Business and Planning Bill

Lord Stevenson of Balmacara Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Monday 6th July 2020 Lords Chamber

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I thank the Minister for his comprehensive introduction to the Bill. A large number of Members of your Lordships’ House wish to speak in this debate, and we look forward to their contributions.

When a crisis hits, effective Governments do two things: first, they deal with the immediate challenge and, secondly, they anticipate the fallout and begin working out how to tackle the consequences in the months and years ahead. It is anticipated that the UK has spent over £200 billion on a first-stage economic rescue operation but there is, as yet, no plan for economic recovery. Millions of jobs are now at risk and even a VAT cut, which is widely anticipated and would be welcome, will not of itself return our economy to pre-crisis levels of activity. The reannouncement of major infrastructure projects remains just that; most are nowhere near shovel-ready and will take many years to come on stream.

The £29 billion in Covid-19 loans to 640,000 businesses has been a significant boost to liquidity but as loans, these are not earned income. They will leave even fundamentally sound companies with huge debts, which will restrict their ability to reinvest for the future while opening them up to predatory takeovers. The current trickle of bankruptcies may turn into a flood.

I say all this because I want to make the point that while the Government have acted to protect us from the supply shock caused by the pandemic, the resolve that delivered the furlough schemes, which currently maintain 9 million people who might otherwise be out of work, needs to be shown again as we start the recovery to stimulate demand and save jobs. It will be a long haul. The Government urgently need to come forward with a comprehensive, flexible and imaginative plan for the support and recapitalisation of viable British businesses, and the prevention of mass unemployment. But this Bill, welcome though it is, is not that plan.

I thank the Deputy Leader of the House, the noble Earl, Lord Howe, for the constructive conversations that he and my colleagues have had on the Bill. It is a short Bill and there is a large degree of agreement on it. The headline provisions, as has been said, are to enable the hospitality industry to reopen quickly and serve a greater number of customers in a safe environment. My noble friends Lord Kennedy and Lady Wilcox will be leading for us on these sections.

We welcome the temporary loosening of licensing and planning regulations to enable bars, restaurants and cafés to serve customers outside their premises. Having said that, we will question why the opportunity has not also been taken to include street-food vendors and small breweries in this legislation. In these essentially local issues, it is important that local authorities continue to have discretion in these matters because they are best placed to make the judgments about local impacts. However, we have received requests to amend Clause 11 so as to prevent increases in anti-social behaviour in town centres late at night and in the early mornings. It is also right that we raise the concerns of USDAW about the safety of staff. The government guidance is clear about the mitigation and reduction of risk that is needed if one metre-plus social distancing is in place. It is also very important that the Health and Safety Executive has the resources and powers to enforce the safety of those extended workplaces. Can the Minister confirm that that will be the case?

The introduction of more flexible planning appeals is also welcome in speeding up the processes, but we want reassurances that no legitimate voice will be excluded from being heard. Local government is worried about the cost implications of these new rules, so we urge the Government to publish a report detailing the extra costs that councils will face in processing increased volumes of planning applications at the new, reduced fee levels.

We also welcome the measures in enabling construction sites to get back to work more easily, through extended working hours. It is important, however, that communities do not feel that their interests are being ignored in this. We would like to see councils being given the discretion they need to restrict hours of operation, where there is a compelling and overriding local reason to do so. But as well as discretion, local authorities need certainty about resourcing. As was said in the other place, £10 billion-worth of costs have been loaded on to local authorities during this crisis but only £3.2 billion has so far been provided by the Government. When he comes to respond to this debate can the noble Earl, Lord Howe, explain how and when the Government are going to honour their commitment to stand behind councils and give them the funding they need, now and in the future? It is important that the Government also offer cast-iron guarantees that none of the measures in the Bill will place additional costs on councils that have to be financed by further cuts in their services elsewhere. I challenge the Minister to put this on the record.

We also welcome the changes to transport and vehicle licensing, an issue which will be handled by my noble friend Lord Tunnicliffe. I will be in the lead on the proposal to remove the “unfair relationship” provision from the Consumer Credit Act 1974. There have been many calls over the years for reform of the CCA 1974, as the safeguards are cumbersome and often inconsistent with bona fide attempts to provide flexible solutions to customers who experience temporary financial problems. That pressure has clearly been increased by the pandemic and it is right to take action now on this issue, even though it is to be hoped that the wider issues are also under review.

Bounce-back loans have been very successful in getting money out to small firms which can use them. This compares with the CBILS, where only half of the applications have been approved. We still do not know why, or how many have been rejected and how many are still in the queue. One thing that we will be asking for is that in the interests of transparency, the Government should publish data on the number of rejections and applications, and list the banks concerned. After all, if moneysavingexpert.com can do it, why cannot the Government?

