Corporate Insolvency and Governance Bill

Nigel Evans Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Stephen Hammond]

The hon. Gentleman has taken a bit of latitude with what I said. I was pointing out that this was beneficial, but that we needed to consider the interests of the other and therefore their protection. He is corrupting, or misusing, my words, shall I say.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I think we might be straying a bit further afield from what we are supposed to be debating this afternoon.

[Drew Hendry]

Thank you, Mr Deputy Speaker, but I did say that this was about the ability of businesses to continue to trade and this has a material impact on the Bill, because along with the Finance Bill, which it was entirely relevant to mention today, and the support for business, this can undermine the work that we are doing on this Bill. I will rein myself in now, but I think that that is a valid point. I hope—as you know, I greatly respect you, Mr Deputy Speaker—that you will understand and accept that point.



I have a lot more to say about that. This issue has not gone away, nor has it been dealt with—but it should be if the public are to have any confidence going forward.

Finally, returning to the Bill, getting this through today to protect people and allow them to trade out of difficulties is vital. We should accept that changes need to be made. I have set out a few, and we have seen the amendments. We should work collectively to make sure that the Bill is as good as possible to protect businesses.

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[Darren Jones]

I do not. The public health emergency had to be dealt with, and understandably, it had consequences for the economic emergency we find ourselves in. Retail was one example that we heard from. However, I declare my constituency interests in the aerospace sector and in the transport sector, where evidently there will be a longer tail of damage to their business prospects than to other sectors of the economy that might be able to open sooner rather than later.

That is why we need a comprehensive recovery and growth plan, which, I understand from the Prime Minister at the Liaison Committee hearing last week, will be with us before the summer recess. That plan will need to take a strategic view on what the British economy should look like in the future, and what capacity, skills and production we therefore need to protect now—with, of course, the net zero transition baked in.

On corporate governance, which the Secretary of State noted today has been part of the longer-term thinking of this Government, I worry that the Government’s determination to act quickly in the Bill has come at the cost of bringing forward long-awaited reforms, as was so eloquently posited by the hon. Member for Huntingdon (Mr Djanogly). The failings that led to the collapses of Carillion and Thomas Cook, for example, and the impact of those failings on their employees, suppliers and customers, as well as the taxpayer, were the subject of extensive work by the BEIS Committee under the leadership of my hon. Friend the Member for Leeds West (Rachel Reeves), and that work underpinned serious reform-minded proposals to protect employees and the smaller suppliers, which too often suffer most.

In response to the Government’s 2018 consultation, Ministers also made repeated commitments to strengthen governance before the point of insolvency, for instance by better incentivising shareholders to take responsibility for performance.

I do not wish to set a panacea standard for the Bill, which I of course recognise needed to come forward quickly, but there was a welcome opportunity for the Government to have a bit more to show to bear out its claims of seriousness on this issue. With that in mind, I am curious to hear what commitments Ministers can make today to ensuring that the anticipated legislation on “Good Work”, following the Taylor report, and parallel legislation to reform the Financial Reporting Council into the Audit, Reporting and Governance Authority, are introduced to the House as soon as possible.

Relatedly, the BEIS Committee’s work in the last Parliament on curbing runaway executive pay and requiring proper reporting of the gender pay gap, alongside the question of how investment decisions on behalf of British savers and pensioners should be made in such a way as to bring society-wide benefits, in line with the stewardship code, constitute a challenge which I hope Ministers will rise to, if not in the Bill, then in the short future.

I understand the Government’s hesitation to reinvent the wheel with this specific piece of legislation, but I would welcome a clear statement of intent from Ministers today on the importance of rigorous corporate reporting—including on executive pay and the gender pay gap—and the centrality of building environmental, social and governance principles into investment decisions. I agree with other hon. Members that there have been many businesses acting in the best possible good faith in very difficult circumstances, but all of us recognise, as has been debated in the House today, that some businesses might be pushing that good faith too far, and where businesses are acting in bad faith, especially when in receipt of British taxpayers’ money, there ought to be at least consequences for the worst examples.

I appreciate the Government’s determination to act quickly, but moments of crisis should broaden, not constrain, our ambition to create a better future. The Bill will come as a genuine relief to businesses in the most difficult shape, and I of course support it. But its caution should be a matter of regret, and any such continued caution could yet be the undoing of the Government’s recovery efforts in the long term. In that spirit, I gently urge Ministers to be bold as well as decisive—so that the Bill forms the start, not the end. I look forward to further discussions on this topic before our Committee.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Chris Clarkson to make his maiden speech.

