Small Business, Enterprise and Employment Bill

Matt Hancock Excerpts

Wednesday 19th November 2014 Commons Chamber

[The Minister for Business and Enterprise (Matthew Hancock)]

I beg to move, That the Bill be now read the Third time.

I would like to start by thanking all hon. Members who have contributed to the scrutiny of the Bill, both in Committee and on Report. There has been considerable consensus and agreement on many of the measures, and I welcome the support from Members on both sides of the House for our doing everything we can to improve the environment for small businesses. It is a clear goal of this Government to make Britain the best place in the world to start and grow a business, and this Bill, the first of its kind, will make a significant contribution to that. Small businesses make a huge contribution to the UK, accounting for around half of UK jobs and a third of private sector turnover, and they are vital to our prosperity and to the UK economy.

The Bill strengthens and improves the way in which regulation is dealt with in government. We have introduced the one-in, one-out and the one-in, two-out approaches to regulatory management, and these have delivered over £1.5 billion of savings per year to businesses since January 2011. I am delighted that there has been support for enshrining the principles of transparent regulatory management in legislation through the regulatory reform measures.

The Bill makes significant inroads into improving the business environment for small businesses even further while also, crucially, providing new protections for the employees who lie at the heart of our recovery. For the first time, we have addressed the abuses of zero-hours contracts. Despite Labour’s promises going back 20 years, no action was taken. Now, however, we have passed legislation to address exclusivity in zero-hours contracts.

[Ian Murray]

Will the Minister tell the House how he can enforce the provisions on exclusivity clauses?

[Matthew Hancock]

Thanks to the Bill, exclusivity clauses will no longer be valid; they will be null and void. The Opposition promised to do this in opposition last time around, they did nothing about it for 13 years and now they witter on about impractical solutions, whereas this Government are interested in making changes that will improve the labour market. I am proud that we are doing this at the same time as increasing the number of jobs in this economy to record levels.

[Andy McDonald]

The Minister has not said how he is going to enforce this. How will it be enforced—will he answer, please?

[Matthew Hancock]

As I said, not only will any exclusivity clause be null and void, but we are consulting on those powers. If the hon. Gentleman actually wanted to get into the detail of trying to sort this out, he would know that that consultation was happening—perhaps he will even respond to it. One thing that happened during the passage of this Bill was that it became clear that the Labour party had not been engaged in any of the consultations about any of the improvements we are making. Instead of making partisan points, we are making it easier to do business and to employ people, and we are strengthening people’s rights where their employment contracts are abused, but doing so in a way that can allow small businesses to continue to grow, employ and take people on.

[Julie Hilling (Bolton West) (Lab)]

The Minister is trumpeting getting rid of the exclusivity clauses as a marvellous thing, but how does it help workers if, instead of having one zero-hours contract with one employer, they end up with several zero-hours contracts with several employers? That does not get to the heart of the problem, which is the abuse of workers on zero-hours contracts.

[Matthew Hancock]

The heart of the problem is that for 13 years the Labour party, having promised to do something about this issue, did absolutely nothing about it. Tackling this issue is about making sure we remove the abusive practices while also supporting the flexible labour market to ensure that people can get jobs altogether. Our reforms demonstrate that we can both deal with the abusive practices—for example, by tackling people who do not pay the national minimum wage and tackling the abuse of zero-hours contracts—and have a jobs recovery. The best way to help people is to make sure they have access to a job.

I am glad that on Second Reading the Bill had all-party support and that, throughout, we have had more than enough time to consider the issues—indeed, we have had time to spare. The fairness and transparency agenda that is also a crucial part of the Bill is all about making sure that businesses that do the right thing are not undercut by those that do not.

[Robert Neill (Bromley and Chislehurst) (Con)]

I recognise the importance of the initiatives set out in part 8. Does the Minister recognise that, consistent with his observation about making sure there is proportionality, before any regulations relating to part 8 are drawn up, careful consultation should take place with those directly affected in the financial sectors and, in particular, great attention should be given to the security risks that might arise if a register is held online?

[Matthew Hancock]

I strongly agree with my hon. Friend. Improving transparency internationally is important in ensuring that we tackle crime and have a system that people trust, but we have to introduce things in a way that supports legitimate business, does not put undue burdens on business and is secure in terms of the data held. The points he makes are important.

We have increased parliamentary scrutiny of the business impact target—the target for regulatory reduction. We heard in Committee that the Labour party would make no commitment to tackle the burden of regulation on business, whereas we have our one-in, two-out rule. We are ensuring that the targets and the associated metrics will have to be laid before Parliament when they are set or amended. We have also changed the Secretary of State’s powers on administration sales to connected parties and certain elements of the register of people with significant control, so that they are now subject to the affirmative resolution procedure, not the negative one.

