Electricity Supplier Payments (Amendment) Regulations 2021

Lord Callanan Excerpts

Tuesday 23rd February 2021 Lords Chamber

Moved by

[Lord Callanan]

That the draft Regulations laid before the House on 21 January be approved.

Relevant document: 44th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, this statutory instrument amends regulations concerning the levies that fund the operational costs budgets for the Low Carbon Contracts Company and the Electricity Settlements Company. LCCC administers the contracts for difference scheme on behalf of the Government, and ESC administers the capacity market scheme. Those schemes are designed to incentivise the significant investment required in our electricity infrastructure, keep costs affordable for consumers and help to meet our net-zero target, while keeping our energy supply secure.

Contracts for difference, or CfDs, provide long-term price stabilisation to low-carbon generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. The capacity market ensures security of electricity supply by providing to all forms of capacity the right incentives to be on the system and to deliver capacity when needed by increasing generation or by turning down their electricity demand in return for guaranteed payments. In both schemes, participants bid for support via a competitive auction, which ensures that costs to consumers are minimised.

The next CfD auction—the fourth to date—planned to open in late 2021, will be available to both established technologies, such as solar PV and onshore wind, as well as less-established technologies, such as floating offshore wind. As the Prime Minister announced in October, we seek to secure up to 12 gigawatts of renewable electricity capacity in this round—double what was secured in the last round in 2019. It will thus allow a broad range of renewable technologies to come forward, while delivering the best possible deal for bill payers.

The capacity market is tried and tested, and is the most cost-effective way of ensuring that we have the electricity capacity we need now and in the future. It facilitates investment in existing capacity to remain in the market and drives innovation in financing new capacity to be built. The capacity auctions held to date have secured the capacity we need to meet the forecast peak demand out to 2023-24. The next auctions, scheduled for March 2021, will secure most of the capacity we need out to 2024-25.

LCCC and ESC play a critical role in delivering the CfD and capacity market schemes. LCCC enters into and manages CfDs with low-carbon generators, collecting the supplier obligation levy from electricity suppliers, which it uses to make payments to generators under the CfD. ESC is responsible for all financial transactions relating to the capacity market, including collecting the supplier charge from electricity suppliers, which it uses to make capacity payments to capacity providers, but also managing supplier credit cover and capacity providers’ auction credit cover. This statutory instrument sets a revised operational cost levy for the LCCC and a revised settlement costs levy for the ESC, which the companies collect from suppliers to fund their day-to-day operations in administering the CfD and capacity market schemes.

It is important that LCCC and ESC are sufficiently funded to perform their roles effectively, given their critical role in administering these schemes. However, the Government are clear that both companies must deliver value for money and, with that in mind, we have closely scrutinised their operational costs budgets to ensure that they reflect the operational requirements and objectives for the companies. Savings have been identified in a number of areas. For example, £184,000 has been saved by reducing the number of desks that LCCC will have at its new office, reflecting changing work patterns.

LCCC and ESC are themselves very mindful of the need to deliver value for money, as their guiding principle is to maintain investor confidence in the CfD and capacity market schemes while minimising costs to consumers. They have taken a number of actions to date to reduce costs, such as bringing expertise in-house rather than relying on more expensive outside consultants. Because of actions such as those, CfD operational costs are falling both per contract and by overall generation capacity, despite the growing size of the CfD portfolio. It is a similar narrative for ESC. The company currently manages 54.4 gigawatts of capacity agreements with 513 capacity providers under the capacity market. This is expected to increase to 55.16 gigawatts of capacity and 546 capacity providers in 2021-22. Despite this increase, operational costs are expected to be marginally lower in 2021-22 compared to 2020-21.

The operational costs budgets for both companies were subject to consultation, which gave stakeholders the opportunity to scrutinise and test the key assumptions in the budgets and, importantly, to ensure that they represent value for money. Subsequently, the budgets remain unchanged save for one amendment, which I will briefly summarise. The consultation was published before the outcome of the 2020 spending review was known. The review announced a pause in public sector pay rises for the majority of the workforce. Taking into account this outcome of the review and the wider economic landscape, LCCC’s remuneration committee decided to agree a pay pause for its staff for 2021-22. Consequently, an allowance contained within LCCC’s operational costs budget for pay rises that was included in the consultation has now been removed.

In conclusion, taking into account the removal of that allowance, the proposed operational costs budget for LCCC in 2021-22 is £20.736 million and £7.472 million for ESC. The amendments revise the levies currently in place to enable the companies to collect enough revenue to fund these budgets. Any levy collected that is not spent will be returned to suppliers at the end of the financial year in accordance with the regulations. Subject to the will of Parliament, the settlement cost levy for ESC is due to come into force on the day after the day on which these regulations are made and the operational costs levy for LCCC by 1 April 2021. Finally, I assure noble Lords that the Government will continue to evaluate and monitor the costs of both companies, ensuring that costs to consumers are appropriately minimised. I therefore commend these draft regulations to the House.

--- Later in debate ---

[Lord Callanan (Con)]

First, I thank all noble Lords who contributed to the debate. I am delighted that the noble Lord, Lord Grantchester, is still following this brief from 2013. He showed that in the excellent contribution he made and in the knowledge he portrayed in his questions. I hope that my answers can do his memorable state justice.

As I set out in my opening speech, the companies and the Government have taken steps to ensure the proposed operational cost budgets allow the companies to perform their crucial roles effectively while representing value for money for consumers. I believe that these twin aims will be achieved if this draft regulation is approved. However, the noble Lord, Lord Grantchester, did make an important point, and I will not pretend the 19% increase in the LCCC’s budget is not significant; it clearly is. I do believe, though, that this is a justifiable increase, and I will set out, for the benefit of the House, why that is.

The increase in the budget reflects a number of factors, in particular the company’s important role in helping to meet our legally binding net-zero target while minimising costs for consumers. The CfD scheme has proven that it can deliver large-scale, low-carbon generation while driving down costs. The cost of offshore wind, for example, as noble Lords have pointed out, fell by two-thirds between the first CfD auction, held in 2015, and the third auction, held in 2019. This proposed budget will allow the LCCC to play its part in delivering the next CfD auction, which will bring forward more low-carbon electricity while further pushing down technology costs and, in doing so, bring us closer to meeting our net-zero target.

I should also point out to the House that the LCCC is facing a number of costs beyond its control in 2021-22, such as the increased uncertainty in energy demand arising out of Covid-19. A number of noble Lords have referred to that. This has necessitated an increase in its existing contingency for lower-than-expected electricity demand—and other world events, such as Covid-19, have also pushed up insurance premiums for companies.

As the CfD portfolio expands, that increases the likelihood of a legal dispute arising between the LCCC and a generator. Consequently, the proposed budget increases the existing contingency for such disputes from £2.1 million to £3 million. The level of this increase has been informed by the costs of past and present legal disputes. It is important to consider that these two contingencies—one focused on electricity demand and the other on legal disputes—may not be needed. If that is the case, the funds raised from the levy to cover these costs will be returned to electricity suppliers. Excluding these contingencies, the overall increase in the budget equates to approximately 9%.

Noble Lords have also touched on what this budget increase means for electricity consumers. That is indeed important. I agree that we have to scrutinise every penny that goes on to consumer bills, but I also believe that in this case there has been sufficient scrutiny. Given the important role both companies play in our electricity system, a bill impact equating to less than 0.1% for the average consumer is proportionate and justifiable.

Virtually everybody who spoke—certainly the noble Baronesses, Lady Bowles and Lady Ritchie, my noble friend Lord Bourne, and the noble Lords, Lord Oates and Lord Grantchester—raised the important question of why we were setting the levy for the next financial year only, when we set the last set of levies, in 2018, for three financial years. We are amending the levy rates for 2021-22 only, instead of for the next three years, because of the impact of Covid-19 on electricity demand forecasting. Electricity demand has reduced significantly during the pandemic. Increased uncertainty with regard to a number of factors used to forecast electricity demand makes it extremely difficult to do so beyond the 2021-22 financial year. LCCC’s operational cost levy rate is calculated by dividing its annual budget by the total forecast electricity demand for the corresponding financial year. If demand is lower than forecast, LCCC will not be able to raise enough income from the levy to meet its budgeted costs. Therefore, a robust forecast of electricity demand is needed for each financial year to set the levy accurately.

My noble friend Lady McIntosh asked whether we needed an impact assessment. As she correctly said, an impact assessment has not been prepared for this instrument because of the relatively low levy impact on electricity consumers’ bills.

My noble friends Lord Bourne and Lady McIntosh, and the noble Baronesses, Lady Ritchie and Lady Bowles, asked about the impact of Covid on electricity demand and household bills. I will write to noble Lords on that, setting out what information we currently have on the deployment.

The noble Baroness, Lady Bowles, and my noble friend Lord Bourne asked about our ability to forecast electricity demand accurately and whether we would therefore set the levy for more than just one financial year. In the next round, we intend to return to the status of setting the levy for three financial years.

My noble friend Lady McIntosh asked about the consultation, on which I have responded. The noble Baroness, Lady Bowles, asked about the contingency for reduced electricity demand and why it has increased. The contingency in the proposed 2021-22 budget has increased by £0.75 million compared to the 2020-21 budget because of the impact of Covid-19. The pandemic has resulted in a reduction in electricity demand. LCCC’s forecasts predict that reduced demand will continue into 2021-22, but the landscape is extremely uncertain, as the Government may need to take further actions that impact on demand; for example, the emergence of new variants may require them to take extra measures in the short term to counter this threat, although we are confident that vaccines can be adapted to mitigate it in the medium term. To reflect this increased uncertainty and to mitigate the risk of LCCC having to rely on BEIS for cashflow, the electricity demand contingency has been increased by £0.75 million, bringing it to £1.5 million overall in 2021-22. As I said earlier, if the contingency is not used, it will be returned to the companies.

My noble friend Lady McIntosh and the noble Lords, Lord Oates and Lord Grantchester, asked when the five-year review of the energy market would be laid before Parliament. I am deeply conscious of the fact that this review is now overdue. We expect it to be laid in Parliament shortly.

The noble Lord, Lord Oates, asked about the operational budget being funded via a levy on electricity consumers rather than general taxation, a point raised many times in this House. The costs of decarbonisation should be shared fairly among consumers. Levying costs for supporting the deployment of clean electricity in this way enables electricity consumers to pay towards the costs associated with increasing the proportion of renewable electricity supply, from which they subsequently benefit. The contracts for difference scheme was designed to deliver value for money for consumers and it is doing so, with costs falling in every auction held to date. The CfD is entering a new phase in which renewable projects could even reduce consumer bills, as they are now much cheaper than alternative forms of generation. The LCCC must therefore be adequately funded if it is to perform its role in delivering the CfD effectively.

A number of other, more general questions were asked about energy policy and decarbonisation. If noble Lords will forgive me, I will not take up the time on these regulations by answering those, but I will write to them separately. I think that I have addressed all the points raised during the debate. I therefore take pleasure in commending the regulations to the House.

Motion agreed.

National Security and Investment Bill

Lord Callanan Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 4th February 2021 Lords Chamber

Moved by

[Lord Callanan]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, this Bill represents a major upgrade to the Government’s powers to screen certain acquisitions on national security grounds. Through the new investment security unit within my department, the new regime provided for by the Bill will act as a vital new tool in the Government’s armoury to protect national security in a rapidly changing world. The UK’s current powers to intervene when mergers or acquisitions pose national security threats date from the Enterprise Act 2002. Apart from some limited exceptions, businesses must have a UK turnover of £70 million or meet a share-of-supply test for government intervention.