I press the Government to think again about the way in which they are restarting the economy. In particular, I call for a more nuanced approach to the ending of the current support schemes. Many sections of our economy, employing hundreds of thousands of people, have opened this weekend with important social distancing restrictions in place. The hospitality industry has restarted, which is good, but at much reduced levels of revenue; these are not sustainable and may translate into a risk to hundreds and thousands of jobs. Live performances, including concerts and the theatre sector, are still forbidden and many of our most important arts organisations are on the point of closure. The announcement today of additional funding for our arts and cultural bodies is very welcome, but we urgently need the long-promised road map to the reopening of live music and theatre venues. While the buildings may be saved, what will be performed? Many directors of small limited companies—often freelancers in the creative industries—have been denied support and are really struggling as a result. The Government are taking a one-size-fits-all approach to the furlough, when it is increasingly clear that we need a differential approach. Some sectors, such as tourism and the creative industries, are more affected by the public health measures than others, so surely the economic support measures have to match that.

The Government have been talking up a new deal in recent days, and we will presumably know more after the Budget later this week. From recent debates in this House and from polling data, it is clear that the idea of a green recovery is shared widely across the nation. People want jobs to be secured and new quality jobs to be created, but they do not want the economy to return to where it was. They want tangible action on retrofitting insulation in our housing stock, manufacturing low-carbon engines, adapting our towns and cities to walking and cycling, creating green spaces, and reforesting and rewilding.

To conclude, we welcome the Bill, but its measures are modest. The Government have shown that they are willing to take action to relieve the worst impacts of the pandemic, but we face the deepest and sharpest recession, possibly for hundreds of years, and government power has to continue to be used. The decisions taken by the Government in the coming weeks will determine how many jobs are saved and how many businesses survive. The commitment to do “whatever it takes” cannot be a hollow promise. In short, we need this Bill, but we also need an extension to the furlough scheme for specific sectors, an urgent job-creation programme with a green recovery at its heart, and real action on infrastructure, not just words. I urge the Government not to step back when our economy, businesses and workers desperately need their support.

Business and Planning Bill

Lord Stevenson of Balmacara Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 13th July 2020 Lords Chamber

[Baroness Kramer [V]]

My Lords, I support Amendments 46, 47 and 48 and regard all three as exceedingly important. I will start by picking up on an issue described by my noble friend Lord German. We know now that the major banks, which have been able to participate in the bounce-back scheme because they have been provided with cheap funding from the Bank of England under its term funding scheme, have failed in what I was told was an obligation to also pass that cheap money through to the fintech industry and other alternate lenders, so that a broad and diverse coterie of lending institutions would be involved in bounce-back schemes and a mechanism to ensure that qualifying small companies would be able to find a source, even if it was not from one of the major banks. We now know that that funding process has not taken place and that relatively few bounce-back loans are being provided by alternate lenders because they cannot find cheap enough funding, since they have no direct access to the Bank of England scheme.

The reason I mention this is that it describes to us the culture of major banks today. Many of us had hoped that after the 2008 crisis we would see a dramatic change in culture among the major high street banks. We have certainly seen some changes, and some are better than others, but we are still dealing with a group of institutions that, frankly, if given a loophole will use it. Amendments 46 and 47 are designed to close off two major sets of loopholes to make sure that proper consumer protection continues to be provided to SMEs that use the bounce-back schemes and to make sure that these do not become mechanisms that enable them to be taken advantage of in ways that they never anticipated. Therefore, Amendments 46 and 47 are vital to limit any potential for abuse.

Amendment 48 is important because it will help us track exactly what is happening under the Bounce Back Loan Scheme arrangements. We have all heard anecdotally that the big banks are cherry picking those to whom they make bounce-back loans. Some of them choose only existing customers because they do not want to overexpand their balance sheets; others pick from within those customers. As I understand it, the whole spirit of the bounce-back scheme is anathema to cherry picking, but it is taking place.

Amendment 48, in the name of the noble Lord, Lord Stevenson, would very rapidly make clear how many people are applying and who is rejected, and it would give us the ability to try to track exactly what is happening under this scheme. I know that something like £30 billion has already been lent through bounce-back loans but, frankly, that is well below the level that the Government expected. Those loans are a lifeline for many companies and we really cannot allow this scheme to be abused. If we are not careful, by the time we intervene, many businesses will already have closed their doors.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I have added my name to Amendments 46 and 47, moved and spoken to respectively by the noble Baroness, Lady Bowles of Berkhamsted, and I support the points that she has made. I also welcome the expert contributions from the noble Baroness, Lady Altmann, the noble Lord, Lord German, and the noble Baroness, Lady Kramer.

