Economic Crime and Corporate Transparency Bill
Lord Johnson of Lainston ExcerptsMonday 27th March 2023
(1 year, 1 month ago)
Grand CommitteeRead Full debate Economic Crime and Corporate Transparency Act 2023 View all Economic Crime and Corporate Transparency Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 96-I(a) Amendment for Grand Committee (Supplementary to the Marshalled List) - (27 Mar 2023)
Member’s explanatory statement
Objective 2 currently focuses on the accuracy and completeness of documents delivered to the registrar. The amendment would expand it to refer to the accuracy and completeness of the register more generally. This would, for example, be relevant not only to the acceptance of documents for registration but also to their removal.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, I draw the Committee’s attention to my interests as set out in the register, including as a director and person with significant control of AMP Ventures Ltd and as a person with significant control and shareholder of several other companies. I do not believe that any of these is prejudicial to my role in today’s debate. If anything, they increase my passion for the important objectives of this Bill: strengthening the UK’s business environment for the law-abiding majority while closing the doors to rogue actors.
This Bill will deliver significant reforms to the role of Companies House, making the biggest change to our system of registering companies in over 170 years. It makes significant amendments to the Companies Act 2006, the largest single Act on the statute book. It will affect the more than 500,000 companies established every year in the UK and the 5 million companies currently on the register, which have grown from 3.5 million since the last major company transparency reforms in 2015. That is quite a significant amount and no doubt bears the attention deserved in this debate.
It is therefore vital that these reforms are designed and implemented properly, both so that law enforcement can undertake its responsibilities effectively and to ensure that they benefit business and that any burdens are proportionate. I am confident that the Bill will achieve this balance and set a sensible framework that works for the benefit of businesses while bearing down on those who seek to abuse our open economy.
If noble Lords will allow, I will express my gratitude to Members in the other place, who greatly contributed to the scrutiny and improvement of this Bill as it passed through their House, not least the honourable Members for Feltham and Heston, for Aberavon and for Glasgow Central, the right honourable Member for Barking and my honourable friends the Members for Barrow and Furness and for Weston-super-Mare.
I am also grateful to Members of this House for their invaluable contributions at Second Reading and for the further views that many of them have provided since to me and my noble friend Lord Sharpe. I see that several of them will speak to amendments today. I am also grateful for the constructive engagement of Members on the Opposition Front Bench throughout and look forward to continuing to work with them. It strikes me that all the amendments proposed today and all the work we have done across this House have the same intentions. That is important. We are working together to create a better company system in this country. My thanks also go to my noble friend Lord Callanan for all his past work on these reforms as the previous Minister for this Bill, to Minister Hollinrake, my colleague at the Department for Business and Trade, and to the Security Minister for bringing this Bill through the other place so effectively.
I very much look forward to the constructive debate that we will have over the coming weeks. I am sure that all noble Lords are as keen as I am to get this important legislation on to the statute book, including delivering the long-awaited reforms to Companies House that we will discuss today. As I set out at Second Reading, I hope that all noble Lords are fully aware of the opportunity before us to make a hugely meaningful difference to businesses, law enforcement and our citizens. I trust that we can count on the continued support of the House to deliver this.
I am delighted to be starting Committee by talking to government Amendments 1, 3 and 56, which amend Clauses 1 and 81. I will start with Amendments 1 and 3. The new registrar objectives introduced by Clause 1 are a key aspect of this Bill. They are designed to empower the registrar and the activities of Companies House, acting as a clear and purposeful signal of the manner in which new and existing powers under the Companies Act will be exercised. They will embolden Companies House to be the proactive gatekeeper that many have long wished it to become.
Government amendments 1 and 3 are designed to expand the scope and reach of one of the objectives. Amendment 1 should be warmly welcomed by those who have criticised Companies House as merely the repository of an accumulation of inaccurate, misleading and potentially fraudulent information. While powers in the Bill allow the registrar to revisit and, where appropriate, remove information that ought never to have found its way on to the register that she holds, this amendment will make it absolutely clear that she must endeavour to address that historical legacy.
Amendment 3 recognises and addresses the fact that the registrar is the custodian of registers other than the register of companies. Objective 2 already puts a duty on the registrar to seek to promote the accuracy of information that is already on, or delivered with a view to being put on, the register and to seek to ensure that the register contains everything that it ought to contain. This amendment makes it explicitly clear that this applies to all the registers that she keeps, such as the register of persons of significant control and the register of overseas entities.
Government amendment 56 expands on the registrar’s new ability, introduced by Clause 81, to require information to be provided to her in order for her to determine certain matters. Importantly, it will allow the registrar to require information to determine not only whether the documents delivered to her meet the “proper delivery” requirements in respect of such things as content, form, authentication and manner of delivery but whether the underlying trigger event for the filing has really happened. For example, this amendment will ensure that the registrar can compel the production of information to determine whether a form sent in to report the appointment of a director was genuinely triggered by a real appointment and was not simply a fraudulent attempt to dupe the registrar into recording an appointment that never happened. I beg to move Amendment 1 and hope that noble Lords will support Amendments 3 and 56.
The Deputy Chairman of Committees (Lord Geddes) (Con)
My Lords, before opening this debate, I advise the Grand Committee that, if Amendment 1 is agreed to, I will not be able to call Amendment 2, due to pre-emption.
Lord Macpherson of Earl’s Court (CB)
My Lords, I support the amendment in the name of the noble Lord, Lord Agnew. I declare my interest as chairman of C Hoare and Co. I apologise for not being here at Second Reading. I had a good excuse: a very bad dose of flu.
I have two brief points. First, legislation on its own does not change an institution—I worked in the Treasury for 30 years and saw many institutions come and go—but it can be really helpful in supporting the leadership of that institution to change its character and the way in which it works. I believe the amendment in the name of the noble Lord, Lord Agnew, would support the leadership in bringing that about.
My second point draws on my experience of seeing through a lot of reform to financial services regulation. I think it is fair to say that the lesson of the 2000s was that tick-box regulation really does not take you very far; a proportionate, risk-based approach is the answer. I believe that the amendment in the name of the noble Lord, Lord Agnew, very much goes with the flow of better regulation.
Lord Johnson of Lainston (Con)
I really thank noble Lords for their contributions. Not for the first time in this House I am surrounded by people who know far more than I do about the subject, with business gurus such as my noble friend Lord Leigh, who gave us the benefit of his many decades of wisdom. It is extremely helpful. As I say, everything that has been said today is mirrored in the emphasis of the Government’s broad objectives, so we are working collaboratively here. I hope your Lordships do not mind me going through each different point—I hope I can answer them all.
Lord Clement-Jones (LD)
I just interrupt the Minister before he goes much further. I have been listening very carefully to what he has to say, but he seemed to imply that a risk-based approach could lead to box-ticking. Surely, a risk-based approach is the very antithesis of box-ticking.
Lord Johnson of Lainston (Con)
I appreciate that intervention. Our view is that if we legislate specifically for a risk-based approach, on top of what we believe is already a risk-based approach, we are not achieving our goals. The concern from the Government’s point of view—and mine, as someone who has registered companies with Companies House—is that you end up box-checking. The Bill is designed to ensure that the registrar is responsible for ensuring the integrity of the register and minimising criminal activity. In my view, those are the core functions of the registrar and the activity of Companies House, so we already have what one would describe as a risk-based approach built in. We feel very comfortable that this ambition, which is what this is all about, is well built into the legislation and will be the core function of the registrar—this is the essence of it—and we believe this to be well represented. Clearly, the ambition of the registrar will be to take a risk-based approach to her activities. We may be arguing over the same point, but I take it very seriously and am happy to consider it with more thought. As I said, this has been drafted effectively to encompass the concepts and points raised by noble Lords.
I believe I have covered most of the points raised. My last point was raised by the noble Lord, Lord Clement-Jones: we are trying to create the registrar as a proactive gatekeeper. That is at the core of the Bill’s ambition. We welcome input on how we can ensure this is done more specifically.
Lord Agnew of Oulton (Con)
My Lords, if my noble friend wants my amendment not to be moved, would it be possible for the registrar to write to us to explain her philosophy and how she is going to make this huge change to delivering a risk-based approach? I am very reassured by his comments, but having been in the trenches of government for 12 years, I just know that the reality is a long way from wise words in a process such as this. A simple letter to us saying, “This is my philosophy, what I am doing and how I am training people to cope with this enormous change”, would be very reassuring.
Lord Johnson of Lainston (Con)
I thank my noble friend for that comment, and I entirely agree that it would be extremely useful to have such a letter from the registrar. I take very seriously the comments about a cultural change at Companies House. We should be aware of where we are coming from. Not to repeat or labour the point, but Companies House is today simply a repository for information; it could practically be a static website. Having said that, in the conversations that I have had with Companies House, I have been very impressed by the tone of the officials I have spoken to there in terms of their determination to crack down on criminal activity around companies and Companies House. They currently make referrals to law enforcement agencies; they are not blind to the issues that present themselves, but they do not have the powers to do what we want them to do.
This Bill gives the registrar and her agents the concomitant powers to execute exactly on this mission that we wish. They talk boldly of a cultural change in Companies House, which we expect, as well as a technological change and a significant resource improvement—and under other amendments we will discuss the resourcing of Companies House. I feel confident that we are going to see a magnitudinous alteration in the relationship between the number of companies and number of directors performing their functions appropriately and providing relevant information to boost the economy, as soon as, or soon after, this Act is enabled—if I have got my terminology right.
Lord Coaker (Lab)
I would be grateful for a clarification. Can the Minister say something about the language being used? My noble friend Lord Browne also picked up on this point. It is not that it is wrong, but why in Clause 1 do objectives 3 and 4, for example, talk about minimising risks or the extent? What I suggest in my amendment is acting proactively to prevent. It is about that sense of purpose and that cultural change, whereby the registrar actively seeks out unlawful activity and actively seeks to inform law enforcement to do something about it. It is not a clash of view but, in talking about cultural change, would not a language change help the Government in delivering what they want?
Lord Johnson of Lainston (Con)
I thank the noble Lord for his comments. I do not want noble Lords at any point to think that I am being defensive in any way, as we are having a collaborative debate around the objectives of trying to improve company law and registration of companies and the integrity of the information stored at Companies House.
Objective 1 is pretty clear in referring to
“any person who is required to deliver a document to the registrar does so”,
and objective 2 is very clear and specific in saying
“to ensure that documents delivered to the registrar are complete and contain accurate information”.
They are unambiguous points—that is very clear. There is no question about there being some grey area around that. But with regard to objective 3 and
“creating a false or misleading impression to members of the public”,
clearly that is relatively subjective statement. It is clear that we have made efforts in this Bill to ensure that company names, for example, cannot be used to be misleading, and additional powers have been placed with the Secretary of State to ensure that companies have to change their names—but there is an element of subjectivity around a company name. To some extent, it is not totally prescriptive. Objective 4 then says,
“to minimise the extent to which companies and others … carry out unlawful activities, or … facilitate the carrying out by others of unlawful activities”.
These are complicated areas, in which, as the noble Lord, Lord Coaker, said, issues around forensic accounting, and so on, have been raised. Nothing is necessarily as straightforward as it seems. The principle here is to try to reduce the crime clearly to zero—so if the registrar reduced levels of criminal activity to a certain percentage, which they felt were somehow in a target range and then stopped their work, we would consider that to be entirely inappropriate. At the same time, they have a very clear objective, which is to minimise financial misconduct and criminality. That flexibility enables the registrar to perform her functions appropriately.
Lord Garnier (Con)
I do not want to prolong this debate because, although it is fascinating, it is something that can be dealt with in the period between now and Report. Perhaps my noble friend could, with his officials, run through the dictionary to find a slightly punchier verb. We all know what “minimise” means—to reduce to a minimum. I take the point that the noble Lord, Lord Coaker, is making. A slightly more aggressive approach to criminal activity or people’s misconduct in using the Companies House system is probably required. It is just a tweak in the language; we are not going to World War III over this—it is just a question of going back, having a look at a dictionary and seeing if they can find a slightly more aggressive word.
Lord Faulks (Non-Afl)
So that the Minister does not have to answer questions seriatim, as it were, I endorse that. I am not sure that I have heard persuasive objections to the amendment tabled by the noble Lord, Lord Coaker. I understand what he says about risk-based, but sharing information with relevant public bodies and law enforcement agencies surely does not tie the registrar’s hand in any way. It must be remembered that while we can all applaud what has happened in Companies House and the change in culture that will follow, this is really a second attempt to tie things up. We should not forget that there was the first economic crime Bill, before the Minister came to his post, where much was promised, so this is the final word on it and the time to crystallise where we are on those things. Objective 5 is another step. If the Minister is saying that Companies House is coming a long way and it is further step to ask it to do this, that is an answer, but I do not think it is an answer that satisfies the Committee.
Lord Johnson of Lainston (Con)
I appreciate my noble friend’s comments. I do not believe that I suggested at any point that this was not baked into the cake of what Companies House is expected to deliver. I would be delighted to have further dialogue with Members around this but, in my humble opinion, the entire Bill is designed to ensure that the registrar takes a risk-based approach to ensuring the integrity of the information at Companies House. I am very comfortable on that, and the Government are very clear on it. We are wary of having duplicative statements in the Bill because that causes more complications when we are trying to create the enforcement regime and the integrity regime that we want to bring to bear.
On the key clauses and the language therein, I am certainly happy to consult my dictionary as noble Lords suggest. I am sorry that I was unable to bring one with me. It would be unusual for us to be quite so prescriptive in part 3 of the four objectives. I am delighted to have further conversations if noble Lords feel that that would be more helpful in setting the right cultural change at Companies House, but I am wary of being too prescriptive. I hope this is not misunderstood by Members of this Committee, but we want to avoid a box-ticking exercise because that is exactly what criminals like, as they can then navigate the system. We want to allow the registrar and her officers to use their judgment because that will lead to far better outcomes when it comes to achieving the mission that all of us are embarking on together.
Lord Browne of Ladyton (Lab)
On a plain reading of this clause, the registrar is being required to promote these objectives, but in objective 4 she is being required not to prevent but
“to minimise the extent to which”
crimes can be committed. What is the problem about setting an objective that she is to prevent, and Parliament is telling her that is the objective we want her to have but recognising of course that perfection is very seldom found in these situations? Why do we set an objective that is less than what we really want? There is no question that Parliament wants these crimes prevented, not minimised.
Lord Johnson of Lainston (Con)
I appreciate the noble Lord’s comment. We have discussed this at some length. I am personally very comfortable defining further the usage of “minimise”, but the intention is very clear. This is not about “minimising” criminal activity to a so-called acceptable percentage; it is ultimately to eradicate it entirely. I am sure there are good reasons why this language has been used, in order to enable an element of flexibility and facilitation for this Bill to operate effectively. I am sure noble Lords will sympathise with me when it comes to legal drafting of text, but the assurances around this Bill are that it should do exactly what we want it to do. I ask noble Lords not to press their amendments and I commend Amendment 1.
“(2) In Objective 2 the reference to “the register” includes any records kept by the registrar under any enactment.”Member’s explanatory statement
This amendment ensures that Objective 2 as amended applies not only in relation to the register of companies but also in relation to any other registers and documents kept by the registrar under legislation.
Lord Ponsonby of Shulbrede (Lab)
My Lords, this is a wide-ranging group of amendments which focuses mostly on the amount of information given about subscribers, founding shareholders and limited companies when registering a company and ongoing shareholders. The amendments in the names of the noble Lords, Lord Vaux and Lord Agnew, are aimed at making it transparent whether subscribers and shareholders are holding shares on their own behalf or on behalf of others.
Currently, information about subscribers is very limited. The amendment in my noble friend’s name, and other Back-Bench amendments, are aimed at helping provide more information. The amendment would require the nationality and country of residence of subscribers. There has been a huge increase in the number of shell companies with directors based abroad. This is one step we can take to increase transparency and fight against the UK’s reputation for tolerating dirty money. The theme of this group as a whole is increasing transparency; there are various specific amendments with that aim in mind. I beg to move.
Lord Johnson of Lainston (Con)
I am grateful to the noble Lord for accommodating this intervention. I thought it would aid noble Lords in having a productive debate if I set out up front the intention of the government amendments in this group, given that it contains a significant number and, as I understand it, the amendments in the name of the noble Lord, Lord Vaux of Harrowden, seek to build on them.
The government amendments seek to further strengthen transparency of shareholder data on the company register. I hope they will reassure noble Lords that the Government take this topic very seriously. A core purpose of the register of companies is to provide details of company ownership. However, users of the register have reported some problems with the way in which company ownership data is recorded. That is why the Bill contains measures to increase the usefulness of the information held on the shareholders, subscribers and guarantors—also known as members—of companies.
The Government appreciate the concerns expressed during the passage of the Bill by expert witnesses and parliamentarians about member information. However, I stress that we are also mindful of stakeholder concerns about imposing disproportionate burdens on businesses. The 2019 corporate transparency and register reform consultation proposed that non-traded companies, such as companies that are not listed on any regulated market, be required to collect the usual residential address and date of birth of their members. Consultation responses were mixed, and the Government concluded that the case had not adequately been made for the collection of the information, given the potential burden on businesses.
