Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability For WrongFul Trading and Extension of the Relevant Period) Regulations 2020

Paul Scully Excerpts

Monday 14th December 2020 General Committees

[The Chair]

Before we begin, I remind Members to sit in the seats with the ticks for social distancing reasons—I think everybody is anyway. Colleagues at Hansard would be very grateful if any speaking notes could go to them at [e-mail].

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

I beg to move,

That the Committee has considered the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 (S.I., 2020, No. 1349).

The regulations were laid before the House on 25 November, but as they are a made affirmative statutory instrument they need to be approved by the House before the deadline. We take the Joint Committee on Statutory Instruments very seriously as an important part of the scrutiny process, but at this stage we need to press ahead with important debates to ensure that the regulations’ passage is not delayed, as the Committee has not been able to report back so far.

There is at last light at the end of the tunnel, but it is a sad fact that the coronavirus pandemic continues to impact on our daily lives. We need to continue to keep our citizens safe and enable our NHS to carry on, but we also need to make sure that we can work with our businesses so that they can survive and build back. Our response to coronavirus has had a well-documented impact on the trading of shops, pubs, restaurants, leisure facilities and many other businesses up and down the country. We have provided businesses with an unprecedented level of support to get through this, but clearly we need to work with them until they are in a more stable situation.

Although the promise of a vaccine gives us good reason for cautious optimism about life returning to some degree of normality, we must in the meantime recognise the impact on business of the necessary but unfortunate restrictions on our daily life that are still in place. This statutory instrument revives one of the measures in the Corporate Insolvency and Governance Act 2020 and extends another. It revives the suspension of wrongful trading liability to 30 April and extends the flexibilities around the manner in which companies and other qualifying bodies can hold general meetings until 30 March 2021. These measures, like others in the Act, are designed to support companies and their directors in dealing with the impact of the pandemic.

I turn first to the suspension of the wrongful trading provisions of the Insolvency Act 1986, a measure that is being revived by these regulations. Wrongful trading is an action that may be taken by a liquidator or administrator that can lead to the courts making a declaration that director is personally liable for losses to creditors if a company carries on trading while insolvent. The provision may be used to recover losses to creditors, but its strength lies in acting as a powerful deterrent to insolvent trading in the first place, and as such it is a very important protection for creditors. In fact, the deterrent is so strong that in the spring there were genuine concerns that many directors would feel obliged to cause their companies to cease trading. The uncertainty about what might happen and how long restrictions might last meant that they did not know if the companies could survive and, if they tried to keep going, they could have been held personally liable for wrongful trading.

The 2020 Act suspended the wrongful trading provisions between 1 March and 30 September, which allowed directors to use their best endeavours to save companies that, but for the impact of the pandemic, would have been viable, allowing them to access Government support to continue trading and to save jobs and livelihoods. It gave them reassurance that if the worst happened and the companies subsequently entered insolvency proceedings, they would not be held personally liable for the wrongful trading. That suspension ended on 30 September, as at the time restrictions were starting to be lifted. Many companies were able to return to more normal trading, having taken advantage of the package of Government support available to them, and it was right for the important protection given to creditors by the wrongful trading provisions to return.

We have experienced a new wave of the virus, so it has been necessary for further restrictions to be imposed across most of Great Britain. Once again, directors face uncertainty about future trading conditions and, once again, they need the reassurance that they can continue to trade and save companies that would be profitable but for the restrictions without the fear of personal liability. The regulations use the power to make temporary changes to the effect of corporate insolvency legislation given by the 2020 Act to suspend the wrongful trading provisions again from 26 November to 30 April next year. That means that directors need not close viable companies because of uncertainty about their own position, helping to save jobs and contributing to the economic recovery. The 30 April expiry date will be kept under review. If in due course it becomes clear that the suspension is no longer needed to prevent companies from entering insolvency proceedings unnecessarily, it will be removed, even if that is before the end of April 2021.

In considering the suspension, it is important for us to recall that it does not remove the other vital protections for creditors that exist when a company is in an insolvent position. It is not a licence for directors to act recklessly. Indeed, directors who act irresponsibly can still find themselves subject to repercussions such as fraudulent trading actions under the Insolvency Act or disqualification from acting as a company director.

To turn briefly to the annual general meeting measure, the Corporate Insolvency and Governance Act also introduced temporary flexibilities around the manner in which companies and other qualifying bodies could hold general meetings. That allowed bodies to balance their constitutional agreement arrangements with the prevailing coronavirus restrictions and in doing so, safeguard the wellbeing of their shareholders and members. That is crucial for the operation of the UK’s strong corporate governance regime, which makes sure that the boards of companies and other bodies are fully held to account by their members. Without an extension, that scrutiny would be made increasingly difficult.

Despite the fact that in large part the season for AGMs is behind us, we know that there remain about 80 large companies still to hold them between now and the end of March. That excludes the multitude of smaller companies, charitable incorporated organisations and mutual societies that have simply similar obligations. The extension in the regulations will give them comfort that they can continue to convene these and other general meetings safely and in a way that is consistent with their legal obligations.

I hope that the Committee will agree that these two measures will provide much-needed reassurance to business in the critical trading period leading up to and beyond the Christmas period, and I commend the regulations to the Committee.

--- Later in debate ---

[Paul Scully]

Fantastic. There we go.

I thank the hon. Member for Manchester Central for her considered response. We agree on the need for certainty for business and, as she rightly says, on the need to save businesses and jobs today while also having a medium and long-term plan. I am acutely aware of the various measures coming to various ends. I speak to the retail sector and hospitality sector on a regular basis and, indeed, to small businesses. They continue to talk about rates, VAT and the moratorium on statutory demands and winding-up petitions. These measures are of great benefit to them, but we need to see what we can do. The best way of doing it, as well as reviewing it, as we clearly will, is to ensure that we can get the companies up and running as soon as possible. I hope that the vaccine and mass testing, as well as improved testing, will mean that in the new year, as the incidences come down, we will be able to trade safely and retailers, those in hospitality and all those kind of businesses will be able to give a warm welcome as well as a safe one and get customers back. They largely welcome the Government’s financial support, but what they really welcome is customers coming back. We will all need to talk up our economy when it is safe and appropriate to do so.

On the question of why we are doing this now and why we will come back to the measures, the wrongful trading measures are clearly a deterrent but they are also an important protection for creditors. It seems right that when things were looking up, we allowed creditors that extra protection by bringing the wrongful trading provisions back into operation. On AGMs, again, they are there for a reason: to report back to shareholders and hold companies, large and small, accountable to them. The more shareholders can fully participate the better, but given the situation we are in at the moment it is important that we extend the ability to have virtual AGMs.

The regulations will, I hope, provide some comfort and reassurance for company directors and allow them to use their best efforts to get their companies through this pandemic and out the other side, ready to continue to contribute to the economic recovery of this country. I thank hon. Members for their contributions to the debate and I hope that the Committee will approve the regulations.

Question put and agreed to.

United Kingdom Internal Market Bill

Paul Scully Excerpts

Consideration of Lords amendments
Thursday 10th December 2020 Commons Chamber

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

I beg to move,

That this House disagrees with the Lords in their amendments 1B, 1C and 1D.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to consider the following:

That this House agrees with the Lords in their amendments 8B, 8C, 8D, 8F, 8G, 8H, 8J and 8K, but disagrees with the Lords in their amendment 8L, insists on its disagreement with the Lords in their amendments 13 and 56, and proposes amendment (a) to the Bill in lieu of Lords amendments 8L, 13 and 56.

That this House insists on its disagreement with the Lords in their amendments 14 and 52 to 54 but does not insist on its disagreement with the Lords in their amendment 55.

That this House does not insist on its disagreement with the Lords in their amendment 44.

That this House does not insist on its disagreement with the Lords in their amendment 45, and proposes amendment (a) instead of the words left out by the Lords amendment.

That this House does not insist on its disagreement with the Lords in their amendment 47, and proposes amendment (a) to the Bill consequential upon the Lords amendment.

That this House disagrees with the Lords in their amendments 48B and 48C.

That this House agrees with the Lords in their amendment 50B, but disagrees with the Lords in their amendment 50C.

That this House agrees with the Lords in their amendment 51B.

[Paul Scully]

I will try to be brief in going through the amendments—but with some detail, Madam Deputy Speaker—to make sure that others can speak.

I am glad that, since our last debate on the Bill on Monday, there have been a number of very positive developments. I am delighted that the peers in the other place and the Government have worked together constructively to agree on a number of areas. However, it is clear that there are still a number of outstanding issues, which I will address today. I will set out the Government’s rationale and I call on this House to support the Government’s proposals.

I want to start with some of the positive developments, notably on part 5 and Lords reasons 14B, 45B, 52A, 53A, 54A and 55A. The Government have been clear throughout that they were committed to implementing the withdrawal agreement and the Northern Ireland protocol. We were also clear that as a responsible Government we could not allow the economic integrity of the UK’s internal market to inadvertently be compromised by the unintended consequences of the protocol. That is why, through clauses in the Bill, we sought limited and reasonable steps to create a legal safety net by taking powers in reserve, whereby Ministers could guarantee the integrity of the United Kingdom and ensure that the Government were always able to deliver on their commitments to the people of Northern Ireland.

We sought those measures to guard against the possibility of not reaching agreement with the EU at the Joint Committee. As my right hon. Friend the Chancellor of the Duchy of Lancaster and his EU counterpart have reached an agreement in principle, I am pleased to say that the clauses that provided for the safety net are no longer needed and the Government are removing them from the Bill: that is, clauses 44, 45 and 47.

I am pleased that the other place has now also agreed to clauses 42, 43 and 46 and consequential amendments, which are purely about protecting Northern Ireland’s place in the UK customs territory and internal market, delivering unfettered access in line with the Northern Ireland protocol and codifying in legislation existing practice in terms of the Foreign Secretary notifying the European Commission on state aid.

Alongside that, and in line with the agreement in principle, we have tabled a new clause that will require the Secretary of State for Business, Energy and Industrial Strategy to set out guidance for public authorities on how the state aid provisions of the protocol will work in practice, as well as consequential amendments as a result of removing clauses 44, 45 and 47. Guidance must take account of any declarations made by the EU and the Joint Committee, which would include the proposed EU declaration that forms part of the package agreed in principle by the Chancellor of the Duchy of Lancaster. I call on the House to agree with the Government’s approach in this area.

I turn now to amendments 1B, 1C and 1D. Yesterday, noble Lords in the other place once again commended the importance of the Government’s continuing co-operation with the devolved Administrations on the common frameworks programme and reiterated their support for it. I would like to take the opportunity to thank the noble and learned Lord Hope for his considered intervention yesterday, and for all his thoughtful work on the Bill. However, while his new amendments would clarify the interaction between divergence agreed under common frameworks in the market access principles, they would still potentially undermine the certainty that the market access principles are designed to provide for business, because of the possibility of differing interpretations of what is permitted under an agreement. Moreover, as I set out on Monday, the amendments could create a broad exclusions regime. In itself, that denies businesses and consumers much needed clarity about the terms of trade within which they operate.

I would also like to take this opportunity to remind the House that common frameworks are processes for negotiation and reaching agreement, and are not in themselves a policy outcome. Wholesale exclusions from the market access principles of agreement reached through the common frameworks process could therefore lead to the unacceptable risk of harmful trade barriers being erected across the UK. Such barriers could not be erected under the EU system unless justified and notified to the Commission, and they are undesirable in our own UK internal market. For those reasons, I respectfully suggest that the approach put forward in the amendments is not appropriate.

I have said previously that the Government are committed to completing the delivery of the common frameworks programme and protecting these areas of co-operation to the benefit of jobs, people and livelihoods. We welcome the support of hon. and right hon. Members here in achieving that. However, amendments 1B, 1C and 1D have considerable drawbacks and I therefore call on the House to disagree with them.

Let me turn to Lords amendment 8L. I remind the House that, in drafting the Bill, and clause 10 specifically, the Government designed an exclusions approach that achieves a careful balance. It sits within the fundamental framework of the market access principles, which protect the UK’s highly integrated internal market, but allows the Government to remove very targeted and specific policy areas from scope, so it can continue to operate for the particular conditions, where they are needed, under the bespoke constraints that are relevant to those circumstances. Let me repeat the point for emphasis: we agree that there is a need for an exclusions regime, but one that is carefully drafted and provides certainty for business.

I am therefore disappointed that the other place has again voted to upset that careful balance with an altered, but still fundamentally flawed, expansive list. It would render the protections and benefits of the internal market proposals under part 1 meaningless. This would allow unnecessary trade barriers and unjustifiable costs to businesses and consumers.

Amendment 8L captures all kinds of public policy objectives and only requires a new regulation to make a contribution to any of the aims in the list. That means that almost any regulation that the UK Government or the devolved Administrations propose in the future could be excluded from the scope of the market access principles. I therefore call on the House to disagree with amendments 8L, 13 and 56, and agree with the Government’s amendments in lieu.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

The Minister refers to the Government amendment, which also refers to consultation and consent. Yesterday, the Senedd voted to withhold consent from the internal market Bill. Its provisions regarding consultation are meaningless. When he says that Wales will be consulted, what we hear is contempt. Will he admit that to press ahead regardless, against the express will of the people of Wales and Welsh democracy, is to follow, as Lord Thomas put it in the other place, the

“discredited principle of ‘Westminster knows best’”?—[Official Report, House of Lords, 25 November 2020; Vol. 808, c. 278.]

[Paul Scully]

We want to work with the Welsh Senedd. We want to work with the Welsh people. We want to work particularly to ensure that Welsh businesses have certainty, and English, Scottish and Northern Irish businesses as well. That is why we need to work at pace to ensure that we have an internal market that works for all come 1 January.

Let me turn to amendments 48B and 48C. It is right, as we leave the transition period, that the UK Government have the right tools to make sure the whole country can benefit from investment, which strengthens the communities, economies and connectivity within and between all parts of the UK. I emphasise once again that this power is in addition to the devolved Administrations’ existing power. It does not take away responsibilities from the devolved Administrations; rather, the power will enable the UK Government to deliver investment more dynamically and in collaboration with the devolved Administrations and other partners.

The Government will work with the devolved Administrations to ensure we can complement their existing and continuing powers, used to support citizens in Scotland, Wales and Northern Ireland. We will also work collaboratively with other crucial partners, including local authorities and wider public and private sector organisations.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

If the desire is to work collaboratively, why on earth are the Government rejecting these amendments, which simply ask for consent from the devolved Administrations? That would be collaboration.