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[Stephen Kinnock (Aberavon) (Lab)]

May I say what a pleasure it is to follow the hon. Member for Heywood and Middleton (Chris Clarkson), who has paid a passionate and upbeat tribute to his constituency? It is the tradition in this House that when one gives a maiden speech, one is usually surrounded by one’s colleagues in a so-called doughnut. I congratulate the hon. Gentleman on giving the first ever maiden speech with a socially distanced doughnut.

Let me begin by saying that I support wholeheartedly the aims of the Corporate Insolvency and Governance Bill. This is a welcome response and a much-needed one in the crisis times in which we find ourselves. However, the changes are and must be just a small part of the rescue and recovery package that will be required in the long term. This Bill will provide short-term relief from overbearing creditors and give necessary protections, but to avoid a wave of insolvencies as we come off the back of this crisis and those protections begin to recede—a situation that would profoundly damage livelihoods and might have just as many damaging public health consequences as the immediate effects of the crisis—we need to have a plan for the long term that will enable our economy to bounce back in a sustainable manner. This means that the Government must go further and they must go faster.

These needs for ambition and urgency are particularly relevant to the steel industry. It is the largest employer in my Aberavon constituency, with 4,000 well-paid jobs directly employed in the Tata steelworks in Port Talbot, but with many thousands more in the supply chain. Nationwide, the UK steel industry employs 32,000 people and contributes £3.2 billion to mitigating our balance of trade deficit through the exports that are produced. It contributes £5.5 billion to the economy directly and through supply chains, and each job pays on average 28% higher than the average UK job. Indeed, steel is the very backbone of our whole manufacturing sector—from defence to transport to infrastructure—and there can and will be no post-pandemic economic recovery for our country without a strong and healthy steel industry.

As my right hon. Friend the Member for Doncaster North (Edward Miliband), the shadow Business Secretary, has rightly said, the support to the steel industry has been far too slow, and it finds itself now teetering on the edge of the abyss. I do not understand why the French and German steel industries received the liquidity injections they required, backed by their respective Governments, within 10 days of their respective lockdowns starting, yet not a single penny of Government liquidity has been made available to the British steel industry to date. I think we do need an explanation of why it has been so slow.

My worry was that the reason might be that some on the Government Benches have given up on the steel industry. I do not believe that to be the case. I do truly believe and hope that the silver lining from this dark coronavirus cloud may be that the UK Government finally recognise the need to support industries of vital strategic, foundational importance, such as the steel industry, and also that they will begin to acknowledge the value of more localised and shorter supply chains.

What we need, coming off the back of this crisis, is nothing short of a manufacturing renaissance in our country. If we are to grow the economy to meet the challenges presented by climate change, by the social care crisis and by the need to rebuild our economy post-pandemic in a serious, sustainable and balanced manner, we must significantly boost our manufacturing sector. It is currently languishing at 9% of GDP. I would strongly recommend that the Government set an ambitious target of boosting manufacturing to 15% of GDP by the end of this Parliament. We know that the Government like to chase targets. Let us have a target that can actually pull our economy together and rebuild it on the basis of a manufacturing renaissance.

Boosting manufacturing is a win-win-win in so many areas. Our economy is currently dangerously skewed towards consumption and debt. Manufacturing is about production, and that is the kind of shift that we need to make. It would boost productivity, and it is far easier to make productivity wins in manufacturing than in the services sector. It would rebalance the economy and correct the massive geographical gap that exists between the wealthiest region in our country—London and the south-east—and the poorest regions. It would reduce our reliance on China. Just look at the issues around PPE: 40% of the world’s PPE is manufactured in China. We surely cannot go back to having strategic dependence on a country such as China, which so patently does not share our democratic values and ideals.