The world is of course a very different place now compared to when the Enterprise Act received Royal Assent in November 2002. When it comes to investment, we are seeing novel means to undermine the UK’s national security that go beyond traditional mergers and acquisitions and the reach of our current powers. The case for action in this area could therefore not be clearer.

The Government have carefully considered these reforms over time. We first published a Green Paper in October 2017, followed by a White Paper in July 2018. We have further considered what powers are necessary to reflect the modern economic and investment landscape in the UK. The Bill before us today is the culmination of all that work.

However, none of the provisions in the Bill change the Government’s position when it comes to foreign investment into the UK. Simply put, the UK economy thrives as a result of foreign direct investment. Since 2010-11 over 600,000 new jobs have been created thanks to more than 16,000 foreign direct investment projects. Inward investment stimulates economic growth in every part of our United Kingdom. In 2019-20 over 39,000 jobs were created in England thanks to FDI projects, with over 26,000 over those jobs coming outside London.

We have designed the regime with business in mind. For the first time, timelines for assessments will be set out in law, not decided by the Government on a case-by-case basis. This will give businesses certainty about the length of the assessments that they are subject to, and the Government will be able to revisit decisions only in exceptional circumstances.

The Bill brings our approach into line with many of our closest allies, including the United States, Canada, Australia, France and Germany, but it does not represent any change in our appetite for investment coming into this country from overseas. I will now go through some of its main provisions. Chapter 1 of Part 1 of the Bill provides for a “call-in” power that the Secretary of State will be able to exercise if he reasonably suspects that a trigger event has taken or may take place that could give rise to a risk to national security. Any decision to use that call-in power could follow the receipt of a notification from parties, or could be a proactive choice on the part of the Secretary of State if an unnotified acquisition meets the relevant criteria.

The call-in power must be exercised within six months of the Secretary of State becoming aware of an acquisition, and within five years if he was not made aware of it. However, the five-year limit does not apply to acquisitions subject to mandatory notification. The scope of the call-in power applies to trigger events taking place from 12 November 2020—that is, the day following the Bill’s First Reading in the other place. This is to ensure that no acquisition can be accelerated to avoid scrutiny while the Bill is making its way through Parliament.

Before the call-in power can be used, the Secretary of State must lay a Statement before Parliament setting out how he expects to exercise the power. The Secretary of State published a draft of such a Statement when the Bill was introduced in the other place. I must be clear to the House that the criteria for use of the call-in power are deliberately tightly drawn on the grounds of national security, and the Government have no intention to widen this to introduce any further “public interest” criteria.

Chapter 2 of Part 1 sets out the trigger events that are subject to the scope of the call-in power. There are broadly two types of trigger events: first, the acquisition of control over entities such as companies, limited liability partnerships and trusts; and, secondly, the acquisition of control over assets, including land and intellectual property.

In respect of entities, the Bill sets out situations where the acquisition of certain levels of shares or votes constitute trigger events. I will not set out the individual thresholds to the House now, but broadly speaking they correspond to the ability of parties to pass or block types of company resolution. The Bill also retains the concept of “material influence” over an entity, as used in the Enterprise Act 2002, as a trigger event for the purposes of the Bill.

When it comes to assets, trigger events occur when parties are able to use a qualifying asset or to direct or control how it is used. Chapter 2 also sets out instances where notifying the Secretary of State of some acquisitions in certain sectors is mandatory. Again, I will not explore each one in detail, but the Government have been careful to ensure that only those scenarios where parties can reasonably self-assess whether their acquisition qualifies are captured.

Parties involved in acquisitions that do not meet the criteria for mandatory notification, but which believe that they could pose a national security risk, will be encouraged to submit a voluntary notification to the Government. The Secretary of State will need to take a decision on whether to call in an acquisition for a full national security assessment within 30 working days of accepting a notification, or instead let it proceed. Once he has taken this decision, he cannot revisit it unless false or misleading information has been provided.

To ensure that mandatory notification continues to work as envisaged in the future, the Government propose taking a power to be able to update the situations where notification is mandatory. The power would also allow the Government to exempt certain types of investor from mandatory notification requirements.

In terms of the sectors where some acquisitions will be subject to mandatory notification, the former Secretary of State published a consultation alongside the Bill introduction on the statutory definitions of the proposed 17 sectors. That consultation closed on 6 January of this year. We have had a good number of responses and I thank all of those who took the time to provide valuable insights. We are now working hard to respond to that consultation and to bring forward draft regulations for consideration as the Bill goes through this House.

I would like to stay with mandatory notification for a minute or two longer. Chapters 3 and 4 of Part 1 set out the mechanics of mandatory notification and the consequences of proceeding with a notifiable acquisition without clearance from the Secretary of State. Put simply, if parties proceed with such an acquisition, it has no effect in law. The Government recognise that this approach represents a harsh deterrent to parties that do not comply, willingly or otherwise. I will make just two points on this. First, it is vital for our national security that parties are strongly disincentivised from trying to avoid scrutiny by this regime. This is even more pressing in the sectors of the economy where the notification of certain acquisitions is mandatory. Secondly, affected parties will have recourse to apply to the Secretary of State for retrospective validation of such acquisitions, as set out in Clause 16.

Clause 15 also obliges the Secretary of State to either call in a non-notified mandatory acquisition or retrospectively validate it once he becomes aware of it, if no national security risks arise. Clause 17 obliges him to retrospectively validate a non-notified acquisition if it is called in and subsequently cleared to proceed. The Secretary of State cannot, in other words, simply allow an acquisition to remain void once he becomes aware of it: he must take action, either to grant clearance and retrospectively validate it, or impose remedies. It has to be this way around: that is to say that non-notified acquisitions should be able to be retrospectively validated, rather than retrospectively invalidated.

The remainder of Part 1 provides for a voluntary notification mechanism whereby parties can formally submit a notification to Government. As with mandatory notification, once the Secretary of State has taken a decision to let an acquisition proceed, he cannot revisit that decision unless false or misleading information has been provided. The Government are committed to giving parties clarity when it comes to this regime and voluntary notification is a key part of that. The Bill also provides for information-gathering powers for the Secretary of State to be able to come to fully informed decisions. There are also safeguards on the use and disclosure of such information.

I turn to Part 2, which provides for the assessment process and any remedies following a call-in. The Bill provides for an initial assessment period of 30 working days once a call-in notice has been given, with an additional period of 45 working days. A further voluntary period is possible if certain criteria are met. I believe this represents a significant improvement on the current process under the Enterprise Act 2002, whereby the Secretary of State sets the assessment timetable on a case-by-case basis. For the first time, timelines for assessment will be set out in statute so that investors can build them into their own plans.

In the course of the assessment period, the Secretary of State may wish to impose interim orders to mitigate any national security risks that could arise as he undertakes this investigation. Such orders could be imposed, for example, to stop or prevent parties doing certain things that they would normally do prior to completing an acquisition, such as exchanging sensitive information. At the end of the assessment period, the Secretary of State must either give a final notification to allow the acquisition to proceed, or a final order if he believes that national security risks could arise as a result of the acquisition. All orders must be kept under review and parties are free to request that they are varied or revoked.

The Secretary of State will be supported in making decisions by the investment security unit which, as I said earlier, is being set up within my department. This new unit will be fully resourced to manage the administrative process for screening notifications and undertaking national security assessments. It will draw on expertise from across government and from the security services. If noble Lords permit, I will go through the rest of the Bill a bit more swiftly as I know there are many who wish to speak in this important debate.

Part 3 provides for a range of offences, along with associated criminal and civil sanctions, although I expect criminal cases in relation to offences committed under the regime to be exceptionally rare. Parties will, of course, have recourse to judicial review in relation to certain decisions made under the regime. Parts 4 and 5 of the Bill contain a number of miscellaneous provisions. Clauses 54 to 56 provide for smooth and timely information sharing when relevant between the Government and overseas public authorities, HMRC and the CMA. These are important clauses to ensure that time is not lost to administrative red tape and that information is appropriately handled.

Clause 61 provides for an annual report to Parliament, which will provide details of the number of notifications received, the number of call-in notices given and the sectors of the economy where they were served, among others. I will return finally to the fundamentals of the Bill before us. It is imperative for any Government to have the tools they need to protect national security in what is a rapidly changing world. This Bill will keep the British people safe. I beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, I thank all noble Lords for their contributions on this important Bill. There is clearly a wealth of expertise on this subject across the House and, as is usual in your Lordships’ House, we have had a thorough and engaging debate, with thoughtful speeches coming from all corners of it.

I start by congratulating the noble Lord, Lord Woodley, on his excellent maiden speech. It is a pleasure to see him in his place today, and I am glad that he has chosen this debate to make the first of what I am sure will be many well-informed contributions. I am glad, too, to have his support for the Bill.

I was contemplating what I had in common with the noble Lord, despite our obvious political differences. We are both from the north, him being from the north-west and me from the north-east; we are both football fans, the noble Lord being a fan of Vauxhall Motors, while I am a fan of Newcastle United; and of course we both have reasons, although different ones, to be profoundly grateful to Jeremy Corbyn. I wish him well, as I do Vauxhall Motors, which, it seems, was on a fine run of form before being stopped in its tracks by the latest national restrictions. Listening to the comments of the noble Lord, Lord McNicol, it seems that his all-weather football pitch would be particularly appropriate on a day like today.

I will do my utmost to respond to as many as possible of the issues raised, but, as always, my door is open to anyone who wishes to discuss the Bill further as it goes through the House.

I thank the noble Baroness, Lady Hayter of Kentish Town, and the noble Lord, Lord Grantchester, for the constructive tone in which they delivered their speeches. I am glad that a sort of consensus is emerging across the House that the Bill is the right step forward. I even find myself in the very unusual position of having the support of the noble Lord, Lord Rooker, and that self-declared old lefty, the noble Lord, Lord Foulkes—two of my most trenchant critics on other pieces of legislation. These are indeed strange times. I reassure the noble Lord, Lord Foulkes, that I am indeed proud to introduce this Bill, so he can put his mind at rest there.

I turn, first, to the concerns expressed about the investment security unit being within my department and its potential caseload—a point raised by the noble Baroness, Lady Hayter, and other noble Lords, including the noble Lords, Lord Reid of Cardowan, Lord Dodds of Duncairn, Lord Bilimoria, Lord Rooker and Lord Bruce. I assure them and the noble Lord, Lord Grantchester, who also raised it, that the unit will not work in isolation from the rest of government and will not in any way compromise on its duty to put national security first.

When it comes to the operation of this regime, we will not have informational barriers with other government departments. We will work closely with them to ensure that we use skills and experience from right across government. We will, though, have appropriate walls in place with those responsible for promoting investment —some walls but not others. Indeed, other departments and the security services are actively contributing to the design of the unit, thus ensuring that the plans for it take a cross-governmental approach. We have worked closely with our allies around the world on how to create an investment screening process fit for the 21st century.

I reassure noble Lords such as the noble Lords, Lord Bruce, Lord Fox and Lord Rooker, that the unit will be fully resourced to ensure that the Government provide a slick and predictable process for all parties involved. Officials will have a mix of national security, business and casework experience. The noble and gallant Lord, Lord Stirrup, spoke forcefully about the importance of having that mix of expertise, and my noble friend Lord Holmes emphasised that important point.

On the caseload for the investment security unit, I stress that the Government expect a fraction of acquisitions across the economy to be affected by the new regime. Once it beds in and investors become familiar with the process, we expect the number of notifications to decrease further. Of the transactions notified, we expect that fewer than 10% will face a detailed national security assessment and, of those facing one, only a small proportion will likely result in government intervention. We have been clear that businesses and investors will be encouraged to come to the investment security unit in advance of any formal notification, allowing for early discussions with officials about deals, although any final decision will be for the Secretary of State.