[Paul Scully]

I have talked about the fact that we have spoken with the Scottish Government and continue to do so and we are very open to that. What has been frustrating, in terms of collaboration, is that although we have collaborated on common frameworks, the Scottish Government have pulled away from discussions about the internal market, and that started to cause this detachment. But we do want to hold out our hand to make sure we can continue to collaborate in the future to complement, as I said, the existing powers.

I want to touch briefly on the UK shared prosperity fund. This power means that the UK Government can make good on our commitment to the UKSPF. The UK Government intend to work with the devolved Administrations and with local communities to ensure that this power is used to best effect and that the UK shared prosperity fund supports citizens across the UK. Indeed, we have confirmed that the devolved Administrations will be represented on the UK SPF governance structures. The Government will set out further details of the objectives and administration of the shared prosperity fund in the UK-wide investment framework, which will be published in the spring. We will continue to engage the devolved Administrations as we develop the investment framework in advance of its publication.

--- Later in debate ---

[Paul Scully]

I appreciate everybody who has taken the time to speak today. My hon. Friend the Member for Stone (Sir William Cash) spoke about the “notwithstanding” paragraphs in the Bill. Clearly, we have made the arrangements. We have found an agreement with the Joint Committee, and I sincerely hope that that will continue through to the next stage, which will be getting a free trade deal, on which the Prime Minister is working very hard with Lord Frost and his counterparts in Brussels. We will always make sure that we look after unfettered access for Northern Ireland into GB, which comes to the points that my hon. Friend made.

[Sir William Cash]

I did ask for an assurance in general terms that the necessary measures would be taken in primary legislation if things were to go wrong for the future. That is all I am asking for. It is not very much, but it is really important in relation to the potential striking down in legislation.

[Paul Scully]

I appreciate what my hon. Friend says. I think we will give the appropriate measures and protections, whatever form that comes as—if it is indeed needed; I hope that it is never needed in the first place. We will look to make sure that we protect Northern Ireland and its unfettered access.

My hon. Friend talked about state aid rules in Northern Ireland. They will apply to Northern Ireland as agreed under the withdrawal agreement and the Northern Ireland protocol, but they are not the same state aid rules that apply today, because there are new flexibilities of service providers. We welcome that agreement in principle in the Joint Committee, which was about managing the risk of reach-back into Great Britain and guards against the Commission taking an extreme or irrational interpretation of article 10 of the protocol. That means that there is no longer a need for the safety net.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) talked about the common frameworks and Scotland’s involvement. I hope I was correct in saying that I believed that the Scottish Government pulled away from discussions about the internal market, not common frameworks. I hope that is clear; if I did mis-speak, that was exactly what I meant to say.

We have now had 90 hours of scrutiny on this Bill across both Houses. I reiterate that I am grateful for how right hon. and hon. Members in this place have debated, scrutinised and engaged on the Bill. I said on Monday and again emphasise that we have been and will continue to be reasonable in discussions on this Bill. Since Monday, we have had a lot of good, positive movement and agreement and we welcome that, but ultimately, Government need to balance this with the need to deliver a Bill that provides the certainty that business wants and needs to invest and create jobs.

[Mr Deputy Speaker (Mr Nigel Evans)]

Perhaps somebody from the SNP could inform the Chair privately who its Tellers might be, should they go afterwards.

Question put.

Rural Scotland: Excess Delivery Charges

Paul Scully Excerpts

Wednesday 9th December 2020 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Ms Rees. Thank you for stepping in to enable my hon. Friend the Member for Moray (Douglas Ross) to make his really important case. I congratulate him on securing this debate. The issue continues to be important for his constituents and for those of other Members in the similar debates that he has led over the years. He has been a dogged champion for his constituents in Moray on this and other subjects. They should be proud to have someone championing people who live in the highlands and other parts of rural Scotland.

Delivery charges are part of the underpinning of trade within the UK, so I have a lot of sympathy with my hon. Friend’s concern that some consumers in parts of Scotland are charged differently from consumers in other parts of the UK. I also recognise that similar issues exist for consumers in Northern Ireland.

I am pleased to be able to take part in today’s debate, and to outline the progress that has been made since the previous debate back in July 2019. Let me first of all remind colleagues of our general approach as a Government. The Government’s aim in relation to post is to secure a sustainable, efficient and affordable universal postal service. With regard to delivery charges specifically, it is crucial that retailers are up front about those charges, as my hon. Friend eloquently articulated: where they deliver to, what they charge, and what premiums apply, if any. Consumers then know where they stand, and can make an informed decision before they purchase. That is what the law requires.

Our legislation is robust. The Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 set out that information given by traders to consumers regarding delivery costs, including any premiums, must be up front and transparent before a transaction is entered into. Any consumer who believes that these rules are being breached should report it through the specifically set up deliverylaw.uk website, so that incidents are recorded and appropriate enforcement action can be taken.

A significant amount of work has been undertaken by the Advertising Standards Authority—I am glad to hear about my hon. Friend’s work with the ASA on this issue—and by the Competition and Markets Authority to ensure businesses comply with that legislation. Where that compliance has not happened, both bodies have on the whole acted swiftly. The ASA has issued enforcement notices to online retailers whose parcel surcharging practices have been reported, and has achieved a compliance rate of over 95%. The CMA has issued a number of advisory notices to the major retail platforms, and I take the point my hon. Friend makes about letters: just telling companies not to do it again goes part of the way, but clearly those companies need to actually change their behaviour, rather than just getting a warning letter. We need to see the results of that. The CMA has also published guidance to retailers who sell via those platforms, and continues to work through primary authorities to ensure improvement in these areas.

On the legal compliance side, significant progress has been made, and our enforcement partners will continue to monitor and take action where necessary. However, the Government recognise that the delivery costs to reach some parts of the UK can be higher, and strongly encourage businesses to, as far as possible, provide consumers with a range of affordable delivery options. To help achieve this, we have ensured that everyone, including retailers, has access to an affordable postal service for deliveries across the UK under the universal service. Through the universal service obligation, Royal Mail delivers parcels of up to 2 kg six days a week at uniform rates throughout the UK. I echo my hon. Friend’s thanks to posties up and down this country, in every part of the UK, who have been working through the pandemic to make sure we remain connected even when we are locked down. As my hon. Friend has said, it is a shame that we cannot join them in the sorting office to wish them a merry Christmas and thank them for all their work as they enter this particularly busy time, but this is a good platform to be able to echo his thanks and season’s greetings to them all.

Let me make this clear: it is up to businesses to respond to customers’ needs and determine the most appropriate delivery options for their customers. There are no rules to prevent the differential charging between businesses for deliveries, and I do not believe, for example, that imposing a price cap is necessarily a practical answer.

The postal sector regulator, Ofcom, recently published new information on how this part of the market is operating as part of its annual post monitoring update. Ofcom collected information on the extent to which parcel operators vary the price that they charge online retailers for bulk delivery of parcels to different parts of the UK. The long and the short of it is that some operators do vary their prices, whereas others do not.

The information gathered by Ofcom showed that operators take different approaches to the pricing of parcel delivery services: two large business-to-consumer operations, Royal Mail and Hermes, do not set different prices based on location. However, the geographical profile of deliveries can still play some role in determining the uniform price that these operators negotiate with retailers, especially if volumes are skewed towards a particular part of the UK.

[Douglas Ross]

I again go back to the Citizens Advice Scotland briefing for today’s debate. I am looking forward to attending the annual general meeting in Moray tomorrow, where I am sure we shall discuss this issue. One of its recommendations is that consideration should be given to whether Ofcom requires further regulatory powers in relation to the parcels market, following on from the publication of the recent data on this market. Is that something that the Minister would consider, and take up with Ofcom?

[Paul Scully]

Obviously we work with Ofcom; it straddles a number of different Departments. We will always look at issues with it, as we do with other regulators, to make sure it has the powers to do the job it needs to do.

As I was saying, there are a number of delivery options that businesses can adopt. Some have minimal delivery charges, and others are more bespoke models. A competitive market in delivery charges, which will ultimately help consumers, should put downward pressure on the charges applied by retailers and delivery operators. There are positive signs that things are changing in that regard.

In August, for example, Argos announced that it would deliver large items to more than 98% of residents on the main Scottish islands, bringing deliveries to 41,000 more homes and another 56 islands, including Shetland, Orkney, the Inner Hebrides and the Western Isles. In 2019, Wayfair took the decision to scrap delivery charges for orders over £40 anywhere in the UK and charge a standard rate of £4.99 for orders below that threshold. Those are the types of commercial decisions that will set businesses apart from their competitors, drive competition and lead to lower costs.

Let me reassure my hon. Friend that the Government are not complacent. The consumer protection partnership chaired by officials in my Department continues to work on the issues. That goes to the point about working with companies to help foster the necessary competition. I am more than happy to continue to work with my hon. Friend so that we can help, convene, push and shape the conversation. Ultimately it is a free market; we are both free marketeers. However, we can make sure that consumer voices are heard, so that if consumers in his constituency have complaints, and if surcharges are imposed after the event, the consumers’ voice will be amplified and heard, through his work and through the Government, to stop unfair practices.

Alongside the work of the consumer protection partnership, and others, Ofcom will be undertaking a review of its future regulatory framework for post over the next year. A call for inputs from stakeholders will be launched before the end of the financial year and a statement on the future framework is expected to be issued by the end of the 2021-22 financial year. The review will consider issues affecting the broader postal sector, as people’s reliance on parcels continues to grow.

I am unconvinced of the need for further legislation, but my hon. Friend talked about whether there is a need for new powers, and what more can be done to encourage the market, drive competition and make sure we enforce the current regulations and legislation correctly. My priority is exactly that—that robust enforcement of the law should continue to ensure that customers are not surprised by delivery charges, and that competitive pressures should continue to drive down delivery charges, as has already happened. I congratulate my hon. Friend once more on securing the debate and on his further championing of his constituents.

Question put and agreed to.

Companies House: Reform

Paul Scully Excerpts

Wednesday 9th December 2020 Written Statements

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

My right hon. Friend the Under-Secretary of State for Climate Change and Corporate Responsibility (Lord Callanan) has today made the following statement:

The Government have today published three further consultations to take forward their plans to reform the UK’s register of company information and give businesses greater confidence in who they are doing business with.

These consultations follow the Government’s response to the 2019 consultation to enhance the role of Companies House and increase the transparency of companies and other legal entities, which was published on 18 September 2020.

The key proposals of the consultations are:

Querying power consultation: Companies House will have new powers to query information, which will be exercised on a risk-based approach. The consultation also explores how its powers will be strengthened in a range of areas, including to close various loopholes and remove information from the companies register.

Accounts filing consultation: This consultation invites views on how companies might in future be able to file accounts once with Government, instead of providing separate filings to Companies House, HMRC and other agencies. We are also reviewing the way small companies submit accounts to get the balance right between minimising burdens whilst ensuring the information provided is actually informative. We are also proposing to require all companies to file accounts to Companies House in digital formats, and to give Companies House more powers to check information in those accounts.

Corporate directors’ consultation: To tackle opaque corporate structures, we propose that corporate directors will be prohibited unless their own boards comprise all natural persons, and those natural persons have their identities verified.

These consultations are another important step in the developing the detail of our package of reforms and will have a negligible impact on the speed at which incorporation and other filings are completed: we still expect the vast majority of companies to be able to incorporate easily within 24 hours.

A copy of the consultations will be deposited in the Libraries of both Houses.

[HCWS634]

United Kingdom Internal Market Bill

Paul Scully Excerpts

Consideration of Lords amendments & Ping Pong & Ping Pong: House of Commons
Monday 7th December 2020 Commons Chamber

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

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

[Madam Deputy Speaker]

With this it will be convenient to discuss the following:

Lords amendments 2 to 7.

Lords amendments 8 to 19, and Government motions to disagree.

Lords amendment 20 to 29.

Lords amendments 30 to 34, and Government motions to disagree.

Lords amendments 35 to 41.

Lords amendment 42, and Government motion to disagree.

Lords amendment 43, Government motion to disagree, and Government amendments (a) and (b) to the words so restored to the Bill.

Lords amendments 44 to 57, and Government motions to disagree.

Lords amendments 58 to 60.

Lords amendment 61, and Government motion to disagree.

[Paul Scully]

This Bill has generated a lot of debate in both Houses, and rightly so. It is a Bill that is vital in providing certainty for businesses and for protecting the Union. It is a Bill that allows the continuing smooth functioning of our UK internal market at the end of the transition period. Our approach will give businesses regulatory clarity and certainty and ensure that the cost of doing business in the UK stays as low as possible, and it will do so without damaging and costly regulatory barriers emerging between the nations of the United Kingdom.

In the other place, the Government and peers had good discussions and debates on the principle behind the Bill, and they have come to very reasonable proposals in some areas. It is right that both Houses work constructively to scrutinise and improve legislation, and the Government are therefore accepting a number of Lords amendments. That is why the Government are disappointed that in some cases amendments put forward by the other place would do the opposite and generate more ambiguity and uncertainty. Other amendments put forward go further, in hampering the Government’s ability to protect the Union and our internal market, to level up the country and to take advantage of the opportunities afforded by the end of the transition period. That is why today the Government are disagreeing with a series of amendments, to which I will now turn.

Regarding Lords amendments 1, 19 and 34, the other place and Her Majesty’s Opposition in this House have been clear about their strong support for common frameworks. I am pleased to hear that, because the UK Government are strongly committed to them as well. Joint work with the devolved Administrations to develop common frameworks is progressing well, and the first three frameworks are currently undergoing parliamentary scrutiny. The common frameworks programme represents successful joint working, ensuring that our shared objectives of making coherent policy, upholding high standards and supporting the distinct needs of each part of the UK can advance as one. They are evidence of our mutual respect for devolution.

I am pleased that work is well under way on the 33 frameworks that we expect to conclude jointly with the devolved Administrations. Thirty of those will be provisionally agreed by the end of 2020 and will then be scrutinised by Parliament and the devolved legislatures. A small number are likely to clear scrutiny by the end of the transition period, at which point they will become full frameworks.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is good that the Minister recognises the importance of common frameworks. All four nations of the United Kingdom have agreed a common framework on an emissions trading system, so why is the Treasury now considering imposing a carbon emissions tax instead, against the wishes of the devolved Administrations? Surely that does not respect common frameworks.

[Paul Scully]

Discussions on that are ongoing and it is right that we have them. On the common frameworks, the devolved Administrations and representatives of England in the UK Parliament have made their views well known.

[Jim Shannon (Strangford) (DUP)]

We have a strong agrifood sector in Northern Ireland. There needs to be an understanding between the Northern Ireland Assembly and this place, to ensure that our agrifood sector can continue to expand and sell its products around the world. Will the Minister reassure us that that will happen and that nothing will hinder it?