The Government consider that the approach taken with these amendments balances competing stakeholder concerns proportionately. The amendments will help to ensure that the policy intent of provisions in the Bill and the Companies Act 2006 are met without imposing undue burdens on business before further consultation is carried out.
Amendment 31 inserts a new clause into the Bill, which will amend the Companies Act 2006 to create an express requirement that old information must be retained where it changes. So, if a member’s name, address or shareholding changes, that old information must be retained for as long as the Companies Act 2006 allows. That is currently implied by other sections of the Companies Act 2006, but the law is unclear. For example, Section 121 states that an “entry” relating to a former member of a company may be removed from the register after the expiration of 10 years from the date on which he ceased to be a member. The retention of old information should already be current practice as it is in a company’s own interests to retain such information for audit purposes. Retrospective disputes relating to votes, dividends, and tax could all hinge on who owned shares at a point in time.
The new clause inserted into the Bill by Amendment 31 will also amend the Companies Act 2006 to provide powers to companies to ensure that member information is provided and kept up to date. The amendments also provide duties for members to provide their information and keep it up to date. There are offences for companies and members failing to comply with the new requirements without a reasonable excuse. That will ensure that the requirements are taken seriously by both companies and members and will enable more effective enforcement activity.
Amendments 6, 31, 34, 59 and 66 restructure existing provisions in the Bill that in turn amend the Companies Act 2006. They also provide powers to strengthen the regime by regulations. The powers allow regulations to require more information to be provided and to ensure that any new personal information is protected as appropriate. That would allow the Government to act swiftly to require more information to be provided if it is deemed proportionate to do so—again, following further consultation. Equally, law enforcement agencies may identify additional types of information that the registrar could require the collection of, which would help them in the prevention and detection of crime.
If new information is later required, it may not be appropriate for it to be made available for public inspection or disclosed except in specified circumstances—for example, if regulations later require a person’s personal email address to be provided, as that could have unintended consequences with spam mail and so on. These amendments ensure that personal information can be protected where appropriate, applying the principles from similar provisions in the Companies Act 2006 and this Bill to these measures.
I want to highlight that the power in new Section 113C could be used to limit any additional information requirements to companies that are not traded on any listed market, as those companies are already subject to similar disclosure requirements. That would reduce the burden on business, in line with the proposals in the 2019 consultation.
These amendments set up the framework for the policy intent to be met and leave the heavy lifting to regulations, once consultation has been carried out. The Government consider that to be an appropriate balance, as all regulations will be subject to the affirmative resolution procedure such that Parliament will have its say when those regulations are made.
The Government intends to remove Clauses 2, 4, 46 and 47 from the Bill because the provisions of those clauses are amended and/ or incorporated into the new clauses that I have described. Amendments 35 to 38, 60 to 62 and 67 allow the provisions to be sequenced more coherently and make consequential drafting tweaks.
I hope that noble Lords will support the amendments, and I look forward to the rest of this debate.
Lord Vaux of Harrowden (CB)
My Lords, I shall speak to Amendments 7, 8, 32 and 33 in my name. Before I start, I hope the Committee will not mind if I point out that my name is pronounced “Vawks”. It is astonishing how many different pronunciations of a four-letter word it is possible to come up with. I should also remind the Committee of my interest in the register as a non-practising chartered accountant.
I thank the Minister for arranging to meet me to discuss the various amendments that I have tabled and for his engagement so far. Like, I think, everyone in the Room, I support everything that the Government are trying to achieve with this Bill. My amendments to the Companies House section try to make it more effective in achieving the Government’s stated aim, which the Minister explained at Second Reading is to
“bear down even further on kleptocrats, criminals and terrorists who abuse our open economy, and it will strengthen the UK’s reputation as a place where legitimate business can thrive, while ensuring that dirty money has no place to hide”.
He went on to say that:
“The use of anonymous or fraudulent shell companies and partnerships provides criminals with a veneer of legitimacy and undermines the UK’s reputation as a sound place to do business.”
I think we all agree with that, but the Bill remains weak in improving transparency.
At Second Reading the noble Lord also said that the Bill would be
“helping to ensure that we know the real people acting for, and benefiting from, companies.”
The Bill makes some improvements in that respect, but it is pretty thin gruel and is not likely to make any real practical difference unless it is strengthened. That is what I am trying to do with these amendments, which I have tabled as amendments to the government amendments.
Lord Clement-Jones (LD)
My Lords, I think I need to say very little given the barrage we have heard. These Benches firmly support the amendments of the noble Lord, Lord Vaux, and congratulate him on putting up with the mispronunciation of his name on such a consistent basis. I expect that the noble Lord, Lord Faulks, has exactly the same problem, so there is a commonality across the Benches here. The noble Lord, Lord Agnew, talked about “heavy lifting” and others have talked about “very light requirements”. Those who have argued for the amendments have made a very strong case, not least my noble friend Lord Wallace of Saltaire on the implications for overseas territories and revealing beneficiaries there. Transparency is the essence of what we are trying to achieve here.
I think we all agree that one of the core competencies of Companies House needs to be expertise in verifying the identity of applicants, whether subscribers or members, and so on. Identity verification, which we will discuss throughout Part 1, will be a vital tool in the policing of the sector if it is to be successful and should be a core competence of what we might call the new model of Companies House. There is some doubt about how far this is being, in a sense, outsourced to others. These amendments make it absolutely clear, particularly as regards nominees, that it should be the applicant and Companies House which make sure that we know who we are dealing with here. It has several distinct advantages and, as everyone has emphasised in this debate, is not an onerous requirement.
Lord Johnson of Lainston (Con)
I thank noble Lords for their amendments. The Government appreciate their intent but consider that we already have the powers we need in the Bill to address the substance of these concerns. Following on from comments from my noble friend Lord Faulks and the noble Lord, Lord Clement-Jones, we are not discussing the verification of corporate providers. I think there is a significant amount of discussion to be had on that a bit later.
I totally agree about the importance of the transparency of the records and understanding who the beneficial owners of companies are—that is the whole point of much of the work we are undertaking today. On the comments of the noble Lord, Lord Vaux, about the ownership level of 25%, in a private company you have to have your identity verified if you are a director, own 25% or more of the company or are a person with significant control. To clarify, the 25% level does not denote a person with significant control. Somebody who has one share can be a person with significant control, and it is the company’s duty to report who they are. It is extremely important to make that clear in this discussion.
I was not in this great House for the previous piece of legislation, the debate on which has resulted in this new piece of legislation, but I am very aware of the importance of understanding who stands behind the companies—as has rightly been said, to quote myself, the people acting for and benefiting from companies. The 25% level does not denote a person with significant control, and companies suffer significant penalties—the penalty regime, which I am happy to share with noble Lords, is substantial and at the very core of this process.
Lord Vaux of Harrowden (CB)
The noble Lord is quite right: there is the question of being able to influence or control the company other than through shareholdings, but he referred to penalties and so on. How many times has anyone been penalised for failing to provide information about being a person with significant control when they did not hold 25%?
Lord Johnson of Lainston (Con)
That is exactly the sort of question that should be asked; I look forward to returning to this Committee with the answer, as I unfortunately do not have it at my fingertips. However, I know that Companies House continues to do a great deal of investigation into these matters, even before this Act has come into place.
The noble Lord, Lord Vaux, also raised an important point in saying that it is too easy and cheap to create a company and that the 1855 principles around the corporate veil are a privilege. At the time, they were considered a great risk to the economy, abrogating people of their personal responsibilities and liabilities to the debts of their businesses. It caused great debate, as noble Lords may remember—looking around the Room, not all noble Lords will, but some may. It is important to understand that it comes with privileges and obligations.
Having done a great deal of investigation into this Act, of the 4.8 million companies on the register, I would have thought that many should not be limited companies; it is not necessary for a sole trader or a small partnership to have a company, so I have a degree of sympathy for upgrading the entire concept of what a limited company is and what sort of information should be provided. It may be important, philosophically, to look at it in that way, rather than simply saying, “Here are a very large number of companies; if we impose undue obligations on them, that will be unfair or overly burdensome to businesses.” It is not unreasonable to look at the picture in the round.
Having said that, we undertook a variety of consultations and feel that the way this Bill has been drafted gives us the security to understand who the beneficiaries of companies are and the requirements of companies to record that information and link those individuals across the information processes and systems in Companies House to ensure that we have integrity of data. To require all shareholders to verify their identity would be unnecessarily burdensome for many thousands of companies and, potentially, millions of small shareholders who are simply passive holders of a business.
I would not like my comments to be taken in the wrong way—perhaps in the way that “minimise” has been taken—but we are making a significant change to the way that companies are established in this country and to the sorts of information levels that we require from businesses to ensure the integrity of data at Companies House, in what both individual directors, persons with significant control or corporate service providers and companies have to provide. It is very important that we do not lose sight of the fact that this country is one of the easiest places to do business in the world. Our wealth comes from our entrepreneurial nature and the importance of having a company structure, system and process that does not place unnecessary burdens where they will not necessarily add value.
I am, however, very open to further conversations to ensure that the philosophy presented here matches our ambition, which is to ensure that we understand who benefits from companies and who is behind them.
Lord Vaux of Harrowden (CB)
The noble Lord has explained the onerous nature of verifying the identity of every shareholder, which I accepted in part when I spoke. We will come back to that issue on Amendments 39 and 43. However, he has not talked about whether and why a shareholder making a simple statement as to whether they are holding the shares on their own behalf—and if they are not, on whose behalf they are—is particularly onerous. I am afraid that I do not see why it should be.
Lord Johnson of Lainston (Con)
The company is obliged to register if there is a person with significant control or someone with more than 25%. If it is not truthful in that registration, it will be committing an offence.
Lord Vaux of Harrowden (CB)
But that is different from any shareholder having to make the positive statement: “I am”—or “I am not”—“holding the shares on my own behalf”. It is very different from, “I’ve got 25% and therefore I have to make some disclosures”. Why is it a problem for an individual shareholder to say, “I’m holding these shares on my own behalf”, or “I’m holding them on behalf of somebody else”? I am sorry, but I really do not see why that is difficult or onerous. It is a very different thing from the 25% threshold that the Minister just mentioned.
Lord Johnson of Lainston (Con)
I appreciate the noble Lord’s intervention. I expect some of this comes down to nominee companies and the roles that they perform on shareholder registers, but I am happy to look in more detail at this point. We had the good fortune to have a conversation about this some days ago and came to the conclusion that it was certainly worth further investigation to ensure that anyone who puts information on to the Companies House website has to ascertain whether they are acting on behalf of other people. However, I believe, and very much hope, that the answer will lie in the depths of the legislation.
My noble friend Lord Agnew’s amendment is very similar. I hope I have covered this point, particularly in relation to the PSC framework already in place.
I turn to Amendment 5, and thank the noble Lord, Lord Ponsonby, for his helpful replacement of the noble Lord, Lord Coaker, in speaking to it. The amendment would require a memorandum of association to include the nationality and country of ordinary residence of each subscriber. A memorandum of association is a memorandum stating that the subscribers wish to form a company, and they agree to become members of that company. Their names are then entered into the company’s register of members.
This amendment, if I may be so bold, would not require the same information to be provided by persons who later become members. Frankly, it is considered that that would create inconsistency between the information requirements of members who were subscribers and other members. The Government consider that any new information requirements should be consistent between the two.
The Government appreciate the intent behind the amendment, but we consider that this would be better addressed by consulting stakeholders about what additional information, if any, it would be proportionate to require every company to provide about all its members, rather than just subscribers who are individuals. To reinforce that point, we would look to consult stakeholders about what additional information it would be proportionate to require.
This Bill, and government amendments to it, provide the powers to require additional information to be provided via regulations. This discussion can happen on an ongoing basis, and we welcome that. The government amendments that I outlined earlier signal our willingness to review the position on this issue, albeit having first consulted stakeholders, given the potential burdens involved. I know we all agree about the importance of keeping the legislation sensible so that it does not impinge on our entrepreneurial spirit and the creation of companies in this country. That is absolutely right, and noble Lords would expect the Government to consult in ensuring that we get the right information registered in the right way. I hope this reassures the noble Lord and that he will withdraw his amendment.
Lord Ponsonby of Shulbrede (Lab)
My Lords, I thank all noble Lords who have spoken in this relatively short but important debate. I make it clear to the Minister that I do not think anyone contributing to this discussion was questioning the underlying philosophy of the Bill. Indeed, we were trying to enhance its underlying philosophy, which is to provide greater transparency about who the ultimate beneficial owners of all these companies are.
The Minister’s response to the various amendments was about disproportionality. He said that they would put disproportional burdens on smaller companies, that personal information may be made available, and that people should be protected from spam, promoters and so on. I do not think anyone is questioning that. Various amendments put forward by various noble Lords try to increase transparency and to stop people being able to hide behind layers and layers of nominee companies.
I was drawn to what the noble Lord, Lord Vaux, said: “Having to lie in public is very different from just keeping quiet”. That is a very sound principle to operate on. He also made the point that identifying shareholders should be the same as identifying directors or people with significant control. That is a second principle behind his amendments.
“Information about subscribers
(1) The Companies Act 2006 is amended as follows.(2) In section 9 (registration documents)—(a) after subsection (3) insert—“(3A) The application must contain—(a) a statement of the required information about each of the subscribers to the memorandum of association (see section 9A),(b) a statement that none of the subscribers to the memorandum of association is disqualified under the directors disqualification legislation (see section 159A(2)),(c) if any of them would be so disqualified but for the permission of a court to act, a statement to that effect, in respect of each of them, specifying—(i) the subscriber’s name,(ii) the court by which permission was given, and(iii) the date on which permission was given, and(d) if any of them would be disqualified under the directors disqualification legislation by virtue of section 11A of the Company Directors Disqualification Act 1986 or Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002 (designated persons under sanctions legislation) but for the authority of a licence of the kind mentioned in that section or Article, a statement to that effect, in respect of each of them, specifying—(i) the subscriber’s name, and(ii) the date on which it was issued and by whom it was issued.”;(b) after subsection (6) insert—“(7) In subsection (3A)(c) “permission of a court to act” means permission of a court under a provision mentioned in column 2 of the table in section 159A(2).”.(3) After section 9 insert—“9A Required information about the subscribers(1) The required information about a subscriber who is an individual is—(a) name;(b) a service address.(2) The required information about a subscriber that is a body corporate, or a firm that is a legal person under the law by which it is governed, is—(a) corporate or firm name;(b) a service address.(3) In subsection (1) “name” means the individual’s forename and surname.(4) Where a subscriber is a peer or an individual usually known by a title, that title may be stated in the application for the registration of the company instead of the subscriber’s forename and surname.(5) The Secretary of State may by regulations—(a) amend this section so as to change the required information about a subscriber; (b) repeal subsection (4).(5) Regulations under this section are subject to affirmative resolution procedure.”.(4) In subsection 10 (statement of capital and initial shareholdings), omit subsection (3).(5) In subsection 11 (statement of guarantee), omit subsection (2).”Member’s explanatory statement
This expands the information that an application for the formation of a company must include about the subscribers and confers a power to amend that information (similar powers currently exist in sections 10(3) and 11(2) of the Companies Act 2006). The clause also incorporates material from Clauses 2 and 4.
Member’s explanatory statement
This amendment is consequential on the amendments to Clause 40 that appear in the Minister’s name.
Lord Johnson of Lainston (Con)
My Lords, I begin by apologising for my lack of fluidity in the procedures of Committee stage—I have not taken such a complex and important Bill through before, so I am grateful for noble Lords’ indulgence and apologise for any confusion caused.
I speak now to the set of government amendments in this group: Amendments 9 to 12, 25 to 30, 40 and 41. These will replace existing Clauses 36 and 38. They create a completely new type of sanctions measure in the Sanctions and Anti-Money Laundering Act 2018 called “director disqualification sanctions”. It will be unlawful for a designated person subject to this new measure to act as a director of a company. These amendments improve and extend the existing clauses, which prohibit individuals who are subject to the asset freeze sanctions measure from acting as directors of companies. Instead of automatically applying director disqualification status to individuals who are subject to an asset freeze only, this amendment allows Ministers to apply the new measure on a case-by-case basis using the existing designation procedure within the Sanctions and Anti-Money Laundering Act 2018. That will ensure that the measure can be better targeted at those designated persons who are acting, or could act, as directors. It provides the Foreign, Commonwealth and Development Office with flexibility as to when to apply it and does not limit it in applying it only to people subject to an asset freeze. That is standard practice for our other designation-based sanctions measures, such as asset freezes and travel bans.
It will be for the Foreign Secretary to decide when and how to deploy the measure, alongside the full suite of other sanctions measures. For instance, this measure could be applied on its own or alongside an asset freeze, travel ban or other measures. While other countries may be able to prevent designated persons from acting as company directors through the effect of other prohibitions, we will be the first country to introduce this as a specific type of sanctions measure.
The amendment will utilise the procedures set out in the Company Directors Disqualification Act 1986 to disqualify the designated person from directorship of UK companies. An individual subject to this new measure will commit an offence if they act as a director of a company or take part in the management, formation or promotion of a company.
