Post Office (Horizon System) Offences Bill

Debate between Kevin Hollinrake and Paul Scully

2nd reading
Wednesday 20th March 2024 Commons Chamber

[Paul Scully]

I did not, but the issue is worth looking at. This is a human scandal, and it is not just about the postmasters who were directly affected. I am not sure how we start to unpick that as it gets wider and wider, but I hope and trust that the Government will reflect on it as we do the wider learning.

[Kevin Hollinrake]

I was tempted to intervene on two of the interventions I heard, but that is impossible here. It is certainly possible that the person who had the contractual relationship with the business concerned, such as a small post office, could submit a claim to the Horizon shortfall scheme, which could include amounts that should be paid to individuals who worked for them so that they can be compensated through that route.

Given that we are looking at public sector or quasi-public sector organisations, it would be dangerous to assume that there is a problem with governance. As my hon. Friend said, from the Back Benches I dealt with a number of scandals that involved private sector organisations, such as Lloyds and the Royal Bank of Scotland—we saw years of obfuscation around similar kinds of problems. We should not jump to conclusions. We should probably let the inquiry report first, and have a debate from there.

[Paul Scully]

My hon. Friend makes a really good point. To follow on from the intervention from my right hon. Friend the Member for Haltemprice and Howden, it is difficult for us as parliamentarians, and doubly difficult for Government Ministers, to speak with authority on behalf of a public organisation—rather than the private sector, which we do not speak on behalf of—without necessarily having all the facts, because there is only so much we can drill into.

Obviously, we want to right the wrongs of the past and make sure as best we can that the people’s situations are restored so that they can have a future for themselves and their families. There is also the case of the Post Office itself. The Post Office still has more branches than the banks and building societies put together. I know that there have been closures in certain areas—that is a whole other debate, perhaps for Westminster Hall—but none the less, the Post Office has a massive impact on people’s lives, especially in rural communities. We must not forget that when we are looking at the Post Office, its brand and its overall aim. This is not a reflection on the current management or anything like that. We have to give the Post Office a future.

Post Office Legislation

Debate between Kevin Hollinrake and Paul Scully

Wednesday 13th March 2024 Commons Chamber

[Kevin Hollinrake]

The shadow Minister’s comments are on the record, so I shall deal with them briefly. I think this is the second time she has made comments at the Dispatch Box that have been unfair or factually incorrect, and I hope that she will correct the record. If she had actually watched the interview I gave, she would know that I absolutely did condemn the words of Mr Hester. I said they were wrong. I said they were racist, and I think it is absolutely right that he has apologised. She should watch the full broadcast, and I hope that she will apologise to the House and correct the record.

The points that the hon. Lady raised pertain largely to the Scottish and Northern Ireland devolved Administrations. I quite understand the concern around those issues, and I am very keen to ensure that we get this right across the United Kingdom. As she acknowledges, there are different legal processes in those areas, and we think it would be inappropriate for us to legislate for parts of the United Kingdom that have different legal processes and different prosecutors. Justice is devolved, although the Post Office is a UK-wide organisation, as she rightly says. That is why we think the legislation should allow devolved Administrations to legislate for themselves, if they choose to. We will work closely with them. Officials meet them weekly to assist wherever we can, so that compensation can be delivered UK-wide; that is how the scheme operates.

I think the hon. Lady said that 80% of compensation was yet to be delivered. I may be wrong there, so I will check the record. Across all the schemes, in around two thirds of cases, full and final compensation has already been received. That being the case, about 2,000 people will be topped up to £75,000, as I announced earlier, but it is not right to say, as I think she did, that the majority of people are waiting for compensation.

The hon. Lady asked whether we wanted to deliver the compensation by the end of the year. Absolutely we do, but as I said, not everything is in our gift. We cannot compel a claimant to submit a claim, or know when that will happen. If somebody puts in a claim right towards the end of the year, for example, it may not be possible to deal with it before the end of the year. Not everything is in our gift, but we are keen to expedite anything that is.

It is absolutely critical that we have independent oversight; all schemes have it. In the overturned conviction scheme, we have retired High Court judge Sir Gary Hickinbottom, and the £600,000 fixed-sum award; but on Mr Hickinbottom’s advice, we have also introduced the £450,000 payment as soon as a full claim has been submitted. We are doing everything we can to make sure that people are compensated as quickly as possible.

[Paul Scully (Sutton and Cheam) (Con)]

I welcome the Minister’s statement, and the pragmatic way that he has looked to speed up claims, and to take this in-house as best he can. I also welcome the proposed legislation, and the extension of the £75,000 to those in the historical shortfall scheme. I point the Minister to an article in The Times this morning about people who may reportedly be excluded from the legislation. Can he give any assurances that people who have gone through this process and whose original conviction was based substantially on the Horizon problems will indeed be exonerated and therefore able to get compensation?

[Kevin Hollinrake]

I thank my hon. Friend for his question, for his tireless campaigning in this area, and for his tireless work as my predecessor in this role. He did some great work to help us get where we are today. He is right to say there are some people who are not exonerated through this process—for example, people who have been before the Court of Appeal—but they will be able to appeal again in the light of our legislation. Of course, they had the right to do that anyway, but we will support them where we can in bringing forward their case to the Court of Appeal, and we very much hope that innocent people who follow that process will be exonerated.

Post Office Horizon Scandal

Debate between Kevin Hollinrake and Paul Scully

Thursday 22nd February 2024 Commons Chamber

[Kevin Hollinrake]

I thank the right hon. Gentleman for his question. The overturned convictions are a key priority for me and my Department. I am always keen to update the House whenever I can. There always has to be a sequence to ensure that we follow proper process. What we are doing potentially affects the devolved Administrations, so it is really important that we engage with them properly. That is one of the reasons why we need to make the written statement later today. I have never been unwilling to come before the House and report on what we are doing. I will, of course, continue to do that.

On the letter from the chief executive to the Justice Secretary, I am aware of the allegations by Mr Staunton. They are very serious allegations that should not be made lightly or be based on a vague recollection. If the right hon. Gentleman looks at the letter from the former permanent secretary, it is clear that she believes the allegations are incorrect, and that there was never any conversation along the lines referred to by Mr Staunton. I think it is pretty clear that those allegations are false.

The right hon. Gentleman has regularly brought up Capture. We are keen to continue to engage with him on that to ensure that those affected are included in any compensation where detriment has occurred. I note his point about an oral statement. As I say, I am always keen to give such statements whenever possible, and to be interrogated on our plans. I do not think he will be disappointed by what we announce later today.

[Paul Scully (Sutton and Cheam) (Con)]

Now that the then permanent secretary has outlined that she did not implicitly or explicitly tell the then chairman of the Post Office to slow down compensation, I hope we can spend time less time talking about someone who has lost his job and more time talking about postmasters who have lost everything. Will the Minister, who is doing great work in sorting this out, recommit to August as his target date for getting compensation—life-changing compensation —out of the door as soon as possible?

[Kevin Hollinrake]

I thank my hon. Friend for his work on this matter; as my predecessor, he did a tremendous job. The most concerning allegation we heard over the weekend was about the delay in the payment of compensation. In her letter, which is publicly available, the permanent secretary wrote:

“It is not true that I made any instruction, either explicitly or implicitly. In fact, no mention of delaying compensation appears in either note.”

So I agree with my hon. Friend that we should move on from that and focus on what really matters, which is getting what he rightly described as life-changing compensation to postmasters as quickly as possible. That is his, and will remain our, No. 1 priority.

Post Office Horizon Scandal

Debate between Kevin Hollinrake and Paul Scully

Wednesday 10th January 2024 Commons Chamber

[Kevin Hollinrake]

I thank the hon. Gentleman for his response to my remarks. I appreciate his offer to work with us and to stand with us to deliver compensation and the overturning of convictions. The first step will be legislation; again, we are happy to work with him on that. That may take some weeks to deliver, but the sooner, the better. The introduction and passing of that legislation will be a matter for both Houses, but our intention is to get on with that very quickly.

From there, it should be a simple process: a statement needs to be signed, as the hon. Gentleman and I both referred to. We will work with the advisory board to ensure that the statement is appropriate. Following the signing of that statement, if people choose the detailed assessment route, that will be more complex because it will look at not just financial loss but personal impacts, such as on health or on other livelihoods, and consequential losses. If people choose the fixed sum award route of £600,000, that process can be very quick, which is one of the reasons why we have managed to complete 30 full and final settlements already, many using the fixed sum route.

The hon. Gentleman raised the issue of people using the pilot version of Horizon, of which we are cognisant. Every postmaster around the country has been written to and should be aware that the compensation scheme is available. We believe that these schemes cover that pilot period for Horizon. I am very happy to work with him and the right hon. Member for North Durham (Mr Jones) to ensure that the people they have identified have already been contacted. The good news is that, following the excellent ITV dramatisation, we have seen a good number of new cases come to light. We are keen for people to come forward, whether they have suffered convictions or financial detriment through shortfalls. We are keen to ensure that those people get access to compensation as quickly as possible.