[Paul Scully]

The whole purpose of this is that we can get the internal market right. We do not want to hamper any business, wherever it is in the UK, from being able to trade overseas with the opportunities afforded by global Britain at the end of the transition phase and beyond.

I want to make progress because I want to get across some detail and allow other Members to have their say. The common framework programme was never designed to be an all-encompassing solution to the maintenance of the internal market. This Bill will instead provide the additional legislative protection to internal UK trade, which is required for business certainty. As an aside, I note that half of the active frameworks have little or no interactions with this Bill, as they do not pertain to the internal market. That has sometimes been forgotten in recent debates.

The flexibility that underpins the framework programme is key to its success. It was set up in 2017 with an objective to manage regulatory coherence in specific devolved policy areas of returning EU law. While the frameworks are envisaged in very high-level terms in schedule 3 to the European Union (Withdrawal) Act 2018, they are taken forward by voluntary agreement, which is the reason why neither the UK Government nor the devolved Administrations have so far felt the need to codify the common frameworks process in legislation. I thank the noble and learned Lord Hope for his considered contributions to the debate and for his thoughtful amendments to the Bill. However, while the Government have carefully considered the arguments made in both Houses about putting common frameworks on the face of the Bill, we feel that that may not sit well with the flexible and voluntary nature of the common frameworks programme.

In addition to their voluntary nature, we must also bear in mind that the current frameworks are jointly owned by the devolved Administrations. Any proposal to legislate them into this Bill would need to take into account their involvement in the programme overall. I am therefore concerned that the Lords amendments would automatically disapply mutual recognition and non-discrimination principles. This would create a very broad exclusions regime and uncertainty for businesses and consumers over the terms of trade within which they are operating. That is clearly not in keeping with the aim of this Bill, which is to provide maximum certainty and a stable trading environment.

[Joanna Cherry (Edinburgh South West) (SNP)]

I will just take the Minister back to his statement that the common frameworks were never supposed to be all-encompassing in relation to the internal market, because I am looking at the Joint Ministerial Committee communiqué from 16 October 2017, which says in its first principle that the common frameworks were to be

“established where they are necessary in order to…enable the functioning of the UK internal market”

The Government have gone back on that, have they not?

[Paul Scully]

The hon. and learned Lady will note that the document states “where…necessary”. As I said earlier, many of the common frameworks do not relate to the internal market. That was my point exactly.

It is a core point that none of us should wish to see internal barriers to trade erected inside our country to the detriment of jobs and growth. We have been clear in the other place about how we see the common frameworks programme and the market access principles interreacting with this point at the heart of the argument. While common frameworks are jointly owned, the UK’s full internal market regime can only be owned by the UK Government and overseen by the UK Parliament.

The Minister for the Constitution and Devolution, my hon. Friend the Member for Norwich North (Chloe Smith) looks forward to completing the delivery of the common frameworks programme, discussing further with our partners in the devolved Administrations and the devolved legislatures how we can capitalise on working ahead through common frameworks and put these areas of co-operation on a sustainable footing for the longer term to the benefit of citizens and businesses. We welcome the support of right hon. and hon. Members in achieving that, but we have been clear that amendments 1, 19 and 34 are not necessary and have considerable drawbacks. I therefore call on the House to disagree with them.

To speak to Lords amendments 8 to 13, 15, 16 to 18, 30 to 33 and 56, the Government have taken positive steps to reach a compromise position that balances concern about delegated powers with the ability of the Government to act to protect our internal market. The Government have already made significant steps. We have removed the power, which is no longer considered essential, for the operation of flexibility in the internal market system. We have made further changes on transparency and accountability, such as a review mechanism on the use of such powers. In the other place, we tabled amendments to require consultation with the devolved Administrations before the use of key powers, reflecting our previous commitments. However, once consultation is undertaken, the right place for final decisions should be back in Parliament where parliamentarians from all parts of the UK can debate and vote on the proposed use of the powers. The Government are therefore disappointed by the decision in the other place.

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

My understanding is that the Welsh Senedd will vote tomorrow to decline to approve the legislative consent motion for the Bill. Does that not indicate the problem with the British Government’s approach to consent? Consent means nothing without the power of veto.

[Paul Scully]

If the Welsh Assembly decides that way, that will be regrettable—[Interruption.] The Welsh Senedd. It will be regrettable, because it is important that we continue to work together and allow continuity of trade and business between Wales, Welsh businesses and, indeed, the other nations of the UK. That is what Welsh businesses have been asking us for as we have been talking to them. They want certainty, and this Bill will give them certainty.

The Government are disappointed that the other place did not take up our reasonable offer and removed key provisions needed to ensure the operation of the internal market.

[Sammy Wilson (East Antrim) (DUP)]

Does the Minister not accept that for places such as Northern Ireland, Wales and Scotland, common standards that allow free trade between those parts of the United Kingdom and their main market, which is probably in England, are an advantage to everyone? The provisions in the Bill should not scare or frighten anybody.

[Paul Scully]

The right hon. Gentleman puts it correctly. When I have spoken to businesses in Scotland, Wales and Northern Ireland, they have agreed with businesses in England. The main market for so many of these businesses is within the United Kingdom. We talk about global Britain, but we have to make sure that we have our internal market right. The opportunities for business, including those in Northern Ireland, are absolutely at the heart of this Bill, and I appreciate his intervention.

Removing the powers that I have outlined would make it difficult for the Government to respond to businesses and the wider stakeholder feedback and act rapidly to respond to changes in the UK internal market due to the shifting economic landscape. The other place also added in conflicting, inconsistent amendments accepting our consultation offer, but also adding consent mechanisms.

Moreover, the other place’s three amendments 12, 13 and 56 introduce a new system for excluding requirements from market access principles, based on a long list of legitimate aims. This new clause would render the protections in part 1 almost meaningless. The regulator or legislator could justify a very wide variety of discriminatory measures using the justifications in the new clause. It would result in uncertainty as to what is in scope and leave little protection from regulatory barriers for businesses operating across the whole of the UK. However, the door remains open to the other place to reconsider, and we have kept our offer on the table.

I will turn now to Lords amendments 48 and 49. Clauses 48 and 49 support the Government’s determination to deliver the commitments on which we were elected—levelling up and delivering prosperity for the whole United Kingdom and strengthening the ties that bind our Union together. They provide for a unified power that operates consistently UK-wide.

[Alan Brown]

Will the Minister give way?

[Paul Scully]

I will just make progress for a minute.

The power will allow for strategic investment throughout the UK, underpinning the United Kingdom Government’s determination to see all parts of the UK flourish. It will make sure that we can deliver UK-wide replacements for EU funds, including meeting our manifesto commitment to replace EU structural funds, and allowing the UK Government to invest directly to support communities and businesses across all four parts of the UK.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Can the Minister explain how this can be strategic investment if the Senedd and the Scottish Parliament have no say in arranging it?

[Paul Scully]

As we said in the last debate in this place, this is complementary to existing spending powers in Wales and Scotland. We will always look to work for the good of the people there, which will reflect—undoubtedly, I am sure, on so many occasions, if not all occasions—the mood and direction from their elected politicians in the Senedd.

We need to make sure that we can deliver the UK-wide replacements for EU funds, including meeting our manifesto commitment to replace EU structural funds and deliver the UK shared prosperity fund, which will allow the UK Government to invest directly to support communities and businesses across all four parts of the UK. Previously in many of these areas, the EU mandated how our money had to be spent, with little say from elected representatives in the United Kingdom. The UK Government intend to take a much more collaborative approach in delivering any funding that replaces EU programmes.

The UK Government remain committed to working collaboratively with key partners, including devolved Administrations, in the provision of financial assistance under this power. Let me be clear that this power is in addition to the devolved Administrations’ existing powers. It will allow the United Kingdom Government to complement and strengthen the support given to citizens, businesses and communities in Scotland, Northern Ireland and Wales. It does not take away responsibilities from the devolved Administrations.

[Chris Elmore (Ogmore) (Lab)]

The frustration at this utter confusion is that this actually circumvents the devolution settlement. Devolution has been in place for some 20 years, and it is Ministers in Wales who have been working with the European Union on how European funding is allocated within projects in Wales. This new system removes the decision making from Welsh Ministers and circumvents the devolution that has existed for more than 20 years. Can the Minister not understand the frustration on the Opposition Benches and the bewilderment of Welsh, Scottish and Northern Ireland Ministers about why they are just not being consulted on priority projects in Wales and any of the other nations of the UK?

[Paul Scully]

I can understand the frustration if that is the wilful misinterpretation of what is actually happening. The EU mandates so much of this spending before it gets to the Welsh Senedd, the Scottish Parliament and the Northern Ireland Assembly and, indeed, here in England, from where we are speaking, but we will work collaboratively to ensure that so many of those concerns are met.

We are disappointed as a Government that the other place has decided to take out the power and hamper the Government’s ability to level up the country and drive investments into all parts of the UK. These Lords amendments also alter the financial arrangements made in this House, and I therefore call on this House to disagree with them.

Turning to Lords amendment 51, I emphasise the importance of the UK continuing to take a clear and consistent approach to subsidy control as we move away from EU state aid rules. The Government have always been clear in our view that the regulation of state aid and the EU’s approach to subsidy control is a reserved matter. This reservation does not change the devolved Administrations’ position in practice. The devolved Administrations have never previously been able to set their own subsidy control rules, as this was covered by the EU state aid framework, but they will continue to make their own spending decisions on subsidies, as they do currently. The effect of the amendment would be to create unacceptable uncertainty regarding the extent to which subsidy control is a reserved or devolved competence. This would potentially give rise to inconsistency if there were different regimes to regulate subsidies across the UK. Ultimately, that could undermine fair and open competition across our internal market, inevitably discouraging investment in the UK, bringing additional costs to supply chains and consumers.

This reservation will enable the UK to design a bespoke subsidy control regime that meets the needs of the UK economy. The Government have been clear that any future domestic regime will operate in a way that works best for all UK businesses, workers and consumers. In the coming months, we intend to publish a consultation on whether we should go further than our World Trade Organisation and international commitments, including whether further legislation is necessary. The House should therefore disagree with this amendment.

--- Later in debate ---

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

The Minister will appreciate, having had some hand in the amendments, that I have an interest in this matter. He will have seen that a statement has been put out by the Government—following the meeting of the Joint Committee earlier today—in which they undertake that they would, in effect, remove clause 44 and deactivate clauses 45 and 47, which were the subject of some concern in this place. Will he confirm that that is the case? Will he also confirm that were there to be any like clauses included in the taxation (post-transition period) Bill, which may come before us, they should, at the very least, be subject to the same parliamentary lock as was inserted in this Bill, if they were to be required at all?

[Paul Scully]

I thank my hon. Friend for his contributions not just here and now, but in the earlier stages of this Bill, which allowed for that important lock. The taxation Bill and this Bill work in lockstep as well, and I can confirm his interpretation. I will come on to that in a second regarding the statement earlier today.

After the transition period ends, Northern Ireland will and must remain fully integrated with the UK’s internal market. There should be nothing controversial about that. The protocol expressly recognises that Northern Ireland will remain part of the UK’s customs territory and qualifying Northern Ireland goods will enjoy unfettered access to the rest of the UK market. We will never accept additional burdens or barriers on goods moving from Birmingham to London, and neither should we accept those on goods moving from Belfast to Liverpool. Moreover, clause 46 would codify in legislation the existing practice where state aid is notified to the European Commission by the Foreign Secretary via the UK mission in Brussels.

[Ian Paisley (North Antrim) (DUP)]

I thank the Minister for the commitment he has made about goods travelling from GB to Northern Ireland. Can he tell us whether the same assurance will be in place for all goods moving from Northern Ireland to GB?

[Paul Scully]

I can indeed.

Part 5 of the Bill contains vital provisions to ensure that this will always be the case, whatever the outcome of our negotiations within the EU. Since these clauses were originally introduced, the UK and EU have worked constructively together through the withdrawal agreement Joint Committee discussions, which continue to progress, and final decisions are expected in the coming days. I can confirm today that if the solutions being considered in those discussions are agreed, the UK Government will be prepared to remove clause 44, concerning export declarations, from the Bill. The UK Government would also be prepared to deactivate clauses 45 and 47, concerning state aid, such that they could be used only when consistent with the United Kingdom’s rights and obligations under international law.

[Stephen Farry (North Down) (Alliance)]

I wonder whether the Minister could reflect on two points. First, I am relatively new to this place, but my understanding is that there has not been a bigger vote in the other place against a proposal from this House for many decades, if not centuries. Secondly, does he recognise that the majority of people and businesses in Northern Ireland want to see the solutions he set out work through the Joint Committee and not through any breach of international law? It is important that there should be a solid legal framework to enable businesses in Northern Ireland to conduct their affairs.

[Paul Scully]

Indeed, we all want this to be dealt with through the Joint Committee. That is why the discussions are continuing, and that is why, in these crucial hours of negotiations between the UK and the EU, we wish them well in that regard.

[Sir Robert Neill]

I will not trespass on the Minister’s time again, but will he confirm that the deactivation of clause 47 would remove one of the areas—the “notwithstanding” clauses—that caused most concern, particularly to legal commentators? Does he agree that that is a significant gesture of good faith on the part of Her Majesty’s Government’s and that it will hopefully remove some of the real concerns that have, for legitimate reasons, been expressed in other places? Does he agree that this demonstrates that we want to find a constructive way forward?

[Paul Scully]

My hon. Friend is right again. I know the debate that has surrounded the “notwithstanding” clauses, and it is important that we work in collaboration and partnership as we do these difficult negotiations, but, ultimately, that is where we want to solve these problems, rather than having to legislate for them in the first place. As I say, we will deactivate them when we get to the point that that is consistent with the United Kingdom’s rights and obligations under international law. While we are hopeful of success, it is only prudent that until such time as the discussions have successfully concluded, we retain these clauses in their current form as a fall-back option.

As has been said many times, the Government are fully committed to implementing the withdrawal agreement and the Northern Ireland protocol, and we have already taken many practical steps to do this, but these clauses will ensure that, irrespective of the outcome of our negotiations with the EU on implementation of the protocol, we will always protect Northern Ireland’s place in the United Kingdom. They will ensure that businesses based in Northern Ireland have unfettered access to the rest of the United Kingdom and that there is no legal confusion or ambiguity in UK law about the interpretation of the state aid elements of the Northern Ireland protocol.

[Sammy Wilson]

I thank the Minister for giving way again. I just want to get some clarification. Article 16 of the Northern Ireland protocol makes it quite clear that where the protocol does serious economic, societal or environmental damage to Northern Ireland, the Government have the right to act unilaterally. If this clause is to be removed and set aside, how will the Government be able to take unilateral action if changes in the protocol or demands from the EU do the kind of damage that is outlined in article 16?

