Draft Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018

Nick Smith Excerpts

Wednesday 14th March 2018 General Committees

[Andrew Griffiths]

The measure will be enforced. I urge the hon. Lady to read the draft order again, because it contains that completely. I have even received divine intervention that clarifies definitely—it is in the SI. Perhaps I can point it out to her after the event.

[Nick Smith (Blaenau Gwent) (Lab)]

The Minister said that he would be interested in monitoring whether the hourly rate of a worker’s pay should be included on payslips in future. How will he do that? We think that that important measure is worth introducing.

[Andrew Griffiths]

I agree. As part of my role, I meet regularly with unions, employers, and employer and employee organisations. Such transparency is the sort of thing that we are introducing through the Matthew Taylor review. There is a plan to engage with stakeholders over the coming weeks and months as this comes into force. Through such engagements, I will monitor the situation to ensure that the transparency and change in the relationship between worker and employee that we want are delivered. I therefore assure the hon. Gentleman that my beady eye will be trained. I will talk at length with the unions to ensure that we deliver fairness for workers, and that people are being paid correctly. The draft order forms a crucial part of our efforts to ensure that no worker is underpaid.

Question put and agreed to.

Mineworkers’ Pension Scheme

Nick Smith Excerpts

Tuesday 5th December 2017 Westminster Hall

[Nick Smith (Blaenau Gwent) (Lab)]

I beg to move,

That this House has considered the Mineworkers’ Pension Scheme.

It is a pleasure to serve under your chairmanship, Mr Paisley. I applied for the debate for one reason: because miners and their families deserve a fair deal from their pension pots. In the time I have, I will talk a bit about the scheme—what it is, what the issues are and what could be done going forward—but first, I want to talk about why it matters.

I have a very personal stake in this because of where I am from and my family. Like much of south Wales, coalmining is a big part of Blaenau Gwent’s history. We were the crucible of the industrial revolution in Wales. Steel and coal propelled the Welsh economy, shaping our landscape and employing hundreds of thousands of people. There were tragedies as well, such as at Senghenydd and Six Bells in my constituency—I could go on.

Like many people in Blaenau Gwent, mining also played a big part in my family. I was named after three colliers—my three uncles on my mum’s side—Nicholas, Desmond and John. I still remember the 1974 coal strike: I went with my Uncle Dessie to pick coal off the patches high above Tredegar to help keep our homes warm. They were all members of this scheme. Working deep underground, miners like my uncles helped keep our country running for decades. It was dangerous work, but they just got on with it. Oakdale colliery, where a lot of my family worked, shut 28 years ago. The British mining industry is almost gone, but what is left is former mining communities such as Blaenau Gwent and pensioners like my uncles.

In 2006, there were 280,000 total members of the scheme. By 2016, there were just over 177,000 members. The scheme projects that that number will fall by about 50,000 in the next 10 years, which would take total membership down to about 127,000—a drop of 55% over 20 years. Those members who are left deserve a duty of financial care from our Government.

[Stephanie Peacock (Barnsley East) (Lab)]

I have hundreds of constituents who have paid into the scheme and deserve the money, in contrast to the Government, who have not made a contribution since 1994. In discussions, the Government have said that they do not intend to agree to changes that are not in their interests. This is simply not fair. They need to think again.

[Nick Smith]

My hon. Friend makes a really good point that gets to the nub of the question we are considering.

I called for the debate following the productive meeting that Labour colleagues and I had with the scheme trustees recently. At the meeting, we looked at ways of improving outcomes for the scheme’s members, and I am grateful to my hon. Friend the Member for Ashfield (Gloria De Piero) for organising it.

On the scheme itself, in 1994, there was an agreement between British Coal pension trustees and the Government. The Government made a guarantee that any pensions earned up until privatisation were safe and would not fall in cash terms. In return, if the schemes were in surplus and doing well, that surplus would be split 50:50, with half going to scheme members and the other half to the Government. The sharing of the surplus is at the heart of our discussion.

Since 1994, the Government have taken £3.5 billion out of the scheme, without making any payments into it. It could be argued that £830 million of that was British Coal’s original share of the surplus being paid back to the Government—I sort of get that and it is a fair point.