A number of noble Lords raised concerns about the impact of the regime on business investor confidence, including in relation to small and medium-sized businesses —a point made by the noble Viscount, Lord Waverley. Among those who also spoke on that issue were my noble friends Lady Noakes, Lord Leigh of Hurley and Lord Vaizey, the noble Lords, Lord Clement-Jones, Lord Reid, Lord Bilimoria and Lord Bhatia, and the noble Baronesses, Lady Bennett of Manor Castle and Lady Ritchie of Downpatrick. The Government are committed to making the regime work for business. We have already published guidance for business on GOV.UK that sets out how the process is intended to work.

Noble Lords are entirely reasonable to expect further high-quality guidance from government to help businesses and investors navigate the regime. My noble friend Lord Hodgson of Astley Abbotts was right to raise that point. On the issue of prepacks, I am pleased that he received my letter in time for this debate and I look forward to further discussions. I know that he has strong views on that subject. That is why we will bring forward further guidance well in advance of commencement to give businesses as much clarity as is meaningfully possible on how the regime will function in practice. We will work directly with businesses and their representative organisations to make sure that we get that guidance right.

More broadly, the Government will never stand in the way of innovative, high-potential businesses setting up in the UK. Our record demonstrates that. Our investment in the British Patient Capital fund has attracted £1 billion of venture capital investment to date and we will continue to invest. By investing alongside the private sector, British Patient Capital aims to support £7.5 billion-worth of investment for British businesses. We have also announced a £7 billion investment in R&D over five years as a first step towards our target to raise total R&D investment to at least 2.4% of GDP by 2027 and 3% in the longer term.

Many noble Lords spoke about introducing a definition of “national security”, including my noble friends Lady Noakes and Lady McIntosh of Pickering, the right reverend Prelate the Bishop of St Albans, the noble Baronesses, Lady Northover, Lady Ritchie of Downpatrick and Lady Jones of Moulsecoomb, the noble Lords, Lord Fox, Lord Clement-Jones, Lord Reid of Cardowan, Lord McNicol of West Kilbride and Lord Bruce, and my noble friend Lord Holmes of Richmond. The Bill does not set out the circumstances in which national security is or may be considered at risk. That reflects long-standing government policy to ensure that national security powers are sufficiently flexible to protect the nation. National security risks are multifaceted and constantly evolving. What may not constitute a risk today may do so in future. I am glad that my noble friend Lord Lansley and the noble Lords, Lord Truscott and Lord Desai, recognised that point. The ability of the Secretary of State to safeguard national security would be limited if the Bill set out the circumstances in which national security is, or may be considered to be, at risk. By defining what national security is, we would, of course, also define what it is not. This could have grave implications and deliberately show hostile actors where the Government could not intervene. It would also have unintended consequences for other national security legislation.

The noble Baroness, Lady Hayter, and the noble Lords, Lord Grantchester, and Lord West of Spithead, spoke eloquently on the issue of parliamentary scrutiny with a particular emphasis on a role for the Intelligence and Security Committee in overseeing the work of the regime. I am grateful for the discussion that we had with the noble Lord, Lord West, last week.

As I set out in my opening remarks, Clause 61 provides for an annual report to Parliament, which will be crucial in ensuring parliamentary scrutiny of the work of the investment security unit and the broader functioning of the regime. The Government will very much welcome the Intelligence and Security Committee’s review of the annual report. There are of course no restrictions on the committee requesting further information from the unit or the Secretary of State. Parliament will also be able to scrutinise the Statement, as was mentioned by the noble Baroness, Lady Bowles of Berkhamsted.

The former Secretary of State laid a draft of the Statement on introduction in the other place and we would, of course, welcome Parliament’s views on its content. We will carefully consider these views and look to reflect those in the next draft of the document, which will be published for formal public consultation, where the Statement can be fully scrutinised.

Many noble Lords spoke about the sectors subject to mandatory notification, including how they interact with other critical national infrastructure sectors. Considered arguments on this point were made by my noble friends Lady Noakes and Lord Naseby, and the noble Lords, Lord Clement-Jones, Lord Reid, Lord Woodley, Lord McNally, Lord Truscott, Lord Rooker and Lord Foulkes. The list of proposed sectors covered by mandatory notifications has been carefully developed across government, with input from all relevant departments and from the intelligence agencies. Put simply, the Government have sought to identify the sectors where certain types of acquisition could give rise to the greatest risks, while balancing this against the need to minimise the burdens on business.

As I set out in my opening remarks, we are working hard to bring forward regulations in time for your Lordships’ consideration. Some sectors, including water, as raised by my noble friends Lady Noakes, Lord Lansley and Lady McIntosh of Pickering, are part of our critical national infrastructure. However, the Government consider that other safeguards provide sufficient protection to not require their inclusion in the mandatory notification sectors. In the water sector, for example, water supply and sewerage licenses are granted by Ofwat based on an assessment of a potential operator’s managerial, financial and technical competencies. Regardless, the Secretary of State will be able to call in acquisitions of control across the economy where the legal test is met. As such, not being in a mandatory notification sector does not mean that acquisitions of control over water, financial services or other critical sectors are exempt from the regime altogether.

Given some of the appalling news around at the moment, it was right that many noble Lords spoke forcefully about human rights—my noble friend Lord Robathan, for example—particularly the situation in Xinjiang. As noble Lords will be aware, the Foreign Secretary made a Statement in the other place setting out a series of measures that the Government are taking in response. The Government are gravely concerned about the human rights situation in Xinjiang. There is growing evidence of large-scale forced labour in the region, alongside the use of extrajudicial political re-education camps and severe pressure on religion and culture. We have been clear that we want a mature approach to China and that we must work together to address global challenges, but we will never hesitate to stand up for human rights as a force for good in the world.

Finally, a number of noble Lords raised the question of the effect of the regime on academia and universities, citing concerns raised by the Russell group. These included the noble Lords, Lord Clement-Jones, Lord Reid of Cardowan, Lord Bilimoria, Lord Desai and Lord Grantchester, and the noble Baronesses, Lady Bowles of Berkhamsted and Lady Ritchie of Downpatrick. I assure them that my officials have been engaging closely with the Russell group; we will continue this engagement as the Bill goes through the House to ensure that universities have smooth engagement with the new regime where necessary.

I thank all those who have spoken today and reiterate what I said in my opening remarks: this Government will always be absolutely committed to the free flow of trade and investment. The Bill does not change that; rather, it is a vital upgrade to our current powers that will keep the British people safe. I look forward to discussing it further in Committee but, for now, I commend it to the House.

Bill read a second time and committed to a Grand Committee.

Hospitality Sector Minister

Lord Callanan Excerpts

Wednesday 3rd February 2021 Lords Chamber

[Lord Caine]

To ask Her Majesty’s Government what plans they have to appoint a dedicated minister for the hospitality sector.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con) [V]]

Responsibility for hospitality is currently split between BEIS and DCMS. Both departments are working closely together to ensure that the sector’s interests are strongly represented in government. The power to create a new ministerial post rests with the Prime Minister; however, whatever is decided, we will work to ensure that the sector is in the best possible place to bounce back from Covid-19 so that it plays a leading role in the UK’s economic and social recovery.

[Lord Caine (Con)]

My noble friend is well aware of the crucial importance of the hospitality sector to our economy, to employment and to our general quality of life. While I completely acknowledge the unprecedented levels of support provided by this Government, the sector still faces massive uncertainty and challenges when we finally emerge from this terrible pandemic. Rather than responsibility being split between different departments, is there not now an overwhelming case for it to be brought under one dedicated senior Minister whose sole focus is to work with the entire sector on recovery? The sector is asking for this through its online petition, which has now attracted 209,000 signatures.

[Lord Callanan (Con) [V]]

I well understand the point my noble friend is making but, as I have said, BEIS and DCMS work closely together. The split in responsibilities reflects the fact that most hospitality businesses are SMEs, and BEIS is very experienced in supporting them. However, hospitality accommodation is more closely aligned with the responsibility DCMS has for tourism. We are co-ordinating our activities closely.

[Baroness Sanderson of Welton (Con)]

My Lords, throughout the pandemic the Government have recognised the importance of the hospitality sector and provided funding accordingly. I would be interested to know why they have so far resisted the idea of a dedicated Minister, as we have for sports and the arts. Will the Government at least consider an interim position, as suggested in the other place, of an industry recovery Minister, which could then be made permanent if it were found to be working well?

[Lord Callanan (Con) [V]]

As I said in my previous Answer, the responsibility for creating new ministerial positions rests with the Prime Minister. I think he has responded in writing to some of these questions from the Liaison Committee on that matter.

[Lord Bilimoria (CB) [V]]

My Lords, the hospitality industry has suffered more than just about any other sector over the last ten and a half months, being closed for more than half that period. Does the Minister agree that the Government should provide a road map, as the CBI—of which I am president—has recommended? This would guide businesses on the opening up of the economy, including whether a tier system is going to return and the use of rapid mass tests. Does he also agree that business support needs to be extended for the hospitality industry in particular, including extending the furlough scheme until the end of June and the business rates holiday, so that there is no March cliff edge?

--- Later in debate ---

[Lord Callanan (Con) [V]]

An unprecedented package of support has been given to the industry; unfortunately it is impossible for us to say at this stage when hospitality and entertainment businesses will be able to open safely and therefore it is impossible to have a road map. We are hoping to set out more details as we go through this month and the data becomes clearer.

[Baroness Blower (Lab) [V]]

My Lords, as I am sure most noble Lords know, the hospitality industry is worth £150 billion a year to the UK economy. This is not counting the wider supply chain. It provides entry-level jobs as well as livelihoods for older workers. With the prospect of foreign holidays receding, this sector could play a major role in the start of a recovery. Therefore, will the Government consider establishing a forum with employers and unions to help secure the future of the sector and a bargaining council composed of Unite the Union and industry representatives to find sector-wide solutions?

[Lord Callanan (Con) [V]]

[Inaudible.]—in new solutions, but I very much suspect that only a small minority of workers in the industry is actually represented by Unite in particular. We have regular meetings with the sector, many of which are small businesses, and I totally agree with the noble Baroness’s point that they will have an important role to play in the recovery.

[Baroness Thornhill (LD) [V]]

VAT and business rates have already been mentioned, which are two important issues to be clarified as soon as possible. There have also been several extensions to the Coronavirus Job Retention Scheme. Is it not time to state clearly that it will be extended until the end of the year, particularly for businesses that continue to be restricted by either social distancing rules or travel restrictions? Given the advice of the WHO, that a 1 metre distance is as effective as 2 metres, are there any plans to consider that as part of the opening-up strategy?

[Lord Callanan (Con)]

We are keeping matters closely under review and if there are any extensions, the Government will want to announce them as quickly as possible. We are dealing with a fast-moving situation, but we recognise that the past few months have been very challenging for businesses in a wide variety of sectors and hospitality businesses in particular. We have provided an unprecedented package of support for businesses during this time of crisis.

[Lord Bassam of Brighton (Lab) [V]]

My Lords, I think the Minister might acknowledge it has been rather more than challenging, because UKHospitality found that sales in the sector fell by 54% in 2020 and now 650,000 businesses fear collapse over the next three months. Will the Government bring forward a comprehensive national plan for the hospitality sector as a matter of urgency, so that the recovery is not choked off? Are the Government actively considering an extension of the VAT cut to 5% for a further month? If a recovery plan is generated by the Government, can they please consult extensively across all sectors and ensure that nations and regions are considered?

--- Later in debate ---

[Lord Callanan (Con) [V]]

We keep all of these recovery measures under constant review and if we need to extend them further, we will of course do so. With regard to the recovery plan, it is impossible to say at the moment when we will be able to reopen the sector, but we should be able to be clearer on this towards the middle of this month.

