Retail and Hospitality Sector

Lord Leong Excerpts

Thursday 22nd January 2026 Lords Chamber

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, it is my privilege to respond on behalf of His Majesty’s Government. I am grateful to the noble Baroness, Lady Monckton of Dallington Forest, for securing this debate. I thank all noble Lords for their thoughtful, informed and passionate contributions on a subject of real importance to our economy and to communities across the United Kingdom. I will endeavour to answer all questions. If I do not, I will go through Hansard and write to all noble Lords, and I will place a copy of the letter in the Library.

I congratulate my noble friends Lady Dacres of Lewisham, Lord Forbes of Newcastle, Lord John of Southwark and Lady Shah on their excellent maiden speeches. They bring a vast amount of knowledge and insight in local government, regeneration, science, computing, law, education, arts and culture. I look forward to working with them and listening to their contributions in this House going forward.

I should also declare an interest. When I was much younger, I harboured ambitions of opening a nightclub —we called them discotheques in those days. In truth, however, I spent far more time boogying on the dance floor than on any serious business planning, and that, I fear, was the end of my nightclub venture. It might have been a brilliant idea, because it gave me the opportunity to set up various businesses, and I became a sort of serial entrepreneur before I joined the Front Bench.

More seriously, I have many friends and relatives working in hospitality, tourism and retail, owning restaurants, wine bars and shops. Through them, I see at first hand the pressures these sectors face every single day: rising costs, staffing challenges and the constant need to adapt. That personal experience informs my appreciation of just how demanding, and how important, these businesses are.

This debate resonates particularly with the noble Baroness, Lady Monckton, and I pay tribute to her remarkable charity, Team Domenica, and to its inspiring new establishment, the North Star in Brighton. This pub is a powerful testimony—an example of social enterprise in action. It supports young adults with learning disabilities and autism through vocational training in hospitality, while fostering inclusion, confidence and opportunity within the community. That it was delivered despite some well-publicised cautionary advice from one Jeremy Clarkson speaks volumes about the noble Baroness’s determination and vision.

Retail and hospitality are far more than economic sectors. They are part of what might be called the everyday economy. They are woven into daily life, shaping how people work, shop, meet and socialise. They anchor our high streets and town centres, provided first jobs and flexible work to many noble Lords—including me —and offer routes into long-term employment and management for those who wish to build a career within them. They also play a vital role in the character and vitality of our towns, cities, seaside communities and villages.

I note here the contribution made by the noble Lord, Lord Young, on Section 21. I do not need to say any more. The noble Lord, Lord Fox, has said everything I needed to say. I was a victim of a bit of banter, but it was nothing more than racist comments; I will just park it there.

A successful high street is rarely just about shops. It is about cafés, pubs, services, culture and places where people feel welcome and connected. Retail and hospitality sit at the heart of that mix. To summarise their impact briefly, in 2024 the retail sector produced something like £115 billion in gross value added, representing 4.4% of UK output, and by September 2025 it supported about 2.8 million jobs. The hospitality sector generated £51.3 billion, about 2% of total economic output, and supported approximately 2.1 million jobs.

While these figures are significant, they tell only part of the story. The true importance of these industries is in their functions as local employers, community centres and catalysts for footfall, investment and civic pride. The Government are clear-eyed about the pressures that retail and hospitality face. In recent years these sectors have weathered an extraordinary series of shocks: the pandemic, supply chain disruption, rising energy costs, inflation, labour shortages and profound changes in consumer behaviour. Government policy cannot remove all these challenges, but it can provide stability, reduce unnecessary burdens and help businesses plan, invest and adapt for the long term.

Several noble Lords mentioned business rates, which rightfully featured prominently in this debate. We recognise that the current system places a disproportionate burden on many high-street businesses, which is why we are continuing its reform in line with our manifesto commitment to protect the high street. From April 2026, we will introduce permanently lower tax rates for eligible retail, hospitality and leisure properties, benefiting more than 750,000 ratepayers. A higher multiplier will apply to the most valuable properties, affecting around 1% of premises, helping to fund this relief in a fair and sustainable way. In addition, we have announced a £4.3 billion support package over the next three years to protect ratepayers facing bill increases following revaluation. These measures are designed to ease pressure where it is felt most acutely, while ensuring local services remain properly funded.