As with existing sanctions measures, the relevant authority will be able to issue a licence to an individual to allow them to undertake activity that is otherwise prohibited. This may be necessary, for instance, where the individual needs to continue to act as a director for a short period of time in order to wind down the company. Additionally, the Secretary of State can by regulations create exceptions to provide more general carve-outs from the sanction.
Information about individuals who are subject to this new sanction, and any relevant licences, will be published on the director disqualification register maintained by Companies House, as well as on the UK sanctions list. This will ensure that the use of the sanction is transparent. It will also make the information more easily accessible. Members of the public will be able to find all the relevant information on the existing register, and will not have to search unfamiliar sources to access information on disqualified directors.
Introducing this new director disqualification sanctions measure will be an important addition to the UK’s sanctions armoury. I beg to move Amendment 9 and very much hope that noble Lords will support the other government amendments in this group.
Lord Agnew of Oulton (Con)
My Lords, I shall speak to my amendment on designated persons. The Minister is already dealing with this issue in some of his own amendments, but I stress that mine would be a slight tweak to the system that would have enormous power over the very few people who would be impacted. Last year only 1,200 people were designated for the Russian activities—across the whole world, not just by us—so we are talking about low numbers of thousands of people relative to the 5 million on the register. We also know that some of these bad actors got wind of their designation before it happened and were able to reorganise their financial affairs, so the horse had well and truly bolted by the time we rumbled into action. This slight amendment would give much more transparency into what these people were doing and allow the enforcement agencies to act accordingly.
Lord Wallace of Saltaire (LD)
My Lords, I note that these various amendments cover England and Wales, Scotland and Northern Ireland, but the UK financial system very much includes Jersey and Guernsey for a great many company formations and associated company forms. I wonder whether at this stage the Minister could explain whether or not the disqualification of persons from being directors within the UK will in time apply to the Crown dependencies, or whether one will still be able to act as a director for companies formed in the Crowd dependencies while disqualified within the UK.
Lord Johnson of Lainston (Con)
I appreciate the noble Lord’s comment about the Crown dependencies. I am happy to confirm that this debate develops the specific answer to his question. My assumption would be that they fall under the register of overseas entities and the requirements placed around them, but I will confirm that. The noble Lord makes a very valid point. It would be peculiar if we did not include the Crown dependencies of Jersey and Guernsey in our legislation. My assumption is that they are well covered, and I hope that is the case.
I thank my noble friend Lord Agnew of Oulton for his Amendment 24. I assure him that I do not think it is necessary to achieve his intentions. Provisions in the Bill already allow Companies House proactively to share data more widely for purposes connected with its functions. Data sharing will also be permitted to assist public authorities with exercising their own functions. This will include government bodies such as OFSI, which is part of His Majesty’s Treasury, the National Crime Agency and so on. Examples of data sharing could be for the purpose of confirming the accuracy of data provided to the registrar to ensure the register is kept up to date or for passing on intelligence to law enforcement agencies to minimise criminal activity.
Companies House will operate a risk-based approach targeting its efforts primarily in those areas where information and intelligence gleaned through new data-sharing powers and through Companies House’s own systems and processes suggest that particular scrutiny is warranted. The Government believe that this amendment, while well intentioned, is overly prescriptive and would lead to Companies House having to share potentially irrelevant and unnecessary information with OFSI and NCA. This would be an inefficient use of government resources and could lead to more serious intelligence that needs to be shared being missed. Although Companies House already works very closely with government departments, including HM Treasury’s OFSI and law enforcement agencies, this Bill will strengthen these existing relationships through enhanced data-sharing provisions.
This amendment seeks to impose a duty on the registrar only with regard to material information, which it leaves undefined. The imposition of such a vague duty could lead to confused and ineffective results and underlines the importance of the registrar being able to share data using a risk-based approach. Furthermore, information about individuals who are subject to this new sanction and any relevant licences will be published on the director disqualification register maintained by Companies House as well as on the UK sanctions list to ensure that the use of the sanctions measure is transparent. Discussions about implementing the new sanctions measure, including data sharing between Companies House, the Department for Business and Trade and the Foreign, Commonwealth and Development Office, are already under way to ensure that the new measure is effective. For the reasons set out above, I ask my noble friend not to move his amendment.
“(7) Where any of the persons named as directors would be disqualified under the directors disqualification legislation by virtue of section 11A of the Company Directors Disqualification Act 1986 or Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002 (designated persons under sanctions legislation) but for the authority of a licence of the kind mentioned in that section or Article, the statement must also include a statement to that effect, in respect of each of them, specifying—(a) the person’s name, and(b) the date on which the licence was issued and by whom it was issued.”Member’s explanatory statement
This amendment is consequential on new clauses (Power to impose director disqualification sanctions), (Disqualification of persons designated under sanctions legislation: GB) and (Disqualification of persons designated under sanctions legislation: NI)(which are inserted after Clauses 36 and 38).
(c) if any of them would be so disqualified by virtue of section 11A of the Company Directors Disqualification Act 1986 or Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002 (designated persons under sanctions legislation) but for the authority of a licence of the kind mentioned in that section or Article, a statement to that effect, in respect of each of them, specifying—(i) the person’s name, and(ii) the date on which the licence was issued and by whom it was issued.”Member’s explanatory statement
This amendment is consequential on new Clauses (Power to impose director disqualification sanctions), (Disqualification of persons designated under sanctions legislation: GB) and (Disqualification of persons designated under sanctions legislation: NI)(which are inserted after Clauses 36 and 38).
Lord Johnson of Lainston (Con)
I greatly thank the noble Baroness, Lady Blake, for speaking in this debate and for tabling Amendment 13, to which I will now respond. All these amendments are concerned with directions issued to a company by the Secretary of State requiring it to change its name under provisions already in the Companies Act 2006 and added to that Act by virtue of the Bill.
I am very sympathetic to some of the background comments relating to this amendment, but we feel that it is better to allow an element of flexibility around the time it takes a company to change its name. There is already a 28-day target point, and it is right that the Secretary of State has the opportunity to extend that.
Noble Lords in the Committee who have been involved in company management will know that sometimes, in order to have a formal resolution, there are certain requirements of notice periods for boards, which can be 30 days. For the businesses I have been involved in, that tended to be common practice; you can have a special resolution, but it is more important that the change happens and that we do not necessarily set arbitrary timelines, which could cause other issues at a later date.
I am very comfortable with having a further discussion with the noble Baroness and her colleagues about this in case something has been missed in the debate. Ultimately, I believe that we have set the right level of activity requirements and that allowing the Secretary of State to have the flexibility would be more appropriate given the ambitions we are trying to achieve.
The second element of the amendments—I am not sure whether they were spoken to, but they were certainly proposed so it is worth covering them briefly because they are part of the debate—is the requirement for the Secretary of State to publish details of any directions. Directions are issued to companies by the Secretary of State rather than the registrar so they do not form part of the company register, which is a record of information provided to the registrar by companies and material issued to companies by the registrar. We do not believe it would be appropriate to depart from that principle. However, to repeat commitments made at earlier stages of the Bill, we would be happy to examine on a case-by-case basis the appropriateness of annotating the register where name change directions have been issued. I therefore ask the noble Baroness to withdraw her amendment.
Baroness Blake of Leeds (Lab)
I thank the Minister. I was indeed referring to all the amendments in the group. I note his offer of further conversations to make sure that we have absolutely nailed down the clarification that we are seeking and beg leave to withdraw the amendment.
Lord Clement-Jones (LD)
My Lords, I have very little to add to what my noble friend said. This is clearly a bit of a curate’s egg and Amendment 23 is a good start, but there are objections to it, which were very well set out by the noble Lords, Lord Leigh and Lord Vaux. As my noble friend said, it is quite usual to use professional offices as a registered office. I hope the Minister will acknowledge that new subsection (2) in Clause 29(3) is not as good as it should be and that he will take on board some of the points made about Amendment 23. Then, we would be in a much better place.
Lord Johnson of Lainston (Con)
I thank the noble Lords, Lord Vaux and Lord Leigh, the noble Baroness, Lady Blake, and the noble Lords, Lord Thomas and Lord Clement-Jones, for their contribution to the debate on this issue.
The Government’s view is that Clause 29 already introduces a revised Section 86 to the Companies Act 2006 in an effort to introduce a definition of what constitutes an acceptable and effective address for a company’s registered office. The amendment seeks to define the opposite: what would not represent an appropriate address. I hope your Lordships will agree with the following argument for why that is unnecessary.
I begin with the suggestion that PO box addresses be explicitly forbidden. We do not believe there is a need for this. A PO box address cannot be an address at which deliveries can be acknowledged, nor an address to which a sender can be assured that what is sent will find its way to the hands of a company representative. It is therefore clearly not an appropriate address—we very much agree with the noble Baroness on that.
I turn to the “reasonable suspicion” element of the amendment. Where the registrar has reasonable grounds to suspect that the company does not have permission to use an address, she will almost inevitably conclude that the conditions that I have just mentioned will not be capable of being met and, again, she will be within her rights to reject or force the company to change it as appropriate.
The other element of the amendment would prevent companies having their registered office address anywhere other than their main place of business. There are, frankly, many reasons why a company may choose to separate the two, so this could be problematic for many companies. That includes, for example, particularly small enterprises that carry out businesses from home but choose to register the company at the premises of their accountant in order to protect their residential address details, which I think we would agree is perfectly reasonable. We have been at pains elsewhere in the Bill to introduce measures to extend, where appropriate, the ability to suppress addresses that the public have access to which might jeopardise the safety or security of individuals. There are elements of the amendment that we believe would run contrary to those aims.
I hope the Committee will be reassured that new Section 86 will be an effective means by which to monitor and police the accuracy of company address information and that the noble Baroness will feel able to withdraw her amendment. As a final point, I personally have great sympathy with the ambitions of the amendment to make sure that the right address is being provided for the company register, but I hope I have laid out the reasons why the processes that the Government have put in the legislation should be sufficient to ensure that real addresses are given and other protections are employed.
Lord Faulks (Non-Afl)
Personally, I am convinced by what the Minister has said about the substitute for Section 86. I just have one query. It creates an offence whereby a person is guilty on summary conviction. The offence appears to be committed by a company and
“every officer of the company who is in default.”
Could the Minister help with who the statute envisages will be an officer of the company who is in default?
Lord Johnson of Lainston (Con)
I appreciate that comment. I will come back to the noble Lord with more detail, if that is possible.
Baroness Blake of Leeds (Lab)
I thank noble Lords for their comments, and I thank the Minister for his explanation. We will of course take those comments away and consider them, but at the moment I feel that there is still room to explore this issue and perhaps come up with another form of wording to take forward at a future stage. As I said earlier, the emphasis on reflecting the fact that the onus is on a business to prove that it is legitimate will need to run through all this. With those comments, and in anticipation of future discussions, I beg leave to withdraw the amendment.
“Power to impose director disqualification sanctions
(1) The Sanctions and Anti-Money Laundering Act 2018 is amended as follows.(2) In section 1 (power to make sanctions regulations), in subsection (5), after paragraph (a) insert—“(ab) impose director disqualification sanctions (see section 3A);”.(3) After section 3 insert—“3A Director disqualification sanctions(1) For the purposes of section 1(5)(ab) regulations “impose director disqualification sanctions” if they provide for designated persons (see section 9) to be persons subject to director disqualification sanctions for the purposes of—(a) section 11A of the Company Directors Disqualification Act 1986, and(b) Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002.(2) As to the effect of such provision, see—(a) section 11A of the Company Directors Disqualification Act 1986, and(b) Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002.”(4) In section 9 (“designated persons”)—(a) in subsection (1), for “3 and 4” substitute “3 to 4”;(b) in subsection (3), after “3,” insert “3A,”.(5) In section 15 (exceptions and licences), after subsection (3) insert—“(3A) Where regulations provide for designated persons to be persons subject to director disqualification sanctions for the purposes of section 11A of the Company Directors Disqualification Act 1986 and Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002, the regulations may—(a) create exceptions from subsection (1) of that section or paragraph (1) of that Article;(b) confer power on an appropriate Minister to issue a licence to authorise a designated person to do anything that would otherwise be prohibited by subsection (1) of that section or paragraph (1) of that Article.(3B) Regulations may, as respects any licences provided for under subsection (3A), make any provision mentioned (in relation to licences) in subsection (3).””Member’s explanatory statement
This Clause would allow an appropriate Minister to designate a person as subject to “director disqualification sanctions” for the purposes of section 11A of the Company Directors Disqualification Act 1986 and Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002.
“Disqualification of persons designated under sanctions legislation: NI
(1) The Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4)) is amended as follows.(2) After Article 15 insert—“15A Designated persons under sanctions legislation(1) It is an offence for a person who is subject to director disqualification sanctions to act as a director of a company or directly or indirectly to take part in or be concerned in the promotion, formation or management of a company (but see paragraph (2)).(2) Paragraph (1) does not apply—(a) to the extent that an exception from paragraph (1) has been created by virtue of section 15(3A) of the Sanctions and Anti-Money Laundering Act 2018, or(b) to anything done under the authority of a licence issued by virtue of section 15(3A) of that Act.(3) It is a defence for a person charged with an offence under this Article to prove that they did not know and could not reasonably have been expected to know that they were subject to director disqualification sanctions at the time at which they engaged in that conduct.(4) In this Article “person who is subject to director disqualification sanctions” means a person who under regulations under section 1 of the Sanctions and Anti-Money Laundering Act 2018 is a person subject to director disqualification sanctions for the purposes of this Article (see section 3A of that Act).”(3) In Article 18 (criminal penalties)—(a) omit “15,”;(b) for “and” substitute “; and any person guilty of an offence under this Article or Article 15 or 15A”.(4) In Article 19 (personal liability for company’s debts where person acts while disqualified)— (a) in paragraph (1)(a), after “Article 15” insert “, 15A”;(b) omit the “or” at the end of paragraph (1)(a);(c) after paragraph (1)(b) insert “, or(c) as a person who is involved in the management of the company, they act or are willing to act on instructions given in contravention of Article 15A or section 11A of the Company Directors Disqualification Act 1986.”;(d) after paragraph (1) insert—“(1A) A person who is subject to director disqualification sanctions (within the meaning of Article 15A) and is involved in the management of a company is not personally responsible under paragraph (1)(a) for all of the relevant debts of a company if the person proves that they did not know and could not reasonably have been expected to know that they were subject to director disqualification sanctions at the time at which they were so involved.”;(e) in paragraph (3)(b), after “(1)(b)” insert “or (c)”.”Member’s explanatory statement
This Clause provides that any person who has been designated as being subject to director disqualification sanctions will be committing an offence if they act as a director etc. in NI, unless they have been issued with a licence or unless an exception applies.
Member’s explanatory statement
This amendment is consequential on new Clauses (Power to impose director disqualification sanctions), (Disqualification of persons designated under sanctions legislation: GB) and (Disqualification of persons designated under sanctions legislation: NI)(which are inserted after Clauses 36 and 38).