The Consumer Credit Act 1974 has long been criticised because of its extensive, complex information disclosure requirements. These are a problem in their own right but they can make it problematic for lenders to be flexible in cases where they might, for example, wish to offer forbearance to consumers experiencing difficulties in making repayments or to those suffering from unmanageable personal debts, as many do. Clearly, if small businesses are being affected by Covid-19 issues, it makes sense to ensure that their access to bounce-back loans is not hampered by requests for unnecessary evidence and detail or by extensive time delays in processing such data.

However, as the Explanatory Notes make clear, SI 2020/480 changed the rules for small loans to individuals and small partnerships so that they are no longer regulated credit agreements. However, as the noble Baroness, Lady Bowles, pointed out, the SI does not affect Sections 140A to 140C of the Consumer Credit Act 1974—the so-called unfair relationship provisions. The problem identified by the noble Baroness seems to be important. In a laudable attempt to simplify the processes, the Government might, perhaps inadvertently, have removed the statutory underpinning of Sections 140A to 140C, which, for example, through the courts protect borrowers from any subsequent attempts by lenders to act unfairly. That can often be the case, as we have heard this evening.

I believe that this issue might need to be reviewed separately once we are through the pandemic. Perhaps when she comes to respond, the Minister will agree that it needs further work. I hope that she will also be able to reassure us that our concerns are unfounded. I have my doubts but am willing to be convinced. The change in law needs to be securely attached only to bounce-back loans and the Covid-19 pandemic. We also need to know that the application of this disregard is proportionate and appropriate to lenders.

Turning to Amendment 48 in my name, I am grateful for the support of my noble friend Lady Uddin and the noble Baroness, Lady Kramer. I hope that the Minister recognises that the amendment covers ground raised in the powerful comments made at Second Reading by the noble Earl, Lord Shrewsbury, who shared his personal experience of the wide variability of responsiveness by the individual banks and lending institutions authorised by the British Business Bank to issue bounce-back loans.

My amendment calls for regular reports. I appreciate that there are confidentiality issues here, but this is also about transparency. If a private company such as MoneySavingExpert can do a survey which reveals that a substantial number of bounce-back applicants suffer delays, rejections and unrelated credit checks, surely the Government can do better. It is true that the MSE report is based on a sample, albeit a large one, but it shows that consumers have had variable responses from the major banks, and some of the smaller challenger banks had very high rejection rates. The transparency which the amendment looks for may improve that situation. I hope that the Minister can offer some movement on this issue, which would help with the task of getting bounce-back loans out to those who can use them. She said in her response to an earlier group of amendments that the Government were constantly reviewing and improving the Bounce Back Loan Scheme. I hope that she recognises that to do that without the sort of information that my amendment proposes might be otiose.

[Baroness Penn]

I thank the noble Baroness, Lady Bowles, my noble friend Lady Altmann and the noble Lords, Lord Stevenson and Lord German, for tabling these amendments.

On Amendments 46 and 47, the noble Baroness, Lady Bowles, made important points around the ongoing treatment of borrowers by lenders under the bounce-back loan scheme. My noble friend Lady Altmann and others referred to memories of previous unscrupulous practices by lenders. It is important to acknowledge the significant changes that the industry has been subject to over the past decade. All the major lenders have now signed up to the Lending Standards Board’s standards of lending practice, ensuring that banks treat their customers fairly and responsibly. The Financial Conduct Authority can now take enforcement action against individuals through the senior managers and certification regime and the new conduct rules, which apply to all employees of those firms and not just to senior managers.

I assure the noble Baroness, Lady Bowles, and all noble Lords who have spoken on the amendment that, while the Bill removes bounce-back loans from the Consumer Credit Act provisions, it does not remove protections from borrowers under the scheme. Under the terms of the guarantee agreement entered into by lenders with the British Business Bank that backs the bounce-back loans, lenders must provide clear information to borrowers before the credit agreement is entered into and during the lifetime of the loan. Lenders must make it clear to borrowers that the loans are not subject to the usual protections under the Consumer Credit Act. However, under the agreement entered into by lenders with the British Business Bank for the guarantee, there are other protections.

Where a borrower encounters financial difficulty, lenders must provide information on assistance available, including sources of free, independent advice. Where a borrower misses payments under the scheme, the lender will give them a reasonable period to remedy any breach of the agreement and will not treat that breach as a default if it is remedied within that period. Finally, lenders must not require borrowers to pay any lender-levied fees of any description, including on default, or any default interest. If a borrower defaults on the loan, the guarantee agreement prevents their primary residence and primary vehicle forming part of the debt recovery. Should a lender not comply with these terms, they risk not being able to call on the guarantee. This provides a strong incentive for lenders to treat borrowers fairly.