We have also introduced new topics during the Bill’s passage, making it easier for small businesses to access finance. Research suggests that 71% of small businesses approach only one finance provider. Our change will ensure that those who want to do so, having been rejected by their bank, can have their details passed on, to encourage greater competition among finance providers. One problem was that there were few different finance providers—the number of banks had shrunk over the past couple of decades—but now, thankfully, the competition is very successfully coming back into the market for finance.

[Mr Jim Cunningham (Coventry South) (Lab)]

I am sure the Minister has covered this before, but it is worth saying again that one big problem for small businesses comes when the larger companies do not pay up on time and they then get a cash-flow problem.

[Matthew Hancock]

The hon. Gentleman is dead right about that and he anticipates my next paragraph. We have also strengthened measures to support prompt payment, acting both to increase transparency, so that when companies do not pay on time that is made clear, and to strengthen public sector prompt payment so that the sector can lead by example. I am grateful for that intervention.

We have also included a new clause on home businesses to remove the incentive, dating from a very old Act of Parliament, for landlords to prohibit tenants from operating a business from home. Home businesses are the hotbed of enterprise; 70% of new businesses are started at home, and we want to make it easier for that to happen. We have also strengthened support for the early-years pupil premium to help three and four-year-olds from less well-off backgrounds by amending the Bill to enable Departments to disclose to local authorities information on eligibility, while ensuring that unlawful disclosure of such data continues to be an offence.

Questions were raised in Committee about the scrutiny of complaints handling procedures in the financial services sector, so we have introduced a measure to require the independent complaints commissioners to produce an annual assessment of complaints handling. That will ensure that processes are fair and accessible to all complainants, including small business.

Finally, on pubs, the Government have listened and responded to the concerns about the burdens the measures would place on family brewers and removed these smaller companies from the scope of the code during the passage of the Bill. Yesterday, we saw the House express its will, and we will reflect on that vote during the Bill’s further passage.

[Toby Perkins (Chesterfield) (Lab)]

Is the Minister not being a little disingenuous to suggest that the Government have listened to what the Committee said, because they voted against the Committee on the family brewers issue and indeed yesterday they tabled another amendment to try to defeat the will of the House on that matter? Is not the truth that the Government have realised this is a battle they cannot win and they have given in?

[Matthew Hancock]

No. As the hon. Gentleman knows, no amendments were moved yesterday on family brewers. We will reflect on the vote on the larger pubcos and the mandatory free-of-tie option as the Bill continues its passage in the other place.

[Bill Esterson]

The Minister says he is going to reflect on the vote, with the will of the House being the market rent only option. I know he has spent his time apologising to the Prime Minister for losing that vote, but perhaps I may press him on the point. This will be taken to the House of Lords. Is he going to try to overturn the will of the elected House or not?

[Matthew Hancock]

As I have said, the House has made its position clear and we will reflect on that vote ahead of consideration in the other place. That is a very clear exposition of the position.

On the question of how we can ensure that Britain can compete in the future, that we can support businesses and the jobs and prosperity that they bring, that this country is the best place in the world in which to start and grow a business, and that we make things as easy as possible for all those who have the spark of an idea and want to turn it into commercial reality, I say that there have been few Governments in history that have done more for small businesses than this one. For the first time in modern history, we are on track to reduce the burden of domestic regulation—something that was never achieved by the Labour party. With these measures in the Bill adding to a multitude of others that have already been taken, we are doing all we can to support the British people and to ensure that we have a long-term economic plan that can secure for you, Madam Deputy Speaker, and for families across the country, the prosperity that we all want to see.

--- Later in debate ---

[Toby Perkins]

Of course I take your guidance, Madam Deputy Speaker, and I shall attempt to crack on but, as we said yesterday, the programme order gives us a pathetically short period of time to debate the Bill.

[Matthew Hancock]

rose—

[Toby Perkins]

I shall give way in a moment.

Indeed, the hon. Member for Huntingdon (Mr Djanogly) tabled amendments, but he did not even have the opportunity—

[Matthew Hancock]

rose—

[Toby Perkins]

I can see you, but I am saying something at the moment. The hon. Member for Huntingdon wished to move an amendment—

[Toby Perkins]

I think that that rather makes my point, Madam Deputy Speaker.