[Chris Evans (Islwyn) (Lab/Co-op)]

I am glad that my hon. Friend mentions British Coal. He will know that British Coal made no employer contributions between 1987 and 1995, when a Conservative Government were in power. Does he agree that that was an error by that Government that clearly proves that, in their time in government, they did not care about ex-mineworkers?

[Nick Smith]

My hon. Friend and neighbour really captures what has happened.

[Wayne David (Caerphilly) (Lab)]

As my hon. Friend has said, the surplus gets to the heart of the issue. Does he accept that the surplus the Government have received is far in excess of their own expectations for what could have happened?

[Nick Smith]

My hon. Friend and neighbour, like my hon. Friend the Member for Islwyn (Chris Evans), gets right to the bone. Nearly £2.7 billion has come from the scheme to the Government as their share of the subsequent surpluses. That means that the Government have taken the same share as the people who earned the pensions in the first place.

Instead of paying in, the Government act as a guarantor in case things go wrong. That is a good thing and has been helpful—the trustees say that. The Government say that they take the money because they will step in and protect the value of pensions if the fund encounters difficulties. The trustees accept that this protection has enabled them to pursue more lucrative investments than might otherwise have been the case. I would like to be clear: we are glad that the Government guarantee is there. It has made a difference and helped to lead to better returns.

[Ben Bradley (Mansfield) (Con)]

I have also met the trustees. Does the hon. Gentleman accept what they have said—that the guarantee is the most important part of the agreement, and that they would not wish to give any movement on that guarantee within the scheme for any price?

[Nick Smith]

The hon. Gentleman is right. When we met the trustees, they told us that the guarantee was important, and I accept that. It has been helpful in terms of pursuing lucrative investments, which have aided scheme improvements and its funding. It has also given miners the peace of mind that the pension they earned will not go down in value, no matter what happens in the markets. It is a good thing. The basic nature of the guarantee is not in dispute. The concern is about how much money is being taken out of the surplus in return for it. That is the question we have to try to tease out.

[Ann Clwyd (Cynon Valley) (Lab)]

I congratulate my hon. Friend on getting this important debate. The miners feel deceived and that they have been led down the garden path. As he and many colleagues know, there is anger in mining communities because they feel they have been duped. Waiting and waiting for some kind of resolution is not good enough. May we have an inquiry by the Treasury Committee into the scheme? Would he agree with that?

[Nick Smith]

I agree. More parliamentary consideration of this important initiative and where it goes next would be valuable.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate the hon. Gentleman on securing this important debate, the tone of his remarks to date and the manner in which he and colleagues are campaigning. Will he explain why during 13 years of Labour Government the deal with the trustees was not renegotiated at all?

[Nick Smith]

The hon. Gentleman makes a fair point, but this is not about looking backwards but about looking forwards and looking after the hundreds of thousands of people I mentioned in my introduction.

The Government have provided the guarantee, which is an important commitment, but I would like to ask the Minister three things and I would like three answers today, please. How many other pension schemes that the Government guarantee have delivered them a windfall of billions similar to that in this instance? Do the Government still think that the 50:50 share of the surplus is fair? Importantly, will the Government consider taking a reduced share in the future?

It has been estimated that the Government will receive windfalls of £51 million each year between 2016 and 2019—another £200 million. Lots of people feel that that belongs to the retired miners, not the Government, and I agree with them. Today, I call on the Government to revisit the surplus sharing arrangements, and in particular I urge them to meet the trustees of the scheme to chart a way forward. I am sure that I speak for many colleagues in saying that there is support for change in our constituencies, and that we should do the right thing by retired mineworkers and their families. The time has come for a better way to help the trustees support our communities. This is the miners’ money. They earned it through years of hard work at the coalface, and they deserve a better and fairer share of it.

Oral Answers to Questions

Nick Smith Excerpts

Tuesday 7th November 2017 Commons Chamber

[Greg Clark]

Through our industrial strategy, we have a clear focus on being the go-to place in the world for the future of mobility in all its different forms. Dunton in my hon. Friend’s constituency is home to Ford’s technical centre, which is obviously one of the major global forces in that future. It is particularly gratifying that Ford has chosen the UK to be the centre of its European operations for the future of mobility.