[Paul Scully (Sutton and Cheam) (Con)]

I thank the Minister and the Lord Chancellor for their work. It has been longer in the making than the drama series, but they met their promise over two days by coming up with the first stage of the solution. Too many victims want nothing to do with the British justice system, the Post Office or Government. They have had enough. Does my hon. Friend agree that there is no perfect solution? The best we can aim for is one that is fast and provides life-changing money to restore these people’s lives as best we can.

[Kevin Hollinrake]

I thank my hon. Friend for his question and for the sterling work he did as my predecessor in this job. Many people recognise the incredible work he did following the outcome of the court case with the compensation schemes that he instigated. He is right that there is no perfect solution, but we have worked across Government to try to find the best possible one. If we want a fast solution that, as he said, provides life-changing compensation to people who have been deprived of that in recent years, we believe that this is the best one.

Horizon: Compensation and Convictions

Debate between Kevin Hollinrake and Paul Scully

Monday 8th January 2024 Commons Chamber

[Kevin Hollinrake]

I thank the right hon. Lady for her work on this issue. On Mrs Skinner, I should say that all people on any of the three schemes get access to an interim payment. If Mrs Skinner’s conviction has been overturned, she is entitled to an interim payment of £163,000. From then, she can take two routes. She can go for a full assessment, which takes more time as the issues are complex, assessing financial loss and detriment relating to things such as health. Our commitment is that 90% of those who go down a full assessment route will have an offer made back to them within 40 working days; that is our target. The alternative is that she can pursue the fixed-sum award of £600,000. There is no need to compile a claim to do that—the money can be paid out pretty much instantly. That is not a route for everybody, but it has been a route for a significant number of the 30 people with overturned convictions who have decided to settle.

[Paul Scully (Sutton and Cheam) (Con)]

Four hours of compelling storytelling has brought a fresh wave of interest, anger and frustration to people around the country and indeed in this Chamber—it is great to see so many people supporting the sub-postmasters’ plight. The Minister has been working diligently on the issue for 18 months now, so he needs no reminder that, as the episodes start by stating, this story is true.

Will my hon. Friend diligently build on his work to make sure that the judiciary allow a blanket quashing of all the convictions, so that they can get to the Treasury to make sure that the funding is there for full and fair compensation and that the Post Office adheres to his timetable of August 2024? Sir Wyn Williams needs no reminder about getting those answers as part of his excellent work on the inquiry. Does my hon. Friend agree that the best way to do this is to remind all those people that we are all human first and politicians second? This is about human cost.

[Kevin Hollinrake]

I thank my hon. Friend. He talked about building on my work. Can I say that I am building on his work? He did a tremendous job in his role when this issue first came to light. We share the ambition to do something that expedites the process of overturning convictions. The time for quibbling is over; it is now a case of action this day and delivering that overturning of convictions. Clearly, we want to do that in a way that does not cause us any constitutional or legal problems across the system. We believe we have a solution and we should be able to give more details in due course—very shortly. Sir Wyn Williams’s work is also playing a key part and I thank him for establishing the statutory inquiry, which is going to lead to so many answers that people rightly demand.

Digital Markets, Competition and Consumers Bill

Debate between Kevin Hollinrake and Paul Scully

2nd reading
Wednesday 17th May 2023 Commons Chamber

[Paul Scully]

Many of the regulators will be under the remit of the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). Indeed, that is something that I did—

[Kevin Hollinrake]

indicated assent.

[Paul Scully]

I just heard the verbal nod from him to say that he continues to do that.

I will come to the CMA in a second. In answer to the hon. Member for Washington and Sunderland West, whom I congratulate for the APPG’s work, the CMA is continuing to monitor the online secondary ticketing market, including the issues that have been reported about refunds and cancellations as a result of the pandemic. The Government welcome the CMA’s report, but we believe that we have the measures in place to ensure that consumers have the information that they need to make informed decisions on ticket resales. The Bill will give the CMA significant new civil powers to tackle bad businesses ripping off consumers, so we do not see the need for additional regulatory powers. However, I agree with her that enforcing the existing regulations is key. I thank her for her work in this area.

I will briefly cover some of the other issues. On judicial review, which was raised by my hon. Friend the Member for Hitchin and Harpenden, we have heard that the entire purpose of the Bill is to ensure that we tackle an area where a small number of companies have dominance in many parts of our lives. That is not necessarily a bad thing, so this is not an attack on big tech. None the less, some of the challenger firms mentioned by the hon. Member for Pontypridd, although they may be household names, are rightly scared because of the relationship they have with big tech. We must get the balance right by ensuring that there can be an appeal on judicial review standards, but it must not be something that a company with deep pockets can extend and extend. Because the harms happen so quickly in a tech business, the remediation needs to take place as quickly as possible.

Economic Crime (Transparency and Enforcement) Bill

Debate between Kevin Hollinrake and Paul Scully

Committee stage
Monday 7th March 2022 Commons Chamber

[Kevin Hollinrake]

I was just trying to establish whether this would be done in the Lords if it was not done here tonight, Dame Eleanor. Perhaps the Minister will say it later in his summing-up.

[Paul Scully]

indicated assent.

[Kevin Hollinrake]

He is nodding—thank you very much. Hansard have got it on record that he is nodding. That is very important.

I want to mention one other important thing that is often missed. Many hon. Members in all parts of the House have talked about resources, and they are absolutely right. New clauses 2 and 9 deal with that. There are nowhere near enough resources applied to economic crime: it represents 40% of all crime, but 1% of the resources. For example, last year I think the Office of Financial Sanctions Implementation, one of the bodies charged with enforcement, sanctioned two individuals or companies with collective fines of £85,000. In the US, a similar body levied 87 fines totalling £1.5 billion, because it is properly resourced. That is hugely important.

New clauses 14 and 27 seek to approach the problem in a different way, because they would provide protection for whistleblowers. It is pointless having lots of law enforcement people charging around not knowing where to look. Whistleblowers tell us where to look. Some 43% of all financial crimes are identified through whistleblowers, yet it is something we do not talk about. We do not just need more regulators; we need somebody to point us in the right direction. Regulators will always be watchdogs, never bloodhounds. We need the bloodhounds in the organisations who are willing to speak up if things are going wrong.

Every single economic crime I have dealt with in my work on the banking side of things has come to light as the result of information provided by whistleblowers. On GPT Special Project Management, it was my own constituent Ian Foxley. Airbus paid $3 billion in fines internationally and £900 million to the UK Treasury, and all that money came as a result of a disclosure from whistleblowers. In every single case you can think of, whether HBOS or the PPI scandal, they were all about whistleblowers. Yet the protection and compensation that we offer whistleblowers in the UK is pretty much non-existent. In the case of Lloyds/HBOS, the FCA itself was guilty of not protecting the whistleblower. Barclays tried to identify the whistleblower in a case within Barclays. Yet very little or nothing is done. So if you are thinking of blowing the whistle, will you do it? My constituent, Ian Foxley, who was involved in the GPT Special Projects case that resulted in £28 million of financial sanctions at Southwark court last year, has been 11 years without a single penny. That man was earning £200,000 a year. Do you think he would step forward next time, or somebody else would do the same? We have to make sure that we protect whistleblowers.

Economic Crime (Transparency and Enforcement) Bill

Debate between Kevin Hollinrake and Paul Scully

2nd reading
Monday 7th March 2022 Commons Chamber

[Paul Scully]

I agree that it is, but let us come back to a sense of unity. We have had some ding-dongs throughout, but it is time now to make sure we can come together and send the most powerful message as a House and Chamber to the oligarchs that their behaviour will not be tolerated for a moment longer.

It is also important to remember that the majority of property held by overseas entities will be owned by entirely law-abiding businesses and people. We are talking about 95,000 properties in England and Wales owned by 30,000 or so overseas entities. Only a tiny fraction of them are likely to be held by criminal or corrupt interests. The transition period is an important protection of the rights of those legitimate owners of property. The Government do not interfere with individuals’ rights lightly and the interference could not reasonably have been expected when rights over the properties within scope of the register were acquired, so we must ensure that we respect those rights in a way that cannot be challenged. No doubt those who wish to avoid these requirements and who are able to afford expensive legal teams will take any advantage of opportunities to do so.

[Kevin Hollinrake]

The transition period—the debate on the timescale of 18 months, six months or 28 days—is key. Does the Minister agree that the most effective way of dealing with this and preventing the asset flight we are all concerned about is through something along the lines of manuscript amendment 64, which would require people who want to sell or transfer their asset to disclose the beneficial owner prior to doing so to Companies House and therefore Her Majesty’s Land Registry could block it? Will he accept that that is the right way forward?

