually going to be named and shamed for the last 12 months?

[Kelly Tolhurst]

Yes.

[Alex Chalk (Cheltenham) (Con)]

Naming and shaming is one tool, but does the Minister agree that one of the most powerful tools to increase incomes is to reduce the amount of tax paid by people on low pay? Like me, does she take pride in the fact that instead of people having to pay tax on earnings of above around £6,000, as was the case in 2010, the figure is now closer to £12,000—adding hundreds of pounds to people’s incomes?

[Kelly Tolhurst]

Absolutely, and this Government have made great ground in that regard. This is not about grabbing headlines. It is about ensuring that workers get the pay to which they are entitled, which is why we have doubled the enforcement budget and are collecting more arrears than ever before. There were more than 3,000 successful investigations by Her Majesty’s Revenue and Customs in the last year alone. I want that budget to be spent effectively on catching more employers who are underpaying the minimum wage.

[Alison Thewliss (Glasgow Central) (SNP)]

It is all well and fine for the Minister to say that some under-25s are paid more than they are legally entitled to receive, but that gives no reassurance to those who are not. May I suggest that she adds to her naming and shaming scheme employers who employ young people on short-term, temporary contracts and then dismiss them when they cost more money?

[Kelly Tolhurst]

The hon. Lady raises an issue regarding the incorrect practice of employers. As I have said, HMRC will investigate every complaint and ACAS is available to receive those complaints. We have asked the Low Pay Commission to undertake a review of the structure of the national minimum wage, and it will report back later in the year. We encourage employers always to pay above the minimum wage brackets if they are able to do so.

[Jo Stevens (Cardiff Central) (Lab)]

The Minister has said on a number of occasions that the Government are taking tough enforcement action against employers who fail to pay the minimum wage, but between 2010 and 2018 in Wales there has not been a single successful prosecution resulting in a fine against employers for underpaying. This is not tough enforcement; it is impunity.

[Kelly Tolhurst]

The hon. Lady raises prosecutions as the only way of action or enforcement, but that is not true. I have said that since 1999 over £118 million has been paid back—to over 200,000 workers in 2019, so in just one year. It is true that there have been only 14 prosecutions. However, organisations are required to pay back the arrears, and pay a penalty, wherever a breach is found. I would like to highlight the fact that the Government have recently been consulting on salary sacrifice schemes. There have been examples in the media of workers being found to have a detriment through salary sacrifice schemes. This has been a key area in employers being caught under the national minimum wage legislation.

[Catherine West (Hornsey and Wood Green) (Lab)]

What assessment has the Minister made of the pay discrepancy among cleaners in Whitehall? The Department for International Development pays the London living wage but the Ministry of Justice, which should be seeking justice, pays the national minimum wage. What does she intend to do about it?

[Kelly Tolhurst]

I thank the hon. Lady for raising that point about the differences between Departments. I do not personally have the details of that and I have not looked into it, but I will happily do so, and I am more than happy to write to her with a fuller answer.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

Last time I spoke to the Minister about the use of unpaid work trials and the minimum wage, there had not been a single tribunal case anywhere in the UK in this regard that had been successful. Since that time, there has, but it was in Jersey, where a Polish woman took on her employer and won back the £30 that the tribunal said she was entitled to for the trial. What impact will that have on UK employment law? In the 20-odd years of the National Minimum Wage Act 1998 we have only just this year had one successful tribunal. Does that not tell her that the law is deficient and needs amending, and that unpaid work trials should be outlawed in their entirety?

[Kelly Tolhurst]

The hon. Gentleman is a keen campaigner in the area of unpaid work trials. As I have said on many occasions, in most cases, unpaid work trials, if they are not a small trial that is conducive to the work environment, are illegal. On the back of his campaign and work that had been done before, we issued new guidance in December 2018. As I have said, where a worker feels that they have had a detriment, they are to report it to HMRC or ACAS. HMRC will investigate every complaint. We cannot just judge this issue on prosecutions. We need to judge it on where the detriment to the worker is, and then ensure that they get what is owed to them and that the employer is penalised.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for the response that she has given. What discussion has taken place with the Chancellor with regard to help for small businesses who struggle to make the payroll, and have a presence on the high street, in order to provide tax relief or other help so that the local economy is helped and that small businesses can survive and pay a correct and fair wage?

[Kelly Tolhurst]

I thank the hon. Gentleman for raising the issue of small businesses. It is absolutely true that small businesses are the backbone of our economy—99.6% of all UK businesses are small businesses, and is absolutely right that we are able to help them. A key part of that is making sure that, as the small business Minister, I make representations to the Chancellor and across Government on what small businesses need. The work that is being done on the review of naming and shaming is to make sure that when small employers find themselves in breach of the national minimum wage legislation, we are able to give them the right guidance and advice to enable them to meet their obligations. Many small employers want to make sure that they pay the national minimum wage, and above the national minimum wage. It is our duty not only to penalise but to aid and enable small businesses to meet their obligations.