[Baroness Pidding (Con) [V]]

My Lords, hospitality matters for so many reasons. It provides jobs and opportunities for business and it offers social interaction, enjoyment and stimulation for our well-being. Does my noble friend the Minister agree with me and other noble Lords that we need a clear road map for the hospitality industry—a route showing how we can ensure that hundreds and thousands of businesses can survive through these challenging times and emerge through to the other side?

[Lord Callanan (Con) [V]]

My noble friend is totally correct in terms of the importance of the hospitality sector. I can assure her that we will not keep restrictions for a day longer than is absolutely necessary, but we cannot have a road map at this stage because we do not have enough data as yet to know exactly how soon it would be safe to reopen. The picture should, I hope, be clearer by mid-February.

[Lord Dodds of Duncairn (DUP) [V]]

My Lords, I heartily endorse the call of the noble Lord, Lord Caine, for a hospitality Minister, who could co-ordinate the national response right across the United Kingdom. In the meantime, can I urge the Minister with responsibility to take on board the need to extend the VAT cut, which has applied from July through to 31 March? Most hospitality businesses have been closed for a large proportion of that time, and it would not make any sense that, as they reopen, that cut would not be available to help them through the very grave difficulties that they will face.

[Lord Callanan (Con) [V]]

The noble Lord made his point very powerfully, and I will ensure that his comments are passed on to the Chancellor.

[Lord Foulkes of Cumnock (Lab Co-op) [V]]

My Lords, I have had a look at the websites of the two departments that are supposedly responsible for the hospitality industry—BEIS and DCMS—and there is a total of 13 Ministers, including three in the House of Lords. Whereas the noble Baroness, Lady Barran, has responsibility for ceremonials and the noble Lord replying has responsibility for the Ordnance Survey, not one of the 13 is listed as having responsibility for hospitality. Is this not embarrassing for the Minister and his department, and what will he do about it?

[Lord Callanan (Con) [V]]

There are two Ministers—Minister Huddleston in DCMS and Minister Scully in my department—who look after the interests of businesses and others in the sector, so the noble Lord need have no fears: the concerns of the hospitality sector are well heard in two government departments.

[Baroness Warsi (Con) [V]]

My Lords, I welcome the additional support made available by the Government for the hospitality sector in the form of the closed business lockdown payment and the additional restrictions grant, but both of these do not appear to support many of those working in the wedding hospitality sector. While I hear what my noble friend has said about planning, could he tell the House what engagement the Government have had with the wedding sector in particular? What plans, if any, do they have for allowing weddings beyond the current arrangements, which allow them only in the most exceptional circumstances?

[Lord Callanan (Con) [V]]

My noble friend makes a very powerful point. My ministerial colleague, Minister Scully, is closely working with the sector to hear its concerns. He has had a number of meetings with the sector—if that is not right I will correct that for my noble friend—to listen to concerns, hear about plans for reopening and do whatever we can to work with it in this extremely difficult and challenging time.

[The Lord Speaker (Lord Fowler)]

My Lords, all supplementary questions have been asked, and we now come to the third Oral Question.

Retail Sector: Unemployment

Lord Callanan Excerpts

Wednesday 27th January 2021 Lords Chamber

[Lord Rose of Monewden]

To ask Her Majesty’s Government what assessment they have made of the impact on unemployment of any decision by the administrators of (1) Debenhams, and (2) Arcadia, not to seek deals which (a) retain staff, and (b) keep stores open; and what steps they are taking to support jobs in the retail sector.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

The Government recognise the significant impact that redundancies will have on employees and their families. We have put together a far-reaching package of support for business and the economy, including the Coronavirus Job Retention Scheme, which has supported 81,900 businesses in the wholesale and retail sector, with claims worth over £7.96 billion.

[Lord Rose of Monewden (Con) [V]]

My Lords, the Fashion Retail Academy works with employers to provide young people skills and practical experience to meet the evolving needs of the industry. In normal circumstances, 96% of its students—more than 1,000 a year—go into permanent jobs. Does the Minister agree that the FRA and other national academies play a vital role in supporting youth employment and that the Government should support their sustainability and expansion as part of a strategy to support young people in retail at this critical time?

[Lord Callanan (Con)]

The noble Lord makes a good point. I know that he has extensive experience in this sector. I am sure that we will want to do all we can to support the kinds of initiatives that he refers to.

[Lord Lamont of Lerwick (Con) [V]]

My Lords, is not the risk that the demise of vast outlets such as Debenhams will have a domino effect in reducing footfall for other shops? While it would be completely wrong for the Government to rescue retailers that have failed to adapt, there is no reason for all retail to disappear from the high street. Is it not the case that the Government’s own measures against Covid have increased the challenge for viable businesses? Will the Government please consider measures such as extending further the business rates holiday and will they also use their urban regeneration programme to facilitate the conversion of shops to other uses, thus avoiding great black holes in many town centres?

[Lord Callanan (Con)]

I agree with the noble Lord. It is very important that we try to do all that we can to retain town centres and high streets. They are a vital outlet for many businesses and are well loved by the public. We have the levelling-up fund and the towns fund so we are doing all we can to assist the sector in these very difficult times.

[Baroness Lane-Fox of Soho (CB) [V]]

At the Covid-19 Select Committee yesterday, both the Fabian Society and the British Independent Retailers Association gave startling evidence to our inquiry. Both said, quite rightly, that this would disproportionately affect women, who traditionally have held many more roles in the retail sector. Many of these roles are now going towards distribution centres, where, as we know, the gender balance is different. What are the Government measuring in relation to this question and what actions do they plan to take to mitigate the impact on women?

[Lord Callanan (Con)]

The noble Baroness is correct, sadly. We recognise that many of those losing their jobs in this sector are likely to be younger, low-skilled female workers, hence the importance of higher universal credit payments, the Kickstart programme and JETS, and, from January 2021, the Job Finding Support service. We have temporarily increased universal credit by around £1,000 a year and are doubling the number of work coaches to 27,000 in 2021.

[Lord Sikka (Lab) [V]]

The loss of 200,000 retail jobs is terrible news for many, especially young people. Does the Minister agree that the Government need to take immediate, practical steps to help, such as reducing the rate of VAT on sales from bricks-and-mortar shops and lowering the state pension age to enable many to retire and vacate jobs for younger people?

[Lord Callanan (Con)]

The noble Lord will understand that I cannot give commitments on VAT and tax changes. They are rightly a matter for the Chancellor. We need to do all we can to assist the sector in these difficult times. I have outlined some of the measures we are taking to support retail. We will continue to do that and will keep all future policies under review to see what we can do to help.

[Lord Campbell of Pittenweem (LD) [V]]

My Lords, if one of the alternative uses is housing, can we ensure that that housing is of the highest standard? Some existing conversions for that purpose have been very poor. Can we also ensure that there will be mixed tenure, with a proper segment for social housing, and that any buildings should fit the existing townscape and not be an excuse for multi-storey conversions?

[Lord Callanan (Con)]

The noble Lord make some good points but he is tempting me to get into planning matters, which, of course, are not my responsibility. We need to make sure that housing, when it is built, is sustainable and of a proper and appropriate quality.

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

My Lords, our thoughts are with the staff and their families who are affected by the closures under this deal. Is there a plan, in scope or in contemplation, for our high streets? If so, will the Minister ensure that it includes consideration of business rate levels, planning issues, investment and transport links, training and retraining? He has mentioned some of those but they need to be bound together in a coherent way.

[Lord Callanan (Con)]

The noble Lord makes a very point. In November, we announced the levelling-up fund, worth £4 billion, for England. This will invest in a broad range of high-value local projects, including upgrading town centres and community infrastructure.

[Lord Leigh of Hurley (Con) [V]]

Does the Minister agree that there are not any grounds for the insolvency practitioner to select a purchaser, as implied in the Question asked by my noble friend Lord Rose? The job is to maximise the return to the creditors. Does he also agree that now is the time to revisit the terms of the moratorium that he and I debated, so that time is given to companies such as these to find better solutions?

[Lord Callanan (Con)]

I enjoyed debating the moratorium with my noble friend—an area in which he has considerable expertise. The moratorium that was introduced is designed to help companies that are financially distressed, and I was very grateful for his recognition of and support for it during the passage of the Corporate Insolvency and Governance Bill. I assure him that the rules for the monitor of the moratorium, who must of course be a licensed insolvency practitioner, will not in any way impede the monitor seeking advice from other restructuring professionals and finding an alternative source of rescue.

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

The noble Lord, Lord Field of Birkenhead, is not available, so I call the noble Baroness, Lady Goudie.

[Baroness Goudie (Lab) [V]]

My Lords, high-street retailers, their customers and their staff should not be prejudiced by unfair online competition, which is contrary to the public interest. To an extent, the supply chains of online retailers rely on the victims of human trafficking, modern slavery, appalling working conditions and exploitation through low pay. These issues are notoriously prominent among a number of the bigger names in online shopping. This is a scandal that must be stopped.

[Lord Callanan (Con)]

Like the noble Baroness, I have seen the media reports. One hopes that they will have shamed many of those companies into action, doing what they can to make sure that their supply chains are robust and sustainable and that they do not indulge in the terrible practices that she has outlined.

[Lord Greaves (LD) [V]]

My Lords, I am speaking from Colne, a smaller town in Lancashire, where most of the high street consists of small, independently owned shops, many of which are in a disastrous situation. We do not want to close down our high street; we want to keep it going and expand it. What are the Government doing to make sure that these small shops, independently owned, will be able to survive and thrive after Covid?

[Lord Callanan (Con)]

I am delighted to hear that the noble Lord is speaking up for Colne and for many other high streets, because they play a critical role in our smaller towns. We have brought forward £81.5 million from the £3.6 billion towns fund to kick-start local investment projects of the exact kind that he refers to. Of course, we have to accept that we cannot protect every job during this crisis, but we will help people to get through it and help them get back into work at the end of it.

[Lord Naseby (Con) [V]]

My Lords, I declare an interest as a trustee of the parliamentary pension fund. What action will Her Majesty’s Government take to ensure that the pensions of thousands of redundant employers, who mainly will be female and will have given years of service, will be protected and that these employees will be told exactly what is happening with regard to their pensions?

[Lord Callanan (Con)]

My noble friend makes a very good point. I appreciate that these will be concerning times for members of these pension schemes, but there are measures in place for these situations. We will ensure that we do everything we can to provide support for those who potentially will be impacted. The Pensions Regulator is working closely with both the company and the scheme to ensure that all prior commitments entered into are fulfilled.

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

My Lords, all supplementary questions from Members available to ask their questions have been asked.

Covid-19: Night-time Economy

Lord Callanan Excerpts

Tuesday 26th January 2021 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

The night-time economy includes businesses operating between 6 pm and 6 am and is therefore very broad. BEIS and DCMS sponsor the hospitality, entertainment, arts and culture sectors, all of which play a significant role in the night-time economy. Over the course of the pandemic, the Government have worked closely with businesses from across these sectors to understand their concerns, and have responded with £280 billion of funding to support businesses, retain jobs and provide support on backdated rents.

[Baroness McIntosh of Pickering (Con)]

I thank my noble friend for his Answer and for the support that the sector has received. I am delighted that he recognises the contribution that the night-time economy makes, in billions of pounds of revenue—in its heyday—and in accounting for 8% of the national workforce, with a high proportion of young people employed. Will he work closely with the Treasury to ensure that, going forward, specific support can be targeted on the fixed costs of those working in the night-time economy, such as rent, insurance, electricity and water, which amount to 15% of their turnover? To date, little targeted help in that regard has been given; this would be very warmly received and would ensure a return to a sustainable and vibrant future as soon as businesses are allowed to reopen.