“Register of members: information to be included and powers to obtain it
(1) The Companies Act 2006 is amended as follows.(2) In section 112 (the members of a company), at the end insert—“(4) Where an individual’s name is entered in a company’s register of members but is not in the form required by section 113A, that does not affect the person becoming a member of the company by virtue of subsection (2).”(3) For the italic heading “General” at the beginning of Chapter 2 of Part 8 substitute “Duty to keep register”.(4) In section 113 (register of members)—(a) for subsection (2) substitute—“(2) There must be entered in the register, in respect of each person who is a member—(a) the required information (see sections 113A and 113B), and(b) the date on which the person was registered as a member.(2A) Where a person ceases to be a member there must be entered in the register the date at which the person’s membership ceased.”;(b) in subsection (3), omit “, with the names and addresses of the members,”;(c) in subsection (5), after “show a single” insert “service”;(d) in subsection (6), omit “, with the names and addresses of the members,”;(e) after subsection (6) insert—“(6A) Where any of the information required to be entered in a company’s register of members changes—(a) that does not relieve the company from the obligation to include the old information in the register if it has not already done so,(b) the old information must be retained in the register until its removal is authorised by section 121 or by court order under section 125, and(c) a note must be included in the register recording the date on which the information changed and the date on which the change was entered in the register.”;(f) in subsection (7), after “If” insert “, without reasonable excuse,”.(5) After section 113 insert—“113A Required information about members: individuals(1) The required information about a member who is an individual is—(a) name;(b) a service address. (2) In this section “name” means forename and surname.(3) Where a member is a peer or an individual usually known by a title—(a) any requirement imposed by section 113D or 113E, or by a notice under section 113F, to provide their name may be satisfied by providing their title instead;(b) the title may be entered in the register of members instead of their forename and surname (and references in any enactment to the name of a person entered in a company’s register of members are to be construed accordingly).113B Required information about members: corporate members and firmsThe required information about a member that is a body corporate, or a firm that is a legal person under the law by which it is governed, is—(a) corporate or firm name;(b) a service address.113C Power to amend the required information(1) The Secretary of State may by regulations—(a) make provision changing the required information about a member for the purposes of this Chapter;(b) repeal section 113A(3).(2) The provision that may be made in regulations under subsection (1)(a) includes provision amending this Chapter.(3) The consequential provision that may be made in regulations under subsection (1)(a) by virtue of section 1292(1) also includes provision amending section 51 of the Economic Crime and Corporate Transparency Act 2023.(4) Regulations under subsection (1) are subject to affirmative resolution procedure.113D Duty on new members to notify required information(1) A person who becomes a member of a company must provide the company with the required information about the member (see sections 113A and 113B).(2) Subsection (1) does not apply if or to the extent that—(a) the person has already provided the information to the company, or(b) the person becomes a member of the company on its incorporation and the information is contained in the application for the registration of the company.(3) A person must comply with this section within the period of two months beginning with the date on which the person became a member.113E Duty on member to notify changes to required information(1) A person who is a member of a company must give notice to the company of any change in the required information about the member (see sections 113A and 113B).(2) The notice must specify the date on which the change occurred.(3) A person must comply with this section within the period of two months beginning with the date on which the change occurred.113F Power for company to require information from members(1) A company may, for the purposes of ensuring that its register of members includes the information that it is required to include, require a member or former member of the company to provide any of the required information about the member or former member (see sections 113A and 113B). (2) The notice must require the recipient to comply with it within the period of one month beginning with the date on which the notice is given.113G Failure to comply with section 113D , 113E or 113F(1) A person who, without reasonable excuse, fails to comply with section 113D or 113E commits an offence.(2) A person who, without reasonable excuse, fails to comply with a notice under section 113F commits an offence.(3) Where an offence under subsection (1) or (2) is committed by a firm, the offence is also committed by every officer of the firm who is in default.(4) A person guilty of an offence under this section is liable—(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);(b) on summary conviction—(i) in England and Wales, to imprisonment for a term not exceeding the general limit in a magistrates’ court or a fine (or both);(ii) in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fifth of the statutory maximum;(iii) in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fifth of the statutory maximum.113H Basic false statement offences in connection with sections 113D to 113F(1) A person commits an offence if, in purported compliance with section 113D or 113E and without reasonable excuse, the person makes a statement that is misleading, false or deceptive in a material particular.(2) A person commits an offence if, in purported compliance with a notice under section 113F and without reasonable excuse, the person makes a statement that is misleading, false or deceptive in a material particular.(3) Where an offence under subsection (1) or (2) is committed by a firm, the offence is also committed by every officer of the firm who is in default.(4) A person guilty of an offence under this section is liable—(a) on summary conviction in England and Wales, to a fine;(b) on summary conviction in Scotland, to a fine not exceeding level 5 on the standard scale;(c) on summary conviction in Northern Ireland, to a fine not exceeding level 5 on the standard scale.113I Aggravated false statement offences in connection with sections 113D to 113F(1) A person commits an offence if, in purported compliance with section 113D or 113E, the person makes a statement that the person knows to be misleading, false or deceptive in a material particular.(2) A person commits an offence if, in purported compliance with a notice under section 113F, the person makes a statement that the person knows to be misleading, false or deceptive in a material particular. (3) Where an offence under subsection (1) or (2) is committed by a firm, the offence is also committed by every officer of the firm who is in default.(4) A person guilty of an offence under this section is liable—(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);(b) on summary conviction—(i) in England and Wales, to imprisonment for a term not exceeding the general limit in a magistrates’ court or a fine (or both);(ii) in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fifth of the statutory maximum;(iii) in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fifth of the statutory maximum.Duty to keep index of members”.(6) Section 115 (index of members)—(a) is moved to after the italic heading “Duty to keep index of members” inserted by subsection (5) of this section, and(b) is renumbered section 113J.(7) In that section as renumbered—(a) in subsection (1), for “names of the members of the company” substitute “names or titles of the members of the company (to be known as “the index of members’ names”)”;(b) for subsection (3) substitute—“(3) The index must include the same details of a person’s name or title as are entered in the register of members.”(8) Before section 114 insert—“Inspection etc of register and index of members”.(9) Before section 121 insert—“Removal of entries from register of members”.(10) In section 123 (single member companies)—(a) in subsection (1), omit “, with the name and address of the sole member,”;(b) in subsection (2), omit “, with the name and address of the sole member”;(c) in subsection (3), omit “, with the name and address of the person who was formerly the sole member”.(11) In section 771 (procedure on transfer being lodged), after subsection (1) insert—“(1A) The company may not register the transfer under subsection (1)(a) unless satisfied that it has the information that it is required to enter in its register of members in relation to the transferee.””Member’s explanatory statement
This Clause confers a power to amend the information that must be kept in a company’s register of members. It also creates an express duty for companies to retain old information about members (eg former address information).
“(1) The Secretary of State may by regulations—(a) require a company to refrain from using, or refrain from disclosing, individual membership information except in circumstances specified in the regulations;(b) confer power on the registrar, on application, to make an order requiring a company to refrain from using, or refrain from disclosing, individual membership information except in circumstances specified in the regulations.”Member’s explanatory statement
This allows the Secretary of State to make regulations requiring a company to refrain from using or disclosing membership information, whether or not a member applies for protection.
Member’s explanatory statement
This severs the link between the operation of Clause 51 and the commencement of Clause 46. The appointed day could be later than the commencement of Clause 46, allowing a company more time to obtain the information it has to provide to the registrar.
Lord Johnson of Lainston (Con)
I thank the noble Lord, Lord Ponsonby, for that summation. I am very grateful to noble Lords for the powerful reason which they bring to bear on these amendments. The Government are delighted to have more discussions around how we ensure that we have full knowledge of people who have control of companies and of companies’ beneficiaries. I believe that the Bill as it stands gives us that level of security. The Government would be reluctant to set arbitrary levels in terms of that above a certain percentage one should have additional registration information, but I am happy to have a discussion around those principles, if that is helpful.
If people do not have confidence in Companies House, we will not have achieved part of our goal, which is to give people a sense of that the data has integrity and is true. The whole point about this exercise is to make sure that people put the right data in so that we know who the people are who are behind businesses and people can trust that information. I am very sympathetic to this discussion, which is extremely important.
To balance this, I say that this is about helping businesses function better in a lawful environment. One can go to the ultimate degree in terms of requirements for information and verification that do not necessitate greater degrees of security but cause significant burdens for businesses. This is not simply about satisfying our desire for excess information simply for the sake it; it must be linked to whether this is going to help us achieve our basic goals, which is to understand who owns these businesses, who is behind them and who is benefiting from them. With that in mind, I am open to having further discussions, as my colleagues would be.
Lord Agnew of Oulton (Con)
I thank the Minister for his offer to have an ongoing conversation about this, because that is how you achieve the best results in these things. This very formal and rigid process of trying to look at individual clauses in isolation does not solve the problem. We have had several clauses this afternoon that all mesh together with one objective, which is to improve transparency. I take my noble friend Lord Leigh’s point about creating a bureaucratic system that impacts adversely on thousands of decent people, particularly small businesses. However, the transaction of changing car ownership in this country, where you have an asset worth a few thousand pounds, it is a very simple process. You fill in a change of ownership form, you send it to the DVLA, and the job is done—so to the point made by my noble friend Lord Faulks, I do not believe that we have to create a bureaucratic system to get transparency.
I remind noble Lords of the downside of not having this information. A case study was given to me by Members in the other place. The awful ammonium nitrate explosion in Beirut a couple of years ago killed and wounded hundreds of people. It was eventually uncovered that the company that owned the warehouse was a British-registered company, Savaro Ltd, but it was almost impossible to find out who the shareholders of that company were and to get to grips with who were the people who caused that terrible accident.
There is a lot more to this issue. As someone who has created a lot of small businesses in my career, I do not want a heavy hand on this, but light-touch regulation done well is the answer. I urge my noble friend to have an open conversation with Members here as a way of solving the problem in a business sense, not in this very formal way.
Lord Johnson of Lainston (Con)
I appreciate my noble friend’s summation. Again, I hope that the Government have demonstrated today that the principles of the Bill conform to the expectations and desires of this Committee. Clearly, there are details that require further discussion, and that debate will help propagate the ambitions and values that we are trying to inject into the Bill. I am grateful for the comments but, in this instance, I ask my noble friend to withdraw his amendment, given that we will have further discussions to try to ascertain the right levels and what burdens we should impose on business to achieve our outcomes.
“(f) if the person would be disqualified under the directors disqualification legislation by virtue of section 11A of the Company Directors Disqualification Act 1986 or Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002 (designated persons under sanctions legislation) but for the authority of a licence of the kind mentioned in that section or Article, a statement to that effect specifying—(i) the date on which the licence was issued, and(ii) by whom it was issued.”Member’s explanatory statement
This amendment is consequential on new Clauses (Power to impose director disqualification sanctions), (Disqualification of persons designated under sanctions legislation: GB) and (Disqualification of persons designated under sanctions legislation: NI) (which are inserted after Clauses 36 and 38).
“False statements about persons with significant control
(1) Schedule 1B to the Companies Act 2006 (enforcement of disclosure requirements in relation to persons with significant control) is amended as follows.(2) In paragraph 13, in sub-paragraph (1), omit paragraph (b) and the “or” before it.(3) In paragraph 14, in sub-paragraph (1), omit paragraph (b) and the “or” before it.(4) After paragraph 14 insert—“False statements: basic offence14A_(1) A person commits an offence if, in purported compliance with a notice under section 790D or 790E or in purported compliance with a duty imposed by section 790G or 790H, and without reasonable excuse, the person makes a statement that is misleading, false or deceptive in a material particular.(2) Where the person is a legal entity, an offence is also committed by every officer of the entity who is in default.(3) A person guilty of an offence under this paragraph is liable on summary conviction—(a) in England and Wales, to a fine;(b) in Scotland, to a fine not exceeding level 5 on the standard scale;(c) in Northern Ireland, to a fine not exceeding level 5 on the standard scale.False statements: aggravated offence14B_(1) A person commits an offence if, in purported compliance with a notice under section 790D or 790E or in purported compliance with a duty imposed by section 790G or 790H, the person makes a statement that the person knows is misleading, false or deceptive in a material particular.(2) Where the person is a legal entity, an offence is also committed by every officer of the entity who is in default.(3) A person guilty of an offence under this paragraph is liable—(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);(b) on summary conviction— (i) in England and Wales, to imprisonment for a term not exceeding the general limit in a magistrates’ court or to a fine (or both);(ii) in Scotland, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);(iii) in Northern Ireland, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum (or both).””Member’s explanatory statement
This is about the provision of false or misleading information about persons with significant control. The current offences require the prosecution to prove knowledge or recklessness in all cases. The amendment replaces that with a strict liability offence (not dependent on knowledge) and an aggravated offence (where there is knowledge).
Lord Johnson of Lainston (Con)
My Lords, I apologise if I have not followed the procedure correctly, but I am grateful to our Deputy Chairman of Committees for her guidance in getting us to the right place.
The purpose of Amendment 42 is to align the drafting of the false statement offences in the Companies Act with the equivalent offences in Section 15 of the Economic Crime (Transparency and Enforcement) Act 2022 and the amendments made by Clause 161 of the Bill. This will ensure the same approach to misconduct by a UK company or an overseas entity.
The current offences require the prosecution to prove knowledge or recklessness in all cases. The amendment replaces those offences with a strict liability offence not dependent on knowledge, and an aggravated offence where there is knowledge. The amendment also removes the need for the prosecution to prove recklessness in any case.
The amendment inserts new paragraph 14A into Schedule 1B to the Companies Act 2006. New paragraph 14A introduces a basic offence, where a person makes a statement that is misleading, false or deceptive in a material particular without a reasonable excuse.
The amendment also inserts new paragraph 14B into Schedule 1B to the Companies Act 2006. New paragraph 14B introduces an aggravated offence, where a person makes a statement that the person knows to be misleading, false or deceptive in a material particular. The penalties are more severe to reflect the knowledge of misconduct. If any of the three offences is committed by a legal entity, the offences are still also committed by every officer of the entity who is in default. I believe the noble Lord, Lord Faulks, raised that point. I am not sure whether there was confusion about whether it related to this part rather than an earlier part, but I would be delighted to clarify that point later.
The penalty for the basic offence is a fine. The penalty for the aggravated offence is up to two years’ imprisonment, or a fine, or both. The level of fines and prison sentences a person will be liable for are the same as for the equivalent offences in Clause 161 of the Bill. This amendment ensures that equivalent offences can be prosecuted in the same way, with the same penalties applied for non-compliance, whether the misconduct relates to an overseas or a UK entity. I beg to move.
Lord Ponsonby of Shulbrede (Lab)
This has been an interesting debate—and a very lawyer-heavy debate —on the juxtaposition of “strict liability” with “reasonable excuse”. I can claim some knowledge here as a sitting magistrate in that I deal with those sorts of things quite regularly, frequently with respect to knife crime and traffic matters. It is a conundrum; it is worth examining further and I hope the Minister will take it further.
The noble Lord, Lord Clement-Jones described this as above his legal pay grade. Talking as a magistrate, I am an unpaid legal practitioner. Nevertheless, the Minister should take up the invitation of members of the Committee to look at this further. I can see that it is open to confusion, and I also take the point made by the noble Baroness, Lady Bowles, about putting other officers in default. I hope that the Minister will take these comments in the spirit in which they were made and that there may be further opportunity for discussion on the points raised.
Lord Johnson of Lainston (Con)
I greatly appreciate the input from noble Lords. Knowing my record over the last hour, I will probably vote against this in any event.
I shall just explain this in my own words, if noble Lords will tolerate my lack of legal expertise. The point was that, until this amendment, you had to prove—I welcome interventions from noble Lords if they feel that I am straying into their legal territory—either dishonesty or recklessness, rather than simply misfiling, in order for there to be a prosecution, which set a very high bar for prosecution. As I understand it, a number of important prosecutions—which is the whole principle for us being here—failed because they were unable to prove that exceptionally high bar.
This therefore makes it an offence to misfile which, as has been rightly pointed out, is a statutory event. However, it would seem to be unreasonable that, if you accidentally put your address down as “46B” when it should be “46C”, you then receive a two-year prison sentence or indeed a significant fine. It is right in this instance that “reasonable excuse” is brought to bear.
Lord Vaux of Harrowden (CB)
Unfortunately, I do not think that is a “reasonable excuse”; that would not be a “material particular”.
Lord Johnson of Lainston (Con)
I am delighted that the noble Lord pointed that out; that is certainly true. I think noble Lords understand the direction of travel in the intent of this amendment. It is important; it is not simply tidying up. There are some elements of making sure that penalties relating to overseas entities relate to companies registered in the United Kingdom, but, following consultation with department officials, it seems to me that this is a very important part of the Bill. I do not support dropping it at this stage, but I am very comfortable having further conversations about it. I would be grateful if the Committee gave me a few moments to consult my team on the specifics about how to proceed. I want to make sure that we have a sensible and reasoned debate but that I do not get the process wrong regarding amendments to the Bill.
Lord Clement-Jones (LD)
The appropriate procedure would be for the Minister to withdraw it, and then move an amendment on Report. We would be very happy if the Minister came back on Report.
Lord Johnson of Lainston (Con)
At this stage, I believe it would be appropriate to consider further the amendment.
Lord Clement-Jones (LD)
May I just clarify for the Minister that it would be very unfortunate if he pressed his amendment? If he pressed it and lost it in Committee, I do not think he could bring back exactly the same amendment on Report. That is the rule: he would have to bring back something different on Report, even if all the officials and legal advice said that it was a perfectly sound clause—he may well get advice on that. I suggest that he withdraws it so that we do not have to vote against it.
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
My Lords, I advise that, if the amendment is voted against, it is negatived.
Lord Johnson of Lainston (Con)
My Lords, I am extremely grateful to noble Lords for their input. I hope they felt, over the last few hours of very productive debate, that the intentions of this Government and the speakers in this debate are entirely aligned: to try to create the right structure for Companies House and the right penalties and compliance regime. Given that, and my gratitude to the Committee for the constructive discussion, I beg leave to withdraw this amendment, with the understanding that we may easily return with something identical on Report, having followed a good degree of debate and discussion on that point.
Neonatal Care (Leave and Pay) Bill
Lord Johnson of Lainston ExcerptsFriday 24th March 2023
(1 year, 1 month ago)
Lords ChamberRead Full debate Neonatal Care (Leave and Pay) Act 2023 View all Neonatal Care (Leave and Pay) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 7 September 2022 - (7 Sep 2022)
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, I begin by thanking my noble friend Lady Wyld for bringing this important Bill forward for debate today. It is a great personal honour to be here to confirm the Government’s ongoing support for the Bill. The cross-party support for this initiative is significant; almost all parties represented in Parliament have supported this legislation specifically. I also thank Stuart McDonald for initiating the process that led to us being able to be here at this moment debating such an important topic. I am sure that we can agree that enabling parents to be with their babies when they are at their most vulnerable is clearly the right thing to do. I will address some of the comments made by noble Lords today in a moment.
Importantly, the Conservative Party manifesto in 2019 committed to introducing neonatal care leave and pay, stating that:
“We will legislate to allow parents to take extended leave for neonatal care, to support those new mothers and fathers who need it during the most vulnerable and stressful days of their lives.”