Contingency Fund

Kelly Tolhurst Excerpts

Wednesday 22nd May 2019 Written Statements

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

The Competition and Markets Authority (CMA) has sought a repayable cash advance from the contingencies fund of £14,700,000 to ensure the CMA’s relocation to Canary Wharf remains on schedule.

The CMA will receive its voted funding for this project at the main estimate, and consequently may only draw the related cash from the consolidated fund after the Supply and Appropriation Act has received Royal Assent in July 2019. This requirement has arisen because the 2019-20 capital expenditure for the construction works at the CMA’s new offices at Cabot Square exceeds the vote on account for capital expenditure prior to Royal Assent. The requirement to include the voted funding in the main estimate was agreed after the vote on account for 2019-20 was approved.

The cash advance will ensure the project stays on track and on budget and ensure that the CMA also meets its operational needs.

Parliamentary approval for additional capital of £14,700,000 will be sought in the main estimate for the CMA. Pending that approval, urgent expenditure estimated at £14,700,000 will be met by repayable cash advance from the contingencies fund.

[HCWS1576]

Register of Beneficial Owners of Overseas Entities

Kelly Tolhurst Excerpts

Wednesday 22nd May 2019 Written Statements

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

Our modern industrial strategy seeks to maintain the UK’s global reputation as a good place to do business. People come to Britain confident in our high corporate standards, including market transparency, which foster confidence and trust. Transactions are improved and the market has greater confidence when people know who they are doing business with, while lack of transparency can facilitate criminal behaviour.

The 2017 national risk assessment of money laundering and terrorist financing highlights the fact that property continues to be an attractive vehicle for criminal investment, in particular for high-end money laundering. The risks relating to abuse of property are most acute where property is owned anonymously through corporate structures or trusts.

This Government committed at the 2016 international anti-corruption summit to create a register showing the beneficial owners of overseas entities which own or buy property in the UK. The Government also committed in primary legislation, through section 50 of the Sanctions and Anti-Money Laundering Act 2018, to report to Parliament annually on the progress that has been made towards putting in place such a register.

Over the past year, significant progress has been made towards the introduction of the register.

The Government published a draft Registration of Overseas Entities Bill on 23 July 2018 and invited comment on it from interested parties. Some 29 responses were received from civil society groups, the property sector and others, which has informed the development of the register. The draft Bill and explanatory notes set out how the register will operate.

A Joint Committee was appointed to consider and report on the draft Bill. The Commons members of the Committee were appointed on 19 February 2019. The Lords members were appointed on 25 February 2019. The Committee held a number of evidence sessions, including one on 25 March 2019 at which I gave evidence. They also invited interested individuals and organisations to submit written evidence to their inquiry.

The Committee made recommendations in a report to both Houses, published on 20 May 2019. The Government welcome the Committee’s thorough and helpful scrutiny of the Bill. We are considering their recommendations and will publish a response in due course.

The Government intend to introduce the Bill to Parliament as soon as parliamentary time allows. We will continue to work closely with interested parties, including our delivery partners, in developing secondary legislation and preparing for implementation. Following Royal Assent and the making of secondary legislation, the Government intend that the register will be operational in 2021.

The UK continues to lead the global fight against illicit finance. The Financial Action Task Force completed a landmark review of the UK’s regime for tackling money laundering in December 2018, concluding that we have some of the strongest controls in the world.

[HCWS1580]

ENABLE Guarantee Scheme

Kelly Tolhurst Excerpts

Thursday 16th May 2019 Written Statements

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

ENABLE guarantee is a scheme administered by the British Business Bank that encourages participating banks and other financial institutions to lend more to small and medium-sized enterprises by either addressing the high capital consumption associated with such lending for banks or by reducing the cost of funding for other financial institutions in order to increase the supply and diversity of finance to SMEs.

British Business Bank programmes are supporting more than £5.9 billion of finance to over 82,000 smaller businesses (as at September 2018). The Department has approved guarantee facilities totalling £1 billion within the ENABLE programme.

We are now extending the scheme to other financial institutions (as defined in the request for proposals available on the British Business Bank’s website), in order to further increase the diversity of supply of funding available to SMEs. This extension will not create a new contingent liability.

The aggregate amount of the guarantees issued by the Department under the scheme is expected to be circa £2 billion, with extension beyond this subject to further review. Within this £2 billion, the aggregate notional amount of the guarantees extended to other financial institutions is capped at £400 million. This enables the Department to manage its risk appetite and limit its credit risk exposure.