Furthermore, the Government have retained Financial Conduct Authority oversight for debt collection, meaning that lenders must comply with the Financial Conduct Authority rules on arrears, default and recovery. Recovery procedures must also comply with the Lending Standards Board’s standards of lending practice. As the noble Baroness, Lady Bowles, mentioned, the Government are working with accredited lenders under the scheme to ensure that they understand the requirements on collections and recoveries for the loans. I will write to her on whether the result of those discussions will be published.

Finally, the jurisdiction of the Financial Ombudsman Service has been maintained for bounce-back loans, meaning that eligible borrowers are able to access this convenient and effective means of resolving disputes with their lender without having to go to court.

Business and Planning Bill

Lord Stevenson of Balmacara Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Monday 20th July 2020 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

19: Clause 5, page 5, line 7, at end insert—
“(6A) Any conditions published under subsection (6) are subject to annulment in pursuance of a resolution of either House of Parliament.”

[Lord Stevenson of Balmacara [V]]

My Lords, in moving Amendment 19, I will also speak to my other amendments in this group. Since there is much agreement, and also duplication, I will try to be brief.

These amendments are drafted pursuant to the 17th DPRRC report. I thank the committee for its hard work on this Bill, and on the emergency Bills on which it has had to work in recent weeks. The timescales are very difficult, and the pressure to deliver is also very high, but it has been able to do that with considerable skill, and we are very grateful.

The DPRRC recommendations set up, in essence, a dialogue between the Government and the committee. However, in a spirit of co-operation and because of the short timescales of the emergency legislation, we often put down the recommendations of the committee as amendments as a way of encouraging the Government to act. In Committee, we had a series of notifications that the Government were preparing to accept the DPRRC recommendations. However, on this occasion, it also produced an interesting outcome. For your Lordships’ information, the wording of our amendments has been strongly influenced by the helpful advice we received from the Public Bill Office, although they are our responsibility and tabled in my name. But it is interesting that on several occasions, recommendations made by the DPRRC in the report have resulted in different wordings in the amendments that have been tabled by the Government and by ourselves. When the noble Earl comes to reply, he may be able to shed light on the Government's thinking and explain some of the differences in approach, and I think that would be helpful. Amendment 78 in the name of the noble Earl says:

“If the Secretary of State considers it reasonable to do so to mitigate an effect of coronavirus.”


But our version in Amendment 79, which we hope will achieve the same result, says

“but regulations may only be made under this subsection where the Secretary of State considers it necessary or appropriate for a purpose linked to the coronavirus pandemic.”

I am not saying that we have a monopoly on the correct drafting, but I think it interesting that we have come to different conclusions about what might be considered the same issue.

I am left with a slight concern that we may have exposed a gap in our procedures that is exacerbated by the nature of these pieces of legislation. I hope that in calmer times, the DPRRC and the House might find an opportunity to reflect on this, and that our other committees, such as the Secondary Legislation Scrutiny Committee and the Constitution Committee, might do likewise.

When he comes to respond, it would be for the benefit of the House if the noble Earl highlighted any areas where the Government have decided not to follow the advice of the DPRRC, in whole or in part. I beg to move.

[Lord Balfe [V]]

I only really need to say one thing. I am concerned that some of these clauses might turn into permanent legislation—I am aware that there is a tendency for what is temporary to become permanent. Can I have the Minister’s assurance that it is not intended to extend any of these clauses beyond what is absolutely necessary to deal with this emergency?

--- Later in debate ---

[Earl Howe (Con)]

My Lords, I begin by speaking to the government amendments in my name—Amendments 26, 28, 47, 49, 58, 60, 65, 67, 73, 75, 78, 80, 81 and 83—which are grouped with Amendment 19 and the others in this group tabled by the noble Lord, Lord Stevenson.

I am grateful to the noble Lord, Lord Stevenson, for tabling his Amendments 19, 22, 57, 63 and 71, which would require any statutory guidance issued by the Secretary of State in relation to pavement licences, extended planning permissions, construction hours or electronic inspection of the Mayor of London’s spatial development strategy to be subject to negative parliamentary procedures. As he indicated, these amendments reflect recommendations made by the Delegated Powers and Regulatory Reform Committee of your Lordships’ House in its report on the Bill. I welcome the opportunity to discuss them.

The committee’s views are always important, and we have responded positively elsewhere in the Bill to its recommendations, as I shall explain in a moment. However, in relation to this matter, I am afraid we cannot accept its recommendations or, by extension, these amendments. This reflects partly a general principle but also the practical realities. First, the statutory guidance under Clauses 5, 8, 16, 17, 18 and 21 is planning guidance. Guidance by the Secretary of State to local planning authorities has been a key feature of the planning system ever since its creation over 70 years ago—whether that guidance has been through circulars, planning policy guidance or, more recently, the National Planning Policy Framework and its associated practical guidance.