[Nick Smith (Blaenau Gwent) (Lab)]

15. What discussions he has had with Cabinet colleagues on providing funding to ensure minimum wage back-payment in the social care sector.

[Paula Sherriff (Dewsbury) (Lab)]

17. What discussions he has had with Cabinet colleagues on providing funding to ensure minimum wage back-payment in the social care sector.

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

I have worked closely with ministerial colleagues to implement a national minimum wage enforcement approach that protects the interests of social care workers and vulnerable service users. The Government recognise the financial pressures that some providers face, and we are exploring further options to minimise any impact on the sector. Any intervention would need to be proportionate, and the Government have opened discussions with the European Commission about issues relating to state aid.

[Nick Smith]

I thank the Minister for that answer, but how are the Government supporting individuals with personal budgets who could face bills of thousands of pounds in back-payments?

[Margot James]

We recognise that such individuals can be among the most vulnerable in society, and we are working to ensure that that group receives the necessary help and support. We expect local authorities to work with Her Majesty’s Revenue and Customs to ensure the right outcome for such individuals, but it is only fair that the budgets provided to personal budget holders reflect their legal obligations to pay the national minimum wage to workers on sleep-in duty both now and when it comes to any arrears owing.

Money Laundering and Tax Evasion (Azerbaijan)

Nick Smith Excerpts

Thursday 19th October 2017 Commons Chamber

[Dame Margaret Hodge]

I welcome that suggestion and will do that.

Ilham Aliyev remains President to this day, and in February this year he appointed his wife Mehriban as First Vice-President, in effect anointing her his successor. According to Human Rights Watch, the ruling élite

“continues to wage a vicious crackdown on critics and dissenting voices”.

But the Azerbaijani Government do want to be respected by the international community, in part because they want to sell us their oil and gas. That is why they worked to become full members of the Council of Europe, why winning the Eurovision song contest mattered and why hosting the European games in Baku was important. The so-called Azerbaijan laundromat that we are discussing today was a scheme designed to launder money out of Azerbaijan—money used to curry influence and bribe European politicians, lobbyists and apologists, and further to line the pockets of the Aliyev family and their cronies.

The scheme was revealed by the Organized Crime and Corruption Reporting Project, working internationally with newspapers, including The Guardian. The leaked documents covered payments over a two-year period from June 2012 until the end of 2014. The payments amounted to €2.9 billion.

[Nick Smith (Blaenau Gwent) (Lab)]

I congratulate my right hon. Friend, who has shown her usual great resilience in identifying financial skulduggery whenever she can; we worked together on looking at financial chicanery as fellow members of the Public Accounts Committee. Does she agree that much more detailed research is needed on this topic so that every angle and element of this huge finagle is properly understood?

[Dame Margaret Hodge]

I completely agree with that important point.

Money came out of Azerbaijan—nearly half from an account held at the International Bank of Azerbaijan through a shell company linked to the Aliyev family. That bank recently filed for bankruptcy. The other main contributors were two offshore companies with direct connections to a regime insider. It is hard to believe that the money was held legitimately in Azerbaijan.

The money was transferred to a small Estonian branch of Denmark’s largest bank, which is where Britain comes in. The money went into the bank accounts in Estonia of four shell companies, all of which were incorporated here in the UK. Our laws that allow such companies to be established were at the heart of this nefarious scheme. Much of the money then went into the pockets of European politicians, journalists, prominent individuals in international organisations and powerful political Azerbaijani families.

The leaked data show, for instance, that Luca Volontè, an Italian politician who led the European People’s Party group in the Council of Europe, received over €2 million. We know that he was instrumental in lobbying to ensure that a report criticising Azerbaijan’s human rights record was rejected by the Council of Europe in 2013. Several months after the country achieved that veneer of respectability from the Council of Europe, the European Commission announced the construction of the controversial gas pipeline from Azerbaijan to Europe. Volontè is now facing charges of corruption and money laundering in Italy.