[Paul Scully]

As I have said before in regard to these clauses, the changes that we set out in a statement earlier today work on the assumption that we have had success in the discussions and that we can solve this elsewhere. We hope that the “notwithstanding” clauses will never have to be used, and we understand the concerns that have been raised. Making regulations of this nature would not be done lightly. That is why, before this clause is commenced, this House, as we have discussed, will be asked specifically to approve a motion to that effect, and the other place will hold a take note debate. Any regulations made under this clause would be subject to the affirmative or made affirmative procedure, meaning that they will be subject to debates requiring a vote in both Houses.

Moreover, as the Prime Minister has made clear, in addition to taking these steps in domestic law, if we had to make it clear that we believed the EU was engaged in a material breach of its duties of good faith as required and provided for under the withdrawal agreement and the Vienna convention on the law of treaties, we would seek an arbitration panel and consider safeguards under article 16 of the protocol in parallel. We must ensure that, in any scenario, we are upholding the economic integrity of the United Kingdom, maintaining the Belfast or Good Friday agreement and the gains of the peace process and protecting the delicate balance between communities in Northern Ireland.

These “notwithstanding” clauses are a limited and reasonable step that create a safety net to enable those aims to be met. They ensure that the UK Government can always act as necessary to protect and maintain our UK internal market and Northern Ireland’s integral place in it. That is entirely in keeping with what the Government have constantly said, including in public commitments from the Prime Minister, our manifesto commitments and our commitments to the people of Northern Ireland. That is why the Government cannot agree with the Lords amendments, which would remove what was part 5, and why I urge hon. Members to disagree with the Lords amendments and restore the critical provisions in full.

[Ian Paisley]

I thank the Minister for allowing me to intervene in this way. Does he welcome the comments made by the Irish Foreign Minister, Mr Coveney, who said that, essentially, all the commentary for the past three years on erecting borders on the island of Ireland was basically a game of bluff by the Irish Republic? Does he welcome the fact that it has now conceded that point?

[Paul Scully]

I have not heard those words, so I will not comment on them. There has been a lot of commentary, but what is important is the reality. Northern Irish businesses want the certainty offered by this Bill and the unfettered access to the GB market.

I emphasise that the Government has been reasonable, and will continue to be reasonable, in discussions on this Bill. We have made many positive changes to the Bill and they are on the table, but the Government need to balance this with the need to deliver a Bill that provides the certainty that businesses want and need to invest and create jobs, to maintain high standards and choice for consumers while keeping prices down, to ensure that the Government can continue to continue to level up the whole of the United Kingdom and strengthen our precious Union, and, ultimately, to preserve the UK internal market that has been an engine of growth and prosperity for centuries.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Colleagues will see that there are a large number of right hon. and hon. Members who want to contribute to this debate. If we have any chance of getting them in, I will have to start with an immediate five-minute limit on Back-Bench speeches, but that may well have to go down.

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. My apologies to the seven Members who did not get in to speak. I call the Minister.

[Paul Scully]

I thank everybody who spoke in the debate today and all the right hon. and hon. Members who have engaged with the Bill throughout.

From many speakers, especially at the beginning of the debate, we heard about exactly what businesses and people throughout the country have wanted—the certainty and consistency that the Bill will deliver. Unfortunately, we have heard, as we have throughout the Bill’s passage, a lot of inconsistency from Opposition Members. We have heard the SNP talk about the fact that we are not going to get a trade deal with America but, by the way, when we do, we have to accept chlorinated chicken. Neither of those things are true.

We have heard that people want the Government to change and negotiate and work with the European negotiating team, but when we reach out to them to explain what part 5 of the Bill is all about and the fact that we will not need a safety net should we get successful talks in the Joint Committee, it is described as shambolic. Which would people like? Would they like change? I think we want certainty.

People have talked about the need for devolution in Northern Ireland and the need to respect Northern Irish businesses and the parties in Northern Ireland and give their businesses certainty, but Opposition Members will vote against part 5 and, in doing so, vote against unfettered access for Northern Ireland into GB.

We heard an SNP Member describe the UK Government as a boa constrictor, yet they want independence from the UK Government and from the other nations to go back to the boa constrictor that is the EU.

We need the Bill and these clauses now because parliamentary time dictates as much and we want the legislation to be ready for the end of the transition phase, whatever happens in the remaining days of discussions with the EU. I wish both sides well in their discussions.

To conclude, the UK’s internal market has been the bedrock of our shared prosperity for centuries. It has enabled businesses and individuals to thrive and has been the source of unhindered and open trade throughout the country. It has helped to demonstrate that our country is greater as a Union than the sum of its parts.

The Government are committed to safeguarding the Union. We fully support devolution and continue to put the Union at the heart of everything we do. I very much believe that the four corners of the UK are stronger together and that the Bill supports and respects the devolution settlements. Some Members have said that the Bill is a threat to devolution, but in reality they are trying to further their narrow political arguments rather than look at the wider political arguments. Their narrow political arguments about independence have nothing to do with devolution.

I stress that the proposals in the Bill are designed to ensure that devolution can continue to work for everyone. All devolved policy areas will stay devolved and the proposals ensure only that there are no new barriers to UK internal trade. Indeed, at the end of the transition period hundreds of powers that are currently exercised by the EU will flow back to the UK. Many of these powers will fall within the competence of the devolved Administrations, and this flow therefore represents a substantial transfer of powers to the devolved Administrations that they did not exercise before the EU exit.

The Bill is vital in preserving our internal market and continuing to provide certainty for businesses as we seek to recover from covid-19, prepare for the opportunities after the transition period and protect jobs. It will ensure that UK businesses can trade across our four home nations in a way that helps them to invest and create jobs, just as they have for hundreds of years. I want to emphasise again that the Government have been, and will continue to be, reasonable in discussions on this Bill. We made many positive changes, and they are on the table, but ultimately the Government need to balance this with the need to deliver a Bill that provides the certainty that businesses want and the need to invest and create jobs. I therefore call on hon. Members to support the Government in these objectives, which I believe we all share, when they vote today.

Question put, That this House disagrees with Lords amendment 1.

Arcadia and Debenhams: Business Support and Job Retention

Paul Scully Excerpts

Wednesday 2nd December 2020 Commons Chamber

[Edward Miliband (Doncaster North) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on support for business and the retention of jobs on the high street in light of the announcement of Arcadia entering administration and Debenhams going into liquidation.

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

Speaking as the retail Minister, let me say that I hope the right hon. Member for Doncaster North (Edward Miliband) realises that although the Secretary of State is not here, we take this incredibly seriously. That is why I want to focus on the detail, because it is a worrying time for the retail sector, particularly for those affected by the announcements this week.

On Monday, Arcadia Group Ltd, which employs approximately 13,000 people, appointed administrators, who are assessing all options available to the group. They will honour orders made over the black Friday weekend. No redundancies have yet been announced and existing sales channels will continue to operate while administrators evaluate options. The Secretary of State has written to the Insolvency Service asking that it expedites consideration of the administrators’ report. Yesterday, Debenhams, which employs approximately 12,000 people, announced the decision of administrators to wind down the company. No redundancies have been announced and existing sales channels will continue to operate while administrators evaluate options. We know that this will be a worrying time for employees and their families, and we stand ready to support them. I pay a particular tribute to the hard-working staff, who have kept these well recognised businesses going in difficult times for so long.

Although the Government have no role in the strategic direction or management of private retail companies, we are in regular contact with both companies and the administrators in order to understand fully the situation they are facing. The coronavirus crisis has made life difficult for retailers such as Arcadia and Debenhams, particularly those that were already facing challenging trading conditions before the pandemic. We acted quickly at the start of the pandemic to deliver one of the most generous and comprehensive economic packages in the world. It included: the coronavirus job retention scheme, which up to 30 September had provided £7.7 billion-worth of support to companies in the retail and wholesale sector; removing all eligible properties in the retail, hospitality and leisure sectors from business rates for 12 months—that is worth more than £10 billion; cash grants of up to £25,000 for retail, hospitality and leisure businesses with a rateable value of between £15,000 and £51,000; more than £50 billion in business loans, which supported 9.6 million jobs and provided flexibility; and legislation to protect commercial tenants from eviction.

Through the plan for jobs, we have also announced a series of measures to protect, support and create jobs, including our £2 billion kickstart scheme and a doubling of the number of frontline work coaches, which will be important in this situation in particular. The Government have committed to supporting the retail sector, and we are working closely with industry through these unprecedented times, particularly to ensure the safe reopening of non-essential retail today. On Monday, my right hon. Friend the Communities Secretary encouraged local authorities to allow shops to open for extended hours, to accommodate more shoppers safely in the lead-up to Christmas. I will continue to work with the sector to meet future challenges. Indeed, I will co-chair the next meeting of the Retail Sector Council tomorrow to discuss our strategic approach to the sector. I have regular retail calls, including one last week, with representatives from Arcadia among the retailers on that call. We are confident that the sector has the skills, knowledge and drive to bounce back.

[Edward Miliband]

Let me join the Minister in expressing deep sympathy for those who are at risk of losing their jobs. The test of Government, and indeed the House, is whether that sympathy translates into action, so I have four specific questions for him.

First, Philip Green owes workers at Arcadia a moral duty. His family took from the company a dividend worth £1.2 billion, the largest in UK history, more than three times the size of the pension deficit. Workers at Arcadia should not pay the price of Philip Green’s greed, so will the Minister now publicly call for Philip Green to make good any shortfall in the pension scheme, and will he ensure that the Pensions Regulator takes all possible steps to make sure that that happens?

Secondly, we need to learn lessons. In the summer, Labour tabled amendments to the Corporate Governance and Insolvency Bill to make pension fund holders priority creditors when businesses went bust. The Minister said it was not necessary. Does he now agree that that was a mistake, that that change would have better protected the pensions at Arcadia and that this should be put right through legislation in the future?

Thirdly, on the workers at Debenhams and Arcadia facing redundancy, given the scale of redundancies and the grim economic backdrop, will the Minister look at providing specific and targeted help for them to get back into work? Fourthly, we have an emergency on our high streets, with an estimated 20,000 shops closing and 200,000 workers losing their jobs since the economic crisis began. While we welcome the support that has been provided, will he recognise that the Government must do more: extend the rent evictions moratorium beyond December, when it is due to expire; increase support for hospitality businesses, which was called for across the House yesterday; and address the massive disadvantage that high street businesses face around business rates compared with online retailers?

Today is a day of great news on the vaccine, but the Government have a massive responsibility to preserve the businesses and jobs we will need on the other side of this crisis. They are still not acting on a scale that meets the economic emergency our country faces. They need to do so.

[Paul Scully]

I am grateful to the right hon. Gentleman for raising some really important points. On pension schemes and support for those facing redundancy, the majority of defined pension schemes are run effectively. We are fortunate to have a robust and flexible system of pension protection in the UK. The independent Pensions Regulator has a range of powers to protect pension schemes, and it works closely with those involved. For schemes where the employer goes insolvent, the Pension Protection Fund is there to help protect the members. Anybody already in receipt of a pension will continue to be paid, and other members will receive at least Pension Protection Fund compensation levels. The Pension Protection Fund is confident that its funding plan investment approach positions it well to weather the current market volatility and future challenges.

It would not be appropriate at this stage for Ministers to comment on individual cases, which are a matter for the regulator. However, in respect of staff facing possible redundancy, the Department for Work and Pensions’ rapid response service has been in ongoing conversations with Debenhams and has now been in contact with Arcadia. Both have been offered support by the rapid response service, including connecting people to jobs in the labour market, helping with job search—including CV writing, interview skills, where to find jobs and how to apply for them—helping to identify transferable skills and skills gaps linked to the local labour market and what benefits they may get and how to claim. I talked about the fact that we have doubled the number of workplace support staff in Jobcentre Plus. Clearly, knowing where the big stores are, for Debenhams in particular, we will be able to offer that sort of targeted support.

The right hon. Gentleman talked about his proposed changes to the Corporate Insolvency and Governance Bill. This was a matter of balance, because elevating pension debts, which can often be quite large, will by its very nature dilute the amount available to trade and credit suppliers, but also to other suppliers, including people with unpaid wages. It is trying to get that complexity and balance right.

Finally, the right hon. Gentleman talks about hospitality and support for other sectors. Clearly, the high street is an ecosystem—it is not only about shops and retail. We need to make sure that we do as much as we can to continue to wrap our arms around the economy at this particularly challenging time. As he acknowledges, there is light at the end of the tunnel, but we must not take our foot off the gas. We must remain alert, in terms of our own behaviours, as community members going up and down the high street, shopping local where we can to support retailers as they remain open, but also as a Government, making sure that we support the retail and hospitality sectors through both the support that I mentioned but also through encouraging them to be able to trade and remain open in all three tiers as best we can.

[Suzanne Webb (Stourbridge) (Con)]

I am sure the thoughts of the whole House will be with employees of Debenhams and Arcadia, who face huge uncertainty this week, particularly in the run-up to Christmas. These are long-standing bastions of the high street. However, both organisations have been struggling for quite some time; indeed, Debenhams has been in administration since January. While no redundancies have yet been announced, many of my constituents will be affected. Can my hon. Friend assure me that, if the worst were to happen, the Government are ready to support anyone affected, whether through jobcentres or universal credit?

[Paul Scully]

My hon. Friend is absolutely right. I know her constituents will be concerned about this. We are prepared to step up concentration within Jobcentre Plus. We will make sure there is support for people in finding jobs and for retaining as many jobs as possible on our high streets.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP) [V]]

I am sure the Minister agrees that there is a great deal of public affection for the Arcadia brands and in particular for Debenhams. While we must hope that redundancies can be avoided wherever possible, this is a sad day for our embattled high streets. All our thoughts are with the thousands of workers, including those in my constituency, many of whom have given years, or even decades, of service in retail, who will be devastated by this news. They must be given all the help they can get to ensure that all their pension rights are retained. Will the Minister ensure that Sir Philip Green’s obligations to pensions are met, and will his Department work with trade unions to make sure that the workers are treated fairly and adequately supported through the process?

Like others, many of the workers will face difficulty in putting food on the table and finding a new job or retraining in a crowded market. They will need the safety net of universal credit to make ends meet. I urge the Minister to use his best efforts and to work with colleagues to retain the £20 a week uplift and to scrap the planned benefit cap that will cost an average of £250 a month. Universal credit is already not enough; taking away the uplift is taking food from people’s tables.