At the start of the Bill’s passage, our objectives were clear—[Interruption.] The Minister for Business and Enterprise is getting angry now. I appreciate that he has had a pretty difficult couple of days, but he should have been apologising last night not to the Prime Minister, but to all the publicans he was trying to get in the way of and all the people he has let down. He turned up late to the start of the Bill’s proceedings in Committee and its passage has been a shambles. If this is his Churchillian way of taking measures through Parliament, he should have spent a little more time at the knee of the Chancellor of the Exchequer, as he might have learned a little more.

[Matthew Hancock]

You are an embarrassment.

[Toby Perkins]

Frankly, the right hon. Gentleman is the one who ought to be a bit embarrassed.

Let me continue by talking about pub companies. The right hon. Gentleman was not in the Chamber for much of yesterday’s debate, but had he been, he would have realised why we were able to convince people that the Government’s proposals on pub companies did not go nearly far enough and that real change was needed. It is a matter of tremendous pride that we were able to convince hon. Members on both sides of the House to express their will in support of the market rent only option. The Minister’s attitude and the approach that he is taking demonstrate how the Government have lost all the arguments on that. I am glad to see that they are not going to try to bring the family brewers back into the scope of the measure, even though he is wrong to say that no amendment was withdrawn yesterday. A series of amendments were withdrawn yesterday that would have attempted to bring the family brewers back in. I hope he reflects carefully before attempting to change in another place something that was the will of this House.

--- Later in debate ---

[Mr Djanogly]

That may be the case, but it has not been said in public.

There is a hint in the impact assessment that, amazingly, provides only two alternatives—do nothing and rely on voluntary campaigns, or jump all the way to the Bill provisions and propose company registers, with companies reporting annually to Companies House. But why does the impact assessment not review more focused registration regimes? That will now need to be addressed in the other place.

This is not an academic issue. In particular, there seems to have been a wholesale disregard for the material impact that these provisions will have on privacy. People can buy assets privately unless the asset is public, such as a listed stock. They may not want other people to know what they own; they may have cultural, security or even religious-based concerns about people knowing that they own part of a company. What evidence do the Government offer in the impact assessment to justify destroying this right of privacy? Very little.

As for the increase in the regulatory burden, the impact assessment talks of implementation costs on companies and ongoing costs. It also says that the costs to people who need to register their interests cannot be ascertained, and those are the same people who may have to take expensive advice.

Investment in British companies is also threatened. The impact assessment methodology is again flawed, because it looks at the quantity of companies affected, not the quality. In other words, one lost huge Chinese investor deciding not to use or invest in an English company could be very damaging to UK plc, even if a thousand single-owner tiny companies say that this measure will not impact upon them. Again, the impact assessment does not support the Government’s contention that they remain convinced that this reform will be good for business and the UK business environment. What the IA actually says is:

“There is a risk that we have not accurately accounted for this potential impact on overseas investment in the UK and UK competitiveness . . . particularly since the UK will likely be a ‘first mover.’”

One has to ask why we should be the first mover, with associated risks as we claw ourselves away from recession.

And here’s the rub: foreign companies will not have to keep this register, which means that British people who legitimately wish to retain their privacy will be forced not to use English companies, but to use, say, Irish or British Virgin Islands ones instead. As always, it will be the relatively small, unsophisticated businessman who bears the weight of regulation aimed at catching drug smugglers, which I suggest these proposals will fail to do anyway.

Looking at this Bill as it goes to the other place, I would consider abolishing the need for companies to file annual returns of their PSCs—that is, returns that will be outdated within five minutes of being filed. Accepting that the company PSC register is instigated to comply with the G8 and G20 requirements, if the company does not wish to release the PSC register voluntarily, the applicant should have to ask the court for access. I suggest that the proper purpose grounds for access should be restricted to national security, personal safety issues and tax investigations.

In this way Government crime and tax agencies would be able to make their inquiries, but the registers would still protect privacy for those companies that wished to respect this right. At the same time, the unjustified costs and regulation of keeping the central register would be abolished and foreign investors would not be put off investing in the UK. Finally, investors, especially British investors, would be saved the irrationality of having to trade through UK branches of foreign companies in order to retain their privacy rights. There is time for the other place to review these provisions, and I hope it does so.

[Matthew Hancock]

Given that there will be no winding-up speeches in this debate, I would like to say for the record that many of the points that my hon. Friend has made, and made eloquently, will be considered in the consultation and, no doubt, in the other place. The key is to deliver on the agreements we have made internationally, and to do so in a business-friendly way. There are reassurances we can give on some of those points, and I know that he is meeting the Minister responsible in due course. I hope that gives him some satisfaction.

[Mr Djanogly]

I am very pleased indeed to hear that confirmation from the Minister. I look forward to having further meetings and seeing progress, because I can assure the House that there is a lot of concern about these provisions out there in the country, and it needs to be listened to.