I am aware of discussions around larger pieces of legislation but, in my view, having had the privilege of taking through other similar Private Members’ Bills over the last few weeks, it is important that we do these right things and do not lose sight of the importance of these specific Bills in making people’s lives better and giving people protections. That is my priority today and I am grateful for noble Lords’ support, and the support of the body politic in general, for this Bill.
If it is helpful, I will go through some of the comments made by Members of this House in this debate. The noble Lord, Lord Patel, made a number of very relevant points, particularly outlining his expertise. I join him, the noble Baronesses, Lady Taylor and Lady Blake, and other Members who did not necessarily articulate it, in expressing my admiration for our doctors and nurses who care for our young babies when they come into this world, exemplified by the noble Lord, Lord Patel, and his expertise and contribution to this area over his lifetime.
The noble Lord and others mentioned the time for implementation. If I may say, I too share a slight degree of frustration at the expectation of an 18-month wait between Royal Assent and implementation. I have investigated this myself, as noble Lords would expect, and I am afraid that there are legitimate reasons relating to the systems and processes—two words that really should not go hand in hand with such an important and emotive topic. They relate to the practicalities of implementing these measures and ensuring that HMRC has the right systems in place. A number of pieces of secondary legislation must also be enacted, which simply takes time. All I can commit to from this Dispatch Box is my personal commitment—I am sure that I also speak on behalf of my Secretary of State and other Ministers—to ensuring that this will be enacted as speedily as possible. We will not let the processes of government delay us except to the absolute minimum. We are targeting April 2025 and we will certainly make sure that, if we can enact any parts of this legislation sooner than that, we will do so.
It was quite right that the eligibility of other types of worker in our workforce was raised by the noble Lord, Lord Patel, and the noble Baronesses, Lady Blake and Lady Taylor. It is felt that we want this to focus on employed workers. It is right to make sure that this mirrors our current maternity and other leave entitlements so that it can be effectively integrated into HMRC systems, pay systems and how businesses function.
I am perfectly aware of, and will take back to the department, the need to continually find ways to ensure that parents in this situation are able, with security, to spend time with their children. There are two very important reasons. First, it is a direct benefit to the health of the child. I would like to raise further in this debate the profile of the charity Bliss and to follow on from the comments about the parents who contributed to this work. This is a deeply personal, emotional and powerful subject. To share those experiences and to broadcast and propagate the importance of this mission is very meaningful. I congratulate them for this and hope to have the opportunity at a later date to do so in person. I hope that they are watching this debate and feel a sense of satisfaction that we continue to progress towards a suitable conclusion. My first point, then, is that it is absolutely right for the health of the child that parents are able to care for them in this difficult and essential period. It is also absolutely right, by the way, for the health of the parents.
My second point is that we must realise that there is a cost to businesses for these important social goods. We should not just ignore that fact. We as a society come together to decide how we want to structure ourselves, and how businesses respond to our needs and to important matters such as this is to be recognised—and I do recognise that. On the effectiveness of business, raised by the noble Baroness, Lady Blake, and the need to make sure that people remain in the workforce, having a structure and framework for how neonatal care leave is taken is far more helpful than the current system, which relies, in effect, on the charity of businesses. Many are extremely forward-footed, very generous and very compassionate but, clearly, they do not have a framework in which to operate effectively.
It is therefore extremely useful to have clear rules, such as we are bringing to bear in other areas such as carers’ leave and so on, so that employees and businesses know how to interact with each other, what their rights are and what the expectations are. As a result of that, I think that we will have far more effective functioning of businesses. We can see from the studies and some of the statistics raised today by my noble friend Lady Newlove and the noble Baroness, Lady Taylor, the number of fathers who are simply taking sick leave or just not going to work. It is not as if , therefore, by not having these frameworks in place, we will somehow have more people in work and that the business situation will be solved. What is happening now is the worst of all worlds: a great degree of insecurity, a huge degree of uncertainty for business and poor outcomes for parents and children. The Bill will solve a number of very important issues. It is absolutely right in every respect and will be an important element of the framework for how we want to make our economy function.
I believe I have covered most of the points raised. I am glad that the noble Baroness, Lady Taylor, mentioned that the delegated powers have been taken out of the Bill, so I do not need to cover that in my speech, if noble Lords do not mind. I was very touched and moved by the personal stories of my noble friend Lady Newlove about the Bagnall family—I am very pleased that super Sam is thriving—and by the stories and important personal experiences related to us by the noble Baronesses, Lady Foster, Lady Taylor and Lady Blake, the noble Lord, Lord Patel, and my noble friend Lady Wyld. I am very grateful to them for contributing to this debate in such a powerful way.
To conclude, these measures will provide valuable support and protection for parents during some of the most stressful days of their lives, when their children are in neonatal care. The Government are pleased to support this Private Member’s Bill and to deliver our manifesto commitment. Supporting the Bill is in line with our ongoing commitment to support workers and build a fairer, high-skilled, high-productivity, high-wage economy. It is good to see that there is such fabulous support from across the political spectrum in the House for this important measure, as is clear from today’s debate. I very much look forward to continuing to work with my noble friend Lady Wyld as the Bill progresses through the House.
Trade (Australia and New Zealand) Bill
Lord Johnson of Lainston ExcerptsMonday 20th March 2023
(1 year, 2 months ago)
Lords ChamberRead Full debate Trade (Australia and New Zealand) Act 2023 View all Trade (Australia and New Zealand) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-R-I Marshalled list for Report - (10 Mar 2023)
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, it is with deep regret that the UK Government have been unable to secure legislative consent for this Bill from the Scottish Parliament and the Senedd. We have also not been able to secure a legislative consent Motion from the Northern Ireland Assembly, given the lack of a functioning Executive. This is disappointing, given that the same approach was followed in the Trade Act 2021, for which the Scottish and Welsh Governments did recommend consent.
The Government have sought to agree compromises with the devolved Administrations. However, despite the best efforts of officials and Ministers, we have not been able to reach an agreement with the Scottish and Welsh Governments. I remind noble Lords again that during the passage of the Bill and the deals it implements, the Government have undertaken extensive engagement with the devolved Administrations, including ministerial meetings, official-level meetings and meetings of ministerial fora, and there were 25 chief negotiator calls with the DAs regarding the Australia free trade agreement alone. In addition, as I have made clear in each debate on the Bill, I reaffirm the UK Government’s commitment to consult the devolved Administrations before exercising the concurrent power in the Bill. I beg to move.
Lord Lennie (Lab)
My Lords, I thank the Minister for taking through the Bill, which is a first for both the Minister and the country—our first trade deal signed following our exit from the European Union. The Minister’s enthusiasm for the Bill was always evident throughout its passage. We now have a trade arrangement with Australia and New Zealand. We will wait to see the overall and specific effects, particularly upon our agriculture sector. While the overall impact is predicted to be very limited, a factor caused by the huge distance between Australia and New Zealand and the UK, there were some specific concerns about certain Australian farming methods and the effect on small hill farmers in the UK. I suspect that these account largely for the failure to get agreement from the Scottish and Welsh Governments.
My thanks go again to the Minister and his team of advisers for their openness and, on this side, to Milton Brown, who again has shown good judgment in facilitating the progress of the Bill.
Lord Johnson of Lainston (Con)
My Lords, it has been a pleasure to take my first Bill through your Lordships’ House. I thank noble Lords for the constructive approach that has been evident throughout the Bill’s passage. We have had robust discussions and debates on the Bill. Likewise, I have had the privilege in recent weeks of engaging with Peers outside the Chamber, and I have benefited from those conversations, which have been in-depth and valuable. The experience, diligence and practical knowledge of noble Lords have challenged and tested the strength of the Bill and its underlying trade deals. I am sure noble Lords will agree that this provides reassurance to the public on the quality of our democratic processes, our accountability and the constructive challenge function of your Lordships’ House. It remains for me only to give a few specific thanks to noble Lords and others before we complete our consideration of the Bill.
First, I thank the Opposition spokespersons, the noble Lords, Lord Lennie and Lord Purvis of Tweed, for the constructive way that they have continued to approach the scrutiny of the Bill—as well as the additional work outside in engaging with our various high commissioners, which I personally appreciated very much.
I pay tribute to my noble friend Lady McIntosh of Pickering for the valuable conversations that we have shared on this legislation and her continued championing of our important agricultural sector. I hope that she has been reassured throughout the Bill’s passage through this House of the Government’s commitment to maintaining our high food standards and safeguarding measures for this sector and UK farmers within both deals. It was due to the scrutiny of my noble friend Lady McIntosh and the noble Lord, Lord Kerr, that we identified the minor drafting error in Clause 2(1)(a), which has subsequently been corrected.
I thank my noble friend Lord Lansley, whose knowledge, frankly, makes my job all the easier as he makes the points in my speech before I get the chance to do so. It is absolutely right that I also thank the noble Baroness, Lady Hayter, and all the members of the IAC for their considered input.
This has been very much a team effort. Behind the scenes, the extraordinary Bill team have put in an unbelievable amount of effort. My thanks go to: James Copeland, Thomas Bingham, Donald Selmani, Jack Collins, Alex Garcia-Pineiro and Catherine Ajani. I also thank my private secretary Sehar Shaheryar and other officials who make up my private office, led by Simon Moore.
Finally, I thank the parliamentary staff, the doorkeepers and the clerks for their professionalism and continued support and to your Lordships’ House.
The Bill provides a power to give effect to our procurement commitments within these agreements, improving three areas of our existing procurement legislation in the UK. We will see benefits to our public services and companies trading in these partner countries—ultimately, unlocking billions in government contracts in a more secure way than ever before.
In conclusion, the Bill will achieve the essence of our post-Brexit vision of Britain. Some noble Lords have questioned the presence of the Government’s trade agenda during the Bill’s passage. In response I say: here it is. These deals guarantee a global interconnectedness of trade deals, with the United Kingdom at the very heart of these new routes, meaning new opportunities for our businesses and citizens. This will result in new markets for our goods and services and new ways to travel and share our cultures. To our friends, trading partners, clients, suppliers, brothers and cousins in Australia and New Zealand, I say, “Hold tight! The UK is coming.” I reiterate my thanks one final time and, with that, I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I apologise on behalf of my noble friend Lord Purvis, who is, unfortunately, unable to be here this afternoon. We thank the Minister for his comments, as well as his patience and expertise during the passage of this Bill. We thank the Bill team for their help and support, as well as the Labour Front Benches and Cross Benches. We also thank Elizabeth Plummer in the Liberal Democrat Whips’ Office, without whose help I do not think that my noble friend Lord Purvis and I would have been where we are today. We support the passage of the Bill and thank the Minister for his help.
Lord Howell of Guildford (Con)
My Lords, I offer my congratulations to the Minister for skilfully conducting the debates on this important Bill, which I think will lead to much greater things in our future. I want to put before him three issues, almost housekeeping issues, that have arisen during the handling of the legislation, one of which has just been mentioned by the noble Earl, Lord Sandwich.
I declare an interest as a member of the International Agreements Committee, where the issue of trade policy and how specific or general it should be has been a matter of lively discussion. That is of course relevant to everything that we have been talking about.
I ask the Minister to keep the three points that I want to comment on in mind when we enter into future discussions on these sorts of areas in FTAs, of which there are going to be plenty more. First, the CRaG system—the Constitutional Reform and Governance Act 2010—has come under a bit of strain, and the question has arisen as to whether, when the other place resolves that something should not be ratified, the 21 days that then follow are enough to get the appropriate debates organised, or whether in fact the Government are not obliged to have a debate and maybe it does not fit into parliamentary time and the net effect can be that there is no debate at all. Perhaps that is an area that needs looking at again.
Secondly, the whole of the CRaG system depends on the assiduity, energy and powers of the committees. The resources on the clerical and research side of many committees, including all the ones that I have served on for 30 years, have been second to none, and have been particularly superb here in the House of Lords itself—but are they enough, given the size and number of the treaties that are coming through? We are not even talking about the EU treaties that are handled by the International Trade Committee; we are talking about thousands and thousands of treaties and agreements, let alone instruments, pouring through day by day. Today’s giant Executive generates a continuous flow, a cascade, of these things. Do the committees have the resources and underpinning that committees in similar parliamentary systems to ours, here in Europe and elsewhere, seem to have? Should there have been harder thinking about whether, in a modern society with a modern Parliament trying to hold the Executive to account, the resources of committees are the key—the physical resources, clerical resources, research resources and back-up, and the power to summon and so on. These are all matters of lively discussion that have arisen in this area.
My third point is a bit of a puzzle, but we are going to hear a lot more about it: the question of consent from the devolved Administrations. I need to have one thing clarified for me. I thought foreign policy was a reserved matter under the devolution legislation that we passed through both Houses. When the Holyrood Parliament refuses consent, I want to know under what powers it is doing that. As the Minister has indicated, that does not actually stop a Bill proceeding and being enacted, but it is a rather curious situation when, if the devolved Administrations have views on this, they can just sit there and not provide consent. Is it because they think Scotland should have some separate relationship with Australia and New Zealand—I cannot believe that is the case—or is it simply some inner procedural matter where they do not feel there has been adequate consultation? Either way, it is a very uncomfortable situation to encounter. My noble friend has handled it excellently, but these things sit there and require some hard thought if future Bills of this kind, of which there will be many, can be conducted in a reasonable way where Parliament feels that it really is getting a grip on what is happening.
Lord Johnson of Lainston (Con)
I greatly appreciate noble Lords’ comments. I think I was so keen to get this Bill through that I slightly jumped the gun. I apologise to those noble Lords who were waiting to speak. I greatly appreciate the personal comments towards my own enthusiasm. I have hugely enjoyed the process of working with so many noble Lords in the first of what I hope will be a series of very exciting, exhilarating and profitable trade deals for the whole of the UK.
I have always been very specific, as have the Government, that this is a journey. We are very keen to hear how we can engage better. It is absolutely in the interests of the Government and these trade deals that there is a broad consensus around their power and effect to elevate our economy to new heights; otherwise, we will not be able to broadcast the ramifications and specifics of the trade deals to the country and people will not take advantage of them. Personally, I am continuing to engage at all possible points.
I am delighted to answer a few of the questions. In terms of the committee resourcing, I will certainly take that away. I thank the noble Lord, Lord Howell, for raising that. The IAC under the noble Baroness, Lady Hayter, has done a very good job. A number of noble Lords have spoken to that today and during the debate. It is certainly worth making sure we have the resources in this House to ensure we are scrutinising according to the appropriate CRaG process.
The noble Lord touched on the consent issues. They have clearly been an important feature of the debates around these trade deals. It does not necessarily look like we have resolved them for future trade deals. However, as the noble Lord rightly said, these are reserved powers. If you consult your Walter Bagehot, as I did over the weekend, he makes it very clear and is absolutely right that the Executive should be making treaties and be given the freedom of rein to implement them across the entire United Kingdom.
Having said that, we have made huge efforts to consult and engage with the devolved nations. I personally made extra efforts, which I would not describe as effort at all but part of a necessary process of good governance and communication, to ensure that devolved nations felt that they had a way in to this process. It is absolutely confirmed that our negotiators spend a great deal of time with officials from all parts of the United Kingdom to make sure that their views are fed in. This reflects on the sort of trade we are trying to do in terms of the specific industries of these nations. We are one United Kingdom, and our power in negotiating global trade deals comes from that fact. It would be a great mistake to try to abrogate that for any reason. Having said that, consultation and communication are paramount to us, and I personally commit to them.
Lord Lansley (Con)
Will my noble friend confirm that the Bill is about incorporating into domestic legislation the procurement provisions and chapters of the treaty? Although treaty making may be a reserved power, the implementation of the procurement-related legislation reflects directly on devolved matters. That is why consent should have been provided by the devolved Administrations.
Lord Johnson of Lainston (Con)
I thank my noble friend for that comment. I do not believe that is necessarily the case, in the sense that this is a procurement Bill relating to a trade deal, so it is right that concurrent powers can be initiated. I believe that is the case. That is certainly how we have operated on the premise of this Bill.
We wanted to gain consent because that is good practice, but, as I say, we focused on consultation and communication, which has achieved the same goal. The whole point of this Bill and the trade deal it underpins is that it will lead to greater trade, more commerce and economic activity and greater wealth creation for the entire UK, which we should celebrate.
If I may come to a conclusion, I thank noble Lords for their extremely helpful scrutiny. I was glad to hear the noble Lord, Lord Kerr, mentioned. It proves the power and point of this Chamber. Any of the body politic who discuss significant revision of the powers of this Chamber should think very carefully about the actions taken on this Bill. Through the scrutiny of this House and the participation of individual Members, we have been able to draft a more effective Bill and draft it correctly, for which I am extremely grateful. I am very excited about the opportunities that the Australia and New Zealand trade deal will give us, our citizens and this nation. With that, I beg to move.