We need to remember that many small businesses in local supply chains will be affected by the news. Some of them will not survive without support, while the owners of others will be joining the 3 million people who have been excluded from support. The Government cannot continue to ignore them. I urge the Minister again to finally get support to this group, who are becoming increasingly desperate.

[Paul Scully]

The existing commitments made to the Pensions Regulator do indeed need to be kept—it is important to say that.

The hon. Gentleman talks about support for employees. If people need financial support quickly, they may be able to claim universal credit and/or employment and support allowance. Our plan for jobs includes a series of measures to protect, support and create jobs, because it is important to get the people affected back into work as soon as possible. We have our £238 million job entry targeted support programme to support that.

The hon. Gentleman also talks about the possibility of suppliers losing out. Administrators will take over the company and seek to establish the position regarding suppliers. The trade credit reinsurance scheme is designed to support businesses coping with the economic impacts of covid-19 and to ensure that there is adequate confidence and credit in supply chains.

[Nickie Aiken (Cities of London and Westminster) (Con) [V]]

As my hon. Friend is aware, the Arcadia Group is headquartered in my constituency and its brands, including Debenhams and Topshop, have their flagship stores on Oxford Street. Covid has the potential to be the straw that breaks the camel’s back for bricks-and-mortar retailers. The New West End Company and I welcome the continuing support of my hon. Friend and his Department for the retail sector. I note the Government’s announcement this week on extending shopping trading hours for Monday to Saturday until January but, particularly in the short term, an extension of Sunday trading hours would be of huge benefit to retailers. Will my hon. Friend support me, The Sun on Sunday newspaper, retailers such as Marks & Spencer and others who are campaigning to extend Sunday trading?

[Paul Scully]

I look forward to joining the New West End Company and, I assume, my hon. Friend on Saturday to celebrate not only Small Business Saturday but traffic-free shopping in the west end. The west end accounts for 3% of the entire UK economy and many, many jobs. We do not propose to extend Sunday trading at this stage, but we are extending shopping hours throughout the weekdays. We want to work with local authorities to make sure that they can support the safe return of shoppers to high streets up and down the country, including in the west end.

[Darren Jones (Bristol North West) (Lab)]

The collapse of Arcadia and Debenhams are two big examples of the broader challenge of survival in the high street-based retail sector. Every job lost and every store closed is devastating for families and communities across the entire country. The Business, Energy and Industrial Strategy Committee has today written to the Secretary of State, and I know we will have full answers in due course, but may I ask the Minister one specific question about support for small businesses in the retail supply chain? I wish to push him a bit further on whether there will be specific support—perhaps a taskforce—for small retail businesses, to help with the hundreds of millions of pounds of orders that could go unpaid.

[Paul Scully]

I cannot give specifics on a taskforce or any other group, but we will look acutely at what we can do for supply chains and the future of the high street. When flagship stores like the 200-odd-year-old Debenhams leave our high streets, it is so important to make sure that we have a co-ordinated response. I will happily work with the hon. Gentleman on that.

[Caroline Nokes (Romsey and Southampton North) (Con) [V]]

My hon. Friend, and the whole House, is concerned about the numbers of jobs potentially lost in the Arcadia Group, but we also have to be concerned about those employed by microbusinesses, perhaps without premises, who have so far not benefited from Government schemes to support them. Will he think again about those who so far have not had Government support and may well be adversely impacted by the news we have heard about Arcadia if they work in the retail supply chain?

[Paul Scully]

My right hon. Friend raises a really important point. We have wrapped our arms around the economy, but clearly it is very difficult to do things at pace to cover everybody. We will always make sure that we reflect on what happens, to help as many people as we can and try to fill the cracks as best we can.

[Sarah Olney (Richmond Park) (LD)]

I, too, express my sympathies to all those employees of Debenhams and the Arcadia Group who find themselves out of work so close to Christmas and in such an uncertain time. Will the Minister’s Department work with local authorities to support them to offer more flexible rates terms to new businesses that want to come in and set up in the large voids that a lot of town centres will be experiencing in their retail spaces? Those voids affect town centres and communities. What can the Department do to work with local authorities to lower the barriers to new entrants into the retail sector?

[Paul Scully]

There are plenty of things on which we can work together with the sector and, indeed, the whole gamut of British high street businesses, including by talking about getting the rent balance right between landlords and tenants, as well as rates, as the hon. Lady says. The Economic Secretary to the Treasury is joining me on tomorrow’s Retail Sector Council call that I mentioned, to talk about the fundamental business rates review. I hope we will be able to work with local authorities to get that flexibility.

[Marco Longhi (Dudley North) (Con)]

Does my hon. Friend agree that Dudley Council and other local leaders in my constituency will play an instrumental role in rebuilding and revitalising the high street? Will he confirm that the high streets taskforce will stand ready to provide whatever advice may be needed in this endeavour?

[Paul Scully]

I know that my hon. Friend works tirelessly for his constituency and local economy. It is so important that we get together to look at the high street, because many of these conversations were about what the high street will look like in 10 or 15 years’ time, but now they are about what the high street will look like next year and maybe only the year after. We have to get a speedy but holistic response.

[Mr Clive Betts (Sheffield South East) (Lab) [V]]

The business rate relief for retailers this year has been welcome, but it was obviously not sufficient for Debenhams and Arcadia and all their employees, who will tragically lose their jobs just before Christmas. There is a fundamental unfairness in the fact that Amazon pays only 0.7% of its turnover in business rates and high street retailers pay 2% or more. Last year, the Housing, Communities and Local Government Committee suggested that the Government look at bringing in a digital sales tax and use the money to provide long-term business rate relief for retailers on the high street. Given that the Government promised to look at business rate reform in 2015, will they now get on with it and give that certainty of reduced business rates to the high street as a matter of urgency?

[Paul Scully]

That is an important question, and it is exactly why we are doing fundamental business rates reform. The first stage of the consultation has ended, and we will respond in the new year, but we need to have a comprehensive approach to tackle this both online and offline.

[Greg Smith (Buckingham) (Con)]

The Risborough basket is an innovative scheme founded by Princes Risborough Town Council in my constituency, with a mission to keep the pound in the town, enabling local shoppers to buy from small independent retailers and have their purchases personally delivered. It is a real boost to those high street businesses, but in setting up the scheme, they have come across a number of regulatory burdens. Will my hon. Friend join me in congratulating everyone who set up the Risborough basket and commit to working with them, so that we can get rid of those regulatory burdens and ensure that such schemes can help high streets up and down the land?

[Paul Scully]

The Risborough basket is one of those brutally simple schemes that are from the grassroots up. It is fantastic to hear about that innovation, and I would love to see what we can do to spread it across the country, never mind working with the council to get rid of some of the burdens in bureaucracy and regulation to help it prosper.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op) [V]]

Mr Speaker, thank you so much for the opportunity to ask this young Minister to take a message back to No. 10 and the Chancellor of the Exchequer. As someone who worked in retail as a young man, and as a Co-op Member of Parliament, I know about retail. We have a workforce facing redundancy and hardship at Christmas. What we want from this Government is a strategy and leadership, not crocodile tears. A fifth of young people have lost their jobs. With 20,000 jobs, the kickstart programme has hardly touched young people’s lives. Will he get on with it and take that message back to No. 10?

[Paul Scully]

The hon. Gentleman talks about me being young, which he can do many times over, but as he says, retail is largely staffed by young people and those on comparatively low pay, so there is so much we can do. The strategy comes not just from Government but from working with the sector. The Retail Sector Council can take a long-term view, but we can also work with retailers on the short-term covid response. This is something for all of us to tackle.

[Laura Farris (Newbury) (Con)]

Not many of my constituents will shed a tear for Philip Green, but we should be profoundly concerned about the 25,000 jobs at risk of redundancy. The high street has been under unprecedented pressure. I welcome the remarks that my hon. Friend made about the business rates review, but will he commit this afternoon to an extension of another six to 12 months in which rates are either reduced or reprieved, to give the high street the best chance of recovery?

[Paul Scully]

I know that those in the Treasury will have listened to that, and they are very aware, particularly in relation to retail and hospitality, of the cliff edge that comes when business rates are due to return at the end of April. We will certainly look at that, and an announcement will be forthcoming.

[Christian Matheson (City of Chester) (Lab)]

In 1791, Susannah Towsey, a draper and haberdasher, moved to more commodious premises on Eastgate Street in Chester. She became Susannah Brown, and Browns of Chester still trades today at the retail heart of Chester, as part of Debenhams. As with other retail premises, it has been undermined by dodgy sale and leaseback property deals led by private equity firms, which has not helped the situation. Browns is one of Debenhams’s stores that trades well, at a profit. Will the Minister speak to administrators and support them, so that where there is potential for shops to continue as a going concern, that is explored and supported?

[Paul Scully]

I agree that it is so important that we continue a viable business where it is possible, and I know that the administrators will have that at heart.

[Simon Fell (Barrow and Furness) (Con)]

The news about Debenhams and Arcadia will cause many concerns as we head into Christmas. Can my hon. Friend reiterate the support that the Government will make available to the employees who face an uncertain future? Further to that, this year alone in Barrow, we have lost M&S and Topshop, so Debenhams will be another heavy blow. What support will the Government provide to offer hope to the high street in future?

[Paul Scully]

In terms of employees, as well as universal credit and access to other support through Jobcentre Plus, we will connect people to jobs in the labour market, help with their employment skills, such as CV writing, interview skills and so on, and identify transferable skills. It is, though, so important that we do more than that for our high streets to create the opportunities for those people to take up, through the future high streets fund and the work that we are doing with the Retail Sector Council and others at every level of government.

[Chris Elmore (Ogmore) (Lab)]

The Minister will be aware that a third of all retail jobs are held by people under the age of 25, and that a huge number of retail workers are women, because it allows flexible working and part-time hours. He will also be aware that many jobs in retail are highly skilled. It is a complete misconception that working in retail is not skilled and that, in years gone by, it was not a job or a profession for life. What specific support will the Minister put in place to offer to young people and to women, who will be more disproportionately affected by this and who have also been more disproportionately affected by the covid pandemic, to ensure that we do not have a lost generation of young people when it comes to finding their first job?

[Paul Scully]

Essentially, it is about creating those jobs and opportunities on the high street to ensure that we can keep retail and expand the offering on our high streets. Clearly, though, we need to ensure that we have that skills transfer work at jobcentre level and elsewhere to encourage our young people to take up those opportunities.

[Mr Speaker]

Order. Before we go to Bob Blackman, let me try to help, because I know how important it is to everybody to get on with the Order Paper, by saying that we need to speed up the answers and speed up the questions. I do not want to miss out people, but we may have to if we do not speed up. I am sure that Bob Blackman will provide us with a good example of speed.

--- Later in debate ---

[Mr Speaker]

Minister, can you pick out the best of that?

[Paul Scully]

I think my hon. Friend was talking about anchor stores and the effect on the high street. I know him very well, so I can predict his question. Yes, if we take out an anchor store, we hollow out a high street, so it is so important that we look at this holistically, work together with local government, national Government and with retailers themselves to build up our high streets and shape them anew.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

Ellesmere Port, like many places, has seen an exodus from the high street over the past decade, which has been accelerated in the past year. Of course, it is no coincidence that, at the same time, online retail is booming, but my constituents do not judge the vibrancy of an area by the number of delivery drivers up their street; they judge it by the number of boarded-up shops in their town centres. Therefore, we need a consistent funded plan for the high street, but, just as importantly, we need a level playing field so that high street shops have a chance of competing. Can the Minister assure us that we will get that?

[Paul Scully]

Indeed, high streets will certainly change, but we need to get the balance right between online and bricks and mortar as well, because both have a really important position to play in our retail offering.

[Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)]

In just three towns in my constituency, 27 shops have either closed or are about to close because of the pandemic. Will my hon. Friend commit today to use the Government’s very generous package of measures to retail businesses at all levels of Government—from central Government to local government to local enterprise partnerships—to follow the Prime Minister’s lead to encourage a massive return to the high streets now that we are allowed to do so under the guidance?

[Paul Scully]

It is really important that, as we extend hours for retailers to be able to open up for Christmas, we rip up and peel back on our bureaucracy as well. We must also encourage local authorities to do more such as offering free parking and other such things.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The high street is facing utter devastation in the next few months, unless drastic action is taken.  Will the Minister undertake, in conjunction with the Treasury, to discuss a proposal that I put to the Chancellor three months ago? The banks and building societies are currently sitting on almost £200 billion in current accounts and deposit accounts, paying 0% interest. A 1% voucher would release £2 billion to be spent on the high street only, at no cost to the taxpayer, and would bring a benefit equivalent to that which was seen in Jersey in the summer and which hopefully will be seen in Northern Ireland next month, as a similar voucher scheme is going to be discussed and released there.

[Paul Scully]

It is certainly something that I will ask the Treasury to look at and discuss with me.

[Elliot Colburn (Carshalton and Wallington) (Con)]

As my constituency neighbour, my hon. Friend will be aware that many Carshalton and Wallington residents work in Debenhams and Arcadia stores, particularly the flagship store at the St Nicholas Centre in Sutton. Will he join me in meeting the affected workers should the worst happen at that flagship store in Sutton, and reassure them that the Government are doing all they can to support them?

[Paul Scully]

Indeed. As well as being a Minister, I am clearly a constituency MP, and Debenhams is also at the heart of my high street. I will certainly continue to meet constituents affected by this and other issues around the high street.

[Julie Marson (Hertford and Stortford) (Con)]

The Government’s support for business has been unprecedented and unparalleled, particularly in the retail sector. The Minister is right to call it an ecosystem, because it does have a far-reaching effect on the economy. Does he agree that we have seen incredible creativity and resilience in our local communities and on our high streets, including from residents and retailers in Hertford, who have formed the Hertford hub and the Bishop’s Stortford business improvement district; and that, while we should look at business rates and so on, it is working with and supporting those communities that will let the sector create, thrive and survive?

[Paul Scully]

It is so much about a “grassroots up” approach. It is great to hear about the Hertford hub and the Bishop’s Stortford BID. There are some brilliant examples of BIDs and initiatives; I would like to hear more.

[Marion Fellows (Motherwell and Wishaw) (SNP) [V]]

Retail trade union, the Union of Shop, Distributive and Allied Workers, has said that it is seeking urgent meetings with Arcadia’s administrators in a bid to preserve jobs. It is crucial that the voice of staff is heard over the future of business in all circumstances. What reassurance can the Minister give that this request will be met?