The issuing of this guidance, as a general principle, has never required statutory instruments. For instance, there is no parliamentary procedure requirement in relation to guidance to local planning authorities about the preparation and content of local plans, a key planning function under Section 34 of the Planning and Compulsory Purchase Act 2004. Similarly, and to give an example directly relevant to this Bill, our construction working hours provisions and the extension of planning permission provisions modify the Town and Country Planning Act 1990. The various powers of the Secretary of State to issue guidance under that Act are not subject to parliamentary procedure. These documents will form part of the full suite of planning practice guidance and, in practice, it would be peculiar to have different parallel procedures for publication.

Our pavement licence clauses are linked to Part 7A of the Highways Act 1980. That Act contains four powers for the Secretary of State to issue guidance, none of which are subject to parliamentary procedure. Two of these powers were inserted by amending Acts in 2000 and 2015. The situation is similar for other statutory guidance required by this Bill. So, prescribing a parliamentary procedure for guidance in relation to the temporary planning measures in the Bill would be out of kilter with our well-established approach.

Furthermore, requiring guidance to be subject to parliamentary procedure does not reflect the practical realities of planning guidance. The draft guidance we have published is, like our other planning guidance, technical and practical and expressed in the form of questions and answers to help local planning authorities, and applicants, and has been formulated taking account of the view of sector specialists. For instance, the guidance on additional environmental approval for extending planning permissions has had input from the Environment Agency and Natural England. I hope that many noble Lords will have had the opportunity to review this guidance during the course of the Bill’s passage.

This guidance is designed to evolve over time in response to local planning authorities’ practical experience of these temporary measures. While we have obviously sought to ensure that guidance is as comprehensive as possible from the outset, we know that, in time, additional questions or clarifications may be required. We want to be able to make these updates in a flexible and timely way. We should not forget that local planning authorities are best placed to understand the specific needs, requirements and arrangements of their local areas. Providing helpful and up-to-date guidance is essential in allowing them to exercise their judgment on the ground. Requiring each change of guidance to be subject to the negative parliamentary procedure makes it more difficult in practice to make incremental changes to help them. I therefore regret that we cannot support these amendments, and I humbly beg the noble Lord, after reflecting on our arguments, to withdraw or not move them.

Turning to the other amendments in this group, I am pleased to say that the noble Lord, Lord Stevenson, and I find ourselves in broad agreement. The Government’s Amendments 26, 28, 47, 49, 58, 60, 65, 67, 73, 75, 78, 80, 81 and 83 implement another of the recommendations of the Delegated Powers and Regulatory Reform Committee, which the Government are pleased to accept. As noble Lords will be aware—I emphasise this to my noble friend Lord Balfe and the noble Lord, Lord Blunkett—the vast majority of the measures in the Bill are temporary. In several cases, clauses provide for expiry dates to be extended by regulations, subject to the affirmative or “made affirmative” procedure.

We thank the committee for its careful consideration of the Bill. Our amendments in this group would implement its recommendation to clarify that the provisions will only be extended for a purpose linked to the coronavirus pandemic. I was grateful to the noble Lord, Lord Beith, for his supportive comments on this issue. I join other noble Lords in extending my sympathy to him on the loss of his wife, the noble Baroness, Lady Maddock.

The Government’s intention has always been for the powers to extend the temporary provisions to be used, if necessary, in response to emerging information about the duration of the pandemic, the nature of social distancing requirements and the impact of coronavirus on relevant sectors. We want to provide absolute clarity that the powers to extend will be exercised only where this is necessary and appropriate, and only to mitigate an effect of coronavirus. Therefore, these amendments make this clear on the face of the Bill. The wording we have used is consistent with other legislation. I also remind noble Lords that the requirement for any extensions to be by regulations, subject to the affirmative or “made affirmative” procedure, will provide opportunity for further parliamentary scrutiny.

I am sure that noble Lords will welcome this clarity, and I hope that the noble Lord, Lord Stevenson, will agree to withdraw Amendment 19 and to not move Amendments 27, 48, 59, 66, 74, 79 and 82, which are intended to achieve the same purpose.

[Lord Stevenson of Balmacara [V]]

I thank noble Lords who have spoken in this short debate, not just for their widespread support but for their brevity. I particularly thank the noble Lord, Lord Naseby, for his kind words. I join other noble Lords in very much appreciating that the noble Lord, Lord Beith, has come in today to speak on this issue, and sympathise with him at this time of loss.