As a matter of record, I will be laying a departmental minute today.

[HCWS1560]

Draft Companies (Directors’ Remuneration Policy and Directors' Remuneration Report) Regulations 2019

Kelly Tolhurst Excerpts

Wednesday 15th May 2019 General Committees

[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 Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019.

It is a pleasure to serve under your chairmanship, Ms McDonagh. The draft regulations will add certain new requirements to the reporting of directors’ remuneration by publicly quoted and traded companies. They will give shareholders more information to assess how the rewards to directors match performance, for example by requiring companies to provide more detail about the award of company shares to directors.

The new requirements are contained in new European directive 2017/828, which is more commonly known as the revised shareholder rights directive and is due to be transposed into UK law by 10 June 2019. The draft regulations will implement articles 9a and 9b of the directive, which cover the reporting of directors’ remuneration, to the extent that they do not already have effect in UK law. Other parts of the directive are being implemented by Her Majesty’s Treasury, the Financial Conduct Authority and the Department for Work and Pensions. For example, the FCA and the DWP are implementing new obligations for asset managers and pension funds to report on how they engage with the companies in which they invest on behalf of their clients.

The draft regulations will add a small number of requirements to the directors’ remuneration policy and the directors’ remuneration report that publicly quoted companies are already required to produce under the Companies Act 2006.

The main change to the directors’ remuneration policy is that companies will be required to provide additional detail about the arrangements under which directors can eventually exercise their shares. The Government believe that that will be a valuable addition to the existing framework for executive pay reporting. The award of company shares to directors is of great interest to shareholders because it has the potential to better align the interests of directors with the long-term success of the company. The draft regulations also provide for the remuneration policy to set out more information on directors’ service contracts and highlight key changes introduced since the previous policy.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

How will the draft regulations affect the deplorable and widening gap between the highest and lowest paid within companies, or the unsatisfactory gender pay gap? What are the Government doing to tackle those issues?

--- Later in debate ---

[Kelly Tolhurst]

As I had started to outline, the draft regulations, which implement the shareholder rights directive, will require more information to be included in remuneration reports so that shareholders have more information when they vote and make decisions on policy. As hon. Members know, we implemented ratio reporting last year, the whole idea of which is to give shareholders more transparency on what executive directors are earning in comparison with the rest of the organisation’s employees, so that they have more information to exercise their votes.

[Mr Dhesi]

And the gender pay gap?

[Kelly Tolhurst]

That is a wider conversation. The draft regulations relate to remuneration reports, whereas the gender pay gap is part of a wider discussion.

I will make some progress on detailing the draft regulations. The main new requirement proposed for the remuneration report is for companies to compare the annual change in directors’ remuneration with the annual change in average employee pay over a rolling five-year period. This will provide greater transparency on how pay in the boardrooms of quoted companies aligns with pay and reward across the company as a whole. It will also complement a new obligation introduced by the Government last year for quoted companies to disclose and explain each year the ratio of their chief executive officer’s total annual pay to the average pay of the company’s UK employees. The draft regulations additionally propose that future remuneration reports show the split between fixed and variable pay for each director in each year. Taken as a whole, the new measures will further strengthen confidence that the UK’s executive reporting framework is based on transparent, consistent and accessible public reporting to shareholders.

I will also highlight two provisions that will ensure the compatibility of the new measures—which, as I have said, originate from the revised shareholder rights directive—with the UK’s existing company law framework. The first concerns the scope of the companies covered by executive pay reporting. The UK’s existing executive pay regime applies to quoted companies, whereas the shareholder rights directive that the draft regulations will help to implement applies to traded companies. In practice, the vast majority of traded companies are also quoted, meaning that their shares are both tradeable on the regulated markets and quoted on the FCA’s official list. The draft regulations address this small technical difference in company definitions between the directive and UK company law by providing for executive pay reporting to apply both to quoted and to traded companies, whether or not they are quoted on the official list.

The second provision, which will ensure compatibility between the new measures from the directive and existing UK law, is a small procedural change to the Companies Act to allow shareholders to retain their existing right to a binding vote on any proposed payments to directors that would otherwise be outwith the terms of the directors’ remuneration policy. This procedural change provides that shareholder approval for any payments to directors outwith the remuneration policy result in an amendment to the policy for the purpose of those payments. In this way, UK law will be compatible with the requirement in the directive that all payments to directors must be in line with a shareholder-approved remuneration policy.