Trade (Australia and New Zealand) Bill
Lord Johnson of Lainston ExcerptsTuesday 14th March 2023
(1 year, 2 months ago)
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Lord Purvis of Tweed (LD)
I am grateful to the noble Lord; he knows I respect his work on this area very much. I would like the Minister to confirm that that will be the case, because I am not convinced. I see the noble Baroness, Lady Neville-Rolfe, in her place. She was kind enough to have a meeting with me about it. I am not yet convinced, because of the elements within the Procurement Bill which will require there to be no discrimination for any of the treaty countries for public procurement in this country, that what he is arguing for, which is effectively a carve-out, will in fact be the case. My understanding is that under the Procurement Bill, we are unable to discriminate against any of the treaty suppliers. I am not sure that a public body in this country would be able to discriminate. I hope the Minister will be able to clarify that point.
The reason this is relevant and why I quoted the then candidate for leader of the Conservative Party’s commitment to 50% of public procurement in this country being local is that I do not know how that squares with what will be the legal requirement under the Procurement Bill that we are then unable to discriminate against Australian and New Zealand produce which will enter the market. I do not know how that squares.
I am simply asking the questions, because we have not had more meat on the bone, if that is not too inappropriate an analogy, about what has been published as a government commitment and is in the Procurement Bill. If the noble Lord has any other answers, I am happy for him to intervene on me. I do not know how he knows how this might be squared. I do not at this moment. That is why part of our agriculture sector is also questioning how these two commitments will come together. The different sequencing of this Bill and the Procurement Bill is relevant. Because it also sets the precedent for Canada and Mexico, with new produce coming in, and if these are gateway agreements for CPTPP, we are looking at potential competition with all CPTPP members for public procurement of produce. If you are a public body in the UK looking at cost-effective procurement of food for schools or hospitals and you are unable under the Procurement Bill to discriminate against Australian or New Zealand produce or that from any CPTPP country and state that there is local producing, similarly, I do not know that it is matched.
I hope that, at this late stage, the Minister can offer some reassurance. I hope that he is able to explain how these commitments to 50% of procurement can be matched, as well as give further reassurances, specifically on the impact on tenant farmers and biodiversity. There are genuine concerns here, I do not think they will go away and we need to offer that reassurance to these sectors, which are so vital to our rural economy.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, I draw Members’ attention to my entry in the register of interests, although I do not believe there is any conflict relating to our debate today. I am also grateful for the apology of the noble Lord, Lord Purvis, for being slightly late. I was fractionally late for Questions this afternoon, and was called on to resign, among other things. I hope the House does not mind that I have not taken that too seriously.
I am delighted to be speaking on Report of this very important Bill. If it is appropriate to make a personal comment, I have deeply appreciated the high level of engagement with the Opposition Front Benches, my noble friends and noble Lords across the House. I do not want to put words into people’s mouths, but I think we agree that it is a fundamentally good thing to do a trade deal with Australia and New Zealand. I was watching the news yesterday and seeing the extraordinary advances we have made in collaboration, particularly with Australia, in our defence. It will benefit the economy in many areas in the north-west of this country, among other parts of this nation. The sheer sincerity of the brotherhood between our nations should be expressed very clearly. I very much hope that if the high commissioner of either Australia or New Zealand—I am grateful to the noble Lord, Lord Lennie, for engaging with Phil Goff recently—is watching this debate, they know that the fundamental spirit of the House is for a successful conclusion of this process and a good and successful trade deal with Australia and New Zealand.
At the same time, I am very aware of the issues that trade deals create. I am certainly not triumphal in any way about trade liberalisation or the effects that this trade deal will have on individuals and farming communities. I have been very sensitive to those discussions over the past few months and take this very seriously. I express my personal view that we must support our farming community, and this is unquestionably the view of this Government as well. It is important to have that on the record.
Baroness Bennett of Manor Castle (GP)
I am aware that the Minister suggested that there be no interventions, but I have to say one word: mulesing. That is a dreadful animal welfare issue in Australian sheep farming.
Lord Johnson of Lainston (Con)
I thank the noble Baroness for that intervention. It is not my plan in this debate to be triumphal or to score points or whatever in terms of coming backwards and forwards. I have done a great deal of work in order to satisfy myself that when it comes to mulesing, the reports suggest that a tiny percentage of meats that would appear in this country—I am only going on the reports that I have been given—would be at risk of being from that practice. I have also been encouraged by reports that I have read about changing practices and standards in Australia. In particular, farmers who come under the Australian farm assurance programme certainly insist on anaesthetising before mulesing. I do not want to go down an alleyway, but the point is that great efforts have been made to ensure that, broadly speaking, our standards are aligned.
I have two more important points. The New Zealand Government have introduced a significant upgrade to their animal welfare standards. I cannot recall the name of the Bill, but if noble Lords wish to look, they will see that they are introducing a whole raft of new animal welfare standards and general environmental standards for farming, which will have enormous ramifications for their production and align them even further, if not go even further than we do. I spoke yesterday, specifically ahead of this debate, to the Australian high commissioner and raised this issue again, as I did with the Trade and Agriculture Minister who I met a few months ago. This has been my main issue, particularly when speaking directly to interlocutors about animal welfare standards.
They have confirmed to me that they are doing further work, which is very important. The Government of Australia have announced the banning of other practices, not associated with our exports but relating to live animal exports and so on. The direction of travel is very positive. We have not celebrated enough that our work in negotiating these trade deals has helped to drive up standards in both countries. I applaud our negotiating team for doing that, and applaud the debates that we have, with leadership from individuals such as the noble Baroness, Lady Bennett, ensuring that these areas are properly highlighted and that we can draw attention to our interlocutors and set standards, and that our negotiating partners know that we have these standards and that we wish to be aligned on them.
I have only a few more points to make. The noble Baroness, Lady McIntosh, made some very relevant references to the Food Standards Agency. I wrote to her and the noble Lords, Lord Purvis and Lord Lennie, covering some of the questions raised in the last debate. This issue was raised. I have interviewed staff there to ensure that they carry out physical checks at the border for Australian and New Zealand products. They do not check every container, and frankly it is quite right that they do not. It would be an extreme impediment to trade, especially for food produce. However, they take a very proactive approach to ensuring that our standards—which, to reinforce the point, are not derogated in any way by these trade Bills—are upheld.
On top of that, the noble Lord, Lord Inglewood, raised a point about whether we can be comfortable of certification on the ground. In my recent call with the Food Standards Authority, I particularly covered the topic of Australia, which has a local assurance system, as do we. To be eligible to export, a farmer must sign up to the federal export assurance scheme; I cannot recall its name, but your Lordships will know what I mean. Therefore, vets who are under obligation to perform their duties—
Lord Inglewood (Non-Afl)
The question that follows from the helpful remarks of the Minister is: are the British Government confident and fully in line with what those schemes have to say?
Lord Johnson of Lainston (Con)
I was just coming to that. I may have taken a bit too long to get there but I am trying to reassure noble Lords by describing in detail the lengthy process of assurance that Australia provides us with. It is part of the global trading system and not necessarily unique to Australia. We must do the same, as I understand. If I am wrong, I will ensure that this is corrected, but we must do the same with any agricultural or meat exports that we send to Australia.
Are we confident that Australia is upholding their system and managing it properly? The answer is yes. I have been impressed with the calls that I have had around this subject. It is a detailed and complicated process of assurance that ensures that we are comfortable that what we receive is indeed what is advertised. I do not want to be called back here if there is a case where that does not happen, because clearly that is not my intention, but on whether we are confident about the processes in place, the short answer is yes.
Regarding South American beef being passed off under British beef titles, I understand that this was only from one retailer, and the National Food Crime Unit is investigating. This struck me as an isolated case. Forgive me that I do not have all the details, but the major supermarket retailers have all denied any knowledge of this and it has not affected them. This is a unique case. I am happy to have someone write to the noble Lord because it would be interesting to find out a bit more about this, but it is not relevant in this instance. It does not seem to be widespread, but is specific. That it has been caught and is being investigated is very important.
I come to a conclusion—
Lord Purvis of Tweed (LD)
Can the Minister address the commitment that the now Prime Minister made for 50% of public sector procurement to be sourced locally? Is that government policy? How does that interact with the legal requirements in the Procurement Bill that a public body in this country would not be able to choose a local producer over a treaty supplier producer, on that basis?
Lord Johnson of Lainston (Con)
I appreciate the noble Lord’s comments and was about to come on to that when I said “conclusion”. Sadly, my conclusions can run to several topics, the noble Lord’s being one of them.
It is correct that the procurement legislation prohibits a nationalist tilt towards procurement, which is what we want. When it comes to government procurement, we want the highest quality products at the lowest possible prices, and I would like to think that they will be British products. It will reassure this House to know that 81% of all beef sold in this country is under British brand labels. Only 19% international beef is sold in this country in the first place. The assumption is that you are already looking at a very high level of local procurement. A 50% threshold would be logical for something such as beef, which already fits into that.
There is a further question and further investigation regarding whether procurement can be assessed in terms of other relevant factors. I am happy to have a further debate about that in general. It can apply to a wide range of concepts. It could even apply to how energy is sourced and supplied. There is always work defining what concepts such as sustainability or relevance to the environment could be in terms of transportation distances and so on. They are discussions to have. I have been having discussions in other areas, for reasons not linked to these trade discussions, on whether these factors can be brought to bear in procurement. We are very wary of introducing anything other than straightforward procurement rules, but I assure the noble Lord that—as with beef, where 81% is already UK beef—it would seem logical that a very high proportion of produce is sourced locally.
Lord Lansley (Con)
At the risk of delaying us on this point, the access that is given through these procurement chapters and for treaty state suppliers under the Procurement Bill is to cover procurement, which means procurements larger than the threshold amounts set out in the schedule to the Procurement Bill. For example, for local food production for a set of schools, this would have to be a procurement over £213,000. In truth, the issue is not whether there is an Australian company that is likely to bid for such a procurement, because these procurements will be smaller than that. It is whether beef from Australia is in this country and in circulation in their market which might then be used by local suppliers—but then they are a local supplier to the school.
Lord Johnson of Lainston (Con)
I have appreciated my noble friend’s extremely positive interventions and applaud wholeheartedly his phrase, “Let’s get on with it.” He has also been extremely helpful in pointing out the specifics of the Bill and the difficulty of attaching these sorts of amendments to it, although I am very sympathetic to the overall philosophy of the desire for proper impact assessments, which we have had and agree to wholeheartedly in terms of the two-year and the five-year monitoring report. I stress again that this treaty does not create a precedent. However, it does create a model. I am very impressed and support wholeheartedly the flexibility of this agreement because it will allow us and allow noble Lords to call Ministers to account on a constant and rolling basis concerning the effectiveness of these trade treaties.
I believe that I have covered most of the points raised. I am very happy to continue a dialogue around these and any other measures that may not have been covered on this important piece of legislation. We believe, and I believe passionately, that this trade Bill is a good thing for this country. It will be of huge benefit to our citizens and our consumers. It will give us enormous additional security and allow us to have a closer relationship with two nations that have been, since their founding, sister nations of this country.
I am continually being asked by the representatives of Australia and New Zealand when this treaty will come into force because, as soon as it does, and only then, their businesses and citizens, and ours, will be able to take advantage of it. I call on this House to support the Government in this mission. I ask the noble Lord, Lord Lennie, to withdraw his amendment, and for the noble Baroness, Lady McIntosh, and the noble Lord, Lord Purvis, not to move theirs.
Lord Lennie (Lab)
The TAC covering procurement seems to be a future possibility, and I welcome the Minister’s comments on it. On the questions of food standards and quality assurance that noble Lords have raised, we will wait and see. We will have a review in two years and a conclusion to that in five years, and we will find out whether the assurances that we seek on food standards have been maintained. I do not think that there is any doubt about this being a gateway agreement: it is clearly to do with the CPTPP. The impact assessment that we are calling for is a one-off. This is the first time that we have negotiated a trade deal for some 45 years. To make sure that we have covered all the bases and got things right, we thought that a review—rather more frequently than the five years offered—would have been better. I beg leave to withdraw the amendment.
Member's explanatory statement
This amendment inserts a word missing from Clause 2(1)(a).
Lord Johnson of Lainston (Con)
My Lords, Amendment 2, in my name, is a minor and technical amendment that has been tabled by the Government to correct a typographical error in the Bill and clarify the power available to Ministers of the Crown or a devolved Administration under Clause 1. I am very grateful for noble Lords’ scrutiny, which was instrumental in highlighting this typographical error in the Bill. In particular, I thank the noble Lord, Lord Kerr, who is not in his usual place, and my noble friend Lady McIntosh, for highlighting this issue in Committee. If I may say so, their laser focus on detail in the Bill shows the real value of your Lordships’ House in ensuring that legislation is as robust and clear as possible. The Government are very grateful to noble Lords for highlighting this issue. I beg to move.
Lord Lennie (Lab)
I rise briefly to speak to Amendments 7 and 8 in this group. These two amendments would sunset the ability to make amendments to two years after the law passes or the UK’s accession to the CPTPP. Incidentally, the Government previously said that accession would happen last year, but, as I am sure we are aware, it has not yet taken place.
The Explanatory Notes to these deals state that each party to the free trade agreement should ensure that its domestic legislative framework is consistent with the obligations in the FTA. The UK-Australia and UK-New Zealand free trade agreements require changes to domestic procurement law. Therefore, why not have sunset powers in the legislation? Is there any expectation that achieving this intention would take more than two years, and are there concerns that constant updates would be required for whatever reason? If so, would it be right to do so for more than two years in any event? If accession to the CPTPP will change our trade relationship with Australia and New Zealand, will a domestic legislative framework need to be updated in a manner not possible within the powers in the Bill so that it is aligned with the CPTPP and these deals if they are to coexist? A series of trade experts have commented that the UK will be a rule-taker, not a rule-maker, when we join the CPTPP. The Minister may perhaps wish to comment on this interplay between the Australia and New Zealand trade deals and the CPTPP. I beg to move.
Lord Johnson of Lainston (Con)
My Lords, I turn to Amendment 8 specifically, which seeks for the Bill to lapse when the UK joins the CPTPP. Bilateral free trade agreements, such as these signed with Australia and New Zealand, do not lapse due to membership of plurilateral agreements such as the CPTPP and the WTO Agreement on Government Procurement. They exist alongside each other—that is important to note—with the UK having separate and continuing commitments under each. This is already the case with the numerous bilateral trade agreements that the UK has with members of the GPA, such as Canada, Switzerland, the Republic of Korea, the EU and Ukraine, to name a few.
I emphasise that the procurement chapters of the Australia and New Zealand agreements will not be superseded by the UK’s accession to the CPTPP. Accordingly, the power in the Bill will still be needed when the UK has acceded to the CPTPP, to implement future modifications to the Australia and New Zealand agreements. In light of this, I ask for the amendment to be withdrawn.
National Minimum Wage (Amendment) Regulations 2023
Lord Johnson of Lainston Excerpts(1 year, 2 months ago)
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Lord Johnson of Lainston
That the draft Regulations laid before the House on 30 January be approved. Considered in Grand Committee on 6 March
Motion agreed.
UK Car Production Since 2016
Lord Johnson of Lainston Excerpts(1 year, 2 months ago)
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The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My apologies; I was waiting outside.
The Government are focused on transitioning our car industry from internal combustion engines to electric and other sustainably powered vehicles. Shortages of semiconductors and supply chain disruption have been key factors affecting recent UK and global car production numbers. However, the Government are accelerating and positioning ourselves for growth in electrification and unlocking industry investment.
Lord Hain (Lab)
I also appeal to Ministers to be more open. My question asked about car production. Car production in the UK has collapsed by over half since 2016—the worst performance of any car producer in Europe. Even the soaring demand for electrical vehicles is likely to be affected when, under the trade and co-operation agreement with the EU, car industry rules of origin exemptions for EVs come to an end this coming December. Brexit has created nothing but uncertainty, extra costs and supply chain problems for business. What incentives have the Government provided for international investors in the car industry to come to this country at a time when the major trading blocs, from which we are now excluded, are becoming more protectionist?
Lord Johnson of Lainston (Con)
I sincerely thank the noble Lord for raising this point. It is important that we have a strong car industry in this country, and there are some legitimate reasons why the industry is transitioning. As many noble Lords who have been involved in this industry will know, we are moving from internal combustion engines to electric vehicles, which means some lines end and it takes time to start new lines. I am also very aware of the rules of origin issue, and I sincerely hope that our new relationship with Europe will allow us to have a more constructive conversation around that. It is in no one’s interest to have a trade war on cars.
I will finish by saying that there have been some great announcements over the last few years, and the Government have been extremely influential and relevant in supporting companies such as Nissan and Envision, with investment in the Vauxhall plant at Ellesmere Port and support for Pensana’s factory near Hull. Ford has committed just under £0.25 billion of investment in Halewood, and in 2022, Bentley announced a £2.5 billion investment to produce its first battery electrical vehicles by 2026, which will secure 4,000 jobs at its Crewe plant. There is certainly more that we can do, but we are acting, and we are trying to transition our car industry into one that is sustainable for the future.
Lord Howell of Guildford (Con)
My Lords, with growing Chinese competition in car manufacturing—in fact, China is dominating the EV market altogether—there are obviously even worse challenges to come. But would my noble friend like to say what he thinks about the EU proposal, announced yesterday, to go for what it calls a Net-Zero Industry Act to compete with the Inflation Reduction Act in the United States, because it is very nervous that Volkswagen and other European manufacturers are all about to move from France and Germany to the United States? How are we going to work it out in this situation? It seems rather dangerous.