It was good to hear the noble Earl give a full response. He always couches his words to your Lordships’ House in such reasonable terms, packaged in a velvet of deepest hue, that it is sometimes easy to think that he is agreeing with you, when in fact he is not. In particular, I picked up his heavy points regarding the Government’s intention not to take up the recommendations from the DPRRC on statutory guidance to which regard must be had. The noble Earl gave very good examples, which had not occurred to me, but I have no reason to doubt that they are genuine. However, the DPRRC’s report is very firm on this issue:

“We have frequently taken the view that statutory guidance to which regard must be had … should be subject to a parliamentary procedure.”


It goes on to say that:

“This is not to say that the guidance should have to be drafted like a statutory instrument … The point is that guidance which has legal significance, and which may have—and may be expressly designed to have—a transformative effect on behaviour in important areas, requires a parliamentary procedure.”


There is clearly no chance that the House will resolve this important issue in this Bill, but I point out to the DPRRC that it has now been raised. It, and other committees, may wish to return to it in order that we resolve it going forward.

The House has given this issue a good kick about. I am grateful to the noble Lord, Lord Kirkhope of Harrogate, for picking up exactly point I was trying to make about the importance of the choice of terminology. He focused on a different set of amendments, but this issue runs like a golden thread through all the Government’s proposals when compared to ours. These are important differences, but they are not necessarily going to hold the House back tonight. I hope, again, that the DPRRC will look at them in due course. I beg leave to withdraw Amendment 19.

Amendment 19 withdrawn.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, Amendment 52, which I have signed and strongly support, is similar but different, in a crucial respect, to the one which the noble Baroness and I tabled in Committee. I am delighted that we are joined by even heavier artillery on Report. In Committee, the noble Baroness, Lady Williams, said:

“At present it is not possible to use a digital ID as proof of age for the purchase of alcohol in the UK because there is no industry standard for digital ID… Until such a standard is agreed, the current restrictions should be upheld. I hope that my noble friend will not press her amendment. I shall finish there.”—[Official Report, 13/7/20, col. 1435.]


I am not going to repeat what I said in Committee—for which I am sure the Minister is grateful—but I know she is always open to sound argument. I want to show why her brief in Committee was not entirely accurate.

It is rather misleading to say baldly that there is no industry standard for digital ID. Back in 2016, the age verification group of the Digital Policy Alliance—which has some distinguished and knowledgeable present and former parliamentarians among its members—sponsored a publicly available specification, PAS, code of practice standard number 1296 on online age checking. This was adopted by the British Standards Institution and the independent regulator, the Age Check Certification Scheme. It is now PAS 1296:2018.

A publicly available specification is a voluntary standard intended to assist providers of age-restricted products and services online with a means to adopt and demonstrate best practice and compliance. There are easily available audit processes and services to check conformity with the PAS, involving policy, quality and technical evaluation, and an enormous number of reputable companies provide age-verification services through digital ID systems. As the noble Baroness said, in many ways the UK is leading the way in digital ID. It is active across the range of age-restricted products and services, such as DVDs, gambling, lottery tickets and scratchcards, knives, air weapons, fireworks, petrol, solvents and cigarettes, but not—perversely and uniquely—alcohol.

This is the digital ID marketplace that the Government said they wanted to build, in their call for evidence last year. Most of these companies are UK-based and many are global. Nearly all work to the standard set by PAS 1296:2018. Many of them have other forms of certification and security standards in place, such as ISO 27001. There is an active trade body, the Age Verification Providers Association, whose members—as the Minister probably knows—have just had good news from the High Court in an important judicial review case involving non-implementation of the age-verification provisions of the Digital Economy Act.

Another government department, BEIS, through its Office for Product Safety and Standards, together with the Chartered Trading Standards Institute, provides training that

“will enable participants to confidently apply the PAS 1296:2018”.

Not only is there a form of auditable standard in place, but reputable training in compliance with PAS 1296.

As we pointed out in Committee, this is a strongly deregulatory measure. Retailers have noted that almost 24% of supermarket baskets contain an age-restricted item. As a result of current rules, many customers are waiting longer than necessary. This would ease any congestion, mitigate the risks of queuing, reduce the need for continual sanitisation by staff—as the noble Baroness said—and be for the benefit of all in infection control. Rather than being the last ship in the convoy, can the Home Office not steam ahead on this? The noble Baroness, Lady Neville-Rolfe, explained that it is essentially a pilot period only. I urge the Government to accept our amendment.