[George Freeman (Mid Norfolk) (Con)]

I am grateful to the Minister for introducing this measure. It is all about the transparency of pay, which we should all believe in because it helps shareholders to hold directors to account on our behalf. Some smaller technology companies are concerned about employee share option schemes, which the Minister knows are a key way of rewarding people in tech start-ups. Can she reassure me that there is nothing in the draft regulations that will in any way change a company’s ability to set the strike price at a level that rewards directors or employees? I believe that may be in some other measure, but I just want to check that it is not contained in the draft regulations.

[Kelly Tolhurst]

My hon. Friend is quite right that a part of the particular sector to which he refers has concerns about potential future restrictions. However, this measure is about transparency and making sure that when shareholders are asked to vote, they have access to that information, and also that that information is publicly available. It is all about transparency and shareholders being able to exercise their rights and having the right information to make informed decisions.

On the impact of the draft regulations, the Government believe that the additional cost to business will not be significant. The UK’s executive pay reporting framework is already one of the most robust in the world, and the draft regulations propose only targeted enhancements to the existing remuneration policy and remuneration report. The Government tested the draft regulations in advance with a wide range of interested parties, including business groups, investors and civil society representatives. No significant concerns were raised, and a small number of technical comments helped to inform the final drafting of the regulations before they were laid in Parliament.

Much of the shareholder rights directive provisions on executive pay are already enacted in UK law, following previous rounds of Government reform on executive pay domestically. I pay tribute to Parliament and in particular the Select Committee on Business, Energy and Industrial Strategy for the active and constructive role that MPs have played in supporting and informing the ongoing reform process.

Most recently, the BEIS Committee has produced a number of recommendations following its recent fair pay inquiry, and I was glad to appear before it and give evidence. The Government will respond to the Select Committee’s report very soon. In the meantime, and to sum up, the draft regulations will increase further the ability of shareholders to scrutinise how directors are rewarded for their performance. In doing so, the draft regulations will enable the UK to implement articles 9a and 9b of the revised shareholder rights directive covering executive pay, to the extent that they are not already given effect in the UK. I hope that the Committee will approve the draft regulations.

--- Later in debate ---

[Kelly Tolhurst]

As always, I thank the hon. Member for Sefton Central for his comments. In particular, it was great to hear him recognise that there are some very good employers who are trying their absolute best to look after their employees and ensure they are sharing out the success of their firms. He is quite right to say that although this debate is about ensuring that we put transparency and scrutiny into the system for shareholders, there are some organisations that operate extremely well, with a strong sense of corporate and social responsibility.

It is true that pay for top executives quadrupled from £1 million to £4.3 million between 1998 and 2013, with pay ratios increasing from 47:1 to 132:1. The figure has since fallen to an average of £3.9 million. Although there was a big increase over that period, executive pay has tended to stabilise. The Government maintain our commitment to implement transparency, which is why we introduced ratio reporting to make companies give more detail on their remuneration policies. They have to report on the pay ratios between executives and the lowest paid, and explain how wider considerations affect the company and its stakeholders more widely.

Quite rightly, the hon. Gentleman asked about the other parts of the directive and whether other Departments will be laying statutory instruments. DWP and HMT will lay other instruments for the implementation of the directive. I am happy to write to him with further details, if he is happy to accept that.

Secondly, the hon. Gentleman was quite right to ask why this has taken so long, because it was agreed by the European Commission in 2017. Unfortunately, the Commission had to consult on other implementation periods and processes, and that was not done until the second half of 2018. Indeed, some consultation was still going on in March, so that is why we are implementing the measure at this stage. I should also like to point out that the draft regulations will come into effect on 10 June, so it would have been slightly unfair to expect organisations to implement European directive rules a year earlier than other European Union member states.

We take wider reform very seriously. We have introduced reforms since 2013 and continue to do so. The hon. Gentleman knows about the wider corporate governance package—we spoke about it last summer—and our aspirations regarding organisational behaviour and the need to provide transparency to shareholders so that when they vote they have all the information and understand how executives formulate remuneration policies. The directive’s measures will complement our own, and I am very supportive of the reforms.

In response to the hon. Gentleman’s comments about worker representation on boards, we have made it clear that no one size fits all. We have outlined a number of ways to get workers’ voices into organisations. We remain committed to that and to ensuring that workers’ voices are heard. Obviously, we always need to go further and to continue to review. I take that seriously in my role as a Minister. I have spoken about the issue in many debates and Select Committees, so I am well aware of some of the comments and feelings out there. Ultimately, the draft regulations implement a European-wide directive, and the Government are absolutely committed to adhering to our responsibilities as a full member of the European Union until such time as we leave.

I thank the hon. Gentleman for his contribution. To sum up, the Government’s intention with the draft regulations is to provide a number of very small but important enhancements to the UK’s well-established statutory framework for the reporting of directors’ remuneration at public companies. In particular, by enabling greater transparency in how company share awards can be exercised by directors, and in how boardroom pay relates to the rest of the company, shareholders will have increased scope to access information on whether pay at the top is appropriate and aligned with the company’s long-term success. In doing so, the draft regulations will complement and build on the important new measures on executive pay that were approved by Parliament last year.