Eduard Lintner, a former German MP, founded the Society for the Promotion of German-Azerbaijani Relations. That organisation received €819,000 over the two years covered, and Lintner got a €61,000 cash payment two weeks after returning from observing the elections in Azerbaijan and praising them for being up to German standards. The Council of Europe said the elections marked a

“step forward taken by the Republic of Azerbaijan towards free, fair and democratic elections”.

The reality was that the opposition alliance boycotted the elections, there was voter intimidation and the press was gagged. Lintner has denied any wrongdoing.

Kalin Mitrev, a Bulgarian who lives in London, received €390,000 for so-called consultancy for Azerbaijan. He now sits on the board of the European Bank for Reconstruction and Development that only yesterday agreed a loan to the Azerbaijan Government for €500 million to build a gas pipeline. While he recused himself from the decision and has denied any wrongdoing, his presence as a board member having received money from Azerbaijan makes it very murky and uncomfortable. He is being investigated by the Bulgarian authorities. At the same time, his wife, Irina Bokova, is Director-General of UNESCO. She bestowed one of UNESCO’s highest honours, the Mozart medal, on Azerbaijan’s first lady, the wife of the President, for:

“merits in strengthening the intercultural dialogue.”

I suppose that is an innovative way of describing the use of bribes to stifle criticism and secure international support.

Those people were paid from companies incorporated in the UK: Polux Management LP, Hilux Services LP, Metastar Invest LLP and LCM Alliance LLP. All were registered at Companies House. They are shell companies, sometimes incorporated through our tax haven overseas territories, that are deliberately used to disguise the origin of the money they receive. They are set up by shady and unregulated formation agents. They can engage in transactions while hiding the identity of the real beneficial owners of the company, yet because they have the UK stamp on them they command a respectable status. Our lax controls allow them to prosper and our corporate system allows money to be moved around and used without any questions being asked. That is simply shameful and it is taking place right here, right now in our country.

I am particularly concerned by the trend for unscrupulous people to use Scottish Limited Partnerships—SLPs—to launder money, and to evade and avoid tax. SLPs were invented to help agricultural tenancies in Scotland. Creating an SLP allows the partnership to hold property and enter into contracts, because it gives them a legal personality. But SLPs do not need to name any “natural person”—an actual person—as partners. They can just name companies. They have limited reporting requirements —for instance, they do not need to file accounts at Companies House unless one of the partners is a UK limited company, and while they are supposed to file returns with HMRC, they do not need to pay UK tax and they do not need to have a UK bank account. Of course, HMRC does not check whether accounts are filed.

Our laws allow a secret vehicle to be created to smuggle unexplained wealth into the system, money that is then used for a variety of illegitimate as well as legitimate purposes. SLPs have become a byword for corruption, tax evasion and organised crime. Just look at the facts. There was a 430% increase in the creation of SLPs between 2007 and 2016. In 2016 alone—in that one year—more SLPs were registered than had been registered throughout the 100 years after they were introduced. Bellingcat has looked in detail at the 5,214 SLPs registered in 2016. Ninety four per cent. were controlled by corporate partners, not individuals, and 71% of those corporate partners were based in tax havens. Seventy per cent. were registered to just 10 mailbox addresses in Scotland. They are anonymous and untraceable obscured structures linked to corrupt jurisdictions.

--- Later in debate ---

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

I congratulate the right hon. Member for Barking (Dame Margaret Hodge) on securing this important debate, from which I have learnt the shocking truth about Azerbaijan, and on her forensic analysis.

The Government are committed to making the United Kingdom’s financial system a hostile environment for illicit finance. The National Crime Agency takes allegations such as those identified by the right hon. Lady seriously, and will consider carefully whether recent information would allow an investigation to proceed. The Government pursue a targeted but proportionate level of enforcement that focuses on achieving compliance from companies. We seek to counter financial crime while protecting the dynamism of the UK’s business environment.

[Nick Smith]

Will the Minister give way?

[Margot James]

I will, but I have very little time.

[Nick Smith]

Does the Minister think that she has heard enough this evening to ask the authorities to launch an investigation?

[Margot James]

I must confess that I am not entirely aware of what my powers are in that respect, but if I am so empowered, I will certainly do as the hon. Gentleman suggests.