[Paul Scully]

Clearly, the administrators will do their work under their own purview, but I encourage them to ensure that they look at the whole issue to keep as many viable jobs going and as many viable parts of the business going as possible, so as not to hollow out our high streets.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab) [V]]

This is an awful situation for every high street and retail park across the country, and even more so for the 25,000 people at Arcadia and Debenhams who are at risk of losing their jobs just before Christmas. In outlining what action the Government are taking to support the people affected, will the Minister specifically highlight any discussions that the Government are having with the Welsh Government, so that any support packages from both Governments can be co-ordinated?

[Paul Scully]

Given that these businesses are big brand names, this is clearly an issue for the whole UK. We will continue to work with and listen to the devolved Administrations, and to speak to them about what support we can look at across the UK as a whole.

[Darren Henry (Broxtowe) (Con)]

Hospitality businesses are a vital part of our high streets. Winter is the time that these businesses, like many others, make their plans for the next season. They are currently planning in the dark, having been singled out for restrictions and excluded from the Christmas bubble proposals. Therefore, many will have no option but to make some very difficult decisions this Christmas. Does my hon. Friend agree that we need to consider a longer-term recovery for this vital component of the high street, and that there is a case to make the 5% VAT rate more permanent—extending it to the end of the financial year—which might help to address the issues of rent, debt and an uncertain cash flow going into 2021?

[Paul Scully]

My hon. Friend is working hard for his hospitality sector offering in Broxtowe. I will be leaving this place to speak to hospitality sector representatives immediately after this urgent question, and they will have a number of those asks. I look at this sympathetically because, as I have said, the high street is an ecosystem; we must all work together to support the business community as a whole.

[Andrew Gwynne (Denton and Reddish) (Lab) [V]]

It is a very worrying time for those employed by Debenhams and Arcadia stores in Denton, Stockport and Manchester, and indeed right across the country. Greater Manchester’s independent prosperity review identified structural changes in the retail sector due to the rise of e-commerce, and sadly we are seeing a rapid acceleration in these changes due to the pandemic. What are the Government doing to put in place a strategic plan for the sector, including retraining and reskilling into digital roles in the sector and in adjacent industries?

[Paul Scully]

We are working with the retail sector itself, including online businesses like Amazon and Asos, and bricks and mortar businesses providing the retail brands that we all know and love, to make sure that we can get the whole gamut of retail together as one and look at the long-term prospects, including digitisation and increasing the skills of retailers and those wanting to go into the sector.

[Mike Wood (Dudley South) (Con)]

Workers at Debenhams, Dorothy Perkins, Evans, Miss Selfridge, Burton, Top Man and Top Shop in Dudley South face a really worrying time, but the challenges facing retail go much wider. Can my hon. Friend therefore confirm that the £1 billion future high streets fund will be accelerated, and will he join me on a visit to Brierley Hill so that he can see for himself how much our bid will transform the town centre and help to support retail jobs in my constituency?

[Paul Scully]

Owing to the restrictions it is nice to be offered a trip anywhere, so I will be more than happy to take that up. Yes indeed—the future high streets fund is a really important initiative along the way of tackling the issues in retail and our high streets as a whole. I wish my hon. Friend well in his bid. The results will be announced shortly.

[Kate Hollern (Blackburn) (Lab) [V]]

There is a Debenhams in my constituency and my thoughts are with the staff at this time, but sadly it is not the only business going to the wall. Yesterday I spoke to Barry, who runs the Bee Hive pub in Blackburn, and he described the Prime Minister’s announcement of £1,000 for pubs as a slap in the face. Barry has spent thousands on making sure that his pub was covid-secure, and with no evidence of spread of the virus in the pub sector, he will now have to throw away thousands more in stock. He is now wondering whether he can survive. So I ask the Minister: did he pluck the figure out of the air, and does his Department think that £1,000 will really be able to save our pubs and, in turn, our high streets?

[Paul Scully]

Wet-led pubs have a particular issue where they are not offering food, and £1,000 does not go far enough in itself, but it does go alongside the other payments such as the forbearance on rent, the moratorium that is still in place until the end of the year, business rates relief, and VAT relief on certain areas of food—although not necessarily in that pub. I will continue to work with the hospitality sector. It is important to say, as the hon. Lady said, that those in hospitality should not be scapegoated, because they have done so much work to make sure that they can offer a covid 19-secure and warm welcome to their customers.

[Angela Richardson (Guildford) (Con)]

Guildford High Street is not only picturesque but is home to one of the finest retail offerings in the south-east, including Debenhams and Arcadia brands. We acknowledge not only the difficult uncertainty for employees today but the significant square footage that these businesses occupy and the gaps that they will leave behind. Does my hon. Friend agree that the Government must actively work to help the high street to recover from coronavirus and also adapt to the long-term changes that will make our town centres sustainable for the future?

[Paul Scully]

I know Guildford very well. It is a destination for residents around Surrey and further afield. Yes, we must all work together to get the balance right so that we do not hollow out our town centres, including Guildford.

[Charlotte Nichols (Warrington North) (Lab)]

The Debenhams liquidation is a tragedy not only for the thousands of Debenhams employees but for all retailers in shopping centres like Warrington’s Golden Square, where Debenhams is the anchor department store driving footfall for the whole centre. With Arcadia brand stores in Golden Square also at risk, and confidence in the wider retail sector waning, what specific support will shopping centres like Golden Square get to protect all its retailers, their employees, and the vibrancy of our town centres?

[Paul Scully]

In terms of shopping centres it is really important that we get the balance right between landlords and tenants. The moratorium helps tenants but clearly does not help landlords, so we have to get the balance right. We will work with the retail sector to try to achieve that balance in the weeks and months to come.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

The Dorothy Perkins in Newcastle-under-Lyme was already closed earlier during the pandemic, and we have also lost major tenants such as Laura Ashley and Edinburgh Woollen Mill during this pandemic, so I welcome what we are doing with the future high streets fund. We have a bid in with the Ministry of Housing, Communities and Local Government. Can the Minister confirm that it will be accelerated? We need to hear about that bid as soon as we can so we can get our towns fund bid in as well.

--- Later in debate ---

[Paul Scully]

I wish my hon. Friend every success in that bid—the announcement will be forthcoming. It is important that we have small business Saturday coming up this Saturday, and we must make sure independent stores thrive. However, the brands he talks about that are going do drag footfall towards those smaller businesses, which is why we need to look at the high street as a whole.

[Hywel Williams (Arfon) (PC) [V]]

Debenhams is a cornerstone employer in Bangor city centre. Its closure will be a severe blow to the staff who have worked there loyally for many years, and even more so now, I am afraid, because North Wales Mersey Dee Business Council reports that, across the region, 17% of businesses in retail and hospitality have already made redundancies. Thinking creatively, what consideration has the Minister given to material Government support specifically for repurposing large retail spaces into smaller, short-term, start-up units?

[Paul Scully]

We always work with local authorities to see what initiatives can come up. We work closely with them because it is typically the local authorities, local enterprise partnerships and other business groupings in each local area that know their local economy, and we are always happy to look at any initiatives.

[Peter Gibson (Darlington) (Con)]

As a student, I worked for the then Burton Group, and I know how vital retail jobs are, especially for students and young people. Can my hon. Friend confirm for my constituents in Darlington who worked at Topshop, Burton and Dorothy Perkins the steps he is taking to provide support, advice and assistance to them?

[Paul Scully]

I thank my hon. Friend, and I commend his work in retail before; many others around the House have done such work. Yes, as well as offering them support through universal credit and other benefits, we will work with them through the Jobcentre Plus and its frontline workers to help them with CV writing, creating opportunities for and sharing opportunities with them, and ensuring that transferable skills have a massive role to play in that.

[Alex Norris (Nottingham North) (Lab/Co-op)]

Up and down high streets in Nottingham, businesses big and small are really worried about their viability in the early parts of next year. They look at us talking about Debenhams and Arcadia today, and they think we will be back in January, February and March talking about them unless something changes. I ask the Minister the same question they are asking me: beyond reviews and promises of reform in the future, what support is coming now to keep our high streets viable?

[Paul Scully]

We are keeping our high streets viable by giving people business rates relief and giving businesses a moratorium to make sure they cannot be evicted and cannot be chased for rent debts, but, most importantly, by keeping retail open in all three tiers so that they can actually trade their way out of this. What they want is not handouts, ideally, although they do need the support; they want customers. They want customers for long- term support.

[Dr Kieran Mullan (Crewe and Nantwich) (Con)]

But our high streets need all the help that they can get, and the towns of Crewe and Nantwich are facing the highest parking charges in the region, while other towns in the area face none. Would the Minister agree that the local authority should at least ensure there is a level playing field, and perhaps reconsider its decision to reject some initiatives for December to introduce free parking to encourage people back on to the high street?

[Paul Scully]

I thank my hon. Friend, and he is absolutely right. When people are bringing back their heavy bags—after a long evening’s shopping, hopefully, in the lead-up to Christmas—just a simple token like free parking or cheaper parking can really help drive footfall and support our local high streets.

[Clive Efford (Eltham) (Lab) [V]]

Debenhams workers have expressed concern about the performance of the administrators. There has been a lack of communication and delays in registering redundancies with the redundancy payments service, which in turn has led to delayed payments to the workers themselves. What can the Minister do to ensure that the rights of workers are protected in these situations?

[Paul Scully]

Clearly, as I have said, there are measures in place that govern the administrators, but we will keep on top of this. My right hon. Friend the Secretary of State has already written to the administrators to expedite the report. We will also follow up to make sure we keep an eye on them to support workers not only through the administrators and redundancy phase, but back into good work.

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

As my hon. Friend will know, I was a furniture retailer for many years prior to arriving in this place. This year has been hugely challenging for our high streets, and my thoughts are first and foremost with the employees of Arcadia and Debenhams. Does my hon. Friend agree with me that the Government must continue to actively work to help high streets both recover from coronavirus and, more importantly, adapt to the more long-term challenges that our town centres are facing at the moment?

[Paul Scully]

I know that my hon. Friend’s experience as a retailer, and his other work, will be massive in the months to come. Yes, we must ensure that we shape the change of high streets. We must allow businesses to pivot to allow for that change, so that our high streets can survive and thrive.

[Christine Jardine (Edinburgh West) (LD)]

Like many others, I am concerned about the many workers across Edinburgh and in my constituency who will today be worried about their jobs with Arcadia. My constituency also contains a number of independent shops that are struggling and need a level playing field with the online behemoths of this world, such as Amazon. I have a suggestion and plan to offer postage support for those independent businesses, in the same way as the Government helped the hospitality sector. Would the Minister be prepared to meet me to discuss that?

[Paul Scully]

I will happily meet the hon. Lady. She mentioned independent retailers, and it is important to realise that big anchor stores have a massive effect on smaller businesses if they hollow out the high streets. It is important to look at both sectors alike.

[Matt Vickers (Stockton South) (Con)]

I too earned my spurs in retail at Woolworths and Home Bargains. This year has been incredibly challenging for high street retailers, and my thoughts are with the employees of Arcadia and Debenhams. Does my hon. Friend agree that we must not only work actively to help high streets recover from the pandemic, but also consider all the other long-term issues they face, from car parking charges to businesses rates? I co-chair the all-party parliamentary group on the future of retail, and we would very much like to see the Minister at its next meeting to discuss those issues.

[Paul Scully]

I thank my hon. Friend—his experience will be valuable, and I would be happy to join him at the APPG. It is important not just to consider the immediacy of this, but the fact that with the new normal there is a new reality—a behaviour change that is baked into people’s approach to the high street. It is important to get right that long-term strategic view.

[Alison Thewliss (Glasgow Central) (SNP)]

I am deeply concerned by the situation facing Debenhams, which is a key part of Glasgow city centre, as well as the stores operated by Arcadia. My thoughts are with the staff, and I know that the Scottish Government stand ready with a pay scheme if it is required. Has the Minister established whether HMRC’s Crown preference rules, which came into force yesterday, had any bearing on the decision by Arcadia to go into administration on Monday? Has he calculated how much HMRC stands to lose as a result?

[Paul Scully]

I have not had any information or consideration of that issue as yet.

[Nigel Mills (Amber Valley) (Con) [V]]

Does the Minster agree that the best way to save these businesses is for people to keep shopping at them? Can he assure people that their rights are protected if they buy vouchers, shop online, or want to return items after Christmas?

[Paul Scully]

That is a really important issue, and my hon. Friend is absolutely right to say that these businesses want people to trade. At the moment, both Arcadia and Debenhams have said that they will accept vouchers, and I encourage anybody who is shopping at either store to use their credit card if they are spending more than £100, because then the Consumer Credit Act 1974 kicks in. At this moment, vouchers are accepted.

[Fleur Anderson (Putney) (Lab)]

Will the Minister accept that although Putney high street is very much loved and the centre of our local community, people are concerned about the fact that covid is accelerating the number of shops that are going? Will he consider a reform of the business rates, and of the meanwhile use rules, so that we can have more community activities in our shops on the high street?

[Paul Scully]

There is a really good community in Putney—I was there a few months ago at the business improvement district—and the more we can strip away through encouraging innovation through meanwhile use provisions, the better. I have spoken about the fundamental review of business rates, and it is important that we look at the whole thing.

[Robert Halfon (Harlow) (Con) [V]]

In Harlow, we have an excellent Topshop that has done very well, and clearly the staff are worried about their pensions and their jobs. Surely, the time has come for legislation to stop these robber barons who own these big companies, who plunder the assets, with the taxpayer left to foot the bill and anxious employees losing their jobs and pensions. We should make sure that we seize the assets of those big vulture capitalists and get the money that the hard-working employees deserve.

[Paul Scully]

My right hon. Friend raises some important points. There is already legislation and regulation in place to look at this. That is why my right hon. Friend the Secretary of State has written to the administrators to make sure that they can expedite the report looking at directors’ behaviour, not just in the immediate weeks but looking back to see if anything untoward has happened.

[Ian Byrne (Liverpool, West Derby) (Lab) [V]]

The job losses resulting from what is happening at Arcadia and Debenhams are on top of a series of devastating job losses across the north-west. Vacancies are scarce and people have few places left to turn. In Liverpool, West Derby, we have had increases of over 100% in both youth unemployment and universal credit claimants since March. Will the Government now commit to cancelling their heartless plan to cut universal credit, which will take £20 a week from struggling families in my constituency?

[Paul Scully]

To flip the question slightly, I know that a number of people up and down the country have been appreciative of the Government’s increase in universal credit to make sure that we can help them through this particularly acute time. Clearly, as I say, we will continue to work not only to support people who are out of a job but to make sure that we can create jobs and opportunities for them to get back into good work.

[Theresa Villiers (Chipping Barnet) (Con)]

Retail is at the heart of our local high streets, and the Government’s huge programme of support has been vital in keeping it going. Will my hon. Friend join me in encouraging my constituents to back Barnet and to come out and shop local on small business Saturday?