Those measures, which are now in place, include a requirement on companies to report their executive pay ratios. Between 2017 and 2018, there was a 67% increase in the number of companies listed on the Investment Association register as having votes of more than 20% against pay policies, so the policy is having an impact, as is the obligation to state whether discretion has been exercised in the award of share-based remuneration. At the same time, the draft regulations will implement articles 9a and 9b of the revised shareholder rights directive, to the extent that those articles are not already given effect in UK law.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019.

Business: Companies Register

Kelly Tolhurst Excerpts

Tuesday 7th May 2019 Written Statements

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

One of the key foundations of our modern industrial strategy is delivering a strong, transparent and attractive business environment in the UK. The strength of the UK’s business environment is founded on our fair and open regulatory frameworks. The companies register is the base on which that strength is built.

While the overwhelming majority of UK corporates operate wholly legitimately, concerns have been expressed about the misuse of UK corporate entities, the filing of false information on the companies register held at Companies House and the use of innocent people’s information on the register to commit fraud and other acts of harm.

In the last three years there have been almost 10,000 complaints to Companies House from people concerned about their personal details, with worries including fraud and misuse of personal details topping the list.

We are therefore seeking views on a series of reforms to limit the risks of misuse. These include measures to: provide greater certainty over the identity of those shown as owning, running or controlling companies, including identity verification; improve the accuracy and usability of data on the register; protect personal information; ensure compliance and take action against offenders; and deter abuse of UK-registered corporate entities. We are committed to minimising burdens on law abiding businesses, especially the smallest. The consultation will therefore look at the best way to minimise burdens on businesses.

These reforms build on our global reputation as a trusted and welcoming place to do business and a leading exponent of greater corporate transparency.

The UK has one of the highest ratings for cracking down on anonymous companies, and the Government’s proposed measures build on the Britain’s world-leading anti-corruption activity. In 2016, the UK became the first country in the G20 to introduce a public register of company ownership, while new protections against identity fraud for company directors were introduced in 2018.

These measures will boost the reputation of the UK’s business environment, ensuring reliability of the UK’s company register. Knowing that a company’s information is accurate and transparent is a fundamental part of a leading business environment—giving entrepreneurs and businesses the confidence they need to do business in the UK.

I will place a copy of the consultation in the Libraries of both Houses.

[HCWS1540]

Oral Answers to Questions

Kelly Tolhurst Excerpts

Tuesday 30th April 2019 Commons Chamber

[Sir David Amess (Southend West) (Con)]

1. What steps his Department has taken to promote youth entrepreneurship.

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

First, I would like to update the House: unfortunately, my right hon. Friend the Minister for Energy and Clean Growth will be unable to join us this morning due to a family illness.

Our young people provide an invaluable contribution to the UK economy—they are more than twice as likely to be entrepreneurs as their peers in France and Germany—and we are supporting them. The start-up loans programme has provided over £60 million in loans to 18 to 24-year-olds since 2012. To further realise young entrepreneurs’ potential, I have asked the Prince’s Trust to lead a review to identify the barriers that they face.

[Sir David Amess]

In 2017-18, recent graduates from the University of East Anglia set up 247 start-ups employing 1,015 people. Will my hon. Friend reassure me that the Government will continue to fund these schemes, as they mean so much to young people and help to create a vibrant economy?

[Kelly Tolhurst]

I thank my hon. Friend for that question. Through our industrial strategy, we recognise the valuable contribution from the creation of spin-outs and start-ups by businesses from university. That is why we have committed to increasing higher education innovation funding from £160 million to £250 million per year by 2020-21. This will help to increase universities’ capacity to engage in commercialisation and work with business.

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

Is the Minister aware that recent research from Sheffield University and King’s College London shows that young entrepreneurs face a very bleak future? In particular, the impact of leaving the EU on many of the very constituents who voted leave is a drop of between 17% and 20% in GDP. That is ruinous for so many of our industrial towns. What is she going to do about it?

[Kelly Tolhurst]

The hon. Gentleman makes a valid point, but it is true that young people in the UK are twice as likely to be entrepreneurs as those in France and Germany. Our percentages for young entrepreneurs are significantly higher. We are committed to our industrial strategy. I have asked the Prince’s Trust to undertake the review so that we understand specifically what the barriers are for young people and come up with a package to be able to help them.

[Mr Philip Hollobone (Kettering) (Con)]

I congratulate the Minister on her inspired decision to appoint the Prince’s Trust, which is a wonderful organisation that does magnificent work. Will it concentrate on 18 to 30-year-olds, and when is she expecting it to report?