[Paul Scully]

He will, and I thank my hon. Friend for his work and for raising that. I will come back to his point shortly.

There will also be law-abiding British companies that have adopted such structures and that type of ownership for legitimate commercial reasons, including real estate investment trusts, which are public companies, whose core business is to manage and own properties that generate income, and in particular pension schemes holding land and properties. Others will be British nationals who have adopted the arrangements for legitimate reasons of privacy—as we have heard, perhaps celebrities who do not want their address to be known publicly. They may wish to apply to Companies House for their personal details to be protected from public view on the new register, but the threshold for exemption from the public register will be high, so it is right for individuals to have time to seek advice on their options and how to make a case to the registrar.

Post Office: Horizon Compensation Arrangements

Debate between Kevin Hollinrake and Paul Scully

Thursday 24th February 2022 Commons Chamber

[Paul Scully]

I ask the hon. Gentleman to pass on my heartfelt sympathies to Della for what she has been through.

This is exactly why we set up the inquiry. My Department has said from the beginning that we will work with the inquiry in the fullest sense to ensure that we offer all the information, support and evidence that Sir Wyn wants, and I have received an assurance to the same effect from Fujitsu and the Post Office itself. I am determined that that process will be carried out.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I thank Members on both sides of the House, and indeed the Minister, for their efforts. As for the 555, lives have been ruined. Now lives have been lost; people die. The compensation must be delivered quickly. Why can people not have access to interim payments? That is the least we could provide. I accept that there are the legal challenges that the Minister mentioned, but this is something that we could and absolutely should do now.

As for the independence of the scheme, Herbert Smith Freehills acted for the Post Office in the litigation to reduce compensation, so how can it be right that it now acts with the Post Office in delivering compensation? That cannot be right, especially given that Herbert Smith Freehills oversaw the Lloyds Bank compensation scheme that was judged independently to be unable to deliver fair and reasonable outcomes to the victims, so it all had to be done again. If we do not put independent oversight into this—with a High Court judge—it will all have to be done again as well. We must act now to change the way in which this is working.

[Paul Scully]

That is why the Post Office has an independent panel to oversee the process. So there is independence. On the interim payments for the 555, they are there for overturned convictions. That is a legal issue that I am working through at the moment because, in the eyes of the law, it was a full and final settlement. That is what I have to tackle at speed because the 555 will understandably not understand this and want to crack on now; they want to receive the compensation. I am determined to ensure that that happens.

Economic Crime: Planned Government Bill

Debate between Kevin Hollinrake and Paul Scully

Wednesday 26th January 2022 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the Government’s plans to bring forward an economic crime Bill.

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

I thank my hon. Friend for his question, but, as I am sure he will appreciate, I am not going to speculate about the content of any future Queen’s Speech, which is the correct moment for the Government to be setting out their legislative agenda for the next parliamentary Session.

However, I can confirm that the Government remain committed to tackling economic crime, which is why my colleagues in the Home Office and the Treasury take the lead on this. In recent years we have taken a number of actions, including creating the new National Economic Crime Centre to co-ordinate the law enforcement response to economic crime and establishing the Office for Professional Body Anti-Money Laundering Supervision to improve oversight of anti-money laundering compliance in the legal and accountancy sectors. We delivered the Criminal Finances Act 2017, which introduced new powers including unexplained wealth orders and account freezing orders. We are determined to go further to crack down on dirty money to protect our security and our prosperity. With the publication of the fraud strategy and second economic crime plan this year, we will further level up the response to crack down on crimes of this type.

My Department is playing its part. The Department for Business, Energy and Industrial Strategy announced plans to reform Companies House in September 2020. In 2021 we consulted on more detailed aspects of the reforms, and we will respond to the consultation soon. Investment in new capabilities at Companies House is already under way, with £20 million being invested in this financial year and a further £63 million announced in the spending review. The draft Registration of Overseas Entities Bill has undergone pre-legislative scrutiny. We are amending the Bill in line with the Committee’s recommendations, and in line with comments that the Prime Minister made to the House just yesterday. We will introduce the Bill and the broader reforms of Companies House when parliamentary time allows.

[Kevin Hollinrake]

I am grateful to the Minister for his response. As he knows, economic crime costs the people of this country £100 billion per annum, according to the National Crime Agency. The Government have committed themselves repeatedly to legislation to give our agencies the tools that they need to tackle this problem, and it was therefore concerning to hear from my noble Friend Lord Agnew—who recently resigned from his role as Minister responsible for countering fraud—that a decision had been made to drop the economic crime Bill from the legislation that is due in the next parliamentary Session.

This is not a notional white-collar offence; it affects real people in very tangible ways. Terrorists and drug dealers depend on it to launder and legitimise their money through UK banks, companies and properties. Up to 50% of moneys flowing through Russian laundromats, often used for tax avoidance, for stolen public funds and to launder moneys derived from organised crime, flow through UK shell companies. UK corporate structures were involved in arms deals which breached sanctions in Sudan. HSBC and NatWest have been fined hundreds of millions of pounds for allowing criminals and Mexican drug cartels to launder their money through accounts held at their banks. An estimated £5 billion or so of taxpayers’ money, in the form of bounce back loans, has been taken fraudulently because some banks have not applied the most basic of checks. Criminals, despots and terrorists involved in people trafficking, illegal immigration, drug dealing, extortion, kleptocracy, the impoverishment of nations, and fraud—including what is taken directly from the public purse, to the tune of £30 billion per annum—are all facilitated by some of the lax rules that we have in this country.

The Government have promised to tackle this issue—as my hon. Friend the Minister has said—by means of Companies House reform; to fund regulation by applying a small surcharge to the current cost of establishing a company in the UK so that we can close down those shell companies and trusts; and to introduce a register of overseas entities to reveal the real beneficial owners of UK property, and a corporate offence of failing to prevent economic crime so that, for example, banks can be properly held to account for granting those fraudulent bounce back loans.

All this, plus more resources for our agencies and new whistleblower protections, will boost this country’s reputation, tackle crime, and help to reduce our tax burden. Every Minister I have spoken to wants us to do this. The Treasury Committee wants us to do it, all our crime agencies want us to do it, and campaigners want us to do it. I urge the Government to introduce the legislation as soon as possible.

[Paul Scully]

Let me first acknowledge my hon. Friend’s work on Companies House reform, on whistleblowing, and on general economic crime. He really has a handle on this issue, and his thoughts are always well received.

My hon. Friend is right to say that economic crimes are a significant cost to the economy. It should also be borne in mind that there are victims at the end of these crimes, and that they experience significant distress. We also recognise the national security implications of allowing dirty money from overseas into our financial system. We acknowledge the need for action on economic crime, and the Government have acted. My colleagues in the Home Office and the Treasury have begun reforms to the suspicious activity reporting regime, created the National Economic Crime Centre to co-ordinate the law enforcement response, and reviewed our money laundering regulations and supervisory regime. That review will produce a report by June 2022. We are legislating for the economic crime levy in the current Finance (No. 2) Bill. We are committed to building a framework that will deter such crimes from happening and to providing a framework that will ensure that those who commit such crimes can be held to account.

Draft Trade Union (Levy Payable to the Certification Officer) Regulations 2022 Draft Trade Union (Power of the Certification Officer to impose Financial Penalties) Regulations 2022

Debate between Kevin Hollinrake and Paul Scully

Tuesday 25th January 2022 General Committees

[Paul Scully]

I am glad the hon. Lady has brought the focus to the regulations rather than the wider scope of the 2016 Act, which was discussed in Committee and during the passage of previous regulations. On finances, the work of the certification officer at the moment is funded through fines and other fees but the regulations will wrap them up in a levy, which will be proportionate and affordable, because we responded to the consultation and made some changes accordingly.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Does my hon. Friend agree that it is quite common for industry to pay for its regulator? For example, the Financial Conduct Authority is funded directly by the banks, as are other financial schemes. That is quite a common way of funding such activities.

Oral Answers to Questions

Debate between Kevin Hollinrake and Paul Scully

Tuesday 11th January 2022 Commons Chamber

[Paul Scully]

The success of the current pension arrangements means that a pensioner in the scheme is 33% better off than they would be in a normal pension scheme. We continue to believe that the arrangements agreed in 1994 with the scheme’s trustees work well and are fair and beneficial to scheme members and taxpayers.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Regional mutual banks are key to the success of small and medium-sized enterprises in the world’s most productive economies, including Germany and the USA. Will my right hon. Friend meet me to discuss that important opportunity?

Subsidy Control Bill (Ninth sitting)

Debate between Kevin Hollinrake and Paul Scully

Tuesday 16th November 2021 Public Bill Committees

[Paul Scully]

To be fair, I had only just started making my remarks. However, whether it is butting up against elections or not, that could equally be the case in three years as well as five years. However, five years was chosen, as I said, basically to correspond roughly with the standard parliamentary term; it gives a good amount of time for good and meaningful data to be collected and analysed; and it is also consistent with the monitoring reports of other bodies, such as the Office for the Internal Market.