[Paul Scully]

My right hon. Friend absolutely nails it, as usual, in supporting her independent retailers—her small businesses. They are the backbone; 99.7% of businesses in this country are small and medium-sized enterprises. She is absolutely right, and I encourage everybody, both in Barnet and across the country, to shop local and get out there and spend money where possible to make sure that there is a high street to enjoy for years to come.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

Arcadia entering administration and Debenhams going into liquidation is devastating news, with thousands facing the risk of losing their jobs, but this is also an issue of greed, with Philip Green having paid his family a tax-free dividend almost three and a half times more than Arcadia’s current pension pot deficit. Does the Minister agree that while Philip Green retains his fortune, employees should not end up paying the price with their pensions?

--- Later in debate ---

[Paul Scully]

The hon. Gentleman raises an important point. Clearly, as I say, the Pensions Regulator has significant powers here, and we will make sure that it has the space and ability to do its job.

[Mark Jenkinson (Workington) (Con)]

My heart goes out to all those affected by the collapse of Arcadia and Debenhams, both of which affect my Workington constituency—particularly Workington town centre, which has a Debenhams anchor. Alongside the stronger towns fund, the Government’s future high streets fund will be crucial to helping town centres not only recover but adapt in the future. In the light of unprecedented challenges this year, can my hon. Friend confirm that future high streets fund decisions are imminent and that the Government will get the cash out of the door quickly so that it can have a positive impact as soon as possible?

[Paul Scully]

I thank my hon. Friend for his work to support Workington. The stronger towns fund and the future high streets fund are two really important instruments in making sure that we have high streets up and down the country that can survive and thrive and that we can be proud of, and we will make sure that those announcements are forthcoming as soon as possible.

[Stephen Flynn (Aberdeen South) (SNP)]

As Arcadia collapses and jobs are put on the line in Aberdeen and across the country, Amazon pays less than £300 million of tax on almost £14 billion of revenue. Does the Minister therefore agree that, in order to protect our city centres, we need a level playing field and the Government must toughen up their digital services tax?

--- Later in debate ---

[Paul Scully]

This is an important situation. Our hearts must all go out, as they have done today, to the employees of both Arcadia and Debenhams. In terms of an online sales tax, that is something we will look at in the fundamental business rates review. It is important that our high streets survive. There is an understanding that online businesses have an important role to play, but they must pay their fair share of taxes.

[Mark Pawsey (Rugby) (Con)]

The challenges that Arcadia and Debenhams face existed before covid, but they have been accelerated by it as people move online. The Minister outlined the very substantial support the Government are providing to retailers, but, to follow the question from the hon. Member for Aberdeen South (Stephen Flynn), should the Government go further and consider levelling the playing field between bricks and mortar and online retailers through an online sales tax?

[Paul Scully]

An online sales tax is one consideration that the Treasury will look at, but it is more than that. We need to ensure, in the fundamental business rates review, that there is a connection between businesses, bricks and mortar retailers, and their place, rather than just the customers themselves. There is an important body of work to be done and I know the Treasury will have heard the comments and views today.

[Mr Speaker]

In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I am suspending the House for three minutes.

Statutory Paid Bereavement Leave: Loss of Family Member

Paul Scully Excerpts

Monday 30th November 2020 Commons Chamber

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

First, I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing a debate on this important issue. I am grateful to her for bringing it to the attention of Parliament.

We have heard today about the impact of bereavement on individuals and their wider families, and about the experience of losing someone whom we love or who has played a special role in our lives. That is deeply upsetting, and I sympathise with anybody who has been in that position. We will all experience bereavement at some point in our lives, but the fact that death is an inevitable part of our experience of life does not detract from the sense of loss that most of us will feel or from the fact that, for some of us, that sense of loss will at times feel overwhelming.

I found the hon. Member’s account particularly poignant because I know she speaks from personal experience. She has spoken with passion and compassion. I am grateful to her for her candour and for raising awareness of this issue and of the impact of stillbirths and baby loss generally on individuals and their wider families, both today and on many other occasions in this Chamber.

All of us have been touched in some way by covid-19, whether as a result losing someone who has played a part in our lives or simply as a result of reading the virus’s mortality rates in the press. I have lost two uncles myself during lockdown, one of whose funeral I could not take part in.

In April this year, as the hon. Member said, we introduced parental bereavement leave and pay for employed parents who lose a child under the age of 18 or who suffer stillbirth from 24 weeks of pregnancy. That new entitlement recognises that the death of a child is particularly tragic. Prior to April, employed parents had a statutory right to take time off work following the birth or adoption of their child, but they did not have a specific right to time off work in the event of their child’s death. Parents who are in that dreadful position are now able to take up to two weeks’ leave in the 56-week period following their child’s death. Where they qualify for pay, parents will receive the lower of 90% of their average weekly earnings or the statutory flat rate, which is currently £151.20 a week. Like all entitlements to paid time off work, the statutory scheme provides a floor, not a ceiling.



The Government are mindful of placing additional burdens on business in the current economic climate, but we strongly encourage employers, as we have heard, to go beyond the statutory minimum if they can afford to. This could involve giving parents additional weeks of leave and pay, or paying them at an earnings-related rate when they are off work on parental bereavement leave.

This debate has raised the question of whether the right to paid leave for parents should be extended to all those who lose a close family member. As we have heard, grief is a very personal experience, which affects different people in different ways. While some people understandably want to take time off work following a bereavement, others may prefer to work through their grief. We believe that individuals are best placed to understand their own specific needs. Employers should, and usually do, respond to these needs in an appropriate and sensitive way, even in the absence of a legal requirement to time off work.

While I of course recognise the pain that can accompany bereavement—as I have mentioned, I am speaking from recent personal experience of this—extending entitlements to bereavement leave and pay would come at a significant cost to the public purse. It would also place additional burdens on business at a time when many employers are struggling to keep their businesses afloat. We cannot ignore this fact, and while we are sympathetic to everyone who has lost a close family member, whether through covid-19 or otherwise, the Government have no plans to extend entitlement to bereavement leave and pay at this time.

I remind hon. Members, however, that employees who want to take time off work are already entitled to take up to 5.6 weeks of annual leave a year. All employees also have a day one right to take time off work to deal with an emergency involving a dependant, and in the case of a bereavement the right to time off for dependants can be used to make necessary practical arrangements, including registering the death and arranging and attending the funeral of the person who has died.

The hon. Lady talked about the cost of bereavement. I am unable to comment on the figures today, but my officials have had an initial meeting with representatives from the Sue Ryder charity, who have agreed to share their analysis with us when the report is finalised.

Grieving is a natural process that we should not attempt to stifle, and most of us are able to cope with our loss with support from our family, friends, colleagues and employer, but I recognise that bereavement is a risk factor for physical and mental health issues. Where a bereavement is particularly debilitating or likely to have a longer-term impact on an individual’s mental or physical health, they have access to our excellent national health service. In May this year the Government announced additional funding of £4.2 million to support mental health charities and charities providing bereavement support. That was part of a £750 million package of support for the voluntary sector announced by the Chancellor in April.

Where a bereavement does affect someone’s mental or physical health, they also have the option of taking sick leave. They may be eligible for statutory sick pay. Clearly, statutory sick leave is a means to an end, but bereavement in itself is not a sickness. Employees can, however, self-certify as sick for the first seven days that they are off work. After that time, a fit note is required and their employer can request medical evidence if they wish. Individuals who are not eligible for statutory sick pay and those who require additional support may be eligible for universal credit and the new-style employment and support allowance.

The hon. Lady talked about covid and its effect on families. I was fortunate enough, at the funeral of one of my uncles, to join close family members to pay my final respects, and indeed to do so for my mother, who died just before lockdown, but not everybody has been fortunate. We talk about the death rates in this country, so this is clearly not just personal to me; tens of thousands of people across the country have been through similar experiences. So I am acutely aware of the fact that covid-19 has robbed so many of us of the opportunity to see our loved ones before they died and to say goodbye in the way we would all want.

No two people’s experiences of a bereavement are the same; we all have our coping strategies. Our experience will, however, to a large extent be influenced by how the people around us respond to us and our loss. As the hon. Lady said, far too many people suffer their loss in silence and this can lead to them feeling isolated and alone. While no one should feel obliged to talk about their personal experiences, they should also not be afraid to do so.

We have given employers the tools they need to approach what might otherwise be a difficult conversation with a bereaved employee. In 2014, the Government commissioned ACAS to provide guidance on managing a bereavement in the workplace. The guidance was developed in conjunction with key stakeholders, including Cruse Bereavement Care, Jack’s Rainbow and other bereavement charities. The guidance has been well received and was updated in 2020 to provide more accessible webpage content for users and to take account of the new right of parental bereavement leave. The guidance can be found on ACAS’s website. Use of the guidance continues to grow and has increased since the start of the pandemic. There was a total of 82,000 visits to the guidance between 1 April and 23 November. ACAS is working on further revisions, including revised case studies to offer more detailed support to employers and employees at this difficult time.

Where an individual loses their spouse or civil partner, they may be eligible for a bereavement support payment. This consists of an initial lump sum payment of £2,500 and up to 18 monthly instalments of £100, with higher amounts being paid to those individuals who have children. The initial payment for individuals who have children is £3,500. Bereavement support payments are intended to meet the additional costs of bereavement rather than providing an ongoing income replacement to bereaved spouses and partners.

As the hon. Member mentioned, the Government will bring forward an employment Bill to implement a range of manifesto and other commitments, and we will publish our detailed proposals for that Bill in due course. While the Government are not minded at this time to introduce a new right to time off work for people who have lost a close relative, we do understand how difficult this can be for people in bereavement.

[Jonathan Edwards]

I thank the Minister for giving way and for the way he has approached the debate. I am slightly disappointed that the Government will not even look at the proposals, because this seems to be a very simple reform. All the Government need to do is define what they mean by “reasonable”. The eligibility criteria are already there. All these different employers have a different idea of what “reasonable” means, so my question would be: what does “reasonable” mean to him as the Minister?

[Paul Scully]

I have been an employer in the past, and the biggest asset of any business is the employees. Any business owner invests time in training and developing people, and they make up the business. In terms of reasonable time, I have talked about the fact that bereavement is different for different people, and I think that they just need to work together with employees. As I said, I am not minded to put it on a statutory footing, but we will continue to work with Members across the House in the employment Bill and with Sue Ryder in understanding their background. I am looking forward to introducing that Bill to this House, when we can talk about a whole range of issues to support employees through the aftermath of this pandemic and put workers’ rights on a long footing beyond now.

[Patricia Gibson]

I want to press the Minister on one point and ask for his view on it. If those who are earning a comfortable salary feel that they need to take additional time off, unpaid, they are free to do that, and they are obviously able to absorb that cost. There is a concern about the people in low-paid jobs who cannot take unpaid leave and therefore do not have the choice to take additional time, unless, of course, it is in statute.

[Paul Scully]

It is essentially about getting the balance right. I talked about eligibility for statutory sick pay, which I know is not suitable for long periods of time, and access to universal credit. There is annual leave of 5.6 weeks per year. It is about getting the balance right between what may suit employees suffering different types of bereavement or having different reactions to bereavement, and employers, especially as we have seen the pressure on them at this moment in time. They may be at risk in relation to the future viability of the business. It is getting that balance right, which is why we continue to try to understand the modern-day employer and the things that we might include in the employment Bill as we reflect on the effect of covid.

There is a range of Government support for people who suffer from a bereavement. Employers can, and do, provide significant support to employees without being legally required to do so. We encourage employers to respond with flexibility and compassion. One of the cornerstones of the employment Bill will be to ensure flexible working by default. That will hopefully provide some succour or support to people who, although not necessarily taking full time off, will be able to arrange their working time around their particular current circumstances.

I thank the hon. Lady and the other hon. Members who contributed to the debate. I also thank everybody who has worked hard to raise awareness of the impact of death on the people left behind.

Question put and agreed to.

Contingencies Fund Advance: Covid-19 Business Support

Paul Scully Excerpts

Wednesday 25th November 2020 Written Statements

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

I hereby give notice of the Department for Business, Energy and Industrial Strategy having drawn an advance from the Contingencies Fund totalling £2,262,587,000 to enable expenditure on covid-19 support packages for business to be spent ahead of the passage of the Supply and Appropriation Bill in March 2021. The schemes are:

Local Restrictions Support Grant (LRSG) (closed) and (open) schemes

Additional Restrictions Grant (ARG) scheme.

Worker Exploitation: Leicester Textile Industry

Paul Scully Excerpts

Wednesday 18th November 2020 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Hollobone. I would like to thank the hon. Member for Leicester West (Liz Kendall) for securing today’s important debate. I was pleased to have the opportunity to meet with her and Councillor Clarke from Leicester City Council to discuss the issue, share our thoughts and plan together. I know it is not going to be the first or last time that we meet to do so. I welcome the opportunity to hear about the work on the ground in Leicester, and their insights as well—it is so important that we learn from the experiences there.

[Claudia Webbe]

I did have permission, Mr Hollobone. I congratulate the hon. Member for Leicester West (Liz Kendall) on securing this important debate. The Minister says that we need to learn, but while the pandemic has thrown the crisis into sharper light, exploitation in Leicester’s textile industry is not a new phenomenon. The reality is that it has been widely reported and studied for at least a decade and there has been a shameful failure to act, despite widespread, long-standing evidence of employer misconduct. There has been a failure to address institutional exploitation in Leicester’s garment industry, which has been brought to official attention over many years and has posed an obvious injustice and health risk to workers.

[Paul Scully]

I thank the hon. Lady. We did have an exchange yesterday in a wider debate about workers’ rights and I was pleased that she was able to raise the important ongoing issues in Leicester. I shall cover some of the historic enforcement issues and what we have done, involving a variety of bodies, as well as some of the problems with getting the evidence to a point sufficient to get people to speak out and make it possible to mount prosecutions.

We are committed to ensuring that workers receive their employment rights, and that employers act responsibly. It is important to realise that some workers are particularly vulnerable. That is where our enforcement bodies have a role. The Government already spend more than £35 million a year enforcing the national minimum and living wages, protecting agency workers, administering a licensing scheme for labour suppliers in the fresh food supply chain, and protecting workers from the worst cases of labour exploitation. In 2017 the Government created the office of director of labour market enforcement, to ensure greater joint working and set the strategic direction across the three labour market enforcement bodies—HMRC national minimum wage enforcement, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority.