[Kelly Tolhurst]

I am grateful to my hon. Friend for allowing me to highlight some of the details of the youth entrepreneurship review. It has started and the board will be announced shortly. It will be looking at 18 to 30-year-olds, and we are hoping that it will report in the autumn. He is absolutely correct: the Prince’s Trust does amazing work with young people from all types of background. In fact, there is already a programme with the Prince’s Trust and Innovate UK that provides mentoring to young people and makes available loans of up to £5,000.

[David Linden (Glasgow East) (SNP)]

The Scottish Government’s 2018-19 Budget means that 90% of firms in Scotland pay lower rates than they would if they were based elsewhere in the UK. Given that 55% of individuals will pay less tax than they would in the rest of the UK, what lessons do the Government plan to take in terms of supporting Scotland’s young entrepreneurs and those elsewhere in the UK?

[Kelly Tolhurst]

The hon. Gentleman highlights specific differences within Scotland, but we are interested in making sure that young people are able to follow their dreams and aspirations whichever part of the country they happen to be in. We are announcing the young entrepreneurs review so that we can look at all the different barriers, including access to finance—something that the Government and I, as the small business Minister, take very seriously—and make sure that we create the right environment for our small businesses to start up, thrive and grow.

[Theresa Villiers (Chipping Barnet) (Con)]

2. What steps he is taking to support small businesses.

[Sir Henry Bellingham (North West Norfolk) (Con)]

10. What recent steps he has taken to support small businesses.

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

Small businesses are the backbone of our economy, employing over 16 million people, and they make a collective contribution of over £2 trillion. We have provided nearly £5.9 billion of finance to over 82,000 small businesses across the UK. We have also just announced an additional £200 million for innovation for British business.

[Theresa Villiers]

What discussions has the Minister had with landlords running small businesses about the proposed abolition of section 21 notices? We all want to help renters, but we need to take care that we do not pass new laws that might actually make it harder for vulnerable people to get rented accommodation.

[Kelly Tolhurst]

I thank my right hon. Friend for her question. We want both to encourage good landlords to stay in the sector and to make sure that proposals do not impact on supply. The Ministry of Housing, Communities and Local Government will be consulting landlords and looking at similar changes in Scotland. However, I reassure her that we recognise that small landlords, or incidental landlords, may have different requirements and they will therefore be very much part of the consultation.

[Sir Henry Bellingham]

Will the Minister join me in paying tribute to Snap-on UK Holdings in King’s Lynn in my constituency? It now employs 141 people and has recently won two Queen’s awards for enterprise and international trade. It is currently exporting to France, Poland, Italy and Spain, and it is trying to open up markets in Asia and Africa. What can she do to encourage other businesses in the country to follow Snap-on’s example and boost their exports, boost our economy and create jobs?

[Kelly Tolhurst]

I thank my hon. Friend for highlighting the excellent work of Snap-on UK Holdings, which has won a Queen’s award for enterprise. Businesses in North West Norfolk have benefited from 60 start-up loans, totalling nearly £500,000. They also have the growing business fund, which provides grants of up to £500,000 per business, where there is an opportunity to innovate and grow and create jobs.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

Small businesses often rely on each other for mutual support; that is certainly the case in my constituency. Will the Minister please explain to her colleagues in the Department for Work and Pensions how detrimental it would be for small businesses and the town centre economy if they relocate 250 jobs out of Merthyr Tydfil town centre as part of their push to centralise jobs and services?

[Kelly Tolhurst]

The hon. Gentleman raises an important point about our high streets. Obviously, the Government play an important part in that respect in making decisions that affect our regions. I would like to reassure him about what we are doing for high streets and the retail sector. With the Retail Sector Council, we are looking at business costs and elements around skills and employment on the high street. We remain committed to making sure that our high streets remain the heart of our communities. I will make sure that I do everything in my capacity as Minister to achieve that.

[Jim Shannon (Strangford) (DUP)]

Can the Minister outline any initiatives that are being considered to offset high street rates to encourage businesses to not only trade online but have a presence in local high streets? Some of my constituents have done that, and they have been quite successful.

[Kelly Tolhurst]

The hon. Gentleman makes an important point with regard to traditional retail and online sales. I have spoken with the likes of Amazon and eBay, and one thing I have been extremely surprised at is that they have worked with small businesses that have started online but then invested in bricks-and-mortar retail outlets. We need to work to make sure we have a mixed economy, and I have outlined the work we are doing with the Retail Sector Council, particularly looking at business rates and other issues.