The steel industry must underpin this manufacturing renaissance. Successive Conservative Governments have unfortunately failed to support the steel industry sufficiently over the past 10 years. For instance, UK steelmakers pay 80% more for their electricity than their French counterparts, and 62% more than their counterparts in Germany. Now, during the pandemic, the Government have failed to come up with the size of loan and liquidity for the cash-flow crisis that Tata Steel, the owner of the Port Talbot steelworks in my constituency, is facing. It is the UK’s biggest steelmaker. It asked the Government for a loan—I stress that it would be a loan, which the company would of course be contractually obliged to repay—to cover the £500 million cash flow black hole that has been caused by coronavirus for the company. The Government recently increased their large business interruption loan scheme to a £200 million cap, but that still falls well short of what the company requires to plug that temporary gap in its cash flow. What a contrast, as I say, with the French and German Governments’ actions. Within 10 days, their steel industries had the liquidity injection that they required.

The Government have now introduced Project Birch, which aims to support those larger companies that did not fall within the parameters of the business loan interruption scheme. However, we know very little about how Project Birch is going to work. Yet again, I am concerned that coming forward with a new initiative could set back the work that has been done under the framework of the previous initiative. It almost feels like we are back to square one. With every day that goes by, the British steel industry teeters closer to the abyss, so I urge the Government to make this their top priority. We need to see the action that is required happening with the greatest possible urgency. My right hon. Friend the Member for Doncaster North and my hon. Friend the Member for Manchester Central (Lucy Powell) have recently written to the Government demanding more action on UK steel, and I thank them for their efforts.

The Government must also urgently recognise that the cost of doing nothing is so much greater to the UK taxpayer than the cost of intervening. Previous research from the IPPR think-tank suggests that the loss of 4,000 well-paid steel jobs could cost the Exchequer almost £1 billion over 10 years, and that is before we count the astronomical capital expenditure cost of decommissioning the blast furnaces and steelworks. The structural cost of putting thousands of well-paid workers on to benefits, combined with the capital expenditure costs of decommissioning, would be absolutely astronomical for the British taxpayer. It would be the definition of a false economy.

The British steel industry is a 21st century industry. It builds the offices we work in, the cars we drive and the homes we live in. It is a cutting-edge industry that is doing so much to promote green growth. There is a project involving Tata Steel and Swansea University just next to my constituency called SPECIFIC, which is creating photovoltaic cells on the basis of a steel-based film, which could turn every home and office in our country into a power station. That is a steel-based product. We are not talking about metal bashing; we are talking about cutting-edge technology and manufacturing. We need to support the backbone of our manufacturing sector that is the British steel industry. We cannot afford to let that backbone break at this crucial time.

The legislation has also missed other opportunities. The Government should be bringing forward long-awaited reforms of corporate governance. I fully support my hon. Friend the Member for Bristol North West (Darren Jones), the Chair of the BEIS Committee, who I congratulate on his recent election to that position. We should ensure that directors do not focus only on profit. They must also focus on people and planet. There needs to be a triple bottom line reporting structure, and the first step is to amend section 172 of the Companies Act 2006. We need companies to adopt a much broader responsibility, not only to narrow shareholder needs and aims, but to a much broader-based stakeholder approach in setting their corporate objectives and mission.

On that note, I commend the work of my right hon. Friend the Member for Doncaster North (Edward Miliband) in his role as shadow BEIS Secretary. He has made it clear that we need a green, sustainable recovery by creating, in his words, an army of zero-carbon workers by retraining and redeploying those who cannot work into different industries. That churn will be essential as we enter the new paradigm of the post-pandemic economy and could apply in areas from home insulation to wind turbine manufacture. These are the opportunities that we see.

My right hon. Friend has also rightly pointed out that those companies that receive state support through this crisis owe obligations to the taxpayer. Those registered in tax havens who want support should come onshore before they get it. Multinationals that plan to pay dividends to shareholders while claiming the Government resources do not need to be doing that. We could also be more creative. In the long term, the Government should consider turning Project Birch into a sovereign wealth fund of the type that has boosted the prosperity of countries such as Singapore and Norway.

Let us ensure that we use this recovery to form a new partnership between Government and business—a partnership that will benefit the whole economy. Let us use this crisis as an opportunity to rethink, redesign and rebuild the British economy. However, the urgent, No. 1 priority now must be to protect the backbone of our economy, our UK steel industry; because without a strong and healthy steel industry, there can be no post-pandemic economic recovery.

[Mr Deputy Speaker (Mr Nigel Evans)]

It is always good to hear Swansea University get a good mention—yes, I went there.

Corporate Insolvency and Governance Bill

Nigel Evans Excerpts

Consideration of Lords amendments & Ping Pong & Ping Pong: House of Commons
Thursday 25th June 2020 Commons Chamber

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

I beg to move, That this House agrees with Lords amendment 1.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this we may take Lords amendments 2 to 116.