Clearly, we work with the CMA on this issue and other issues. The CMA will work on the subsidy control regime in the future; we work with it very closely. In the evidence session, Rachel Merelie talked about the fact that there may be merit in the CMA providing advice more frequently at the request of the Secretary of State, and that is exactly what is set out in the Bill, so that the frequency of reporting can be changed, which I will come on to shortly.

We have heard that the various amendments will reduce the key periods, down to either two years or three years, depending on the particular amendment. I will cover the amendments in turn.

First of all, amendment 29 would require the initial monitoring report to be produced within two years of the Bill gaining Royal Assent, as opposed to within five years. Well, I have talked about the fact that five years would normally be the appropriate timeframe, so that the wider evidence and the consequences can be properly considered. I agree that circumstances might arise that could make it beneficial for any monitoring report on the new control regime to be produced within a shorter timeframe. That is why clause 65(4) says:

“The Secretary of State may direct the CMA to prepare a report in relation to a specified period.”

And the Secretary of State will provide the means for an earlier report if it should be considered necessary. Therefore, I believe that amendment 29 is unnecessary.

Amendment 30 relates to the reporting frequency. Again, I understand the desire of the hon. Member for Aberdeen North for more frequent reporting. However, reducing the interval between the reports by the subsidy advice unit to one year is not necessary and could divert resource from other important activities.

Equating more frequent monitoring reports with improved scrutiny and transparency might seem attractive, but in reality it could well have an effect opposite to that intended by the hon. Member, resulting in more superficial reports, which would be less useful in assessing the overall effectiveness of the subsidy regime.

Clause 66 already requires the subsidy advice unit to provide annual reports to Parliament, in order to provide transparency in referral cases that it has handled throughout the year. The monitoring reports set out in clause 65 go beyond that, covering the functioning of the whole regime and not just the specific role of the subsidy advice unit. By necessity, those reports take longer to produce, so that there is sufficient quality data for the subsidy advice unit to consider.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It may seem tempting to wrap all this stuff in lots of scrutiny, but does my hon. Friend agree that red tape costs money? Wrapping the economy in red tape costs money. Ultimately, the cost of that has to be borne by the taxpayer. He is absolutely right to say that at any point in time the Secretary of State could ask the CMA to consider whether there is any evidence of problems with the provisions in the Bill. Better to have that arrangement than simply to ask for review after review, for which there will be a cost to the taxpayer.

[Paul Scully]

My hon. Friend is absolutely right, as usual; we do not want reviews for the sake of reviews. It is good to have a focus, but it is also good to be able to look at the meaningful evidence rather than distract attention and resource from what may be important scrutiny by the subsidy advice unit itself in its day-to-day work. Such reviews would obviously put pressure on public authorities and the awarders as well.

It is important that we ensure that the unit has sufficient time to collate and analyse the evidence. Reducing the amount of time available to produce these monitoring reports would only result in less useful reports, as there would not be good enough quality data available for the unit to assess, nor sufficient time for it to collect and analyse the data that is available. And it would indeed divert resources away from the subsidy advice unit’s other functions, which could, for example, reduce the capacity to accept voluntary referral requests from public authorities.

Amendments 61 and 62, which are meant to be considered together, were tabled by the hon. Member for Feltham and Heston. They are obviously very similar to amendments 29 and 30, which were tabled by the hon. Member for Aberdeen North.

Amendment 61 would require the subsidy advice unit’s initial monitoring report to be produced within three years of the Bill gaining Royal Assent, as opposed to within five years. I have already said that five years would normally be the appropriate timeframe. However, I agree that in some situations it would be beneficial for the monitoring report to be produced within a shorter timeframe. For that reason, we already have the powers set out in clause 65(4). As I have already said, clause 65(4) says that

“The Secretary of State may direct the CMA to prepare a report in relation to a specified period”,

should that be necessary. As such, I believe that amendment 61 is unnecessary.

SMEs: Access to Finance

Debate between Kevin Hollinrake and Paul Scully

Tuesday 9th November 2021 Westminster Hall

[Paul Scully]

I thank the hon. Lady for that intervention. I mentioned levelling up the country, and she is absolutely right that we need affordable, diverse finances for SMEs right across the country, and that includes in Scotland. I want to make sure that we go further to make the UK the best place to start growth. It should not matter where we are in the country. It should still be the best place to start to grow and scale a business. That is as equally true of Scotland as it is of Wales, England or Northern Ireland. Brilliant businesses can be found everywhere in the UK. However, access to finance is undoubtedly skewed towards London and the south-east, and we need to rectify that.

At the Budget, we took some major steps towards redressing those regional imbalances. For example, the British Business Bank’s start-up loans have been helping entrepreneurs since 2012 with viable ideas that might otherwise struggle to obtain finance from more traditional sources. In fact, the bank has made 165 loans to businesses in Darlington, totalling more than £1.5 million. At the spending review, we built on that success, pledging another 33,000 loans over the next three years. That is not all for Darlington—it would be a significant number of start-ups there—but across the country. That is money that will get other great ideas off the ground.

Members have spoken of the need for strong local options for business; we absolutely agree. That is why the Budget committed a further £150 million to the bank’s successful Regional Angels programme, which helps entrepreneurs obtain early-stage finance across the UK. We also announced more than £1.6 billion for the British Business Bank’s regional funds, which provide debt and equity finance for SMEs to help them with their next stage of growth. Across those funds and start-up loans, CDFIs will continue to play an essential role to help get finance to underserved SMEs.

To answer the points hon. Members raised on CDFIs and mutual banks, community development financial institutions play a massive role in the landscape of alternative lenders, including those essential lenders providing credit to SMEs. They are such an important delivery partner for the start-up loans programme; 11 of the 21 start-up loans delivery partners are CDFIs. They account for approximately 30% of the loans issued through the scheme in 2021. More widely, the British Business Bank was working with 21 CDFI delivery partners, across a range of programmes, at July 2021. That includes the regional funds and the recovery loan schemes.

In addition, 14 CDFIs were accredited lenders for the covid loan schemes. In the wake of the spending review, we will continue to explore opportunities for collaboration between the BBB and CDFIs. The Government are also supportive of efforts to establish the regional mutual banks that we have heard so much about this afternoon across the UK. I understand that some prospective mutual banks have had success in raising capital from various sources, but they have also encountered some challenges. There are no plans directly to capitalise regional mutual banks, but I know the Government have been engaging with prospective mutual banks and are willing to explore solutions that are practical and proportionate.

My hon. Friend the Member for Darlington is not only not far from the Treasury in this place and constituency neighbour to the Chancellor, but the Treasury is moving a number of its operations to Darlington, his home town, which he represents. He will not have too far to go to knock on the door to further his case for regional mutual banks. I am sure he will be delighted to know that businesses will continue to obtain funding through all those schemes, along with those in the north-east and the wider south-west of England for the first time as we get regional funding for the British Business Bank increased.

The new regional funds the British Business Bank is setting up in Scotland and Wales, while building on its existing activity in Northern Ireland, will bring levelling-up opportunities for businesses across the UK. As the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) said in relation to Scotland, it is important that we support businesses wherever they are. The regional funds will support a wide range of businesses, including the innovative, high-growth firms that play such a big part in creating prosperity and opportunity. We are further turbocharging those firms through the £375 million Future Fund: Breakthrough, which sees the Government co-invest with private investors and businesses that are heavily focused on R&D.

Finally, as we have heard, the Chancellor announced the extension of the recovery loan scheme to 30 June 2022. From 1 January, the scheme will be open only to small and medium-sized enterprises and the maximum amount of finance will be £2 million per business. The guarantee coverage that the Government will provide to lenders will be reduced to 70%.

We also heard from Members about patient capital, and we are looking to improve access to longer-term sources of finance. We absolutely agree with my hon. Friend the Member for Darlington that we need to unleash the hundreds of billions of pounds in pension funds and other institutional investors for long-term investment. That is not just good for the wider economy, because it will support growth, but good for the customers who will benefit from the opportunities for returns offered by UK long-term assets. It is an area where we know we can and should make more progress. I am happy to say that this Government are taking significant steps in that direction.

We are implementing a plan to unlock more than £20 billion to finance growth in innovative SMEs. As part of this, British Patient Capital, a subsidiary of the British Business Bank, is supporting UK companies with high-growth potential to access the long-term financing they need to scale up.

We have also taken significant action to remove barriers to pension scheme investment in a wide variety of asset classes. Members may recall that in the Budget, the Chancellor announced the consultation on further changes to the auto-enrolment charge cap to remove barriers to higher-return investments, while ensuring vital member protections remain in place.