[Lord Callanan (Con)]

My noble friend makes some important points. We will of course work closely with the Treasury, as always. The support package that the Government have put in place is designed to help businesses with their fixed costs. It includes the business rates holiday, the job retention scheme and various grants, and introduces a moratorium on the eviction of commercial tenants. The Government keep all these support measures under constant review.

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

My Lords, the night-time economy also generates employment for freelance and self-employed musicians, actors and technicians. It is clear that DCMS funding for established building-based clients is not reaching this group, over half of whom have reported receiving no support. Will the Minister work with colleagues in DCMS to ensure that this issue is resolved quickly and for the future?

[Lord Callanan (Con)]

The noble Lord makes an important point, as he so often does. The Government recognise the important role that freelancers, including musicians, play in the night-time economy. That is why we have put the Self-employment Income Support Scheme in place. We have funded Arts Council England to provide £26 million to support over 8,200 creative people. We have provided £6 million in benevolent funds to make direct awards, reaching almost 3,500 people so far, but of course we need to look at what more we can do to help.

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, the night-time economy is essential to any city or town in the United Kingdom. Hospitality is a critical source of employment, particularly of young people starting out in life. Today, it is the highest unemployment sector. Successful theatres, pubs and restaurants contribute considerable amounts to the Exchequer every year. Does the Minister agree with me that there are also important and immeasurable social, mental and physical health benefits to the nation from people enjoying social interaction, which is clearly evidenced by its unhappy absence over the last 12 months?

[Lord Callanan (Con)]

I do agree with the noble Lord. The night-time economy generates around £66 billion in UK revenues. It employs 1.3 million people, across a wide range of businesses, so the points that he has made are well received.

[Baroness Altmann (Con) [V]]

I wonder if my noble friend could update the House on the progress of the £1.57 billion Culture Recovery Fund, which was announced by the Government and is most welcome; I congratulate the Government. Does he agree with me that this sector of our economy is important not just economically, with 1.3 million people estimated to be employed, but culturally, socially and health-wise?

[Lord Callanan (Con)]

My noble friend is correct. The Culture Recovery Fund is delivered through Arts Council England, the National Lottery Heritage Fund, Historic England and the British Film Institute. It covers charitable and private organisations of all sizes, in the arts, museums and heritage sectors, as well as music venues, festivals and independent cinemas. The Government continue to work closely with each of these sectors to understand what further support we can provide.

[Lord Goddard of Stockport (LD)]

My Lords, I declare my interest as vice-chair of the APPG for the Night-Time Economy. In 2019, the annual revenue budget for the night-time economy nationally was £66 billion. Comparatively, the fishing industry, in 2018, was worth £784 million to the economy. That is about £60 billion less a year. Could the Minister explain, in pure economic terms, why people are asking me why the night-time economy has been abandoned by this Government in favour of protecting the fishing industry? Minister, I like fish, but not at the expense of Ronnie Scott’s or the Band on the Wall in Manchester or thousands of other venues now on their knees. Many thousands of jobs are predicted to go permanently in our sector, if more financial support is not immediately forthcoming.

[Lord Callanan (Con)]

I am not sure of the point that the noble Lord is making. It is not a choice of one or the other. Of course the fishing industry is important, but the night-time economy is vital also. I outlined earlier the many steps that we are taking to help them.

[Baroness Warsi (Con) [V]]

My Lords, black cabs and licensed Hackney carriage drivers are essential to the night-time economy. Is my noble friend familiar with offers from black cabs in London and licensed hackney carriage owners throughout the country to assist in the Government’s response to the pandemic? What consideration have the Government given to this offer, specifically to deliver the pandemic vaccination programme?

--- Later in debate ---

[Lord Callanan (Con)]

Not just black cabs but various private hire companies have offered to help. I will certainly pass on those comments to my colleague, Minister Zahawi, who is responsible for the vaccination programme.

[Lord Berkeley of Knighton (CB) [V]]

Although the Chancellor’s support for the arts, already mentioned, has been vital and is much appreciated, I know that the Government accept that many freelancers, particularly musicians, have fallen through the support network if they have failed to qualify for universal credit or the SEISS. I wonder if the Minister and his colleagues could look at some kind of register, through the auspices of agencies such as the Musicians’ Union and the Incorporated Society of Musicians, to identify and assist cases of real hardship, at a time when musicians cannot work and some are in dire straits.

[Lord Callanan (Con)]

The noble Lord makes an important point. I understand his concerns. In my answer to the noble Lord, Lord Stevenson, I outlined the support that we are providing to the sector, but I am sure that my colleagues in DCMS will work closely with the sector to understand its concerns and see what more we can do to help.

[Lord Jones of Cheltenham (LD) [V]]

My Lords, UK Music tells us that almost three-quarters of musicians are thinking of quitting due to the drop in income and opportunities. The legendary rock drummer Bob Henrit says that we are in danger of losing a whole generation of talent. Are the Government happy about losing the tax revenues that these people are likely to generate in the future?

[Lord Callanan (Con)]

No, of course we are not happy about it. We are not happy about any of the measures that have we have been forced to put in place because of the pandemic. We want to see these venues reopening, as soon as it is safe.

[The Earl of Clancarty (CB)]

My Lords, live events are a significant aspect of the night-time economy. The need for a Government-backed insurance scheme to protect organisations against the cancellation of events due to Covid cannot be emphasised enough. Many organisations, including festivals, cannot survive much longer without such insurance, which has been granted to the film and TV sector.

[Lord Callanan (Con)]

I outlined the support packages earlier. We want to take into account the concerns of many sectors, such as those that the noble Earl highlights. We will keep these matters under review and my colleagues in DCMS will continue to liaise closely with the sector.

[Lord Taylor of Warwick (Non-Afl) [V]]

The night-time economy accounts for 8% of the UK’s employment, with revenues of £66 billion a year. Perhaps less well known is that 18% of the black community work at night, compared to 11% of the white community. Bearing in mind that Covid appears to have more of an adverse effect on the black community, what progress are the Government making into researching the reasons for this racial disparity?

[Lord Callanan (Con)]

The noble Lord is tempting me to stray into matters beyond my brief. I know that considerable research is going on, from funding provided by the DHSC, to ascertain the precise impacts of the virus on different communities. The noble Lord is entirely right that the night-economy time is vital to the black community. Within the night-time economy, the hospitality sector alone employs around 2 million people, with 7% more BAME employees than the UK average of 12%. As I outlined earlier, we have taken steps to try to preserve as many of these jobs as possible.

[The Lord Speaker (Lord Fowler)]

My Lords, all supplementary questions have been asked, and we now move to the third Oral Question.

Workers’ Rights

Lord Callanan Excerpts

Tuesday 26th January 2021 Lords Chamber

[Lord Hendy]

To ask Her Majesty’s Government what plans they have to review workers’ rights.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, there is no government plan to reduce workers’ rights. The UK has one of the best employment rights records in the world, and it is well known that in many areas of worker protections the UK goes much further than the EU. Now that we have left the EU, our Government and Parliament can decide what rules should apply and make improvements where they are needed.

[Lord Hendy (Lab) [V]]

The Government took power in the Brexit deal to degrade workers’ rights. On 14 January, the FT reported that

“a package of deregulatory measures”

was being drawn up, particularly in relation to working time. Apparently,

“select business leaders have been sounded out on the plan.”

The review was confirmed in the other place on 19 January. Yesterday and today, any intention to reduce workers’ rights was denied. What is the scope of the review, who is being consulted, why are the TUC and trade unions excluded, and what of the employment Bill?

[Lord Callanan (Con)]

I can only reiterate the Answer I just gave: there is no government plan to reduce workers’ rights. Our manifesto promised, among other things, to get Brexit done and to maintain the existing level of protection for workers provided by our laws and regulations.

[Lord Monks (Lab) [V]]

Surprisingly, it did not take long after Brexit for the Government to consider shredding the working time directive, which deals with maximum hours, rest breaks and, importantly, minimum holidays. Instead of making vulnerable workers more vulnerable, when will the Government tackle abuses in the labour market, such as the growth of one-sided zero-hours contracts and other exploitative measures? These should be the priority targets, not attacks on workers’ established rights.

[Lord Callanan (Con)]

There is no plan to make vulnerable workers more vulnerable, as he put it. The House should be in no doubt that the Government will always stand behind workers and continue to stamp out unscrupulous practices where they occur.

[Lord Fox (LD) [V]]

My Lords, I know of no business organisation calling for the Government to cut back workers’ rights, but no matter how much the Minister protests, the Government did sound the working time dog whistle to Back-Bench Tories. Business are calling for help to retain and recruit people through, for example, a cut in employers’ national insurance contributions. Will the Minister undertake to redirect the activities of his department to ensure that the Treasury brings in this vital support to our businesses?

[Lord Callanan (Con)]

I am sure the noble Lord is well aware that I cannot speculate on tax changes. They are a matter for the Chancellor. I would get myself into serious bother if I tried to pre-empt what he might decide to do.

[Lord Randall of Uxbridge (Con) [V]]

My Lords, does my noble friend agree that, in many areas, the United Kingdom goes further than the European Union on workers’ protections?

[Lord Callanan (Con)]

Indeed, my noble friend is correct. Our equalities legislation and our maternity and paternity entitlements are already much better than minimum EU standards. In the UK you get over five weeks’ annual leave minimum; the EU requires only four weeks. I do not understand the Opposition’s obsession with wanting to downgrade our standards to those of the EU.

[Baroness Wheatcroft (CB) [V]]

My Lords, the Transfer of Undertakings (Protection of Employment) Regulations have preserved the terms and conditions of many employees who find themselves working for a new employer after a transfer of business. With very many more businesses likely to change hands due to the effects of Covid, does the Minister believe that the TUPE rules are still fit for purpose?

[Lord Callanan (Con)]

Yes, indeed I do.

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

I thank the Minister for confirming that the Government have no plans to weaken employment rights. This will be a great relief to many people across the country. However, what about levelling up? Does he agree that there is still work to be done on, for example, the Taylor review, which is yet to be completed; the protections needed for employees on zero-hours contracts, as mentioned by my noble friend Lord Monks; the differences in rights between workers and employees; and the continuing need for vigilance about non-payment of the minimum wage?

[Lord Callanan (Con)]

We will of course always clamp down on unscrupulous practices where they occur, including on those who do not pay the minimum wage. I am proud that it was a Conservative Government who banned exclusivity clauses in zero-hours contracts, giving gig economy workers more control over the hours that they work. We will look to go further where we can.

[Baroness Ludford (LD) [V]]

My Lords, as my noble friend Lord Fox said, there is no business demand for weakening job protections, but they would be severely hit by even worse border friction and possible tariffs. Can the Minister say how, in their review of employment rights, the Government are assessing the potential for EU trade sanctions under the level playing field provisions of the trade and co-operation agreement? Also, the tweet from the Conservative Party impliedly criticising the EU law for having no pay provisions is, as he knows, completely disingenuous, because the treaties bar the EU from having such provisions. The Conservatives would have been the first to complain if the treaty had such provisions.

[Lord Callanan (Con)]

I am surprised that the noble Baroness is asking about the trade and co-operation agreement, because the Liberal Democrats voted against it and therefore would have preferred no deal, but it is the case that, under that trade agreement with the EU, either party can consider whether divergence on labour standards merits a rebalancing of the agreement. We will of course completely comply with our obligations, as we do under all trade agreements.

[Lord Mann (Non-Afl)]

When I spoke at the rally at Staythorpe power station in 2009, it was European Union law that allowed foreign workers to be flown in and put in containers, stopping British workers getting those jobs. Why are the Government not changing our law to prohibit this undercutting of workers’ rights?

