Lord Mendelsohn
Main Page: Lord Mendelsohn (Labour - Life peer)
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
My Lords, this Bill will strengthen the UK’s position as the best place in Europe to start and grow a business, and make sure people who work hard can succeed. When the Bill left this House for the other place, the noble Lord, Lord Mendelsohn, whom I see in his seat, rightly said that it was,
“certainly a better Bill than the one that arrived”.—[Official Report, 15/12/15; col. 1985.]
Today, we welcome the Bill back to this House with further improvements and amendments.
Let me begin with the pubs provisions—always a favourite subject, since the men in my family love a pint. As part 2 of the government consultation on the Pubs Code confirmed, we do not intend to frustrate access to the market rent only option. Amendment 28 improves Clause 33 on the MRO by amending Section 43 of the Small Business, Enterprise and Employment Act to put beyond doubt that MRO will be available at rent assessment, irrespective of the level at which the rent is set. This has now been reflected in the draft Pubs Code regulations, which were laid on 14 April. These also satisfy the concerns and commitments relating to pubs made during the passage of the Small Business, Enterprise and Employment Act and at earlier stages of this Bill.
In particular, on parallel rent assessment, tenants can consider tied and MRO offers in parallel. Further, we have retained all the conditions in the Act that would entitle a tenant to request the MRO option. We said we would exempt genuine franchises from MRO, and we have done just that. Similarly, we have exempted tenancies at will and other short agreements that cumulatively last for no more than 12 months from most of the other provisions of the code, including from MRO. We have enabled pub-owning businesses and tied tenants to agree to defer for up to seven years the point at which MRO is available at a rent assessment and renewal, where the pub-owning business makes a significant investment. The minimum threshold for a significant investment is set at 200% of the pub’s dry rent.
Amendment 29 tidies up Clause 34, which addresses concerns that pub companies were changing their practice to avoid application of the pubs provisions in the Small Business, Enterprise and Employment Act. These amendments make it clear: first, that potential unfair business practices occurring since the Small Business, Enterprise and Employment Act was passed in March 2015 are covered; secondly, that the adjudicator will report on avoidance of both the Act and the Pubs Code; and, thirdly, that territorial extent is in line with the SBEE Act pubs provisions.
The new Pubs Code Adjudicator, Paul Newby, has now been appointed and will take up post on 2 May, ahead of the Pubs Code coming into force. Mr Newby brings great experience of the sector and a reputation for professionalism. Let us give him the opportunity to show his worth.
I am very pleased with the progress that we have made on pubs in both Houses and, particularly, by working with stakeholders through the Pubs Code consultation. I look forward to a final discussion next month on the draft regulations, as Parliament considers the details of the code via the affirmative procedure.
The amendments in this group relating to Wales have been developed in agreement with the Welsh Government and will allow Wales to benefit from further or extended regulation-making powers in devolved areas in respect of the Regulators’ Code, the primary authority scheme and business rates.
Lastly, we come to the amendments to the extent and commencement clauses. I hope noble Lords will accept my assurance that these amendments are technical and need no further debate.
I commend all these amendments to the House and I beg to move.
Lord Mendelsohn (Lab)
My Lords, I thank the Minister for the progress we have made in matters relating to pubs. Throughout the Bill’s progress, in both Houses of Parliament, we have seen the reversion of the original intention in the small business Act and have reinstated the parallel rent assessments; legislated for additional checks to ensure that pub companies do not game the code; reversed the decision to offer MRO conditional on there being an increase in rent; and ensured protection for tenants being offered investment in turn for opting out of MRO. I am tremendously grateful to the Minister for dealing with this extremely well and making sure that these amendments properly express what this House intended when it passed that amendment. I also congratulate the officials in the department, who have done a terrific job in restoring the balance that we hoped had been struck in the small business Act and making sure that these provisions are adequately catered for. We are tremendously grateful for that.
We welcome these amendments, but I will raise just a couple of technical issues on which I seek some clarity from the Minister. For the draft Pubs Code that has now been published, Regulation 3 states that every time a pub tenant wishes the adjudicator to be appointed to arbitrate on an MRO dispute, they must pay a fee of £200. Also, when an arbitration goes forward, there is the possibility of costs of up to £2,000 being awarded against tenants. We understand that this is to discourage vexatious complaints, given that tenants’ conduct could result in an unreasonable increase in the costs of arbitration. However, I want to raise a couple of issues on that.