[Kevin Hollinrake]

I would like to put on record my thanks to the British Business Bank, which has done a fantastic job in engaging with the APPG over the last 18 months or so and a tremendous job in helping to get that money out of the door. In terms of releasing equity capital—the Minister talked about pensions, which is a very good move by the Treasury—I think Octopus also suggest we allow ISA investments into unquoted companies which, again, could provide a source of equity finance for some of the good, high-growth companies he was talking about. Would the Minister consider having a discussion with the Treasury about this?

[Paul Scully]

That is certainly something the Economic Secretary to the Treasury will have heard and will consider as we look to diversify finance, especially in longer-term projects. We have established the productive finance working group, which is an industry-led body, which has now published recommendations setting out how we can unlock new investment in those long-term assets. I am pleased to say the Financial Conduct Authority has just published its rules for a new long-term asset fund structure, which will make accessing illiquid assets easier and encourage investors to look increasingly further ahead.

Finally, we are encouraging asset management and pension funds to play their part. I am delighted to say that the Chancellor and the Prime Minister are planning an institutionalised investment summit later this autumn, which will be a chance to celebrate the progress and commitment to further industry-led action.

Although we undoubtedly need to do more to widen access to finance for business, we should not overlook the great support that existing lenders provide to our SMEs. Last year, in fact, members of the Finance & Leasing Association provided SMEs with more than £16 billion to fund new equipment, plant and machinery, or software. According to the British Business Bank’s “Small Business Finance Markets Report”, banks provided £104 billion in SME lending, up 82% compared with in 2019.

I am delighted that some major lenders are helping our Help to Grow scheme, which aims to boost productivity by giving entrepreneurs management training through the Help to Grow Management scheme, and helping them to adopt digital technology through Help to Grow Digital. I encourage all hon. Members in the Chamber and further afield to promote those schemes to their SMEs because they are incredibly important opportunities to boost productivity wherever they are in the country.

Subsidy Control Bill (Fourth sitting)

Debate between Kevin Hollinrake and Paul Scully

Thursday 28th October 2021 Public Bill Committees

[Paul Scully]

Streamlined subsidy schemes have an important role to play in supporting public authorities to deliver well-designed subsidies: subsidies that address market failures but minimise the risk of excessive distortion to competition, investment and trade and that are not subject to mandatory or voluntary referral to the subsidy advice unit under the provisions of chapter 1 or part 4. The Government intend that streamlined subsidy schemes will be a pragmatic means of establishing schemes for commonly awarded subsidies, including in areas of UK strategic priority, that all public authorities in the UK would able to use if they wish. They will therefore function best when they apply across the entire UK. The Government will design them so that they are fit to be used in all parts of the UK. In addition, clause 10 sets out the procedural requirements when making a streamlined subsidy scheme, including the requirement that it is laid before Parliament.

The practical effect of the amendment would be to require devolved Administration Ministers to lay streamlined subsidy schemes before the UK Parliament, both when they are made and if they are modified. The appropriateness of that procedure is questionable, given that devolved Ministers are not directly accountable to the UK Parliament.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Can the Minister give an example of a streamlined subsidy scheme?

[Paul Scully]

The streamlined subsidy schemes will be worked up as we come up to the commencement of the Bill, so I will not set out a list of streamlined moots as yet, but they are there for something that is common and not necessarily devolved in particular areas that needs to be rolled out at speed with minimum interruption to the public authorities. The obvious example––it is not necessarily a streamlined moot––in recent years is the grant scheme that we have had in covid, which came under a lot of pressure from having to ask for exemptions within the European Union to get the framework available there, which meant that we could not roll it out to the extent that we wanted to, as quickly as we wanted to.

--- Later in debate ---

[Paul Scully]

I remind hon. Members that the principles in schedule 2 include general matters such as requiring energy and environmental subsidies to be aimed at, or to incentivise the beneficiary in, delivering a secure, affordable, sustainable energy system, or to increase the level of environmental protection relative to that which would have been achieved in the absence of the subsidy. The schedule also includes a number of more specific principles, covering for example the decarbonisation of emissions linked to industrial activities or subsidies to electricity-intensive users to compensate for rises in electricity costs.

While I recognise the commitment shown by the hon. Member for Aberdeen North to our transition to net zero—subsidies that are correctly devised, designed and targeted can be a powerful means to achieve that—public authorities grant subsidies for many reasons and in connection with many policy objectives.

[Kevin Hollinrake]

The UK is pretty much a world leader in tackling climate change, second only to Sweden in the Climate Change Performance Index. We must look at this question in the context of what the United Kingdom does, rather than something so specific. Would not the amendment effectively open the door to a lot of judicial challenges on whether subsidies were always in the interest of energy and the environment? Is that not opening the door to a lot of problems in the granting of subsidies?

[Paul Scully]

It might be. Whether there would be a slew of judicial reviews remains to be seen, but certainly, there is a question whether subsidies for other policy objectives would be awarded in the first place, because it would be too onerous to do so. Let me take the example of subsidies for training young people. There are some valuable economic and societal purposes there, but depending on what we are training the young people for, they do not always necessarily have much connection to the energy and environmental principles.

Expanding the principles in schedule 2 to include all subsidies may discourage public authorities from granting subsidies in pursuit of otherwise valuable aims. We do not want that to happen. The additional principles in schedule 2, which apply to energy and environmental subsidies and to subsidy schemes, fully support the UK’s priorities on both net zero and protecting the environment. I want to ensure, particularly given this morning’s discussion and the fact that we are in the lead up to COP26, that we are championing those priorities and continuing to lean in and show global leadership from the front. In this instance, owing to the reasons I have set out, I ask the hon. Lady to withdraw the amendment.

--- Later in debate ---

[Paul Scully]

Basically because this is a framework Bill. The policy objective of the Bill specifically is not levelling up. It enables levelling up through the framework, but it is the spending and subsidy themselves that are the policy objectives we are talking about. That is why schedule 1 refers to having to explain those policy objectives. Ultimately, this is a framework Bill that allows a permissive approach to subsidy, rather than the opposite—the state aid regime that we had when we were a member of the EU. The Government are fully committed to making sure that the UK subsidy control regime does support disadvantaged areas and facilitates the levelling-up agenda.

As part of the broader consideration that public authorities are required to undertake when assessing a subsidy, the subsidy has to be compliant with the principles within the Bill, and the wider impacts of the subsidy on competition and investments in other parts of the UK must be taken into account. We will publish guidance to make clear how this requirement should be applied by public authorities when considering subsidies that advance the levelling-up agenda or promote the economic development of relatively disadvantaged areas.

I welcome the interest in freeports, which are one of the Government’s flagship programmes to support levelling up and economic recovery. They are there to encourage new investment and create new businesses. The freeports offer follows the subsidy control principles set out in the Bill. They are an example of the UK Government levelling up economic growth across the UK—a strategic interest, which the domestic regime has been designed to reflect.

[Kevin Hollinrake]

On the Minister’s earlier point about technology needing subsidy, actually touchscreens, GPS and the internet were all developed initially through public funding, both in the US and the UK. Is the clause not trying to prevent companies from gaming the system by trying to pit one local authority or area of the country against another through a bidding race to bring their jobs to a certain part of the country?

[Paul Scully]

That is exactly right. Look at subsidy control regimes around the world. Witnesses in the evidence sessions focused on America and the subsidy race between various states, which is exactly what we are trying to avoid through this sensible and proportionate measure. Accordingly, we believe that requiring the Secretary of State to report to Parliament on clause 18’s consistency with the Government’s strategic priorities to do with supporting deprived areas and freeports is not necessary. The new UK domestic regime is designed to ensure that disadvantaged areas have maximum freedom and reassurance to receive levelling-up subsidies that best suit the characteristics of the area. I request that the amendment be withdrawn.

Supporting Small Business

Debate between Kevin Hollinrake and Paul Scully

Tuesday 19th October 2021 Commons Chamber

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

I thank all hon. Members for their contributions. First, can we celebrate and commend the small businesses up and down the country that have been so hard-pressed during the pandemic, especially in the areas that we have heard about today—hospitality, retail, leisure, tourism and indeed travel?

Businesses have shown incredible resilience throughout the pandemic and it is right that we support them, as the Government have done with £352 billion-worth of immediate financial support through loans, grants, the furlough scheme and various reliefs. That leaves us, as free market Conservatives who do not believe in big interventions but who are the Government with probably the biggest intervention since the war, with 352 billion reasons to get the recovery right and build resilience into our economy.

All I have heard from Opposition Members for nearly three hours is re-diagnosis of the problems. We can all agree that business rates need reform: that is why the Chancellor launched the fundamental business rates review. It is not starting now; we are concluding it now. It is looking at the entire scope of the business rates system, from the multiplier and reliefs for plant and machinery to billing, the administration of the system and alternative taxes. All those matters are being looked at and the report will be coming in the autumn.