Lord Johnson of Lainston (Con)
I thank my noble friend for his comments. There has been a large amount of debate around the value of the Inflation Reduction Act, which I believe is the greatest oxymoronic legislative title in history, frankly, as I cannot believe that it will reduce inflation. Some of its measures are also relatively protectionist. The Government are investing heavily, not just in car manufacturing but in the research and development around it. For example, the Faraday Challenge amounts to £500 million, the Automotive Transformation Fund is hundreds of millions of pounds and the Advanced Propulsion Centre is providing huge amounts of much-needed money for new car production facilities and the inventiveness around that. It is not good enough just to try to find a bigger bazooka; we must ensure we focus on regulation and proper support for R&D, because our brains are our best defence.
Baroness Randerson (LD)
My Lords, the Minister may call it “transitioning” but most people will call it “declining”. But let us take his word: transitioning. In order to create the industry for electric vehicles, Britain needs a gigafactory. The Government pinned their hopes on the Britishvolt factory. That failed, the company is being taken over and it will now be used for a different purpose. Last week I asked how the Government’s ambitions for a gigafactory would be fulfilled in the very near future. I did not get a detailed answer and I would be very grateful if the Minister could give me a proper answer now that explains how the industry is going to be able to rely on a gigafactory at the centre of government strategic thinking.
Lord Johnson of Lainston (Con)
I greatly appreciate the pressing on this point. It is essential that we have strong battery manufacture capability in this country if we are to have an automotive industry. Do not be under any illusion: the Government are concentrating on this night and day. I draw the noble Baroness’s attention to the fact that I think the Britishvolt transition —if I can use that word again—was quite successfully handled. The Government pledged money, which should have worked in the financing. Unfortunately, it had to evolve to a new owner, but that transition has been successfully managed and it will still be making battery materials and technology.
As I highlighted earlier, through government support through the Automotive Transformation Fund, Nissan and Envision have signed a deal to produce batteries. Importantly, this is linked to a critical mineral supply deal we did with Indonesia that I personally helped steer through after the excellent work of my noble friend Lord Grimstone. This does not just give us battery manufacturing capability. As importantly, the focus of this Government is to make sure that we have the materials to supply these batteries, so that we can be ahead of our competitors.
Lord Stirrup (CB)
My Lords, the Minister referred to our brains as being our competitive advantage. The Government reiterated in the integrated review refresh their ambition for the UK to be investing 2.4% of GDP in R&D. The OECD average is 2.7%. Does the Minister think that the Government’s ambition is likely to turn us into a so-called superpower in terms of science, and will that be sufficient to support the kinds of ambitions we ought to have in our car industry?
Lord Johnson of Lainston (Con)
I thank the noble and gallant Lord for his point. I am glad he agrees with us that our brains are our best defence. I see around this House many good examples of that. I would stress that the Government are investing not simply in R&D in science and technology to become a science and technology superpower, but heavily in education, which is not necessarily classified under those figures. I saw recently an extra £2.8 billion being announced for education and training. We have further projects to ensure that our tertiary education remains the strongest in the world with, I might point out, three of the top 10 greatest universities in the world coming from this nation, which is something we should celebrate.
Baroness Armstrong of Hill Top (Lab)
My Lords, why are the Government investing for their own fleet of cars in South Korea? My friends in Sunderland are bewildered as to why investment is going to South Korea and not to the Nissan Leaf in Sunderland.
Lord Johnson of Lainston (Con)
I greatly appreciate the noble Baroness for drawing this to my attention; I am afraid that I was unaware of government investment in Korean car production, so maybe we can follow that up at a later date. As I said, the Government have provided a huge amount of support for the motor industry, not just financial support but real support. I can assure her that the Office for Investment, which is under me at the Department for Business and Trade, works continually to ensure that all the opportunities around the world are brought to this country so that we can have a strong car manufacture and research and development industry in this nation.
Baroness Jones of Moulsecoomb (GP)
It is good that the Minister emphasises R&D, but, truly, electric cars are not really sustainable, so the Government will actually have to think about the next generation of much more sustainable vehicles. Will any of that research and development go into improving our public transport networks—not HS2?
Lord Johnson of Lainston (Con)
I am grateful, as always, for the prompting on the importance of achieving net zero and sustainability over the next so many years. I draw this House’s attention to the broadness of our attempts to build a sustainable automotive sector in this country, with Johnson Matthey announcing in July an £80 million hydrogen gigafactory at its existing site in Royston. So this is not simply about EVs; it is important that we want to have a diversified strategy to ensure that we are sustainable for the future. That requires effort, finance and the businesses themselves to be successful, and we are supporting all those three.
Lord Lamont of Lerwick (Con)
My Lords, is the European-wide nature of the problems facing the car industry not illustrated by the fact that Germany in 2021 produced fewer car passenger vehicles than it did 30 years ago? The German Ministry for Economic Affairs has prophesised that there will be loss of 100,000 jobs in the car industry because of the transition. Has my noble friend the Minister noted the intention announced by both the German and Italian industry Ministers that they may veto the previous decision of the EU to phase out CO2-emitting cars by 2035? If that were to happen, what would the impact be on Britain, with its different target?
Lord Johnson of Lainston (Con)
I appreciate my noble friend’s point on this subject. We are committed to our targets, and it is absolutely right to achieve net zero by the date we have set. I am glad that he mentioned the other European car manufacturers, because this past week alone the Prime Minister travelled to Paris for a summit with President Macron to work on the very important task of rebuilding our links with Europe, to ensure we can have sensible conversations with our European partners. I call that Project Grand Amour, and it has been enormously successful. If we look ahead at some of the problems facing us, particularly in our automotive industry—and at the importance of ensuring we have strong trading relationships with our European neighbours, which is the essence of this point—we should be extremely grateful for, and indeed celebrate, the Prime Minister’s wonderful and marvellous actions last week in the new Belle Alliance.
National Minimum Wage (Amendment) Regulations 2023
Lord Johnson of Lainston Excerpts(1 year, 2 months ago)
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Lord Johnson of Lainston
That the Grand Committee do consider the National Minimum Wage (Amendment) Regulations 2023.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, the purpose of these regulations, which were laid before the House on 30 January 2023, is to raise the national living wage and the national minimum wage rates on 1 April 2023.
The strength of the UK labour market remains something to be proud of. Unemployment is low, the number of employees on payrolls is 1 million above pre-pandemic levels and demand for workers remains close to record levels. The Government’s overarching priority is to achieve sustained economic growth. Our commitment to a high-skilled, high-productivity, high-wage economy will further address cost of living pressures, as well as levelling up every part of the UK and hastening the transition to net zero.
However, we recognise the impact of inflation for people right across the country, which is why this Government have continued to take robust action. This year sees the largest cash increase in the history of the minimum wage, and, once these measures come into force, the national living wage will have risen more than twice as fast as inflation since its introduction in 2015. Furthermore, benefit payments and the state pension will increase by 10.1% in April, in line with September’s CPI inflation rate. We have also delivered a package of measures, including the energy price guarantee, which has saved a typical UK household around £900 across the winter, and hundreds of pounds-worth of support in the form of cost of living payments targeted towards the vulnerable households that need it most.
I turn to the detail of the national living wage and national minimum wage regulations, which will come into force on 1 April. Following a comprehensive impact assessment prepared and published by the Government, we estimate that 2.9 million workers will receive a pay rise across the United Kingdom. I am pleased to confirm that the Government have accepted all the rate recommendations made by the Low Pay Commission in October 2022. The Low Pay Commission is an independent body which conducts expert research and analysis and brings together input from representatives of business and workers. I thank it for its tireless efforts.
The Government remain committed to their ambitious target for the national living wage to equal two-thirds of median earnings by 2024, provided that economic conditions allow. This will have the effect of ending low pay in the UK in line with the OECD definition, and this year’s increases keep us on course to achieve that target. Under the new regulations, the national living wage, which applies to those aged 23 and over, will increase to £10.42 an hour. This is an increase of 9.7% or 92p. As a result, a full-time worker on the national living wage will see their annual pay before tax rise from £17,300 to over £18,900—an increase in excess of £1,600. This also ensures our national living wage rate remains one of the highest in the world. According to the Low Pay Commission, as of the start of 2022 the UK had the fourth highest minimum wage rate in Europe.
These regulations will also increase the national minimum wage rates for younger workers and apprentices, as well as the accommodation offset. Workers aged 21 and 22 will be entitled to a minimum hourly rate of £10.18, representing an increase of £1 or 10.9%. This narrows the gap with the 23 and over rate and keeps this group on course to receive the full entitlement to the full national living wage by 2024—another ambitious target set by this Government. Those aged between 18 and 20 will be entitled to a minimum rate of £7.49 an hour, an extra 66p, while those aged under 18 will be entitled to a minimum rate of £5.28 an hour, an extra 47p. Both these changes represent an increase of 9.7%. Apprentices under 19 or those in the first year of their apprenticeship will also receive an increase of 9.7%, as their rate rises from £4.81 to £5.28.
Finally, on the detail of the regulations, the accommodation offset will also be increasing. This is the maximum daily amount that an employer can charge a worker for accommodation without it affecting their pay for minimum wage purposes; it will be rising by 4.6% from £8.70 to £9.10. The Low Pay Commission has made recommendations about the future of the accommodation offset in its recent report. The Government are continuing to consider them carefully and will issue a full response in due course.
These regulations aim to reward the lowest paid workers in every sector and in every part of the country for their contribution to our economy. We are aware of cost of living pressures and will continue to closely monitor all the impacts of increases to the national living wage and national minimum wage rates. To that end, the Government will shortly publish this year’s remit to the Low Pay Commission and ask it to provide recommendations for the rates which will apply from April 2024.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister for the report on this statutory instrument. I note that, only a few minutes ago in the Chamber, the Minister answered an Oral Question and gave a lot of information related to what we are discussing here. I thank him for that information as well. He said that we do things in bits to get them through. In a sense, it is not very clear when you are doing it “in bits” what the whole picture is.
The increases in minimum wage must be welcomed; of course, we welcome them. But they are not that generous, as £10.42 per hour times, say, 35 hours over a seven-day week is only £364. I wonder if we really consider that anybody can manage on that sort of sum in our large conurbations—£364, if you manage to do 35 hours. It should be more.
The Minister kindly gave us the detail that in October 2022, five months ago, these were considered to be the increases that ought to happen. The question I ask him to consider, because we are doing this five months later, is how up to date those figures are. Should they be more generous? As a start, perhaps we should consider an independent review to consult on how to set a genuine living wage across all sectors. For instance, we could pay the living wage in all central government departments and their agencies and encourage other public sector bodies to do likewise. It is important to set minimum wages at appropriate levels, including setting a 20% higher minimum wage for those on zero-hours contracts at a time of normal demand to compensate for the fluctuations in their hours of work. This statutory instrument takes no account of that.
Lord Lennie (Lab)
My thanks are due to the Minister for setting out the upratings on the national minimum wage, the living wage and associated allowances, and the noble Lord, Lord Palmer, for setting out his views on how things should improve in future. These changes are welcomed by the Opposition. Not surprisingly, it was us who set up the national minimum wage in 1999. We had a minimum wage, below which earnings must not fall, in the teeth of fierce opposition from the then Conservative Opposition Benches. I am glad that that situation has now been ameliorated, and they now support the minimum wage; all converts are welcome.
I think the number of jobs covered in all these figures is 2.9 million. The number affected by the national minimum wage is approximately 1.5 million, which compares with 700,000 at the time of its introduction. Does the Minister have any explanation for this increase in the numbers covered by the national minimum wage? Retail, hospitality and cleaning and maintenance are overrepresented in the minimum wage sector, and women are approximately two-thirds of those currently on the national minimum wage. Some explanation for that would be helpful.
The Labour Party would ensure that the national minimum wage was a real living wage. The noble Lord, Lord Palmer, asked how to do so. We would do it by changing the Low Pay Commission’s remit so that, in addition to other factors, it reflected the need for working people’s pay to at least cover the cost of living. The national living wage would finally live up to its name. We would ensure that the national minimum wage applied to every adult worker and was properly enforced. It is unfair to pay adult workers below the national minimum wage, and by adult worker we mean everyone aged 18—the age at which you are treated as an adult in the UK—or over.
Many employers already pay the national minimum wage, and that is to be commended, but compliance is a big and continuing problem. Can the Minister tell us how many prosecutions or enforcements took place last year for failure to pay the national minimum wage? We welcome these upratings, as I have said, and look forward to having the opportunity to progress this legislation further by extending the protection that the national minimum wage provides for all adult workers sometime in the near future.
Lord Johnson of Lainston (Con)
I thank noble Lords for their valuable contributions in today’s debate. I particularly appreciated the comments of the noble Lord, Lord Palmer, about my responses on the OQ earlier. I like to think that we will have a slightly more mature exchange over this issue than we experienced then—but such is the nature of the important scrutiny of the parliamentary system.
If noble Lords do not mind, I will go through and try to answer some of the points raised by noble Lords. The noble Lord, Lord Palmer, asked about the relationship between the October date and the bringing into practice date of 1 April. In normal periods, that would be a perfectly reasonable time lag; in fact, it is relatively fast for Governments to move with only a six-month or so period. I am very sensitive to the fact that we live in an inflationary environment, and inflation is taken into account by the Low Pay Commission. A number of factors are taken into account, as noble Lords may imagine. It would be difficult to make sudden changes, however, given the fact that we need to make sure that employers have a suitable timeframe to bring into practice the pay increases. Although the public sector is also paying the minimum wage and the national living wage, we must not forget that it is on the whole employers who are paying these additional wages, and we should be thankful to them for the support of this overall concept.
Given that this is appraised every year, I hope we will still be in a position to make sure that these wages reflect our ambition, which is to make them represent two-thirds of median earnings. In preparation for this debate, I did some work with the officials from the department, who can bear witness to this. I wanted to see where we were in relation to other European countries on median earnings and absolute amounts, given the currency fluctuations. It is not my place to celebrate or feel triumphant about minimum wage levels, because we want people on maximum wage levels—but it is important to see where we stand, so at least we can benchmark. We compare very strongly. If you look at where we are on the European averages, you can see that we are one of the highest, out of the whole of Europe, and we compare extremely favourably with countries such as Germany.
The noble Lord, Lord Lennie, made a very good point, and I have thought about the philosophy of minimum wages, which were brought in in 1999 by a Labour Government and not supported by the Conservative Opposition at the time. I personally was unsure of what the effects would be on business; I was concerned that it would drive up costs for business and cause a negative or opposite effect to giving people security—that it would lead to greater insecurity and lower levels of employment. Actually, it has made sure that people are guaranteed a level of income, and it is an extremely powerful way for us to manage our economy. I am very pleased that we have converted—and, like all converts, we have probably ended up being more passionate about the cause than the original proponent. We have introduced the national living wage, which is a very effective way to ensure that the overall pay rates are raised.
On the noble Lord’s comment about the age at which these rates should apply—in other words, that the national minimum wage and the national living wage should be synchronous—I have some sympathy. At the same time, it has been believed, and I think there is evidence, that an element of flexibility for 18 to 22 year-olds, or those in their early 20s, is necessary, particularly as that is where there is greater vulnerability for employment volatility. We have plans for the pay scales of those over the age of 21 to eventually come into line with the national living wage, but we would still be keen to retain some flexibility for employees below that level.
This is all about making sure that the employment market functions properly and that we can employ as many people as possible at the right rates. This is certainly a matter for debate—we are trying to ensure, not that people are paid less, but that there is flexibility in the market so that new workers in the workforce can get the jobs they need.
It is important to cover the noble Lord’s point about there now being 1.5 million, from 700,000 when this came into practice. I am happy to do some more analysis of that, but my surface suspicion is that there are 3.75 million new people in the workforce since 2010. It would be interesting to see an analysis of what those jobs are. I would like to inquire into this, as I appreciate that the noble Lord has raised a very relevant point. In some respects, I would like to think that it is a good thing that we have people coming into the workforce, but clearly we do not want to see a derogation of wages. We want to see people being paid more. I stress that these are minimum-wage levels—they are not the set wage levels—to ensure that no one is paid less than that rate.
The noble Lord, Lord Palmer, mentioned issues around fixed-hours contracts and the flexible economy. We are doing an awful lot in that area to make sure that people have an element of certainty. He was generous enough to remember my response to the Oral Question earlier today. There is quite a long list of different types of specific protections that we are bringing in. I draw his attention to the Employment Relations (Flexible Working) Bill, which effectively allows employees to demand flexible working from day one, rather than week 26, and to the Workers (Predictable Terms and Conditions) Bill, which is probably more relevant to what he was talking about. It gives more strength to employees’ requirements for predictability in terms of numbers of hours if they are on temporary work contracts. Once you have worked for an employer on a part-time basis for a certain length of time, you will be given a greater opportunity to ask for predictability in how you are paid and your hours.