First, for tenants who are unfamiliar with how the code operates, it will be very useful to get some understanding of how it would apply to a tenant calling who lacks understanding about how this is done. Is the £200 fee an automatic charge, or is there some discretion available to the Pubs Code Adjudicator on how that might be levied for any inquiries? Certainly, given the lack of full understanding of how this code works, it would be extremely unwelcome if the fee stopped tenants coming forward with legitimate concerns.
Secondly, in relation to managing some of the issues around the code, obviously most tenants could not take reasonable legal advice or pay the costs of other sorts of advice. It is entirely plausible and possible that they may well add to the complication of the arbitration because they are not sufficiently skilled or sufficiently well resourced to add to the expertise that would be required to make sure that the costs can be minimised. We would hope that the Pubs Code Adjudicator would do some of those things. It would be useful, therefore, to have some sense of how these costs may act fairly rather than just as an impediment to tenants coming forward with complaints.
Finally, within six months of being established, the Pubs Code Adjudicator must issue guidance on the criteria that the adjudicator intends to adopt in deciding whether to carry out investigations and on the practices and procedures that the adjudicator intends to adopt when looking at investigations. I would be grateful if the Minister could come back to this House, either in her response or in writing, about what input the Government will or could have, or what input this House could have, in this process. If there are any issues of concern with the procedures that are developed, what checks are in place to discuss and revise them, if necessary, after the Pubs Code Adjudicator delivers them?
Baroness Neville-Rolfe
I thank the noble Lord for his very constructive response and reiterate my thanks to all noble Lords who have engaged in this. I look forward to our further debate.
On fees, the adjudicator has a power to give advice, so that will not have a charge. Once a referral is made, a fee of £200 is due. I will look further at the detail of what the noble Lord has said, in case there is something I can add. I will also write on the point that he raised about the detail of the adjudicator, so that that is entirely clear as well.
I believe that the changes that we have made, as I think the noble Lord has said, to the SBEE Act legislation and to the draft Pubs Code regulations should mean that all concerned can support these measures as a balanced package to deliver greater fairness—a word that he used—in the relationship between tied pubs and the pub-owning businesses. I very much hope that the industry and the tenants can look forward to a prosperous future.
Lord Mendelsohn
At end insert “, and do propose Amendment 30B in lieu of the words so left out of the Bill”.
“Green Investment Bank: Office for National Statistics classification
Where, prior to a sale of shares of a UK Green Investment Bank Company (as defined in section 31(2)), the Office for National Statistics ("ONS") has a duty to make an assessment of the Green Investment Bank concerning its classification as public debt for the purposes of the National Accounts, the ONS must publish a report outlining its reasoning and the steps it has taken to reach its decision.”
Lord Mendelsohn
My Lords, before I speak to the amendment, I would like to congratulate noble Lords on the Liberal Democrat Benches for their work on this. The noble Lord, Lord Stoneham, made a very powerful speech in Committee. I pay extraordinary and particular tribute to the noble Lord, Lord Teverson, who has done a simply outstanding job in all the spadework that was done, and in speaking to a range of people; he has come up with a very elegant formula. I also congratulate the noble Lord, Lord Smith of Kelvin, and his colleagues at the Green Investment Bank, in moving to embrace this model. In fact, the special share provides for a much better Green Investment Bank and for the green purposes to be more extensive than they would have been with any form of government participation because of the state aid rules, so I think we are in a much better position.
The rationale behind this amendment relates, of course, to the problem we had in determining the structural issues. In June 2015, the Business Secretary announced the Government’s intention to privatise the bank to allow it to borrow more capital without adding to government debt, as reported in Business Green. However, the ONS ruled that, in order for the bank to obtain status as a private body, the Government must repeal any of their involvement in or control over the Green Investment Bank’s operation. As part of the privatisation process, the legislation in the Enterprise Bill, enshrining the Green Investment Bank’s green ethos, must be removed from the statute. This requirement has prompted fears that the bank could be hijacked by a private investor seeking to make investments not aligned to its core values.
The department’s November policy statement described the situation as follows:
“The decision on whether an organisation is classified to the public or private sector is made by the Office for National Statistics (ONS) and is considered in accordance with the EU-wide regulations, set out principally in the European System of Accounts 2010, (ESA 2010) and supplemented by guidance in the accompanying ‘Manual on government deficit and debt’”.
In the light of the Government’s discussions with the ONS and HM Treasury, and the department’s assessment of the regulations, it was clear that even if the Green Investment Bank was no longer owned by the Government, current legislation on the bank was highly likely to be assessed by the owners as constituting government control over it, preventing it being reclassified to the private sector. It also said that the ONS would be in a position to take a substantive decision on the bank’s classification only once a transaction had actually taken place. Of course, that involves in part the question of contractual arrangements, but it is also about procedure.