I have heard nothing from the Opposition as an actual response. One can say that everything is funded and costed, but saying that does not mean that it is actually there. We have heard pledges from the Opposition to scrap business rates; that is £26 billion, and we have heard nothing about how it will be paid for. We have heard about freezing business rates until the end of the financial year; that is another £6 billion. What are they going to do to pay for it?

We heard from my hon. Friend the Member for Bexhill and Battle (Huw Merriman), who talked about changing high streets, and from my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who proposed changes to VAT. He made a cogent argument, albeit a controversial one—at least he came up with a solution that he had costed and threw it into the mix. That is the difference between Government Members and the Opposition: we come up with solutions that businesses can understand and that we can debate and work through.

My hon. Friend the Member for Ipswich (Tom Hunt) was accused of talking down his area. Actually, he was talking about the issues that he is tackling and that he is bringing together and convening people to tackle, such as antisocial behaviour. He is doing things like that through the town deal that he is championing. He raised the future high streets fund, which is already bringing empty properties back into use—there is a lot of infrastructure going on and it is already delivering upgrades. He also talked about shopping parades. It is really important that we talk about retail parks and shopping parades as well as high streets: they are part of the ecosystem of our local economy.

[Kevin Hollinrake]

The shadow Chancellor did present a short-term solution: a sixfold increase in the digital services tax. Does my hon. Friend agree that when we implemented the digital services tax, Amazon added that 2% straight on to the prices of the merchants on its site? Does he accept that if there were an increase, it would be passed directly to consumers?

[Paul Scully]

My hon. Friend raises a really important point. We also heard about business rates being scrapped and replaced with a property tax—on a property that would presumably be owned by a business, and I guess we could use our rating system to work it out. Essentially, that is just semantics, not a systematic and effective way of replacing business rates. That is why the fundamental review is so important.

My hon. Friend the Member for Wantage (David Johnston) made a comparison to Chris Hemsworth and talked about the Great British Mead Company, which reminds me of the importance of the hospitality sector as part of the ecosystem of our local and night-time economy and indeed the high street. My hon. Friend the Member for Devizes (Danny Kruger) talked about opportunity and connectivity, which are at the heart of what we are doing to allow high streets to bounce back further.

All I have heard is negativity from the Opposition with no answer, but we are making sure that the 352 billion reasons to allow the economy to bounce back are as effective as possible. Our plan is working. Our unemployment rate is at less than 5% and falling, which is lower than France, America, Canada, Italy and Spain. We have one of the fastest recoveries of any major economy in the world, and GDP is growing. That shows that the Government’s approach is a success and that we have fostered the right environment for the economy to grow.

The Labour party will never admit this, but the UK is a great place to do business. We have the lowest corporate tax rates in the G20, and the kind of lean regulation that puts us in the global top ten for ease of doing business. Next year, my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy will publish an enterprise strategy which will explain how we want to revive Britain’s spirit of enterprise and help more people to start and scale up a business.

It is easy to see why the UK is consistently home to one of the largest and most resilient economies in the world. All this underlies the reason why it has long been a great place to do business, and why we are seeing so much excitement in the rest of the world about investing in the UK. People are queuing up to spend at the global investment summit that is being held today. In the last 10 months, we have already seen a flurry of spending in the UK: there is to be a gigafactory in Sunderland, Ford and Stellantis are churning out electric vehicles in the north-west, and GE Renewable Energy and others are creating an offshore wind hub in Teesside. Those projects constitute a huge vote of confidence in the UK as a place to do business as we recover from the pandemic.

We have been there for small businesses since the start of the pandemic, we are there for them now, and we will be there for them for as long as they need us. I want to ensure that as we move forward into this area of recovery, we build resilience into our economy as well. We will do that through the fundamental review of business rates and through our enterprise strategy, and by making sure that we stand behind our businesses.

Question put:

Employment Rights

Debate between Kevin Hollinrake and Paul Scully

Tuesday 8th June 2021 Commons Chamber

[Paul Scully]

The Uber judgment that the right hon. Gentleman talks about was a landmark judgment. It is important that we reflect on that, but it is important that Uber, primarily, reflects on that and makes sure that workers are getting their rights, because every worker is different. Indeed, Uber contracts have changed over the last few years, and other companies working in the gig economy have different contracts, so it is complicated, but that is the definition of flexibility and dynamism. None the less, he asked about the employment Bill, and as I have said, it will come forward when parliamentary time allows.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. As a former employer, I absolutely support the Government’s approach to strengthening workers’ rights and stamping out bad practice. When it comes to enforcement, whistleblowers are far more effective at identifying inappropriate behaviour or practices than regulators are. Nevertheless, from a position where the UK used to lead in whistleblower legislation, it has now fallen behind. It is a key area that we could work on to improve the situation. Will my hon. Friend the Minister set out the approach that the Government will take to improve the legislation?

[Paul Scully]

I am grateful for my hon. Friend’s work in this area. I am looking forward to meeting him and his colleagues to discuss it further, to get his knowledge and the experience of his constituent, who has been put in an incredibly tough and invidious position. As I say, we will review the whistleblowing framework once we have had sufficient time to build the necessary evidence, which will include that conversation. We are considering the scope and timing of the review.

Post Office Court of Appeal Judgment

Debate between Kevin Hollinrake and Paul Scully

Tuesday 27th April 2021 Commons Chamber

[Paul Scully]

What I can confirm is that the inquiry will look into the Post Office’s approach and the “who did what” in its approach to the sub-postmasters, because clearly that heavy-handed approach early doors did lead to prosecutions. As I have said, there are wider considerations for the legal process, including private prosecutions, and we will need to learn from this.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I have used this quote already in the Chamber today; Warren Buffett often says:

“What we learn from history is that people don’t learn from history.”

When we finally discovered the 10-year cover-up of a fraud at Lloyds, we inexplicably let Lloyds run its own compensation scheme, which three years later was determined to be not fair or reasonable, and we had to do it all again. Will my hon. Friend at least put in place independent oversight of this compensation scheme to ensure that all those who have suffered get fair, reasonable and consistent compensation, whether they have been through litigation or not?

[Paul Scully]

My hon. Friend has been consistent in his campaigning in this area, and what I can say is that we will be ensuring that the Post Office provides fair, consistent and speedy compensation within the structures, as will be outlined over the next few weeks and months.

Greensill Capital

Debate between Kevin Hollinrake and Paul Scully

Tuesday 13th April 2021 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

If we can put to one side the blatant political opportunism here, there is a scandal behind this. Greensill failed because it overextended itself to GFG Alliance. That was signed off by Grant Thornton, GFG’s auditors, effectively on a business model that included borrowing hundreds of millions of pounds based on the security of a very insecure, possibly non-existent order book. Will my hon. Friend bring forward his intended reforms to the audit regulatory system and make sure that Grant Thornton’s role in this is properly investigated?

[Paul Scully]

My hon. Friend will appreciate the audit reforms that we are consulting on. It is absolutely right that the markets work when they are transparent and open, which is why we are determined to make sure that, in the light of recent failures, we get these audit reforms through, and I look forward to his contribution to that debate.

Oral Answers to Questions

Debate between Kevin Hollinrake and Paul Scully

Tuesday 9th February 2021 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con) [V]]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests. In my parliamentary work I have seen a number of examples of council landlords being unreasonable with tenants who are facing eviction or, potentially, insolvency when the right of forfeiture is restored on 31 March. Will my right hon. Friend set out his plans for this, but also send a message to local authorities that they should set a good example when it comes to helping businesses through this crisis?

[Paul Scully]

I have been continuing to have conversations with landlords and tenants to encourage constructive conversations to see what happens after the moratorium. Those tenants who can pay should pay, while landlords should show forbearance for the medium to long term, and that includes local authorities. In government, whether central or local, we should be setting that example.

DRAFT STATE AID (REVOCATIONS AND AMENDMENTS) (EU EXIT) REGULATIONS 2020

Debate between Kevin Hollinrake and Paul Scully

Tuesday 3rd November 2020 General Committees

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

I beg to move,

That the Committee has considered the draft State Aid (Revocations and Amendments) (EU Exit) Regulations 2020.

It is a pleasure to serve under your chairmanship, Mr Davies.

I hope that the Committee will support the draft regulations and their objectives. The regulations were laid before the House on 29 September of this year. They were made under the powers in the European Union (Withdrawal) Act 2018, as amended by the European Union (Withdrawal Agreement) Act 2020, which I will refer to as the “Withdrawal Act”.

The draft regulations remove redundant EU state aid law from the domestic statute book after the end of the transition period. However, it may help if I set out a little context. State aid, which is an EU concept, is support in any form from any level of Government that gives a business or another entity an advantage that could not be obtained in the normal course of business. The disadvantage is the potential to distort competition within the internal market, affecting trade between EU member states, when state aid is present.