We have to strike a balance—and I think we do—in giving employers flexibility, which is at the core of what has been an incredibly dynamic and successful labour market over the last 20 years or longer, and making sure that workers feel protected. Importantly, flexible working hours are very much appreciated by a number of workers who want flexibility. It would be a mistake to throw the baby out with the bath water and get rid of zero-hours contracts or highly flexible working. People appreciate them, as they give a great deal of flexibility. A lot of students and part-time workers who could not do full-time work and would not want predictable work will use these contracts. They constitute about 3% of the workforce. There are mechanisms and there is analysis of how we can improve the rights of workers, but we do not want to dilute the flexibility that these structures give to our workforce and economy.
The question from the noble Lord, Lord Lennie, about the factors that the Low Pay Commission takes into account is well made. It takes a great number of factors into account when assessing pay. I believe that the Government have accepted all the recommendations of the Low Pay Commission; this is a very important partnership that we have. My assumption is that the factors in decision-making are continually reviewed, which is absolutely right. Ultimately, our ambition is to ensure that the national living wage effectively reaches two-thirds of median earnings by next year. I am very pleased to say that we are on track to achieve that. As a nation and a society—let alone a sense of triumph for the Government; this is about people’s hard work and being rewarded properly—it would be a great thing if the United Kingdom could achieve that, and we are on track and very close to doing so.
I believe I have covered all the issues, except for the question raised by the noble Lord, Lord Palmer, on tips. I am afraid I do not recall seeing the noble Lord in his usual place on Friday for the debate on tips. The legislation is very specific and will be brought to bear specifically so that all tips go to the workforce, with no deductions, not even for credit card charges. I hope that is clear, because that is the whole purpose. They will be paid monthly, so they cannot be accumulated, and, importantly, they cannot be used as so-called “pay bonuses” or “top-ups”.
Lord Lennie (Lab)
Before the noble Lord sits down, could he comment—or write to me if he cannot—on enforcement actions in the past 12 months? What are the numbers and so on?
Lord Johnson of Lainston (Con)
I apologise to the noble Lord, Lord Lennie. I try to answer all the questions, but there is always one that I miss. Enforcement is very important and all businesses are responsible for paying the correct minimum wage to their staff. HMRC follows up on every worker complaint it receives, even those that are anonymous. This includes complaints made to the ACAS helpline. In 2021-22, HMRC identified pay arrears in excess of £16.3 million for more than 120,000 workers. I am very happy to go through this now, but it might be more useful to write to the noble Lord if he is happy with that.
I will address one point that has been raised. To some extent I am embarrassed by it, but not embarrassed to be open and transparent about it. The question was why the listing of companies that have not paid their staff the minimum wage had not happened. The list is supposed to be published every quarter. I am afraid that there has been some turnover of Ministers. I spoke to the Minister responsible today and he is determined to make sure that it happens in the very near future. I cannot give a specific time, but we are very aware of it. We want to make sure these companies are named; it is a powerful incentive for employers to behave properly. We are entirely of one mind here and I will be delighted to put the information in the House of Lords Library relating to enforcement. The good news is that I can reassure the Committee that HMRC in particular has been focusing on tackling wilful non-compliance and that significant progress has been made.
Trade (Australia and New Zealand) Bill
Lord Johnson of Lainston Excerpts(1 year, 2 months ago)
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Lord Johnson of Lainston
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 and 2, Schedules 1 and 2, Clauses 3 and 4, Title.
Workers’ Rights
Lord Johnson of Lainston Excerpts(1 year, 2 months ago)
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Lord Woodley
To ask His Majesty’s Government what steps they are taking to legislate to ensure high standards of workers’ rights.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
Over the past year, we have proven our commitment to supporting workers across the UK by raising the national living wage to its highest rate yet. The Government are supporting six Private Members’ Bills to increase workers’ rights. These deliver enhanced protections for new parents, unpaid carers and hospitality workers. They also give all employees easy access to flexible working and workers the right to request a more predictable contract.
Lord Woodley (Lab)
My Lords, the Tories won the last election by promising improvements to employment rights, but we have seen completely the opposite. I am sick and tired of posing the same questions to the Minister time and again concerning the protection of TUPE legislation. We never get a straight answer, and I believe that it is disrespectful to this House. The Minister’s attitude to date has always been, “Let’s just wait and see.” That cannot possibly be right when we have employers and employees wondering what is coming round the corner—if, indeed, there are any fundamental changes to the Government’s thoughts on employment legislation. So, for the fourth time of asking: will the Minister confirm that TUPE will remain to protect workers’ wages and terms and conditions? Or, failing that, will he finally admit that the British people were hoodwinked at the 2019 election?
Lord Johnson of Lainston (Con)
I thank the noble Lord for raising this matter, and I think it right that we look at employment rights. He asks what is coming round the corner, and I will tell him: the Neonatal Care (Leave and Pay) Bill, the Employment (Allocation of Tips) Bill, the protection from redundancy Bill, the Carer’s Leave Bill, the employment relations Bill and the Workers (Predictable Terms and Conditions) Bill, all supported by the Government. Three of those Bills were brought into this House on Friday with the wonderful cross-party support of everyone here who believes in actually doing something for workers and giving them the protections this Government will afford them.
Lord Naseby (Con)
My Lords, do not workers’ rights apply equally to all our school leavers this summer, regardless of whether they were educated in the independent or public sectors? If those rights do apply, why has the Bank of England announced that independent sector pupils, including those on bursaries, will be excluded from its education presentations and group talks? Surely this is social discrimination. Will my noble friend approach the Bank and ask it to think again?
Lord Johnson of Lainston (Con)
I thank my noble friend for that question. I saw that article myself and I was surprised by it. It is not for me to comment on the tour practices of the Old Lady of Threadneedle Street, but this is certainly worth further inquiry.
Lord Storey (LD)
I want to come back to the issue of paid care workers. Care workers are skilled workers who are often subject to low wages and poor working conditions. Without urgent reform, this sector will continue to suffer from high vacancies that jeopardise the quality of care. Currently there are 165,000 vacancies, an increase of 55,000 from last year. Is not the answer that if more money is provided to these skilled workers, many of the problems the care sector faces will no longer exist?
Lord Johnson of Lainston (Con)
I appreciate the noble Lord’s point. It is an incredibly important sector, and the approximately 1.5 million people who work in it are to be cherished and celebrated. The Government have put £7 billion into the sector over the last two years, which clearly is a follow-on from the crisis we faced during Covid. I will be pleased this afternoon to place a statutory instrument before this House to raise the national living wage and the minimum wage by a substantial 9.7%. All these things will help, but I am always aware that we must do all we can to support that important and vital sector.
The Earl of Clancarty (CB)
My Lords, I think the Minister mentioned hospitality work. Freelance work has been a long-term and growing aspect of the economy, with 1.77 million freelancers contributing £125 billion to the economy. What attention are the Government going to give to those insecure workers’ rights?
Lord Johnson of Lainston (Con)
I thank the noble Earl for that point. Hospitality has been an important focus for this Government, which is why we are introducing the Employment (Allocation of Tips) Bill, an important measure to ensure that, when you tip, the money actually goes to the service staff who have supported you. To my surprise, and probably that of many other Members of this House, in many instances it did not. These are the sort of Acts we absolutely need to focus on, and I am always delighted to have further conversations about how we can do more to protect this vital sector.
Baroness O’Grady of Upper Holloway (Lab)
My Lords, the employment Bill that was promised back in 2019 has been promised time and again; in fact, on 20 different occasions we have been promised a comprehensive Bill that would deal with workers’ real concerns. Millions of workers in this country are on zero-hours contracts, false self-employment or other forms of temporary work, or stuck in low-paid employment, and now with the prospect of real fears and concerns about what will happen to their rights. Can the Minister explain why there has apparently not been time to bring forward a Bill that would give workers much-needed and urgent protection on everything from TUPE to sexual harassment to insecure contracts, yet the Government have found time to bring forward two red-rated Bills, on retained EU law and strikes, that will make it harder for workers to stand up for their rights?
Lord Johnson of Lainston (Con)
I enjoyed that question because it bites into my time for answering questions, so I thank the noble Baroness. It is very relevant to realise that this Government have invested a huge amount of time in focusing exactly on this, and I would like to go through a few quick points. Apart from increasing pay by raising minimum wage levels, we have extended the ban on exclusivity clauses, which is vital for allowing flexibility in the workforce; we have introduced legislation to ensure that an equivalent to the minimum wage is paid to thousands of seafarers, who are in a sector that is very important to this country and needs protecting; we have closed loopholes that allowed agency workers to be employed on cheaper rates than permanent workers; and we have quadrupled the maximum fines for employers who treat their workers badly. I have mentioned the list of employment legislation that we are bringing in, and we continue to try to do more. If you look at it in the round, better than having one huge, complicated piece of legislation is getting these measures through in their own way and actually making a difference to the workers in this country. That is how I would prefer it.
Baroness Blackwood of North Oxford (Con)
My Lords, the disability work gap remains stubbornly wide. Can the Minister update the House on the workforce review being conducted by the DWP, which is examining proposals for subsidies for occupational health services that could close that gap?
Lord Johnson of Lainston (Con)
I am grateful to my noble friend for that question. I am afraid this is not my department, but I would be delighted to come back to her with a Written Answer.
Lord Leong (Lab)
My Lords, both the Minister and I founded and ran our own businesses before coming to this place. I hope he will agree not just with me but with many business leaders and trade unionists, such as my noble friend Lord Woodley, that decent working conditions for employees’ security, health and well-being directly lead to improvements in productivity. Will he remind his government colleagues that a surefire way to make UK plc more productive would be to enshrine the highest standards of workers’ rights in legislation and not to seek to weaken or remove them through the Retained EU Law (Revocation and Reform) Bill or the Strikes (Minimum Service Levels) Bill going through both Houses?
Lord Johnson of Lainston (Con)
I thank the noble Lord for that point and for the extraordinarily high level of collaboration we engaged in last week when we were doing exactly this: bringing in protections for workers—in this case, the Carer’s Leave Bill, which will allow carers the flexibility to have a much-needed one week of unpaid leave. Ultimately, the best way to strengthen the workforce in this country and to enable businesses to give pay rises is to encourage the sorts of policies this Conservative Administration have brought into play, which have resulted in nearly 4 million new people in work, the average and minimum wages going up by over £8,000 and—
Lord Johnson of Lainston (Con)
This is important, because if you do not have a strong economy, you cannot deliver the sorts of benefits this country needs and the strength of pay, which is the most important thing in a proper workforce.
Lord Balfe (Con)
My Lords, I am sure the catalogue the Minister read out is welcome to many people. I was here last Friday when we brought some of those laws forward, but the fact of the matter is that the wealth generators of this country who go to work every day feel that the Government do not particularly see them as colleagues. May I ask the Minister to do his best to get the social partners back together again and, in particular, to meet with the TUC and other people who want to improve the benefits and productivity of this country so we can all work together as a team?
Lord Johnson of Lainston (Con)
I thank my noble friend for raising that point. It is important that we work collaboratively, and my department does meet regularly with the unions in terms of trade advisory groups. We will continue to do so, and to collaborate to ensure that we have the best framework for employment, employment rights and business in this country.
Carer’s Leave Bill
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The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
I thank the noble Lord, Lord Fox, for introducing this debate. It was a highly eloquent, extremely thoughtful, very technical and, frankly, quite moving introduction to what I think we all agree is a most essential Bill. I also thank Wendy Chamberlain for initiating this process in the other place and the noble Baroness, Lady Pitkeathley, who clearly has been an inspiration to many in this House. She is an inspiration to me and has helped drive this agenda for many years. I hope that the noble Baroness feels a sense of satisfaction as she sits here participating in this debate, where we can now as a group “do something about it”, as they say. I personally appreciate the enormous support the noble Baroness has given to this process.
I would like to cover three specific areas in terms of why the Government are so keen to support the Bill. First, this is good for business. I believe that the noble Baroness, Lady Blake, covered this from her expertise in her trade and economy role. Many other noble Lords also focused on this important point. We cannot afford for so many individuals to leave the workforce if we can possibly avoid it. I will talk about the moral case for that in a moment, but purely commercially, it does not make sense. It is an economic disaster that people are forced to leave employment in order to care. The figure quoted, of £2.9 billion, seems to me to understate the cost to the economy of this situation. Coming at this from a relatively dry economic standpoint, as someone who is not a proponent, fundamentally, of excessive regulation or additional burdens on businesses, I believe this is absolutely the opposite. It is an essential lubrication to the opportunity for businesses to prosper and for more people to come back into the workforce. As the noble Baroness, Lady Pitkeathley, wisely said, it will allow us to raise the profile of carers. It will allow people to better understand the business case for being able to combine work and caring. It will also help businesses understand the importance of retaining their staff and engendering good relations with their employees. I am absolutely convinced, as are the Government, that the business case for this Bill is paramount and incontrovertible.
Secondly, the Bill reflects the relevant role that carers play in our society. I was appalled to hear of some of the costs that the noble Baroness, Lady Pitkeathley, mentioned, of between £10,000 and £20,000, the well-established losses to pension contributions, and the poverty levels in which many carers find themselves on account of having to give up work to do the right thing.
The right reverend Prelate the Bishop of Leicester raised a number of issues which have confluence with these points. I have not read the report of the Archbishops’ Commission on Reimagining Care. I would be grateful if he would be kind enough to make a copy available to me, and I will certainly invest some time in it.
Other noble Lords raised the issue of the economic cost to carers, including the noble Baronesses, Lady Blake and Lady Tyler. The noble Baroness, Lady Tyler, had to hide her caring responsibilities from her employer. My noble friend Lord Young asked whether employers are obliged to keep a register of carers in their companies. They will be obliged to record people who say they are carers—clearly the process to obtain the unpaid leave will necessitate that type of information—but they are not obliged to undertake a survey of their staff. I do not believe it is a requirement for registration when you join a firm. I think this initial stage is probably satisfactory, but it is certainly something that should be kept under review.
We hope this legislation will start to change the attitudes of businesses and individuals so that we can be proud to be carers, and businesses can be proud to have carers in their businesses and to support them in an appropriate way, as they would those in other occupations, such as the Territorial Army or whatever it may be, who have important work to do and whom they want to retain. This is a very relevant incentive—not that I am comparing those two roles, but I hope noble Lords understand what I am trying to imply.
The noble Baroness, Lady Uddin, made important points that I would like to address relating to making sure that the profile and value of carers is appropriately raised. Their importance to society must not be understated. For me, this Government and, I am sure, all of us in this House, it is better that we have an effective voluntary care system for dependants from loved ones, friends, neighbours and relations as a principle in how we structure our society and community. We believe firmly in that, so any measures that enable this type of society—a society of people bound together through love—is more powerful than any state support that could be provided to an individual, so I emphasise to the noble Baroness, Lady Uddin, my support for her remarks.
I am also very aware of the noble Baroness’s comments around signposting entitlements to carers. It is important that we have a variety of different signpost mechanisms. They are, on the whole, the traditional mechanisms of websites, through ACAS and the tribunal system and similar government information portals, but I am not unaware of the need to raise the profile of this principle. I hope that debates such as this and the work of noble Lords will ensure we can continue to do this.
I am also aware of the issue around minority information portals. The Government are very committed to ensuring that all language communities are fully covered, but if there is anything that I can do personally to magnify this situation to any specific community, I would be keen to hear. This is ongoing work. I am sure all input will be well received. I believe the noble Baroness, Lady Uddin, asked me to write to her with specific details. I will be delighted to do so, and that may instigate further debate.
I hope I have covered everyone’s specific points. I express my gratitude to all sides of the House for the moving and powerful way that we have come together to very clearly put all our support behind something that is very straightforward, easy to administer, essential for our economy, right for the moral fibre of our nation in terms of keeping carers in work, and will benefit society fundamentally in the long term as well as raising the profile of this issue so that we can be proud to be carers and workers.
I turn now to some of the specifics that it would be useful to have on record. The Bill will create a highly flexible new leave right with low administration requirements. It will be available from the first day of employment, so people will be able to take their one-week entitlement in blocks as small as half a day or, indeed, for the full week. Both “dependant” and “long-term care need” are defined in the Bill, as has been raised. This is important, and these definitions are very broad, as has been welcomed. This ensures that leave is available for the widest possible range of long-term caring scenarios.
The Bill also keeps the administration process as light as possible. It is our intention that the associated regulations will state that an employer cannot demand that an employee present documentation in support of a leave request. I think we all agree that that is a relevant point. It is not for people to justify their actions; that raises even higher hurdles and barriers around the situation we are discussing. This helps the employee, who may not wish to divulge details of the health and well-being of their relative or friend. It also helps the employer, frankly, as it will relieve them of the responsibility of storing and managing that data effectively.
In conclusion, the Government are pleased to support this Private Member’s Bill and deliver our manifesto commitment. I thank again the noble Lord, Lord Fox, for bringing the Bill before us today, and the noble Baroness, Lady Pitkeathley, for her endeavour and her journey to where we stand now. I thank all noble Lords who have participated in the debate. Many have spoken passionately about their personal experience of caring for loved ones. I hope that in future, for many unpaid carers, this new leave right will make it that little bit easier to balance their work and caring commitments, and that their lives will be a little bit better for that. This is why I want to see the Bill succeed. We have an opportunity here today to make a real difference to the lives of those who seek to rely upon carer’s leave in the future.