This leads to a highly unsatisfactory process, which we faced when the Green Investment Bank provisions were first introduced into this Bill, which was something of a rush. It involved a lot of panicked conversations and an extensive repeal of existing legislation, without particular rhyme or reason being properly articulated. We have had an unseemly mess, which has only been adequately resolved by the efforts of the noble Lord, Lord Teverson. That could all have been avoided if there had been a reasonable discussion and a proper statement of reasons by the Office for National Statistics.
We have to consider that there are other opinions about whether this provision would breach those rules, and whether what was being said was likely to be actually true. Many experts in this field, given the opportunity, would have liked to make the case that classification was not necessary and the ONS was not just being overly cautious, but went way beyond the mark in making such an assessment. Indeed, there are examples in other countries of similar models which statistical bodies have applied without any real difficulty.
Finally, from the discussions that have taken place I am led to believe that the provision of a special share and the new structure of the Green Investment Bank enhance its value and the possibility of the overall sale of the bank. It is sensible for us to put in not some form of government or parliamentary oversight but a broader ability for ONS decisions to be made public earlier, for experts and practitioners in this field to have the chance to review them, and for the ONS to make a much more timely assessment and make those reasons well known. This is a simple amendment, which we hope the Government will look at carefully and consider a probable enhancement to the process as we look to change the status of certain assets in the Government’s control and move them towards the private sector. This would be a helpful addition, and I beg to move.
Lord Mendelsohn
My Lords, I thank the noble and learned Lord, Lord Hope of Craighead, and the noble Lord, Lord Teverson, for their comments about the good work of the noble Lord, Lord Smith of Kelvin, and the good wishes that we have for the bank’s successful operation in the future.
I thank the Minister for her comments. I would just say that if you go to someone for a provisional view and they give it, you must have given them some assumptions for the basis of which they can take such a view, and you must have given them a potential range of assumptions. It is certainly true that a decision cannot be confirmed until the full facts are there, but some assumptions were given at the first stages in order to take that provisional view. All we are asking is to make sure that that view is made properly available because, as the noble Lord, Lord Teverson, said, so many of the measures are subjective. But I appreciate her comment that she will go back and look at what can be done. In light of that positive response, I beg leave to withdraw the amendment.
Lord Hain (Lab)
My Lords, I welcome what the Minister has just said in respect of Wales. I point out to her that that is exactly the argument that I and my noble friend Lady Morgan put forward on the Trade Union Bill when we said that these were devolved matters covering devolved public services and that it was a breach of the devolution settlement that the Trade Union Bill transgressed that. So I am very glad that she has conceded that principle in this Bill.
Lord Mendelsohn
My Lords, the Conservative manifesto introduced this issue, saying that a Conservative Government would legislate to cap redundancy compensation for public sector workers with a particular focus on larger amounts. I will make just a few comments about something that has received some consideration but falls slightly outside that, and it would be useful if the Minister could give some indication of whether the Government were thinking in some way about how to accommodate this. It relates to the nuclear decommissioning workers who entered into an agreement with their employer. To seek to undo that agreement through legislation is slightly unjust, and this is worth looking at.
The new legislation supersedes protections under previous legislation, including the statutory protections introduced under Schedule 8 to the Energy Act 2004, which currently safeguards workers’ pensions, such as those of the Magnox workers. It has been estimated that about 1,200 Magnox workers who are decommissioning the UK’s nuclear plants will be caught out by the proposed measures in the Bill, which could see them losing thousands of pounds in retirement income. The particular reason why these cases are worthy of note is of course that people took on those jobs knowing that it would change their retirement years because they were involved in a job which had an end date which was not the same as their full working life—these were expert workers who made the decision to do it because in compensation the balance of pension payments would in some way adequately reward their commitment to that work. The impact of the Bill could also be felt by many other workers, including the entire 30,000 who are working across the Nuclear Decommissioning Authority’s estate, who will also be affected by a cap of £95,000.
As I understand from the presentation in the manifesto and at other times, the exit cap was to be seen as putting a stop to the so-called golden handshakes or fat-cat pension payouts in the public sector. But it will impact on many long-serving low-paid workers within the nuclear industry. That is why we hope that there will be some opportunity outside the Bill for the Government to look very carefully at the arrangements they have for those who do this difficult, dangerous and very important work and to give some due consideration to that, particularly because their provisions also relate to an agreement that was present in the Energy Act 2004.