--- Later in debate ---

[Lord Callanan (Con)]

Indeed, the noble Lord makes an important point, but these are all now matters that we can decide for ourselves. Immigration laws are, of course, kept under review, and the new immigration Act will be in force shortly, but we are now allowed to decide these things for ourselves. The EU will no longer be dictating to us how we conduct our own affairs.

[Lord Balfe (Con)]

My Lords, does the Minister agree that responsible trade unionism is valuable in protecting workers’ rights? However, clearly from time to time the law needs updating, possibly in the way referred to by the noble Lord, Lord Mann. The Minister will know that in 13 years of Labour Governments none of the basic reforms of the Conservative Government who preceded them was repealed. Will the Minister argue for reforms that will be similarly widely accepted?

[Lord Callanan (Con)]

My noble friend makes an important point. We remember that when we served in the European Parliament we were lobbied many times by UK Labour Governments to try to maintain existing flexibilities in the working time directive and others. Hopefully the Labour Party will return to that path of common sense soon. It is also important to bear in mind that most workers are not members of trade unions. We need to consult with trade unions where they represent workers but to bear in mind the rights of workers who are not represented by trade unions.

[Lord Singh of Wimbledon (CB) [V]]

My Lords, the Covid pandemic has severely tested the strengths and weaknesses of workers’ rights and found them to be wanting in recognising the importance of childcare to family and national well-being. We have seen some employers using the pandemic as an excuse to fire workers and then re-engage them on lower pay and conditions. Does the Minister agree that strengthening and enhancing workers’ rights is important in increasing productivity and national prosperity?

[Lord Callanan (Con)]

In our manifesto we promised that we would enhance workers’ rights where it was appropriate to do so, and we stick by that commitment. I think the noble Lord makes some important points.

[Lord Davies of Brixton (Lab) [V]]

My Lords, we are suffering the worst pandemic for a century. Now as much as ever the employment rights of workers who keep the economy going need to be protected. Will the Minister condemn employers who take advantage of the situation and tactics such as fire-and-hire, and commit the Government to a review of such pernicious practices?

[Lord Callanan (Con)]

I understand that ACAS is currently conducting a review and, of course, the Government will listen carefully to any recommendations it makes. We want to provide support to employees at such a time, but we also need to recognise the very difficult time that many businesses and companies are going through at this unprecedented time during the pandemic.

Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020

Lord Callanan Excerpts

Tuesday 19th January 2021 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020.

Relevant document: 40th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, since the emergence of Covid-19, the Government have been swift to act and provide businesses with help and support to give them every chance to survive and get through this difficult period of uncertainty. Since March last year, businesses have benefited from an unprecedented package of government support targeted at saving jobs and livelihoods, such as the furlough and job retention schemes, as well as billions of pounds in loans, rates relief, tax deferrals and grants.

Today, all areas of Great Britain are again subject to restrictions put in place to limit the spread of the virus and to help save lives. These restrictions are crucial to prevent our NHS from being overwhelmed and we wait for everyone to be vaccinated. But until life returns to normal, we have to recognise that the impact on business is severe and continuing. The adverse effects that these essential restrictions continue to have on many businesses, particularly those in the retail and hospitality sectors, have been well documented and well debated in our House. Once again, the Government have acted quickly following the introduction of the latest national restrictions, with a new £4.6 billion package of lockdown grants to support businesses and to help protect jobs.

These regulations, which were laid before the House on 9 December 2020, will continue to help companies by extending the temporary suspension on using statutory demands to wind up companies and other restrictions on company winding-up petitions to 31 March 2021. First introduced by the Corporate Insolvency and Governance Act 2020, these measures were extended from the end of September 2020 by order to 31 December and this instrument seeks to extend them further. The measures, like others in that Act, are aimed at supporting directors in guiding their companies through the period in which business is being affected by the current pandemic. Since their introduction in March last year, these temporary measures have helped to protect many viable companies from aggressive creditor enforcement during unprecedented trading conditions.

The temporary restrictions on company winding-up petitions that the regulations seek to extend mean that a petitioner must satisfy a court that any debts are not Covid-19 related. In this way, companies that would be viable but for the effects of the virus will not face action from creditors seeking to wind them up because they have been unable to pay their debts due to the trading restrictions that have been necessary to protect our citizens and the National Health Service. This extension will further help to support companies while national restrictions continue to affect the trading capability of many of our businesses.

While these measures are intended to help companies that may be subject to aggressive creditor enforcement, the Government have been clear that they are not to be seen as a payment holiday. Where companies can pay their debts, they should, of course, do so. It is important to note that these measures aim to encourage forbearance and do not extinguish any existing creditor rights or interests.

In addition to the protection that this measure gives, it is also intended to give those companies with unavoidable accrued arrears caused by the pandemic time to take advice from restructuring professionals and to negotiate and reach agreements with their creditors wherever that is possible. I know that many companies have done so successfully and I am grateful to them, but I urge others to do so and to plan for the post-Covid future with confidence.

I know that many businesses and their business representatives will welcome the continued support that these regulations will give them during this very uncertain time. But I also recognise that these measures will mean a further period of uncertainty for creditors where their rights to enforce recovery of their debts are temporarily suspended. The Government continue to ask for forbearance in allowing people and businesses to meet their debt obligations during these difficult and unprecedented times. As I said, these measures do not extinguish any existing rights or interests. Instead, they temporarily remove one mechanism for enforcing a debt and therefore provide additional protection to companies in distress as a result of the virus. A variety of other debt enforcement methods will remain. We think it is right, therefore, that any consideration of an extension and for how long should be done on an individual basis, rather than in the round, considering all the circumstances and potential impacts.

In conclusion, we do not take this action lightly and we will review carefully before taking any further decisions when this extension period expires at the end of March. Therefore, I commend these regulations to the House and I beg to move.

[The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)]

I inform the Committee that the clock is not working currently and remind them that speeches are limited to six minutes. I call the next speaker, the noble Lord, Lord Sikka.

--- Later in debate ---

[Lord Callanan (Con)]

Let me first thank all noble Lords who contributed to this debate. I thought it was an excellent discussion and the points raised have highlighted the importance of the measures being extended by these regulations and the necessity we feel for extending them so that businesses can continue to benefit from them.

Since the emergence of Covid-19, businesses have continued to face an exceptionally challenging time, with many unable to trade, or their ability to trade at full capacity restricted due to social distancing measures. As I said in my opening speech, since March last year, the Government have provided businesses and their employees with a comprehensive package of support targeted at saving jobs and livelihoods, including the furlough and job retention schemes and billions of pounds in loans, rates relief, tax deferrals and grants.

Let me attempt to address some of the issues raised in the debate. The noble Lord, Lord Sikka, made a number of important points and asked in particular what the Government are doing to make long-term plans when these temporary measures end. I can assure him that we continue to keep these matters under review, and will of course always keep in mind all the various provisions in what we think is our world-class insolvency regime, to ensure that it remains fit for purpose.

My noble friend Lord Bourne asked about the different timescales for all these measures. He makes a good point. Following the expiry of the wrongful trading measure at the end of September last year, the country entered a new phase of national restrictions, necessitating the urgent reintroduction of the wrongful trading temporary measures in the Corporate Insolvency and Governance Act, which of course could not be made retrospective, whereas this measure was already in force and was not due to expire until 31 December 2020.

My noble friend also asked how temporary these measures are and whether there was any impact assessment. We of course keep under consideration the ongoing impact of Covid-19 in the context of the new period of national lockdown, the ongoing effect of social distancing and the potential impact that these measures will have when we determine what measures should be extended and the period of that extension. Because of the temporary nature of the measures, as I am sure my noble friend will understand, a full impact assessment has not been carried out and, indeed, is not required by the better regulation framework. However, the Government have considered, and will continue to assess and monitor, the possible and likely impacts of the measures, their scope and their potential risks.

The noble Baroness, Lady Jones, and a number of other noble Lords, raised the issue of HMRC’s preferential status and the impact on HMRC. That of course does not concern these particular regulations. We work closely with the regulators, the courts and the insolvency profession to ensure that they will be able to scale up and cope with the expected increase in insolvencies. The noble Baroness did not let us down and managed to include references to climate change and environmental factors. As I am sure she will understand, they are not connected with these measures, but I acknowledge her long-term point, which I think is right, about the need for environmental sustainability in businesses. I refer her to the recent announcement by the Chancellor that the UK will implement the requirements of the task force on climate-related financial disclosures, which will require companies to make disclosures of their climate impacts, so there will be an ability to compare across companies and shareholders will be able to take this into account when making investment decisions. The UK is one of the world’s leading regimes in making companies go over to these measures. The noble Baroness will also be awaiting with interest the further measures that will address some of these factors, which will be forthcoming in the review of the audit procedures.

My noble friend Lady McIntosh, the noble Lord, Lord Razzall, and the noble Baroness, Lady Ritchie, asked what plans are being made for the end of these measures. As I said, businesses have already received billions in loans, tax relief, rate relief and grants to support them, and of course we always keep all these measures under consideration. The Government recognise the cliff-edge scenario, which would involve the cumulation of unpaid debts becoming due when restrictions and government fiscal support expire, and I can tell noble Lords that work is ongoing to develop measures to address what we are aware is a potential issue.

My noble friend Lord Bourne also asked about an impact assessment. As I said, we are not required to carry out an impact assessment under the better regulation framework, but of course we take careful note of the issues and what effect they are having.

The noble Baroness, Lady Ritchie, asked why the measures were not made for longer. The temporary measures under the original legislation can be extended only for six months at a time. Of course we realise that they are a serious curtailment, as a number of noble Lords pointed out, of the rights of creditors, so we keep them under constant review to ensure that we get the balance right and that they are not kept in place for longer than is absolutely necessary. When the measures expire, the insolvency regime will return to its normal working practices, including the right of creditors to act to wind up companies that have not paid their debts.

The noble Lord, Lord Razzall, also raised the issue of the impact assessment and asked how many liquidations have been postponed under these regulations and their predecessors since the summer. I do not have those figures for him, but if there is any further information that I can provide him with, of course I will do so in writing.

Finally, the noble Lord, Lord Stevenson, asked how it would be possible for a petitioner to satisfy a court on, as he put it, the negative that the debt was not due to coronavirus tests. That is a good point, but ultimately it is for the courts to consider how to apply that test and whether the failure to pay is not related to Covid-19 in individual cases. The test of whether Covid-19 has caused a company’s difficulties is intended to present a high bar, as I think the noble Lord recognised, temporarily to enforce the forbearance of creditors that the Government have called for.

Extending this measure now to 31 March will provide the necessary certainty that companies are looking for, to provide them with relief in the short term. However, the Government recognise the difficulties faced by many small businesses and sole traders and have introduced a range of support measures, including local restrictions support grants, bounce-back loans, deferred VAT and PAYE payments and, of course, the newly announced job support measure that is due to commence in May.

In conclusion, these regulations will provide much-needed continued support for businesses, allowing them to concentrate their best efforts on continuing to trade and build on the foundations for economic recovery in the UK. Careful consideration has been given to the extension of these temporary measures. As I said, we will continue to monitor this situation closely before making any decisions about further extensions and, of course, at the time we will consult fully with businesses and their representatives. With that, I commend these regulations to the Committee.

Motion agreed.

Construction Industry: Retention Payments

Lord Callanan Excerpts

Thursday 14th January 2021 Lords Chamber

[Lord Aberdare]

To ask Her Majesty’s Government what steps they have taken since the publication on 26 February 2020 of the responses to their consultation on retention payments in the construction industry.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

The Government, in conjunction with the Construction Leadership Council, are working to develop a sustainable strategy on retentions for the whole sector. During the current pandemic we have also provided guidance to the industry on responsible and fair contractual behaviour, including in relation to retentions. We are committed to improving payment practices and working with the construction industry to take this important matter forward.