The rules relating to state aid ensure that EU member states operate in a way that is compatible with the internal market. The European Union establishes the rules, and the European Commission enforces them. The rules, together with case law, set out the details on how and when aid can be granted. However, we are no longer members of the European Union or the single market and, after the transition period, we will no longer be bound by those rules. If we did nothing, therefore, after the end of the transition period, EU state aid law would become part of UK law as retained EU law under the Withdrawal Act, but it would contain fundamental deficiencies making such retained EU law for state aid inoperable in the UK.

The objective of this statutory instrument, therefore, is to revoke the redundant law. That is both appropriate and necessary to provide legal certainty for UK businesses and public authorities that EU state aid rules no longer apply in the UK, except where they apply directly under the Northern Ireland protocol. That clarity is essential for businesses. The Government have long been clear that the UK will not follow EU state aid rules after the transition period, and will not align with EU state aid rules in any trade agreement with the EU. Instead, the UK will have its own subsidy arrangements to support its competitive, dynamic market economy.

My right hon. Friend the Secretary of State announced in a written statement to Parliament on 9 September 2020 that, from 1 January, the Government will follow World Trade Organisation rules on subsidies and other international commitments agreed in free trade agreements, and that we will consult on whether to go further, including on whether to legislate.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Some of the provisions of the coronavirus business interruption loans and bounce back loans were restricted because of EU state aid rules, which the Government had to work alongside. In future, will we be more fleet of foot in drawing up our own schemes for such loans and, potentially, might we be able to extend them a bit further into the distance? At the moment, they only extend to the end of January. Will the Minister look at extending those schemes perhaps to the middle of the year, because we can determine the rules ourselves? Is that correct?

[Paul Scully]

I thank my hon. Friend for an apposite intervention. I will not be drawn too much into what we will do in future, but I will say that being fleet of foot is exactly the reason for switching off the state aid rules at this point and having our own sovereign approach.

Over the coming months, we will work closely with businesses and public authorities across all parts of the United Kingdom to ensure that we consider how best to design an approach to subsidy control that works, as my hon. Friend said, for the UK economy.

I now turn to the detail of this draft statutory instrument. The SI will disapply and revoke retained EU state aid rules, which are preserved by sections 3 and 4 of the Withdrawal Act. Articles 107 to 109 of the treaty on the functioning of the European Union, together with the EU regulations and decisions made under that treaty, govern the state aid regime. Article 107(1), for example, defines state aid and sets out the general prohibition on giving aid. That prohibition operates by providing that aid is incompatible with the EU internal market, insofar as it affects trade between member states, unless that aid has been approved by the European Commission. Article 107(2) and (3) set out where the Commission must give approval and where the Commission has discretion over whether to approve aid. Article 108 sets out the Commission’s role in monitoring state aid and obliges member states to notify the awarding of aid to the Commission in advance.

Aid cannot be awarded until approved by the European Commission. This is known as the standstill obligation. While the Commission has the exclusive competence to decide whether aid is compatible with the internal market, national courts can enforce the standstill obligation. In effect, national courts can suspend an aid measure until the Commission has considered whether that measure is compatible with the internal market. However, after the transition period, the UK will no longer be bound by EU state aid rules, so the rights and obligations I have just described will no longer be relevant. This SI ensures that they are not retained in UK law by the withdrawal Act.

Furthermore, several EU regulations are in place to enable the EU state aid regime to operate across the member states. These broadly consist of procedural and exemption regulations. The procedural regulations set out how the state aid regime operates and make clear the roles and responsibilities of the Commission and the member states. They set out the procedures to be followed on notification and investigation, and give the Commission information-gathering powers. The exemption regulations set out the conditions under which an aid measure is exempt from the requirement to notify the Commission in advance. After the transition period, these provisions will become retained EU law through the withdrawal Act, but they will have no practical application, because the Commission will not have a role in the UK’s domestic subsidy control arrangements. The SI will therefore revoke these redundant provisions. Removing retained EU law that is both deficient and no longer relevant from UK statute books avoids any possible confusion about whether state aid laws must be complied with or not. The instrument also makes consequential amendments to other retained EU law and UK domestic legislation that refer to state aid rules, ensuring that this legislation can continue to operate appropriately beyond the transition period, when EU state aid rules will not form part of domestic law.

Hon. Members will recall that I mentioned that the regulations do not prejudice the Northern Ireland protocol. Article 10 of the Northern Ireland protocol will apply at the end of the transition period. The protocol will apply the EU state aid rules for measures relating to goods and wholesale electricity, affecting trade between Northern Ireland and the EU. The protocol is given effect in the UK by the withdrawal Act. The regulations will not affect the application of the Northern Ireland protocol. The regulations only make amendments to UK domestic law. The Government seek powers through the United Kingdom Internal Market Bill to ensure, if necessary, that there is no confusion or ambiguity in UK law about the interpretation of the state aid elements of the Northern Ireland protocol.

In conclusion, it is a fact that, from 1 January, EU state aid rules will no longer apply to the UK. The purpose of this statutory instrument is simply to revoke retained EU law on state aid from the UK statute book, and to fix any technical deficiencies in other retained EU law and UK domestic legislation that refers to state aid rules. I think we agree that clarity on the UK statute books about which rules do and do not apply after the transition period comes to an end is in the best interests of all. The instrument will ensure legal certainty for businesses, aid-granting authorities and courts. I therefore commend the regulations to the Committee.

CCRC Decision on 44 Post Office Prosecutions

Debate between Kevin Hollinrake and Paul Scully

Monday 5th October 2020 Commons Chamber

[Paul Scully]

The Prime Minister promised an independent inquiry, and that is what we have announced. We want to make sure that postmasters engage with it. The Post Office and Fujitsu have also said they will engage with it. It is now for Sir Wyn Williams to instigate the inquiry and get it under way, and he can always report back if he finds he is not getting the support he needs.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

When you have caught and removed the fox from the henhouse, it is never a good idea to put it back in there to compensate the rest of the chickens. We did exactly that with Lloyds, and I fear we are doing exactly that with the Post Office. There is no obvious means of compensation for those with criminal convictions. The jury is out on the historic shortfall scheme, and those who are employed as sub-postmasters through McColl’s or the Co-op have no direct means of compensation. Will my hon. Friend confirm that the Government are committed to making sure that every single person who was disadvantaged is fairly compensated?

[Paul Scully]

There is a separate director within Post Office Ltd who is looking specifically at the historic shortfall scheme to make sure that the rest of Post Office Ltd has the capacity to reset its relationship with postmasters, but we will of course look at Sir Wyn Williams’s findings. Postmasters who have had wrongful convictions have other methods of compensation, as I outlined in my original statement.

United Kingdom Internal Market Bill

Debate between Kevin Hollinrake and Paul Scully

Tuesday 22nd September 2020 Commons Chamber

[Paul Scully]

I must bring my response to a close. The amendment risks undermining the independence of the CMA and its global reputation for producing credible, impartial and expert analysis.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Will my hon. Friend give way?

[Paul Scully]

I cannot at the moment, I am afraid. I hope that hon. Members will not press their amendments to a Division, for the reasons that I have given, and that they will support the Government’s amendments.

My hon. Friend the Member for Bromley and Chislehurst talked about amendment 66, and I assure him that we will be moving it. I thank him for his work on resolving this issue.

The hon. Member for Poplar and Limehouse (Apsana Begum), who is not in her place, talked about the concerns over the Belfast agreement. The Bill does not interact directly with the Belfast agreement. It does interact clearly with the withdrawal agreement and the Northern Ireland protocol, but it seeks to make the Belfast agreement work in certain given circumstances.

[Kevin Hollinrake]

Earlier, my hon. Friend mentioned the Sewel convention. Could he set out exactly what influence it has on legislation that is made in Brussels?

[Paul Scully]

Exactly. As my hon. Friend knows, it has none. Importantly, as we bring back power from the EU to the UK Government, we will work to pass on many, many powers to the devolved legislatures, whether it is the Scottish Parliament, the Welsh Assembly or the Northern Ireland Assembly. They will be getting powers, and we will all work together as the UK to give businesses the continuity that they need with our UK internal market.

Horizon: Sub-Postmaster Convictions

Debate between Kevin Hollinrake and Paul Scully

Wednesday 10th June 2020 Commons Chamber

[Paul Scully]

The Government have challenged it over the years, especially in recent years—the Horizon situation has come about over 20 years, but as I have said, recently there have been independent reviews in 2013 and investigations in 2015. It is because we have been unable to get a result that we have had to resort to the courts. We need to get to the bottom of this so that we can right the wrongs done to the postmasters of the past and ensure the respect of future postmasters, who must feel secure in their positive relationship with the Post Office.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I fear the cover-up could continue. The Post Office has decided to bring in Herbert Smith Freehills to oversee historic cases. This is the practice that contributed to the cover-up of a fraud at Lloyds HBOS over seven years and oversaw the establishment and operation of the Lloyds bank customer review, which was described by the Financial Conduct Authority’s review of that scheme as discriminatory, flawed and an unacceptable denial of responsibility, and that review is now having to be done again. Does the Minister think the Post Office should reconsider that decision?