[Lord Stevenson of Balmacara [V]]

My Lords, I speak in support of Amendment 52. I very much hope that the Government welcome the spirit of what was said by the noble Baroness, Lady Neville-Rolfe, even if they cannot accept the amendment today—although I hope they can. There are a number of areas in public life where we urgently need a proper age-verification system that deals directly with what an individual can and, on occasion, cannot do. Gambling and access to legal pornography are two that come to mind, but access to alcohol, whether consumed on or off the premises, is under direct consideration today.

The noble Baroness, Lady Neville-Rolfe, spoke convincingly in Committee and again this evening on the benefits that a digital ID system would bring. This was echoed by the noble Lord, Lord Clement-Jones, who also explained what is happening in the digital marketplace. If, as the noble Baroness says, this boils down simply to putting ID cards, passports or driving licences on mobile phones, it is hard to see why the Government do not grab this initiative. It is already widely used, particularly for verifying age for knife sales.

There may be other work going on in the Home Office on digital ID, but I would be satisfied if the Government today confirmed that they are aware of the benefits of digital ID, supportive of the technology in principle and prepared to work with the industry to resolve any outstanding issues in the near future.

[Baroness McIntosh of Pickering]

My Lords, I too will address Amendment 52. I thank my noble friend Lady Neville-Rolfe for the interest she has shown in digital ID. I again declare my interest as chairman of the board of PASS, the Proof of Age Standards Scheme. I welcome the opportunity to again put on record my support for digital age verification. I am proud of the work PASS does; it has stood the test of time well in providing assurance through a set of national standards and an independent audit of physical proof-of-age cards. However, we are determined that PASS will not stand still. In an age when so many young people own a smartphone—according to Ofcom data in 2018, 95% of 16 to 24 year-olds own a smart- phone—it is only pragmatic for proof-of-age schemes to adapt to the technology most widely used by young adults.

That is precisely why PASS launched a consultation to seek views on its proposals to develop a set of standards to underpin digital proof of age. The PASS proposals will offer a seamless transition from physical to digital verification, continuing to support the many thousands of physical proof-of-age cards currently in use while mirroring those high standards for a new generation of digital proof of age. It will create a universal solution that will work in any number of outlets that sell or provide age-restricted products, as well as for alcohol licence holders. It will avoid additional costs for retailers and pubs, which are, as we all recognise, experiencing unprecedented challenge and change—that is why this Bill, and its measures to help businesses as the economy starts to reopen, are so welcome. It will allow for a level playing field of competition and choice for the new market of digital-age providers, where retailers and licence holders will not be reliant on a single supplier.

I do not believe that we want to prejudge the findings of the consultation: it closes this week, on 24 July, and the responses so far run into hundreds. However, there is support for the direction of travel set out by PASS from retail trade bodies, including the Association of Conveniences Stores, the National Federation of Retail Newsagents, the Retail of Alcohol Standards Group, and the Wine and Spirit Trade Association, and high-street supermarket brands, some of which are members of the British Retail Consortium. There is support within the hospitality sector, including from some well-known pub companies, and from the majority of card issuers, including CitizenCard and Young Scot. There is also support from the Age Verification Providers Association, which includes many of the new generation of tech companies, specialist in digital solutions, and the Government’s very own commissioned expert panel on age restrictions.

I pay tribute to the hard work and responsibility of the retail and hospitality industries over recent years. That we talk less today than in the past of the scourge of underage drinking and the dangers of age-restricted products is a great tribute to their hard work and responsibility. But let us not lose sight of the importance of preventing the sale of such products to minors; the protection of children from harm is a vital licensing objective. Regulation is important in managing risk, and accreditation against agreed and independently audited national standards is vital.

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[Baroness Kramer (LD) [V]]

My Lords, first, I thank the noble Baroness, Lady Penn, for her willingness to talk virtually to a number of us who have been focused on this issue; however, I came away from those discussions almost more confused than I went into them. This House will be aware that the financial regulators—certainly the FCA—do not regulate institutions but activities. One of the activities it cannot regulate is commercial lending, which is on the far side of what is generally called the regulatory perimeter. A slight sleight of hand is, to some extent, made available to sole traders, micro-companies and the very small end of small businesses so that they do merit some protection, that typically coming in the form of an appeal to the ombudsman. Although the ombudsman has very limited power to actually make sure that any remedy is effected, there is at least one to go to.

For companies that do not fall into this category—my noble friend Lady Bowles provided the detail, so I will not repeat it—there is no form of protection; the FCA has no standing. Therefore, when those companies are put into default and the banks come to collect on their debts, their only resort has been to the courts. Under this arrangement, that is now removed from those companies if they have taken out a bounce-back loan. I really do not understand why the ability to go to the courts to protest unfair treatment has been removed.