[Lord Aberdare (CB)]

My Lords, it is three years since the Government’s consultation on retentions ended and, as we have been reminded today, three years since the collapse of Carillion, which led to small construction firms losing hundreds of millions of pounds in retentions. Retentions limit their ability to invest, grow, train staff, take on apprentices and, all too often, survive. The actions mentioned by the Minister are better than nothing but do not go nearly far enough. I have two questions. What are the Government doing now to prevent small construction firms, already under pressure from the pandemic, being crippled because funds properly belonging to them are being used by larger clients to prop up their own cash flows? When will the Government introduce the legislation reform that is recognised as the only way of bringing proper ongoing relief to these small firms?

[Lord Callanan (Con)]

I know that the noble Lord has been active for many years on this important issue. This has been a slower process than we might have liked, in part due to the complexity of the issues associated with the practice of cash retentions and the wide range of interested parties. While most in the construction industry favour or could accept change, unfortunately no consensus on a preferred solution has emerged from industry to date.

[Lord McColl of Dulwich (Con) [V]]

My Lords, what happened to the suggestion in the Murray review of 2017 that retention payments for subcontractors and vendors on major projects should be held in a designated trust account? As far as retention payments are concerned, will it help to develop the system of financial rewards for those who settle accounts earlier?

[Lord Callanan (Con)]

That is indeed one of the policy suggestions we are looking at, but given the complexity of the policy issues, it is premature to commit to the introduction of a retention deposit scheme. We will continue to seek consensus and work with industry to find a way forward.

[Baroness Wheatcroft (CB) [V]]

Can the Minister estimate the construction payments retained by the public sector, specifying the extent of the payments to Carillion retained by the Government? Given that there were only 55 responses to a consultation that concluded in February 2018, why did it take two years to publish those findings on what he terms an “important matter”?

[Lord Callanan (Con)]

I do not have figures for the public sector, but not withholding retentions is government policy—although I am aware that some departments and agencies do. Unfortunately, we do not have the power to instruct local authorities in this matter. If there are any figures available, I will of course let her have them.

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

My Lords, I declare an interest as my wife is a construction lawyer. This issue was raised regularly by the late Lord O’Neill of Clackmannan, and I am sure I speak for the whole House when I say that we miss him. The consultation referred to by the noble Lord, Lord Aberdare, is highly critical of current practice. It also stresses that the pandemic raises major insolvency worries. Why do the Government not use their Covid-19 emergency powers either to introduce an RDS or to abolish retention payments and try out this new policy?

[Lord Callanan (Con)]

I join with the noble Lord in paying tribute to the work of the late Lord O’Neill: as the president of the Specialist Engineering Contractors’ Group, he was active on this issue for many years and instigated an inquiry on it in 2002. As I have said, given the complexity of the policy issues, there remains no consensus on the way forward, but we will continue to examine the issues, to work with industry and to seek a solution to this problem.

[Lord German (LD)]

The last two paragraphs of the Government’s responses paper lay out only two policy options: the retention deposit scheme or phasing out retentions completely. May I follow the noble Lord, Lord Aberdare, in pressing the Minister? He already has the responses and knows the two options before him. Can he tell us when the legislation will come forward to make this happen? It is much needed and will avoid late payments, non-payments and insolvencies.

[Lord Callanan (Con)]

Those are two of the alternatives that have been suggested as a policy response. Changes in this area would require primary legislation, and there is always pressure on the Government’s legislative timetable. We think that working with the industry to seek a consensus is a good way forward, but there is not yet a consensus: some notable companies are against a deposit retention scheme or the other policy option the noble Lord mentioned.

[Baroness Donaghy (Lab) [V]]

I would like to thank the Minister and the noble Lord, Lord Stevenson, for referring to Lord O’Neill. We miss him and I am sure the industry misses him.

This has been going on for decades. The large construction companies that owe money to subcontractors use it as working capital. Having a retention fund would stabilise the industry and prevent job losses and redundancies. What priority will the Government give to taking long overdue action?

[Lord Callanan (Con)]

The noble Baroness is right: this has been going on for a long time and under many different Governments. The complexity of the issues is one reason why no action has been taken so far. As I said, we are committed to working with industry to find a consensus, and we are working with the Construction Leadership Council. We are committed to addressing the related issue of late payments, and we will try to find a consensus on a way forward.

[Lord Kirkhope of Harrogate (Con) [V]]

My Lords, although the consultation process was quite wide, only seven individuals contributed. Does my noble friend agree that, particularly at this time, any arbitrary or unfair retention of moneys due to individual tradesmen and women—whose skills we must retain in the construction industry—exerts a disproportionate pressure on them and the continuation of their specialist services? Is it not time to alleviate the pressures on these people in particular?

[Lord Callanan (Con)]

I agree with my noble friend. We understand that the practice of cash retention can create problems for individuals and businesses in the construction supply chain, due to late payment or non-payment. We are committed to improving payment practices and working with the construction industry to try to take this matter forward.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I understand the attraction of looking for consensus among all the players, but it is obvious that the current system is unjust and has a particular impact on smaller businesses, which need the money desperately. Why do the Government not just take a lead and govern as they should?

[Lord Callanan (Con)]

At the risk of repeating myself, it would require primary legislation and there is pressure on the legislative timetable. There are a number of different options to take this forward. We are committed to ending the practice of late payment and we will work with industry to try to find a solution to this problem.

[Lord Stunell (LD) [V]]

The Minister’s answers so far have been deeply disappointing. Of course there is no consensus within the industry, because there are winners and losers. The winners of the present system are the big companies; the losers are everybody else. The current retention system undermines trust and confidence, destroys capacity and deters long-term investment in training and skills. Having heard noble Lords today, will the Minister agree to come back to your Lordships’ House before the end of this Session and say exactly how and when the Government plan to mitigate the damage caused by the current system? He cannot sit on his hands and say he is waiting for other people to come to their decisions first.

[Lord Callanan (Con)]

We are not waiting for other people to come to their decisions. We are actively working with the Construction Leadership Council to try to find a solution to this problem.

[Lord Bourne of Aberystwyth (Con) [V]]

My Lords, this is clearly a serious problem. In the meantime, the building industry has committed to achieving zero cash retention by 2025. Can the Minister inform us how that process is being pursued? What success are we having?

[Lord Callanan (Con)]

A lot of discussions are taking place between the Government, the Construction Leadership Council and different parts of the industry; we are actively exploring possible solutions and are committed to improving payment practices and working with the construction industry to take this forward. Of course, any solution has to work for the industry and its clients, and it has to be sustainable, addressing all of the issues: the need for surety and fair, prompt payment. As I said earlier, several policy options are being considered, including a possible retention deposit scheme and, of course, phasing out retentions completely. During the current pandemic, the Government, in conjunction with the Construction Leadership Council, have provided guidance to the industry on responsible and fair contractual behaviour, which, of course, includes retentions.

[The Deputy Speaker (The Earl of Kinnoull) (Non-Afl)]

My Lords, all supplementary questions have now been asked, and we move to the fourth Oral Question.

Covid-19: Vaccine Trials

Lord Callanan Excerpts

Wednesday 13th January 2021 Lords Chamber

[Baroness Lawrence of Clarendon (Lab)]

I beg leave to ask the Question standing in my name on the Order Paper and I declare my interests in the register.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

The NHS Covid-19 vaccine research registry has helped to facilitate the rapid recruitment of large numbers of people into trials. The Government have encouraged a diverse pool of people to volunteer to help researchers to better understand the effectiveness of each vaccine candidate. As of 12 January, more than 28,000 individuals from BAME communities have volunteered to take part in clinical trials.

[Baroness Lawrence of Clarendon (Lab)]

In the first wave of the pandemic and the lockdown a report stated that a high proportion of black, Asian and ethnic-minority people were dying of the virus. In the second and third lockdowns there was no mention of their effect on these communities and on the death rate. With the vaccine being rolled out, I have heard messages from the black community about their mistrust of and lack of confidence in the vaccine. I ask Her Majesty’s Government: what proportion of those taking part in the vaccine trials were black, Asian or from ethnic minorities before the rollout?

--- Later in debate ---

[Lord Callanan (Con)]

I pay tribute to the work the noble Baroness has done on this important subject. It is vital to point out that the vaccines have been deployed only as they have been proven to be safe and effective by our independent medicines regulator. Everyone from all communities can be absolutely confident that no corners have been cut. The Government are sponsoring content on social media channels and on a range of news media outlets to get this message out to provide information and advice to communities, in many different languages. I can tell the noble Baroness that, in the Oxford trial, 830 BAME participants took part out of a total of 9,531, which is just under 9%. That data is from September 2020.

[Lord Naseby (Con) [V]]

Is it not the case, though, that the key point is the sample profile, not just the raw numbers? In the case of Covid-19, the research looked at efficacy in adults across all ethnic groups, with some skewing for the older age groups. Against that, will the Minister confirm that the regulator would have been party to signing off the research in the first place?

[Lord Callanan (Con)]

The audio was a little unclear and I did not quite catch all of that question, but I can certainly confirm that the regulator is of course aware of all the information supplied on the research and the trials, and on the participants in the scheme, and signed it off for use by all communities.

[Lord Hastings of Scarisbrick (CB) [V]]

My Lords, the Government know that there is deep scepticism and distrust, especially in urban and black youth communities and among the under-40s, over the efficacy of the vaccine. There is profound suspicion. Given the prevalence of this fear over reason and the need to build confidence through very local, trusted community facilities such as fast-food outlets, barbers, local pharmacies, community food shops and tech repair centres, will the Government agree to work with a consortium of black-led research and impact agencies to get the rollout done in a trusted way, and not use the standard hyper-expensive PR firms, which do not know this community?

[Lord Callanan (Con)]

The noble Lord makes some very good points. Vaccine misinformation is harmful, and the Government are working with developers, manufacturers, industry and communities to present a clear picture of the rollout process. As I said to the noble Baroness, Lady Lawrence, we are also sponsoring content on social media channels and a range of news media outlets to provide information and advice to communities in numerous different languages.

[Baroness Wheeler (Lab) [V]]

Ensuring that participants in Covid-19 research proportionately represent the ethnicity of the wider population is vital to ensure that the new treatments and vaccines being investigated are effective for everybody, including people from different ethnicities. What steps are researchers taking to recruit more clinical trial volunteers from ethnic minority communities to take part in urgent public health studies to help tackle these disparities in health outcomes?

--- Later in debate ---

[Lord Callanan (Con)]

We have set up the vaccine registry, a new NHS service launched in July 2020, to enable people from across the UK to sign up for information on Covid-19 vaccine trials. This research registry is extremely important and we are using all available channels to encourage people from all communities to sign up for these trials.

[Baroness Hussein-Ece (LD) [V]]

My Lords, Public Health England published a review last summer which found that people from ethnic minorities were more likely to die from Covid-19. Ministers promised to take steps to reduce disparities and the risk of these outcomes. I raised this point on a number of occasions, but this pledge has not yet been honoured. It is no wonder that there is still mistrust in many communities when apparently no priority has been given to addressing the mistrust that many people from ethnic minorities now have in the vaccine. Will the Minister take steps to ensure that the Government set up a dedicated website with frequently asked questions targeting vulnerable groups, to restore trust and transparency? Also, last June, the Health Secretary indicated that black and ethnic-minority communities could be prioritised when the vaccine was developed. Why has this not happened?