[Andrew Griffiths (Burton) (Con)]

I congratulate the Minister on the work she does for small businesses. She will know that one of the major challenges small businesses face is not just with late payments but with getting prompt payments and reasonable terms from bigger businesses. Will she ensure that the Government do all they can to end the scourge of late payment? Will she also ensure that the prompt payment code has some teeth so that it actually does the job it is supposed to?

[Kelly Tolhurst]

I thank my hon. Friend for highlighting prompt payment. It is a particular focus within the Department to tackle late payments, which can be very damaging to small businesses. This week, the Chartered Institute of Credit Management has announced that there are 17 businesses that I have removed or suspended from the prompt payment code to make sure that we highlight where bad practice is occurring. We want to bring business with us. We do know that late payments can have a major impact on small businesses, and I therefore stand committed to ensuring that we do all we can as a Government to end this poor practice.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

This morning I met Matt Dowling of the Freelancer Club, who adumbrated to me some of the terrible situations that freelancers have faced when trying to be paid, often being coaxed into working for nothing for things like experience. Will the Minister meet me and Mr Dowling to discuss how we might crack down on that?

[Kelly Tolhurst]

Absolutely. I reiterate that this Government do not support the culture of poor payments and late payments. The hon. Gentleman is absolutely right to raise the concerns of those in a particular sector who might face trouble getting paid for legitimate work. I would be very happy to meet him and that organisation.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

3. What assessment he has made of the effect of uncertainty of the UK’s trading relationship with the EU on the delivery of the industrial strategy.

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

I regularly meet representatives of the supermarket sector, both individually and through the Retail Sector Council, to discuss a range of issues. One issue that the council has identified as a priority is employment. The Government have committed themselves to upgrading workers’ rights and protecting the most vulnerable workers in all sectors through the good work plan. That represents the biggest upgrade of workers’ rights for over 20 years.

[Siobhain McDonagh]

I apologise for arriving late, Mr Speaker. I am delighted to have the opportunity to ask the Minister to support Mrs A, who has worked for Asda for 30 years. Her take-home pay, and that of 3,000 other members of staff, will be cut because of changes in the pay structure masquerading as an hourly increase. Paid breaks will be reduced, the night shift will be changed, and bonuses will be slashed. Will the Minister join me in supporting Mrs A and ensuring that she keeps what she is earning now?

[Mr Speaker]

The hon. Lady was not late for her own question. Her principal responsibility is to be in her place to ask her question, and we are delighted to see her. She does not need to be too apologetic; in fact, she does not need to be apologetic at all.

[Kelly Tolhurst]

The hon. Lady is absolutely right to raise those questions. She is a strong campaigner for workers in her constituency, and we have met on a number of occasions to discuss some of the issues involved. Obviously we want Asda employees to receive the remuneration to which they are entitled. It is true that a consultation is taking place on changes that may be introduced towards the end of the year, but, in general, terms and conditions are subject to negotiation between the employer and the employee. While it is always open to either party to enter into negotiations on the terms of contracts, if employees are subject to changes in terms to which they have not agreed, they can take legal action.

[Stephen Kerr (Stirling) (Con)]

The Minister is right to champion workers’ rights, because ours is the party of the workers. However, there are still too many examples of employers not paying the national living wage. What further steps will the Government take to ensure that the national living wage is enforced and workers receive a fair day’s pay for a fair day’s work?

[Kelly Tolhurst]

I thank my hon. Friend for raising that issue. He is right: we are the party of the workers, which is why we introduced the good work plan, the biggest reform of workers’ rights for 20 years. We are committed to enforcing the national minimum wage and ensuring that people receive the remuneration that they deserve. Her Majesty’s Revenue and Customs has identified £24.4 million of arrears that affected more than 200,000 workers last year, which was an increase on the previous year. We have almost doubled the budget for enforcement since 2015, and we remain committed to ensuring that people receive the national minimum wage when they are entitled to it.

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[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

On 4 April, the Office for Product Safety and Standards published its investigation into Whirlpool and the ongoing issue of its product safety. The report was lambasted by consumer organisations, including Which?, as weak. Just days later it was revealed in the media that Whirlpool allegedly paid one consumer to stay silent after she was forced to flee with two young children as a blaze engulfed her home after her dryer had been modified. Can the Minister tell us whether the OPSS was aware of those allegations and, if not, whether it will now reopen its investigation in light of the accusations?

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

I thank the hon. Lady for raising this issue, and I commit to making sure that I speak to the OPSS about the allegations she has highlighted and what further information we can ascertain. She is right, in that I laid a written ministerial statement before the House on 4 April. I have to let the House know that the OPSS has written to Whirlpool asking it to take action, and it has 28 days to reply to that. I stand ready, as the Minister, to make sure that consumer safety and protection is at the heart of what we are doing and that we take further action where necessary.