[Paul Scully]

The Corporate Insolvency and Governance Bill has been a demonstration of what can be achieved in the best interests of businesses, jobs and the country’s economic future when there is collaborative work across both sides of the House. I am grateful to hon. and right hon. Members for the constructive way in which the Opposition have engaged with the Bill, both in this House and the other place.

Over the past three months, this country has faced the unprecedented hardship of needing to adhere to stringent social distancing measures due to the covid-19 pandemic, where Government had no choice but to order businesses to close their doors to safeguard the nation’s health. We recognise the huge sacrifices that has entailed, and my right hon. Friend the Chancellor has provided unprecedented economic support to businesses and workers across the country to help them make it through this challenging time.

Some UK businesses have been hit hard, with many unable to trade or facing a significant short-term reduction in demand for goods and services. As a result, many otherwise viable companies face the threat of insolvency.

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[Paul Scully]

I am grateful to the hon. Gentleman. Clearly, these are all things that we will continue to look at.

The hon. Gentleman talked about the hospitality sector. Let me reassure him that the Government recognise that this sector is particularly hard hit by closure. I have regular conversations with representatives of the hospitality sector, including, most recently, only yesterday. They were very pleased and optimistic about the fact that we have now been able to change the rules within England and start giving them the certainty that they need to reopen. I look forward to successful reopening in England and, in time, in Scotland as well. It is so important that we work with the hospitality sector. The three winters issue that he described has been raised with me and I do appreciate it.

This shows the interlinking of the economy. I also hold the position of Minister for London. The hon. Member for Richmond Park (Sarah Olney) talked about culture. With regard to the hotel sector in London, people do not tend to go to a hotel just to sleep in another bed—they come, they sleep and they go because of the theatres, the restaurants and the culture around the area. It is therefore important that we get each of these sectors up and running. That is why we have these frequent discussions and work as collaboratively as we can. That also gives us the understanding we need in order to inform our support. A range of hospitality bodies and companies were consulted on the safer workplaces guidance, for example.

The hon. Member for Richmond Park talked of striking a balance, which is what we have tried to do in this Bill. I am grateful to her colleagues for making the point so clearly that measures are needed for longer. I hope she will agree that the Government have taken on board those concerns. She also spoke about the theatre sector. I know the Orange Tree. I tend to know the Orange Tree pub next door a little bit better than I do the theatre, but I know the great work that it does in the community. I will take her concerns back to colleagues.

Let me take this opportunity to thank the House of Commons Public Bill Office and the House Clerks for ensuring that this vital piece of legislation could be expedited through the House and consequently come into force as a matter of urgency. The support they have provided has been invaluable. I thank the officials who have brought this legislation into existence: my Bill team of Andy Ormerod-Clarke, Muneera Lula, Jess Bradbury, James Roddy and Alice Roycroft. All those in the teams in BEIS and the Insolvency Service—there are too many mention—have worked tirelessly, across weekends and in the evenings, to make sure that we could bring this to bear as quickly as possible. I want to mention the lawyers who have worked day and night, some of them with very young children, to draft this legislation: in particular, Jo Ashida, Denise Fawcett, Samihah El-Gindy, David Anderson, and our lead parliamentary counsel, Diggory Bailey.

I pay tribute to the policy leads, some of whom have worked in this area for many years, and who have worked with outside experts to make sure that we had the measures right: Steve Chown, Simon Whiting, Laura Bardsley, Rob Mak and many, many more. Colleagues from HMT, the Department for Digital, Culture, Media and Sport, the Ministry of Housing, Communities and Local Government and the DWP have also been invaluable. I pay tribute to all the organisations and representatives of businesses, consumers, workers, shareholders, investors and insolvency experts who have engaged with us in developing these proposals.

I conclude by mentioning those for whom this Bill is intended: the millions of business owners up and down our country who are keeping Britain moving. I say to them: please keep it up. Let us keep moving and let us bounce back our economy as and when the limitations and the restrictions are lifted.

Lords amendment 1 agreed to.

Lords amendments 2 to 116 agreed to.

[Mr Deputy Speaker (Mr Nigel Evans)]

I am sure we all wish baby Cameron Hendry the very best of health and luck for the future.

I suspend the House for three minutes.