The labour market enforcement bodies play a crucial role in protecting vulnerable workers. In 2019-20 alone, HMRC recovered more than £20.8 million for more than 260,000 workers and issued 1,000 penalties to non-compliant businesses with respect to national minimum wage. The Employment Agency Standards Inspectorate recovered more than £61,000 for agency workers, dealing with almost 1,700 complaints, and led more than 300 inspections. The Gangmasters and Labour Abuse Authority recovered more than £166,000 for workers and was involved in more than 260 criminal investigations, which resulted in 29 arrests for suspected labour market offences.

Those figures show only a fraction of what state enforcement bodies achieve on a daily basis to protect vulnerable workers, but there are challenges with so many different bodies playing a role in this space. That is why we have committed to the creation of a new single labour market enforcement body that will bring together what is currently a fragmented landscape, as we have heard, making it easier for workers and employers to know where to get help. It will do even more, enforcing holiday pay for vulnerable workers and also with respect to umbrella companies. By bringing together the existing bodies we can also develop a more comprehensive picture of non-compliance, making better-targeted, proactive activity possible.

We consulted on proposals for the new body last year, as the hon. Member for Leicester West said. We planned to take them forward in the forthcoming employment Bill. Progress on that has been slower than I would have liked, because of covid-19, but the delay gives us the opportunity to learn a huge amount from the situation in Leicester, as well as from the covid-19 pandemic situation. That will strengthen the plans for the new body.

[Claudia Webbe]

Will the Minister give way?

[Paul Scully]

I have only a little time to cover the points raised, I am afraid.

The allegations of abuse in textiles manufacturing in Leicester that are the subject of today’s debate are not new, as the hon. Member for Leicester East (Claudia Webbe) said. On the recommendation of the previous director of labour market enforcement, Sir David Metcalf, the main enforcement bodies undertook a pilot project with Leicester City Council in 2018 to address the issues. In response to the most recent allegations, as we have heard, a multi-agency taskforce led by the Gangmasters and Labour Abuse Authority has been set up in Leicester. It works closely with Leicester City Council. Partners include HMRC, the Employment Agency Standards Inspectorate, Leicestershire police, the National Crime Agency, Leicestershire City Council and the Department for Work and Pensions.

The work plan includes targeting enforcement activity, strengthening intelligence gathering and improving community engagement. The taskforce has identified more than 200 premises of interest for investigation and has so far conducted more than 140 visits. In those visits, it has identified issues with non-payment of national minimum wage, unsafe working conditions and small amounts of potential illegal working, but so far it has seen no indication of modern slavery offences. The enforcement bodies will fully investigate all concerns and bring appropriate enforcement action against non-compliant employers.

Historically, HMRC has recovered more than £215,000 in wage arrears for 411 textile workers and issued more than £325,000 in corresponding penalties to employers, including in Leicester. Since 2015, HMRC has facilitated 19 director disqualifications relating to the textile sector. Early evidence suggests that the visibility of enforcement activity is having a positive effect on employer behaviour, with some factories making changes to become more compliant. That is an encouraging development, but the enforcement bodies clearly are not complacent.

One of the major challenges is a lack of reporting from workers, many of whom may be worried about speaking to law enforcement because of a perceived fear of reprisals. Leicester City Council has been leading work to improve community engagement and encourage people to come forward, and has launched a campaign with Crimestoppers to raise awareness and promote workers’ rights. In recent weeks, the taskforce has seen a small increase in reporting from workers, although we remain conscious that there is still work to be done.

This is a key issue that we need to look at as we develop plans for a single enforcement body; it must be seen as being approachable to workers and employers. We need to build stronger links—as we have seen in Leicester—with local authorities, workers and community groups, who can share valuable insights and information. There is much that we can learn from Leicester City Council here. I am also grateful to the director of labour market enforcement, Matthew Taylor, who is chairing a series of workshops to gather views on how we can make the body approachable to different groups and build links for effective ongoing engagement. Getting that right will be key to the body’s success. Through those workshops, Mr Taylor will also consider what sort of sectoral engagement and approach might be needed.

Alongside enforcement action, however, retailers of course have an important responsibility to promote compliance in their supply chains. The findings, as we have heard, of the review by Alison Levitt, QC into Boohoo’s Leicester supply chain are very concerning. I welcome Boohoo’s commitment to implementing the recommendations in that report, but, as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) said, there is much more that we need to do. We must not be complacent, but work to see that that is carried through.

Since the publication of the report, the engagement with Boohoo has been encouraging, but there is more to do. Boohoo and other retailers, including Missguided and New Look, have raised issues with the taskforce as they have become aware of them, which has been instrumental in building the intelligence picture. The apparel and general merchandise public and private protocol is the main form of engagement between the taskforce and the sector, and is aimed at tackling all forms of labour exploitation in the garment trade. That group is undertaking a programme of work looking at improving worker engagement, business accountability, intervention mechanisms and the regulatory framework; I very much support its work and look forward to seeing the results.

The Leicester and Leicestershire Enterprise Partnership is also playing an important role, working with the city council to support businesses and improve working practices. It is keen to set up a textiles hub in the city, supporting local businesses and employees through the sharing of best practice, skills provision and business training. The Government have provided £1.4 million to the enterprise partnership since 2015; I welcome these initiatives and I encourage local partners to join in and deliver those plans.

It is in shareholders’ long-term interests to promote responsible behaviour from the companies they own. The share price often suffers if companies are found wanting. As reflected in the revised stewardship code, which took effect from the start of the year, I expect asset managers to take more account of environmental, social and governance factors in their investment activities.

The Government have acted to drive stronger business transparency so that companies are more accountable to shareholders on corporate responsibility. For example, in 2018, our corporate governance reforms introduced new company reporting requirements on executive pay, including pay ratio reporting and new reporting on how directors are having regard to employee, environmental and other interests in pursuing the success of their company within the meaning of section 172 of the Companies Act 2006. The hon. Lady talked about consumers, as well as shareholders, having a responsibility beyond the value of the company. It is important that consumers get that right and are very aware about supply chains, albeit that some supply chains are incredibly complicated.

The behaviour of brand names is not only affecting Leicester. I engage regularly with retailers and manufacturers from across the country on the issue and I stress the importance of preventing abuse in supply chains. I know the Business, Energy and Industrial Strategy Committee is doing some important work on that as well. My officials are engaging with the British Retail Consortium on options to improve compliance in UK textile manufacturing, including proposals for a licensing scheme.

We are also committed to strengthening our approach to transparency in supply chains overall, under section 54—

Motion lapsed (Standing Order No. (10(6)).

Covid-19: Employment Rights

Paul Scully Excerpts

Tuesday 17th November 2020 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Sir Christopher. Like everyone else, I congratulate the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) on securing today’s important debate. This is a really important matter—a collective matter—and we have heard a number of excellent contributions from across the Chamber detailing individual issues within the overall, encompassing issue of workers’ rights.

Clearly, covid-19 has had a massive effect; it reaches deep into our economy and society. It has required us, as a country, to wrap our arms around the economy and around businesses and employees as well. The Government have acted decisively to provide an unprecedented package of support to protect people’s livelihoods.

[Grahame Morris]

Will the Minister give way?

[Paul Scully]

I will briefly, but I do want to make progress.

[Grahame Morris]

I appreciate that the Minister is under siege, so I will just ask a simple question. If we are truly wrapping our arms around workers and employees, will he take steps to ensure that the awful practice of fire and rehire is outlawed, because it is unnecessary and is having an appalling effect?

[Paul Scully]

The reason why I am limiting interventions is that I want to leave the hon. Member for Paisley and Renfrewshire North time at the end of the debate to sum up. I will clearly cover fire and rehire in a second.

Before doing so, I want to look at just some of the ways in which we have wrapped our arms around the economy and around businesses and employees. We have done that through the furlough scheme, which has allowed 1.2 million employers across the UK to furlough 9.6 million jobs. As we have heard, that scheme has been extended to the spring. With regard to the self-employment income support scheme, there is an increase under the third instalment of the grant, covering November to January.

It is also important that we help to get people, and particularly young people, back into work; we have heard about that from other hon. Members today. That is why, as we have announced, more than 19,000 jobs have been created so far through the kickstarter scheme, helping young people from across the country into the workplace and into a variety of sectors. In addition, 1.3 million businesses have had a Government-guaranteed loan to support their cash flow through the British Business Bank. That is delivering £8 billion to more than 98,000 SMEs—something close to my heart.

The hon. Gentleman talked about fire and rehire tactics. A key aspect of building back better is to continue championing a flexible and dynamic labour market, which gives employers the confidence to retain and hire staff, while maintaining a framework that protects individuals. For those who, sadly, lose their jobs, clear laws about unfair dismissal will ensure that their rights are protected. We have tightened the protections throughout the covid-19 pandemic. For example, we have made sure that statutory redundancy pay, statutory notice pay and unfair dismissal compensation are based on a furloughed employee’s normal pay rather than furlough pay. People who, sadly, are made redundant will receive the same level of financial compensation as they would if they had not been furloughed.

To understand better the issues in relation to fire and rehire, the Government are working with ACAS, and we are bringing together a number of roundtables with businesses, employee representatives and other bodies to discuss these issues in more detail. The House should be left in no doubt that this Government will always continue to stand behind workers and to stamp out unscrupulous practices where they occur.

We have responded swiftly and effectively to the pandemic.

[Gavin Newlands]

Will the Minister give way?

[Paul Scully]

I will come back to some of the hon. Gentleman’s points, but, yes, I will give way now.

[Gavin Newlands]

I am grateful, and I will keep my intervention brief. Can the Minister confirm, if he is having roundtable discussions about the practice of firing and rehiring, whether something might be brought forward in the employment Bill, when that Bill is eventually brought forward? If that is the case, will he work with me and others across the House to ensure that those provisions are good enough for the workers of this country?

[Paul Scully]

I will gladly work with the hon. Gentleman in continuing to discuss workers’ rights in this area and other areas. It is important that the employment Bill, when it does come, not only extends workers’ rights in the way that we talked about in our manifesto, but does so in a way that fully reflects the situation we are going through and the lessons learned from the pandemic.

Some hon. Members talked about pregnancy and maternity discrimination. That is not acceptable under any circumstances. We have continued to remind employers of their existing responsibilities under current legislation. Equalities legislation requires that employers must not discriminate in the workplace based on gender, pregnancy or maternity. Following the Government’s consultation in 2019, we are extending the redundancy protection period afforded to mothers on maternity leave to six months, once the new mother has returned to work, and to those taking adoption leave and shared parental leave.

We have taken steps to support new parents by passing emergency legislation that ensures that parents who are furloughed during the period, and are determined to be entitled to maternity, adoption and other family related statutory pay, do not lose out.

[Rachael Maskell]

Will the Minister give greater clarity about what rights women in the third trimester of pregnancy have to protect themselves and their children?

--- Later in debate ---

[Paul Scully]

I am happy to write to the hon. Lady fully to outline those details. The legislation entitles parents to a rate of pay based on their normal earnings, not their furlough pay.

Employment rights enforcement is as important as ever during this pandemic. We already spend £33 million a year on state enforcement of employment rights. Enforcement bodies continue to protect vulnerable workers and have worked with businesses to promote compliance throughout the pandemic. As has been mentioned, we have committed to go further and establish a single enforcement body for employment rights, to better protect vulnerable workers and create a level playing field for the majority of employers that comply with the law.

[Wera Hobhouse]

Will the hon. Gentleman give way?

[Paul Scully]

I will not because I want to leave time for the hon. Member for Paisley and Renfrewshire North to respond.

The Government have acted decisively to protect the health and safety of workers who cannot work from home during the pandemic, including by providing tailored guidance on social distancing in the workplace to enable sectors to reopen and, where exemptions apply, to trade through the new English national restrictions. To date, the guides have been viewed over 3 million times. Where the Health and Safety Executive identifies employers that are not taking action to comply with the relevant public health legislation and guidance to control public health risks, it will consider taking a range of actions to improve the control of workplace risks.

The hon. Member for Paisley and Renfrewshire North made a powerful argument about fire and rehire. When I spoke in the Chamber recently, I was absolutely clear that it is not acceptable to use that as a bargaining or negotiating tactic. When I talked about flexibility for firing people, I was not talking about adding any extra power to Goliath over David. Indeed, it is clear that we must have a level playing field.

Small businesses need to be able to thrive, but when employees in big businesses are concerned about collective bargaining and the power of the large employers, that shows that we need to strengthen workers’ rights and not weaken them in any way. We will continue to work with hon. Members across the House. Any sensible employer should know that investing in and working with their people is the biggest strength that they have. I say that as someone who ran small businesses for 25 years.

We have talked about bereavement. I am glad that we introduced the right to bereavement pay for people who have lost a child. There is day-one right for unpaid leave to respond to other forms of bereavement.

The Low Pay Commission recommends the national minimum wage and the national living wage to Government. We will always respond to the collective view of that body, which encompasses union, independent and employer representation, rather than just taking a Government view, to come up with what is best for the economy, but not on the basis of the lowest paid in this country. We want to make sure we include our manifesto commitment to allow people to benefit as we level the playing field for people aged 23-plus as well.

The hon. Member for Blaydon (Liz Twist) talked about retailer abuse, on which USDAW, with whom I have had regular discussions, has had a good campaign. The retailers themselves have raised issues most recently about the closure of pubs and restaurants. In Nottinghamshire, for example, there has been an increase in reported abuse of retailers around the sale of alcohol, so we need to reflect and act on that quickly.

We have heard about zero-hours contracts from a few speakers. Some 3.2% of workers are on zero-hours contracts, and they work an average of 25 hours a week. The Taylor review recommended not scrapping zero-hours contracts. We have got rid of exclusivity clauses in zero-hours contracts, but he said that banning such contracts

“would negatively impact…more people than it helped.”

To conclude, I thank the hon. Member for Paisley and Renfrewshire North once again for securing this important debate. I want to reassure workers across the country that we will continue to stand shoulder to shoulder with them throughout the crisis as we build back better. As soon as parliamentary time allows, we will introduce an employment Bill to reflect everything that we have learnt, and we will deliver the Government’s manifesto commitments. The legislation will make workplaces fairer by providing better support for working families and new protections for those in low-paid work, and will encourage flexible working. It will balance the needs of both employers and workers, ensuring that everybody benefits from flexibility. It will also create a new enforcement body for labour market abuses and give greater protections to vulnerable workers.

The hon. Member for Leicester East (Claudia Webbe) talked about the situation in Leicester, which is so important for us all. The taskforce set up in Leicester has visited 140 premises. There are a significant number of live investigations, and we want to do more to make sure we get to the bottom of any reports of abuse in Leicester and beyond. The Government have a proud history of protecting and enhancing workers’ rights. We are committed to making the UK the best place in the world in which to work.