Draft Employment Rights (Amendment) (EU Exit) Regulations 2019 Draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) Regulations 2019 Draft Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018 Draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) (No. 2) Regulations 2018

Debate between Kelly Tolhurst and Rushanara Ali

Wednesday 13th February 2019 General Committees

[Kelly Tolhurst]

The statutory instruments that were laid subject to the negative procedure, which was changed by that Committee, relate particularly to Northern Ireland. They were upgraded to be debated, so we have the opportunity to debate all four sets of regulations in Committee today.

Although I hope that the regulations will not need to come into effect, because I hope that we can reach an agreement, in the event of no deal it will be vital that they are enacted. Failure to pass these largely technical regulations would result in uncertainty about workers’ rights and employers’ obligations, which could lead to disruption for business and citizens and an increased risk of litigation, which is in no one’s interest.

Against that background, I will explain one set of provisions about which hon. Members may have concerns. The Employment Rights (Amendment) (EU Exit) Regulations 2019 make changes to the rules on European works councils. Businesses and trade unions in the UK value the opportunity for employee engagement and consultation that the councils provide, and the Government recognise and encourage those benefits. However, withdrawing from the EU without a deal will mean that the UK is no longer covered by EU rules on European works councils.

In that scenario, it would be for the EU to give UK workers the right to be represented on the councils. It is an unavoidable and unfortunate truth that there is no way for the UK unilaterally to ensure that workers in this country retain that right without a deal. There is also no way to replicate the European works council system only in the UK, as their purpose is to enable cross-border engagement. That requires the same rules in all countries, which requires a withdrawal agreement.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The assertion that the UK cannot make those provisions is incorrect. In relation to financial services, for instance, the UK is unilaterally making provisions on payment services and hoping that EU member states will do the same. Is the Minister aware that what she is saying is incoherent and inconsistent with what is happening in other policy areas?

Is the Minister not concerned that we are, yet again, in Committee considering statutory instruments without impact assessments, which does not allow adequate scrutiny? I have raised the issue several times. Can she give an assurance that the next time she or her colleagues come before such a Committee, they will provide an impact assessment?

[Kelly Tolhurst]

All the regulations have had de minimis statements applied. Obviously, they have been cleared through the better regulation framework, because if the impact exceeded the de minimis threshold, full impact assessments would have been made. All regulations or SIs that we bring to the House will be looked at by the Department in a deep way to assess the impact.

The hon. Lady’s first point was on other regulations that may be passing through the House at the moment and that are not directly related to the draft instruments. It is clear that we are retaining EU law. The changes we are considering are mostly technical, apart from the changes to the particular area I am referring to at the moment. Rightly, we want to see co-operation and agreement in the future where it is necessary and achievable. That is why the Government are determined to deliver a deal, so that we can have those reciprocal agreements with other member states.

--- Later in debate ---

[Kelly Tolhurst]

I am proud that this Government look at and deal with the issues that arise, and then look for ways of resolving them, which is exactly what we are doing with our “Good Work Plan” and the SIs that have already been laid. I understand the concerns of Opposition Members, but I am pleased to be extremely clear in saying that we are committed to maintaining workers’ rights and to going as far as we can. We talked about European Union committees and the work currently going on. We are still involved in those negotiations, are feeding into those negotiations and are helping the EU to formulate recommendations. The legislation that we are bringing forward will ensure that they are protected and will continue to be protected.

[Rushanara Ali]

Will the Minister give way?

[Kelly Tolhurst]

I would like to finish my points and then get on to answering some of the questions I have been asked.

I was pleased that my hon. Friend the Member for Basildon and Billericay made his contribution. He was absolutely right, as was my hon. Friend the Member for Beckenham. I thank them for making their points. The accusations that the Opposition have levelled at our party and our Government this afternoon characterise a party that I did not join and I am not part of; they illustrate something that I do not think is the reality. I am the Minister responsible, and it is not what I think, so there we go. [Interruption.]

Draft Business Contract Terms (Assignment of Receivables) Regulations 2018

Debate between Kelly Tolhurst and Rushanara Ali

Monday 10th September 2018 General Committees

[Kelly Tolhurst]

I am grateful for the Committee’s consideration of the regulations, and to the hon. Gentleman for his contribution to this important debate. I will touch on a number of the elements he rightly brought up.

The hon. Gentleman is absolutely correct that there are two types of benefit to invoice financing: a factoring element and a discounting element. He is also right that it is one tool within the overall finance packages from which businesses are able to draw. The measures before us will aid the growth of invoice financing so that where suppliers want to enter into a contract agreement with invoice financing, nullifying the term allows them to do so. However, invoice financing on its own does not solve the problems with accessing finance. It is one tool—the regulations try to widen the scope for businesses to access it, but there are two different elements.

It is true that many small businesses have applied for finance with banks, but many have not. They decided that they would rather stunt their growth than borrow because of the fears around long-term borrowing. We know, however, that they will often be willing to improve their cash flow, which enables them to grow and invest. Without the ability to access invoice financing, many small businesses would not be able to take up the contracts that they want to, which enable them to grow.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The Minister will be aware that there is a shortfall in lending to SMEs of £35 billion relative to the pre-crisis period. She referred to just under £1 billion that would be made available through this policy, which is welcome, but is a drop in the ocean compared to the bigger challenges facing SMEs. SMEs have created 2 million jobs since 2010 and power our economy. With the uncertainty of Brexit, life will get worse for SMEs. Will she say something about the broader picture of what the Government will do to address the pre-crisis gap of £35 billion? That is the bigger question that the Government need to address. Lots of work had been done to address the lending issues facing small businesses, but as she knows from her impact assessment, it has not happened to the extent that it needs to.

[Kelly Tolhurst]

The Government are looking at many different ways to increase small businesses’ access to finance. Having run a small business, I know how crucial that is. While this statutory instrument represents just under £1 billion of net present benefits, it is a gain. Because we are making this decision, this element of finance will be available to more SMEs, which can only help. It will also aid the ability of new invoice financers to come into the marketplace, which we welcome, because that brings more jobs and more receipts into the Exchequer.

I have covered the cash-flow issue. Many businesses will not now take an overdraft. Instead they can take out finance invoice and manage their business needs as a small business. It is difficult for small business owners to get access even to what we might regard as small sums, so many suppliers will use this as an ongoing tool. Factoring may suggest that a company has been in financial difficulties. That factoring can now take place on a private and confidential basis, so that customers are not aware of that financing on their faced invoices.

The hon. Member for Sefton Central mentioned the small business commissioner, whom I was pleased to meet for the first time last week. He is doing wonderful work with small businesses in the battle against late payments to ensure that they can receive some of the moneys they are owed. The hon. Gentleman is right to mention the prompt payment code, particularly in relation to Carillion. However, he will know that we are looking to consult widely on late payments. Since I have been in my post I have been particularly concerned about that, so I have been looking at it personally. I look forward to launching that, so that we can assess it and, as a Government, take forward more measures to help small businesses.

We all agree that businesses should be able to access the finance they need, choosing whatever options are most suitable for them. The Government are committed to ensuring that businesses can secure the finance they need to invest and grow. It is not about favouring one type of finance over another. Invoice finance will not be the right choice for every business, but that should be a decision made by individual entrepreneurs, not made for them through onerous terms imposed by their customers. The regulations ensure that restrictive terms will no longer apply to SMEs while protecting freedom of contract for large enterprises. That change will allow thousands of small businesses to access invoice finance for the first time and will reduce the cost for existing and new clients alike. I commend the regulations to the Committee.

Question put and agreed to.