[Paul Scully]

My hon. Friend and I spoke about this earlier. As he says, the Post Office decides its own legal advisers. As far as I understand it, the Post Office changed its advisers to Herbert Smith Freehills in the latter stages of the litigation, which resulted in the settlement, good progress in resolving outstanding claimant issues and a successful launch of the historical shortfall scheme.

Corporate Insolvency and Governance Bill

Debate between Kevin Hollinrake and Paul Scully

Committee stage & 3rd reading & 3rd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Kevin Hollinrake]

Matters are progressing quickly and it is important to bring forward these measures now, but they do not directly tackle the issues relating to conflict of interest. The Department’s proposal to look for a single regulator could well do that. Will the Minister be prepared to meet me to discuss those measures to see when they might be brought forward in future legislation?

[Paul Scully]

I welcome my hon. Friend’s intervention. He has spoken at length on this and he has been a champion for that change, and I would be happy to meet him to discuss that further.

Amendments 18, 19, 21, 22, 23 and 25 deal with the Cape Town convention, which is an international treaty that seeks to lower the cost of finance for various high-value, mobile assets, including, importantly, aircraft. I know the sector has been particularly impacted by the unique situation posed by the coronavirus pandemic. The insolvency provisions in the Cape Town convention and the aircraft protocol, which we ratified in 2015, are some of the key provisions that give rise to low financing costs in the airline industry. They provide aircraft creditors with greater certainty that they will be able to take steps to enforce their security if an airline debtor defaults on payments or enters into insolvency. The effect of the provisions in the Bill that the Government are amending would have been to enhance the existing protections afforded to Cape Town creditors by extending those protections beyond what the convention and the aircraft protocol require. That was done to create even greater certainty for creditors and further reduce lending costs within the industry. However, in doing so, the new provisions would also have constrained the ability of a financially distressed airline to restructure without creditor consent, either using existing tools under the Companies Act 2006 or the new restructuring plan procedure that is being introduced by the Bill.

Since the publication of the Bill, we have listened closely to the views of many, including interested stakeholders in the airline sector and the restructuring profession. Both have expressed that these provisions could create a significant hurdle to successfully restructuring a struggling airline. The Government are absolutely aware of the very significant impact that this emergency is having on the airline sector. I am also clear that the overriding aim of the Bill is to make it as easy as possible for affected companies to get the breathing space that they need to weather the impact of covid-19, which clearly applies to the airline sector. Given the extraordinary challenge of the circumstances faced by the sector, the Government have decided to remove the relevant provisions from the Bill, which will retain the ability for an airline to use a scheme of arrangement and a restructuring plan to affect Cape Town creditors’ registered interests without the consent of every individual creditor, provided that the other safeguards of those procedures are satisfied. It is complex and we know that we need to work with the airlines on this and give struggling airlines the ability to successfully restructure.

I turn to amendment 15, which deals with the temporary changes to the moratorium that we are introducing in the Bill specifically for England, Wales and Scotland. I will shortly speak to a corresponding amendment for Northern Ireland. Members of this esteemed House will be aware that one of the things that the Bill is for is to create the moratorium, which is vital to give troubled companies the breathing space, but they face significant risks when seeking to restructure, and creditors can derail rescue plans and cause otherwise viable companies to fail unnecessarily. This adversely affects the interests of the company, its creditors and its employees, as well as the wider economy. Recognising the pressing need for companies to be able to access a moratorium in the face of the immediate impact of this emergency, in addition to the permanent measures, we have also introduced temporary measures to ensure that it is as easy as possible for businesses to access a moratorium in the short term. This is done in schedule 4 to the Bill.

While the schedule 4 temporary measures are in place, it is important that these can be applied consistently to each type of entity that can obtain a moratorium. If eligibility for the temporary measures changed depending on what sort of entity was seeking the moratorium, that would patently not be the case. As drafted, there are two entities for which schedule 4 would not otherwise apply: limited liability partnerships and co-operative and community benefit societies. This amendment would add a small fifth section to schedule 4, consisting of two paragraphs to make limited liability partnerships and co-operative and community benefit societies eligible for the temporary moratorium measures. That ensures that these entities can also be brought within the scope of the schedule and make best use of the breathing space that the measures offer. It ensures that both co-operative and community benefit societies and limited liability partnerships in England, Scotland and Wales will benefit from the temporary measures that we have set out in the schedule, as well as from the wider provisions on moratoriums. There is a corresponding amendment for Northern Ireland. These time-limited and temporary changes will make sure that we best address specific issues for companies during the covid-19 emergency and ensure that the relevant entities are all equally eligible for our temporary measures on moratoriums.

Amendment 17 is related and ensures that the temporary modifications that have been made to the moratorium process can be applied to limited liability partnerships and certain types of registered societies in Northern Ireland. It inserts two paragraphs to the temporary measures in Schedule 8, so it largely mirrors what we see in the previous amendment.

Amendments 20 and 24 are minor and technical amendments, intended merely to make a clarificatory point to ensure that it is crystal clear that at the point when a company proposes a restructuring plan coming out of a moratorium, the company should contact all creditors with an explanatory note of a proposed restructuring.

Similarly, amendment 16 deals with an erroneous repeal of the Northern Ireland provisions. The provision being repealed is still needed, so the amendment rectifies that and I therefore commend it to the House. I turn briefly to one amendment raised by the hon. Member for Manchester Central (Lucy Powell). It seeks to make any pension scheme deficits a priority creditor in the event of an insolvency. I have to say that I can understand where her intentions are coming from in this proposed amendment. I am sure that, in recent years, we can all remember one or two high-profile insolvency cases—we have heard of some today—which feature large deficits owing to the pension scheme, and we can appreciate the uncertainty that that brings.

However, as always, when insolvency occurs, there is a balance to be struck when considering the order in which those owed money are paid out of the available assets. There are seldom enough funds to pay all creditors in full in insolvency cases. To ensure fairness, the law requires that available funds be distributed in a certain order. Secured creditors are paid out first for the sale of any property to which their charges attach. Without that, securities, banks and others who funded business activity would be less likely to do so, or would charge more to cover the increased risks they bear. It is essential that the insolvency system helps to give investors, lenders and creditors confidence to take the commercial risks necessary to support economic growth. Unsecured creditors are paid once the secured creditors and preferential debts, which include employees’ remuneration, have been dealt with, and they share the funds that are left. For limited amounts of unpaid pension contributions, which are preferential, any deficit to a pension scheme ranks alongside all other unsecured creditors, which will inevitably include trade suppliers, some of which will be small and micro companies. Therefore, the level of debt owed to a pension company can be very large—we know that. To raise the priority of these creditors and pay them ahead of not only unsecured creditors, but also, as the new clause would seem to suggest, preferential creditors such as employees for unpaid wages and floating charge holders would really upset the balance that has existed for a long time.

New clause 5 seeks a future review of trade union involvement in company restructuring and to commit the Government to specific proposals in spite of what that review might show. It does not seek to amend or improve the debt finance restructuring provisions in the Bill being taken forward as those most needed at this moment in time. The permanent restructuring provisions introduced by the Bill have been the subject of a considerable period of consultation and engagement dating back to 2015. The process included the then Government’s review of the corporate insolvency framework public consultation in 2016 and extensive public engagements since then, with a wide range of stakeholders. There were no strong or widely made calls at that time for trade unions to be given a formal role in the new processes proposed. The design of the new restructuring provisions already includes strong protections for employees. For example, a company in a moratorium will be required to continue paying wages and salaries during the moratorium. If they are not paid, the moratorium will have to come to an end.

In addition, the measures allow employment tribunal proceedings to continue during the moratorium, despite the fact that other types of legal processes are to be prevented during the moratorium. In cases where employees are creditors of the company that they are employed by, and so a party to a new restructuring plan in that capacity, they will benefit from the comprehensive set of general creditor protections built into the new measure.

On corporate governance reform more widely, the Government are implementing a number of reforms already enacted that strengthen the voice and interests of employees in company decision making, be they members of a trade union or not.

The Government also intend to put forward a further consultation on audit and corporate governance reform, taking into account the recommendations of three independent reviews of audit, the views of the Business, Energy and Industrial Strategy Committee and a recent industry development, so we do not believe that a separate review is necessary.

At this point, Madam Deputy Speaker, I am not able to accept any of the amendments, apart from the Government amendments that are in my name. I hope therefore that hon. Members will therefore withdraw their amendments.