[Scott Mann (North Cornwall) (Con)]

T7. Many of my constituents still access some form of off-grid energy. While the Department looks to introduce a cleaner form of energy, will it also look at the cost impact of energy? Many of these people are also in fuel poverty and would like not only a clean form of energy, but a cheap one.

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[Helen Whately (Faversham and Mid Kent) (Con)]

Shared parental leave is a good option for new parents, but the Secretary of State will know that take-up remains low. Will he consider introducing a stand-alone period of parental leave just for partners, to help families to balance work and childcare?

[Kelly Tolhurst]

I thank my hon. Friend for raising this issue. She is a keen champion of rights for parents. I agree that fathers and partners have a key role to play in caring for their children. The shared parental leave and pay scheme gives parents more choice and flexibility and challenges the assumption that the mother will always be the primary carer. Last year, the Government ran a £1.5 million campaign to promote shared parental leave and to increase its take-up, and we are preparing a further campaign for later in the year. I assure my hon. Friend that we always keep these things under review. I am keen to meet her in the near future to discuss her particular concerns.

[Jessica Morden (Newport East) (Lab)]

T6. The Government’s industrial strategy has recently drawn criticism for neglecting steel. The UK steel charter was mentioned earlier; will Ministers attend the launch of the charter on 20 May and sign up to it on behalf of the Department, to maximise opportunities for UK steel in uncertain times?

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[Stephanie Peacock (Barnsley East) (Lab)]

My constituent was made redundant from Carillion last April after 11 years’ service as a cleaner. She has been passed from pillar to post, from PwC to the insolvency services. Will the Minister please look into this case as a matter of urgency?

[Kelly Tolhurst]

I would welcome it if the hon. Lady passed me the details of her constituent, so that I can follow up that matter.

[Peter Heaton-Jones (North Devon) (Con)]

In North Devon, we are proudly playing our role in clean energy generation with two major wind farms. Does the Minister agree that, to ensure our security of supply and to get the best climate change outcomes, we need a mix of clean energy generation?

[David Hanson (Delyn) (Lab)]

The enterprise finance guarantee scheme and its continued use by the Royal Bank of Scotland is still causing controversy. Even this week, we have seen discussions from the hon. Member for Thirsk and Malton (Kevin Hollinrake) around the use of debt. Will the Minister, or the Department, discuss with the Treasury how this scheme and its legacy are now operating?

[Kelly Tolhurst]

I thank the right hon. Gentleman for raising that matter at BEIS questions today. I will happily take on that challenge.

[Martin Vickers (Cleethorpes) (Con)]

Small businesses in Cleethorpes are suffering because of yet another two high street bank closures. Individuals and businesses need both the counter services and expert financial advice from banks. Indeed, banks are important to the vitality and viability of our high streets. Will Ministers assist local authorities in establishing financial hubs, where financial institutions can come together and provide that service?

[Kelly Tolhurst]

My hon. Friend is absolutely right to raise concerns about banks pulling out of our high streets. Those concerns have also been raised by many other MPs across the country. High street banks do offer a valuable service for consumers, and that is why I am grateful to the Post Office for renegotiating the banking framework, which will offer better payments to postmasters providing banking services in those high streets. However, he is quite right: we do need to work closely with local authorities at a regional level to make sure that the services being offered on the high street are those that people wish to see.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Will the Minister confirm that the Secretary of State for Scotland put in writing his objection to onshore wind finding a route to market in Scotland? Why will the Government not release that correspondence in the interests of transparency?

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[Robert Courts (Witney) (Con)]

I know—from chairing the all-party parliamentary group for small and micro-business, and from talking with west Oxfordshire businesses—that one of the major challenges that small organisations face is finding sufficient people of the right skills to grow their businesses. What are Ministers doing to provide a national strategy to ensure that our young people have the skills they need for the future?

[Kelly Tolhurst]

I congratulate my hon. Friend on his work as chair of the all-party parliamentary group; he is extremely passionate about this subject and does a lot to champion small businesses in his constituency. We have outlined a £1.3 billion investment in UK talent and skills to attract the best. We are also keen to work with businesses—particularly small ones—to ensure that we are delivering on our apprenticeship targets. We have seen some fantastic results when young people have been brought into organisations and been given the training and workplace experience to grow and thrive. I very much hope to champion such schemes as we go forward.

[Ruth George (High Peak) (Lab)]

The other week, I was shocked to meet a constituent who had worked in care for nine months solidly without being given a single day off, while on a zero-hours contract. Such workers, who are vulnerable, need protection for their rights at work. Will the Secretary of State look at bringing in group claims for industrial tribunals and representative cases so that workers do not have to stick their head above the parapet?