We want the United Kingdom to be a trusted place in which to do business, and the best place in the world in which to set up and grow a business. The UK has high standards of business behaviour and corporate governance. The overwhelming majority of its 3.9 million companies contribute productively to the economy, abide by the law, and make a valuable contribution to society. In discussing what action to take in response to the minority who abuse the system, we must not undermine its strengths or impose more burdens on the law-abiding majority without very careful consideration.

The Government are active in taking action to tackle misuse. Since 2015, we have implemented a series of reforms to increase the transparency of UK incorporated legal persons and arrangements in order to prevent their misuse for illicit purposes. The reforms include, but are not limited to: the introduction of the publicly accessible register of people with significant control, which the right hon. Member for Barking mentioned; the abolition of bearer shares; the introduction of unexplained wealth orders; and the introduction of the combined register of trust and company service providers supervised by professional bodies, as well as HMRC.

[Margot James]

I have a lot amount of material to cover. I will give way a little later if I have time.

It is too early to measure the impact of many of those reforms, but we expect them to make a significant difference in helping to prevent the misuse of companies and other entities, and in assisting law enforcement agencies with their investigations when misuse does occur.

The right hon. Lady mentioned Companies House. It carries out checks on all information that is received to ensue that it is valid, complete, correctly formatted and in compliance with company law filing requirements. The obligation to ensure the information is accurate lies with the company and its directors. The validation checks serve to help companies to get things right. A company commits an offence if it fails to maintain its registers and keep them up to date.

The UK has a robust system of publicly accessible data. The Government favour an approach that encourages transparency of information, followed by the scrutiny of company information over its lifetime. I appreciate that—

[Nick Smith]

rose—

[Margot James]

I will give way if I have time, although I might cover the points the hon. Gentleman wants to raise.

It might appear that the system is designed around the needs of law-abiding companies, which are the vast majority. I appreciate that it is open to abuse. Maintaining one of the most open and extensively accessed registers in the world is a powerful tool in identifying false, inaccurate or possibly fraudulent information. With many eyes viewing the data, as well as errors, omissions or worse, the information held on the register can be subject to significant policing by a variety of users.

Companies House is always looking at ways to further improve the quality of data. A significant recent development includes the introduction of the “report it now” function, which makes raising concerns easier than ever before.

If irregularities are raised, Companies House follows up with the company in question, and in most cases any inaccuracies are corrected immediately. There were over 2 billion searches of the Companies House register in 2016-17, which indicates that the data are available and under scrutiny. Companies House works closely with enforcement agencies such as the National Crime Agency in sharing data analysis to combat economic crime.

I will now talk about Scottish limited partnerships, which the right hon. Lady raised. I fully recognise her concerns. Over the past year or so, serious concerns have been raised about the use of these partnerships as vehicles for criminality. As a result, my Department launched a call for evidence earlier this year to collect information about the extent of the problem and how the limited partnership legal framework might therefore need to be strengthened. The Government have been considering this evidence and I can confirm that we are actively considering reform. We will announce our next steps shortly.

That said, it is important to mention that Scottish limited partnerships are a popular form of incorporation. I accept that their number has increased over the last few years, which gives rise to perfectly legitimate suspicions, but they are also used by many legitimate businesses across the economy, particularly in the investment and pensions sectors, fulfilling a genuine commercial need.

As the right hon. Lady mentioned in her letter to me at the end of last month, as of June this year, Scottish limited partnerships and a number of other legal entities were required to identify and disclose their “people with significant control”—beneficial owners—to Companies House. This information will form part of a central register that is publicly available, consistent with the requirements already placed on other forms of UK companies since 2016. Our objective is that the requirement will provide transparency over the ownership and control of Scottish limited partnerships.

Scottish limited partnerships are also required to submit a statement at least once a year confirming that their “people with significant control” information on the companies register is accurate. The right hon. Lady highlighted in her letter to me that many companies have yet to comply, but I can assure her that they will be chased down. As this is a relatively new requirement, the build-up of the names into the register of those who own and control SLPs is still under way. Companies House is undertaking compliance activity to ensure that Scottish limited partnerships comply with the new regulations.

In summary, I can confirm that the Government are actively considering options for the reform of these partnerships and will be setting out their approach soon.

Question put and agreed to.