[Lord Callanan (Con)]

I will certainly take the noble Baroness’s suggestions back to my department and the Department of Health to look at. It is important to point out that there is no strong evidence that ethnicity by itself or genetics are the sole explanation for observed differences in rates of severe illness and death in minority communities. What is clear is that certain health conditions are associated with an increased risk of serious disease, and these conditions are often over- represented in certain black, Asian and minority-ethnic groups. The prioritisation of people with underlying health conditions will also provide for greater vaccination among those in BAME communities who are disproportionately affected by such health outcomes.

[Lord Sheikh (Con) [V]]

Following up on the points made by the noble Lord, Lord Hastings, there is increasing evidence of hesitancy to take Covid-19 vaccinations, particularly within some minority communities. It is vital that we persuade as many people as possible to take the vaccine for the fight against this pandemic to be won. I am currently involved in a national community-led campaign to be launched to encourage everyone to take the vaccine. Will my noble friend the Minister meet me and members of the group to discuss ways in which the Government can support us in this important initiative?

[Lord Callanan (Con)]

I pay tribute to the work that the noble Lord is doing. It is through exactly such examples as this, from community leaders and others, that we will help to get that message across. I am very happy to arrange a meeting for him with officials, to see how that work can be taken forward.

[Baroness Uddin (Non-Afl)]

I thank my noble friend Lady Lawrence and echo what she has said about the suspicion and lack of confidence within many communities. Can the Minister confirm the numerous health reports from experts who suggest that there are higher numbers of deaths, admissions and infection among the Bangladeshi community in particular? How many of the 830 who took part in vaccine trials were from the Bangladeshi community? What are the Government doing to ensure that that community is continually consulted and considered?

[The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)]

My Lords, can we please keep questions short? The last few have been far too long.

[Lord Callanan (Con)]

I do not have specific information on the Bangladeshi community and how many took part in the trials. I only have the information on BAME communities as a whole. These distinctions are quite hard to draw sometimes, but certainly if that information is available, I will write to the noble Baroness.

[Lord Roberts of Llandudno (LD) [V]]

I welcome this Question, because it shows how we are all in this together, without regard to nationality, ethnic group or blood group. The Prime Minister said that the two nurses helping him most when he was in hospital were from Portugal and from New Zealand. The first vaccine came from Belgium. We are all in this together. The virus is no respecter of persons. Neither are we relying on our own people to nurse and to be medics—

[Lord Roberts of Llandudno (LD) [V]]

All I ask is for an assurance from the Minister that, when this is over, those on the front line who have been so devoted to us will be allowed to stay in the United Kingdom and not cast to one side.

[Lord Callanan (Con)]

The noble Lord makes some important points. We will certainly look closely at this.

[Baroness Warsi (Con) [V]]

My Lords, the Minister will be familiar with the polling which shows that, although BAME communities were initially less likely to accept a Covid vaccine than white communities, when they had the opportunity to discuss their concerns with a healthcare professional, they were more likely than white communities to be persuaded to have the vaccine. Is my noble friend familiar with this polling, and what work is being done in government to follow up?

[Lord Callanan (Con)]

My noble friend makes some important points. We are indeed working closely with health experts to provide information and advice at every possible opportunity to all communities across the country. The NIHR launched a public campaign to raise awareness among people from BAME back- grounds, partnering with British comedian Omid Djalili, alongside Whoopi Goldberg, Sanjeev Bhaskar and other leaders, who can offer examples to the community of how important it is to take part in research and receive the vaccines when they are available.

[The Lord Speaker (Lord Fowler)]

My Lords, the time allowed for this Question has elapsed. I underline the point made by the Leader, that questions should be kept short and confined to two points. It is unfair to everybody else if that rule is not followed. We now go on to the second Oral Question.

Covid-19: Small Businesses

Lord Callanan Excerpts

Wednesday 13th January 2021 Lords Chamber

[Lord Stevenson of Balmacara]

To ask Her Majesty’s Government what assessment they have made of the number of small businesses at risk of permanent closure as a result of the restrictions put in place to address the COVID-19 pandemic; and what additional support they plan to provide to such small businesses.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

Throughout the pandemic, the Government have recognised the need to support businesses through the impacts of Covid. The Government continue to deliver a comprehensive package of measures to provide that support, including loan guarantees, business grants, tax deferrals and the Coronavirus Job Retention Scheme. We will continue to keep the approach under review and continue to engage with the business community.

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

My Lords, the ONS’s index of services shows that, despite the Government’s welcome support, all but a few sectors of the economy are significantly down on previous years. The travel, hospitality and creative industries are in deep trouble, registering between 50% and 90% cuts in activity. We have consistently called for a differential approach to sectors with a high level of freelance, seasonal and self-employed workers. Does the Minister agree that it is important to retarget government support going forward?

[Lord Callanan (Con)]

We keep all these matters under constant review. We are supporting self-employed people with the fourth income support grant. We are providing an extra £4.6 billion to protect UK jobs and businesses. Businesses that are self-employed, freelancers and sole traders can benefit from other measures such as mortgage holidays, VAT relief and business loans with generous repayment terms.

[Lord Dodds of Duncairn (DUP) [V]]

My Lords, many small businesses and retailers say that having an online presence is a major element in creating sustainability for their business in the face of repeated closures. We all want our high streets to succeed and, therefore, the way forward is a mixed click and brick model for small businesses. Can the Government outline what they are doing to help small businesses get online or improve their online presence?

[Lord Callanan (Con)]

The noble Lord makes an important point. There are a range of assistance schemes provided by many local authorities and government agencies to help and support them.

[Baroness Verma (Con) [V]]

My Lords, I refer to my interests as set out in the register. Would my noble friend help me understand what help will be given to our high streets? I am particularly concerned about my own city, Leicester, where so many shops have closed down since the pandemic. Can my noble friend please see what more can be done to help those in the supply chain to the hospitality and leisure sectors, especially those in multi-occupancy buildings? They have not received as much support as they possibly could have.

[Lord Callanan (Con)]

I will certainly bear the comments made by the noble Baroness in mind. Local authorities across England have been allocated a further £500 million in discretionary funding via the additional restrictions grant to support businesses from 5 January. This could include businesses supplying the retail, hospitality and leisure sectors or businesses outside the current business rates system which have effectively been forced to close

[The Earl of Clancarty (CB)]

My Lords, are the Government looking at the devolved Administrations? In some cases, they have been more agile in addressing gaps in support for small businesses, such as Northern Ireland’s Covid Restrictions Business Support Scheme which provides grants for supply chain businesses. A similar scheme is operating in Wales. This would certainly give some help to the live music sector, which continues to be hard hit. Technical supply companies have seen a disastrous 95% drop in their revenues.

[Lord Callanan (Con)]

As I said earlier, we keep all these matters under review. We are conscious that our scheme is one of the most generous in Europe, with £280 billion-worth of support. Of course, we are always willing to learn lessons from the devolved Administrations or other countries.

[Lord Allen of Kensington (Lab) [V]]

My Lords, the FSB say that around 70% of small businesses are carrying some form of debt. Almost half of them—some 47%—are using personal loans, family loans, overdrafts, their own credit cards and personal mortgages on their properties to support their businesses. Many, including 710,000 company directors who pay themselves through dividends only when their business is in profit, have been excluded from any form of personal support. This is because the Treasury seems to have put this into the “Too difficult” box. At some point, many of these entrepreneurs will lose not only their businesses but their homes and possessions too—notwithstanding the stress, anxiety and mental health issues. What will the Government do now to stop this happening?

[Lord Callanan (Con)]

We are aware of the issue of dividends highlighted by the noble Lord. We have looked at that, but it has proved very difficult to separate different kinds of dividends. However, we have amended some of the terms of the bounce-back loans—for example, no repayments are due during the first 12 months of the loan term. This gives businesses the space they need to get through the difficult period without the worry of directly repaying in the immediately following months.

[Baroness Bakewell of Hardington Mandeville (LD) [V]]

My Lords, large villages and small market towns are dependent on a varied patchwork of small businesses for both their economic and community well-being. Many of these have already closed during lockdown. Whether they provide retail outlets, services such as hairdressers, or are small engineering subcontractors, they all need and deserve support. Can the Minister give reassurances that rural areas will not be forgotten when considering support?

[Lord Callanan (Con)]

Rural areas are badly affected, as indeed are city areas. Like other SMEs, rural businesses can access support including loan guarantees, business grants and the tax deferrals I referred to. Those needing advice can now access free advice on the right finances from local government-backed growth hubs, which are part of the LEPs. But I totally accept the point made by the noble Baroness.

[Lord Shinkwin (Con)]

My Lords, given that the OBR has warned that the UK economy will shrink by 11.3% this year—the biggest fall for 300 years—and that unemployment will peak in the second quarter at 7.5%, and given that the Chancellor said in his recent spending review that we are facing an “economic emergency”, will the Minister agree with me that, as soon as we possibly can, we need to shift the focus from saving lives to saving livelihoods and thereby signal our support to small business people across the UK?

[Lord Callanan (Con)]

I agree with my noble friend that, as soon as we possibly can, we need to lift these restrictions to get the economy moving again, but we are indeed facing a public health emergency at the moment, as he has said.

[Lord Sikka (Lab) [V]]

My Lords, SMEs are also destroyed by unfair insolvency laws, which enable secured creditors to walk away with most of the proceeds from the sale of a bankrupt business’s assets, leaving next to nothing for unsecured creditors, including SMEs. The Carillion bankruptcy affected nearly 30,000 SMEs. Will the Government consider legislating so that SMEs have a higher priority in corporate bankruptcies?

[Lord Callanan (Con)]

The noble Lord makes an important point, and, of course, we constantly review all these numbers. We last looked at the insolvency provisions in recent legislation, and it is always difficult to get the balance between different creditors right when there are insufficient funds available.

[Lord Alton of Liverpool (CB) [V]]

My Lords, I return to the question of the noble Baroness, Lady Verma. Will the Minister commit to an empirical evaluation of the impact of Covid-19 on our already embattled high streets—in relation to footfall and spending? As the experience in different parts of the country has been bumpy and uneven, will he spell out how the Government are working with local authorities and chambers of commerce to ensure a tailored response, according to local circumstances?

[Lord Callanan (Con)]

We are fully committed to supporting businesses that make our high streets and town centres successful. As the nation responds to the impact of Covid-19, I can tell the noble Lord that we are investing £830 million through the future high streets fund in 72 areas across England, helping to renew and reshape high streets in our town centres.

[Lord Cormack (Con) [V]]

Does my noble friend accept that these constant reviews have not done much to help many of the self-employed, a group that includes some of the hardest-working people in our country? In the creative industries, particularly music, there have been some horrific stories. Can we have an immediate review of the help for the self-employed?

[Lord Callanan (Con)]

In my earlier answer to the noble Lord, Lord Stevenson, I outlined the help that we are giving to self-employed people, with the fourth income support grant. We are providing an extra £4.6 billion to protect UK jobs and businesses. We accept, of course, that a lot of these schemes were put together quickly and in haste, and that we need to keep them under constant review to ensure that as many people as possible are receiving that help and support.

[Lord Dholakia (LD) [V]]

My Lords, we are aware that our diverse communities are substantially and adversely affected by the present pandemic. I have received a large number of complaints about SMEs, including post offices, pharmacies and corner shops, that may go down because of a lack of finances and other resources. I ask the Minister, as I have done before: will he ensure that these businesses are adequately consulted and assisted before they go down, never to recover?

[Lord Callanan (Con)]

The noble Lord makes a vital point. I and my ministerial colleagues regularly having meetings with all the various business representative organisations to ensure that the support we are able to give is carefully tailored, targeted and available to as many different businesses as possible.

[The Lord Speaker (Lord Fowler)]

My Lords, all supplementary questions have, again, been asked, and that brings Question Time to an end.