On top of the support package announced at the Budget, the Chancellor also commissioned work to look at what more can be done to support pubs. Further details will be announced in the coming days. Treasury Ministers have met with a range of stakeholders to discuss business rates before and since the Budget, including the British Beer & Pub Association and UKHospitality. Many noble Lords have spoken with real feeling about the future of pubs.

[Lord Fox (LD)]

I thank the Minister. In outlining the changes in the rate system, the Minister is talking about the process. Could he perhaps talk about the outcome, which, when conjoined with the reduction and removal of Covid relief, leaves many businesses—indeed, most businesses—paying more, not less, business rates? Will he at least acknowledge that from the Dispatch Box?

[Lord Leong (Lab)]

I thank the noble Lord. I am coming to the part of my speech that addresses some of the noble Lord’s concerns.

Many noble Lords have obviously spoken with real passion about the future of pubs, including me, and understandably so. Pub closures are always painful, and each one represents the loss of a place where people meet, talk and feel part of something local. Around 2,000 pubs in England and Wales have closed permanently over the last five years. That is a matter of genuine concern, although it reflects a long-term trend that pre-dates recent changes to national insurance, the minimum wage or business rates. Much of this reflects changes in how people live and socialise. People are drinking less often, particularly young adults, including my 19 year-old daughter, with a growing interest in low and no-alcohol options. The pandemic accelerated shifts towards home-based socialising, remote working and more food and experience-led venues.

Costs do matter, and the Government continue to provide targeted support, including specific help for community pubs. The future of pubs depends not only on managing costs but on being supported to adapt to changing habits and expectations. Our approach reflects that reality. Following the establishment of the Licensing Taskforce last April, we published the National Licensing Policy Framework in November. This was co-created with industry councils and various trade associations.

The Government work closely with the Hospitality Sector Council to improve the productivity and reliance of hospitality businesses by co-creating solutions to issues impacting business performance. Likewise, the Retail Sector Council is also undertaking to support growth, working very closely with government on sustainability and the circular economy. High streets, international trading and cybercrime are the main areas of focus. It sets out a vision for a simpler, more consistent and pro-growth regime that reduces bureaucracy, supports investment and promotes cultural and community life. We will build on this work through further planning reforms to help hospitality and high-street businesses grow and adapt.

Alongside regulatory reform, we are also providing targeted support. The Government have introduced a £1.5 million hospitality support scheme, including £440,000 to help rural pubs diversify as community hubs delivered with Pub is The Hub. This initiative is only the start. The Government are committed to supporting pubs and further announcements will be made very soon. This has already unlocked more than 40 previously stalled projects, generating jobs and new services. Industry research suggests that every £1 invested generates more than £8 in social value, as my noble friend Lord Rook said.

The noble Baroness, Lady Neville-Rolfe, made a point about drink-driving. One in six road safety casualties involves drink-driving. I can share with the noble Baroness that the Government are consulting on lowering the limit, which is currently the highest in Europe. In 2014 an academic study showed no impact from the reduction of the limit in Scotland.

It is also right to recall the scale of support provided to hospitality and leisure during the pandemic. These sectors were, rightfully, among the largest beneficiaries of emergency intervention, including furlough, business rates relief, grants, VAT reductions, government-backed loans and measures such as Eat Out to Help Out. That support helped many businesses survive an unprecedented shock.

Since then many parts of the sector have seen a recovery in output and revenues, though I readily accept that this experience is not uniform and that pressures remain acute for some businesses. Emergency support was, by its nature, time-limited and designed to help businesses through an extraordinary period rather than to replace the need for long-term sustainability. The Government will continue to engage constructively and to support growth through skills, investment and proportionate regulation, as businesses move forward on a sustainable footing.

Labour and skills are central to the success of these sectors. I recognise the concerns expressed about changes to the national minimum wage and the national living wage—but I can say to the noble Lord, Lord Hannan, that we are not the highest. Countries with higher minimum wages include Luxembourg, Australia and the Netherlands. Working people have borne the brunt of the cost of living crisis, and it is right that pay reflects living costs, productivity and wider economic conditions. In setting wage rates, the Government rely on the independent expertise of the Low Pay Commission, which my noble friend Lord Hannett mentioned, balancing fairness for workers with the need for businesses to grow and employ.

Concerns have also been raised about the Employment Rights Act. I take this opportunity to thank my noble friend Lady Jones of Whitchurch, who was the Minister who took that Act through this House. My department consults daily with businesses in all sectors and trade associations on implementing the Act. There will be further consultation on parts of the Act, and further announcements will be made in due course.