The Government have full knowledge that the FCA cannot act under these circumstances. I suppose that, occasionally, somebody in government will argue that the FCA can turn to the Senior Managers Regime, but, as we all know, having listened frequently to the testimony from Andrew Bailey, only in very rare instances would the regime apply. Indeed, the FCA has been very reluctant to use it, even in some very egregious cases; in fact, I would be interested to hear from the Minister the number of times the FCA has actually used it. It is not a workable mechanism for trying to force the banks to provide fair treatment to the larger end of SMEs if they go into default under their bounce- back loans.

The Bounce Back Loan Scheme is brilliant, but I am very concerned that it will end up with a stain on its character when, in 18 months’ or two years’ time, we have a chain of companies that are clearly being treated unfairly by the banks and both the Government and the regulators stand back and say, “There is nothing we can do. This was an unregulated activity, only contract law applied, and we have disallowed these companies’ ability to go to the courts to seek any form of redress”. Frankly, it is a tragedy and a scandal in the making.

I am not sure it has been made clear to companies that when they apply for bounce-back loans, it is caveat emptor and they will be without even the normal range of protections should they go into default. If I understand correctly, the Government have decided to disapply the right to turn to the courts as part of an enticement to the banks to participate in the Bounce Back Loan Scheme. I cannot believe that that concession should be given; and if it was asked for by the banks, I am even more worried because, as we know, the banks seek opportunities to make profit—that is the business they are in.

Perhaps the Minister is not that familiar with the RBS and GRG scandals. The GRG was a profit centre. The RBS staff who were part of the GRG were looking not only to get loans and interest repaid but to make an additional profit, particularly by seizing assets. Under the various contract terms, they could identify firms that would value those assets. The owners or borrowers could argue that the assets were being valued at well below market value, but had no means of enforcing that, and of course we know from the various reports that followed that it was not infrequently the reality that assets were valued very low, triggering the default, and months later, having been seized by the bank, were resold for multiples of the valuation.

The mechanisms that the banks use when they have the opportunity to put a company into default are frequently outside the boundaries of what any of us would consider fair and appropriate. I do not understand stripping away from companies any possible route to a remedy under those circumstances.

[Lord Stevenson of Balmacara [V]]

My Lords, my name is on this amendment, and I am in general support of the points powerfully made by the noble Baroness, Lady Bowles, in Committee and today, and by others who have spoken. They have made the main arguments, which I will not repeat.

The Government argue that the key driver for this initiative is to get the bounce-bank loans out to as many small businesses as want them and can use them, and to reduce barriers to that effect. I sympathise—it is very hard to be against that aim—but there are clearly risks here, as we have heard. While my concerns are not identical to those of the noble Baroness, Lady Bowles, they are very similar, and I would like to make three points on the issue.

First, there is general agreement that the Consumer Credit Act 1974 urgently needs bringing up to date, to be fit for purpose regarding the changed regulatory landscape of different lending practices and the tighter financial circumstances of the 2020s, now and post Covid-19. The current lender/borrower relationship envisaged under the Act does not work but, as others have said, it is very risky to remove all the court protections, and I sympathise with that.

Secondly, the Government have put on record the very tight constraints that they are putting on lenders who wish to engage with bounce-back loans, including banning fees, banning punitive interest and forbidding reach-through sanctions to personal assets such as houses and vehicles, but is that enough? There is a powerful tool in the Government’s armoury.

Thirdly, the 100% guarantee that we have been talking about is on the lender, not the borrower, but that gives the Government considerable powers which they say they will use to drive good behaviour. For me, the key question is whether, in removing access to the courts under the unfair trading clauses of the 1974 Act, the Government have put the bounce-back loan borrowers in a worse position than if they had left it all in place, or—as suggested in the amendment—just the affordability issue. It is a close call.

I would be very grateful if the Minister, when responding, could deal fully with the following points. First, will she confirm that the Government will undertake to overhaul the Consumer Credit Act 1974 in the near future, taking full account of the issues raised in this debate? Secondly, can she list concisely the limits on lenders’ ability under the bounce-back loan to penalise borrowers who are in default or otherwise transgress, irrespective of the amount of money borrowed, and the statutory and non-statutory opportunities for borrowers to protect themselves and their possessions if lenders attempt to penalise them absent the core protection of the 1974 Act?

Thirdly, can the Minister set out what she called “the steely determination” of the Government to use their power to reduce or cancel the 100% underwriting of loans made under the BBL scheme, if lenders transgress? This could be a very powerful weapon. It would be useful to know who will have the power to trigger certain sanctions, and how borrowers will be informed about the process. The noble Lord, Lord Carlile, suggested that an arbitration structure was needed, and he may well be right. If the Minister can confirm that these points are in play and give assurances on them, then I suggest that the noble Baroness, Lady Bowles, does not press her amendment to a vote this evening, as we will not support her.