Economic growth is our foremost priority, but growth cannot be built on insecure or unpredictable work. By strengthening employment protections we are improving stability for workers and employers alike, and supporting a modern, productive economy. These reforms sit alongside our wider commitments to skills development, tackling economic inactivity, accelerating construction and delivering a modern industrial strategy. Together they form part of our long-term plan for national renewal.

I want to address directly the concerns raised in this debate, including by noble Lords who take a different view from that of the Government. I recognise that the pressures that many businesses face, particularly smaller operators, are immediate and personal. Policy choices, even when carefully designed, can feel very different on the ground, and that is why the scrutiny of this House matters. I welcome that scrutiny. Where noble Lords have raised concerns about costs, regulation or the cumulative impact of change, I want to be clear that the Government are listening.

We do not claim that the system is perfect, nor that there are no difficult trade-offs. Our task is to strike a balance between supporting growth, protecting workers, maintaining public finances and enabling businesses to plan with confidence. Retail and hospitality succeed when high streets succeed. Through the Pride in Place programme we are investing £5 billion across 339 communities to renew high streets and centres.

The noble Lord, Lord Borwick, who is elegantly suited this afternoon, talked about retail crime, as did the noble Lord, Lord Sharpe. The Government are committed to restoring visible and responsive neighbourhood policing, with 3,000 additional officers in neighbourhood policing roles by the spring of 2026 and 13,000 by the end of this Parliament. We are also ensuring that the right powers are in place. In the Crime and Policing Bill, we have brought forward a new offence of assaulting a retail worker, to protect the hard-working and dedicated staff who work in stores. We are removing the legislation that makes shop theft of and below £200 a summary-only offence, sending a clear message that any level of theft is illegal and will be taken seriously. But funding alone is not enough, which is why we remain committed to ongoing engagement with local authorities, trade bodies, businesses and workers, so that policy remains grounded in lived experience.

The noble Baronesses, Lady Monckton and Lady Neville-Rolfe, asked about the visitor levy. The precise design and scope of the power for the levy is still under development. The Government have published a consultation, which will run until 18 February 2026, to ensure that the public and businesses can shape the design of this power.

Retail and hospitality are not just engines of economic activity but places of connection, opportunity and shared experience. They matter deeply to communities across the country, and they matter to this Government. Through targeted support, community investment and proportionate reform, we are determined to work with these sectors as they adapt to a changing world. We may not agree on every point, but I hope all noble Lords will recognise our commitment to engagement, stability and long-term renewal. I thank all noble Lords once again for contributing to this important debate. I owe the noble Lord, Lord Fox, an explanation about business rates, so I will write to him.

[Lord Sharpe of Epsom (Con)]

My Lords, can I make a request to the Minister? In the letter that he plans to write to us, can he explain how many consultations across the whole of government are currently being run? It is a huge number, and I would like to know what it is.

[Lord Leong (Lab)]

Is the noble Lord referring to on employment rights or does he mean across everything?

[Lord Sharpe of Epsom (Con)]

I mean everything across government.

[Lord Leong (Lab)]

I obviously do not have the figures here, but I will endeavour to find out and will write to the noble Lord accordingly.

Fair Work Agency: Small and Micro Businesses

Lord Leong Excerpts

Wednesday 17th December 2025 Lords Chamber

[Lord Sharpe of Epsom]

To ask His Majesty’s Government what assessment they have made of the potential impact of the proposed Fair Work Agency on small and micro businesses.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, this Government recognise the vital contribution that small and micro-businesses make to our economy. The Fair Work Agency will provide better support to the majority of businesses that want to do right by their staff to help them comply with the law. Assessing how best to support small businesses will be core to the Fair Work Agency. That is why we are putting business expertise at the heart of the agency through its advisory board.

[Lord Sharpe of Epsom (Con)]

My Lords, I am grateful to the Minister for his Answer, but small businesses continue to raise concerns about the Government’s one-size-fits-all approach to labour market policy. Can the Minister assure the House that in designing the structure of the Fair Work Agency, proper account will be taken of businesses with small or no HR departments?

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[Lord Leong (Lab)]

The noble Lord is absolutely right to highlight this issue, and I welcome his continued engagement on it. The agency will provide straightforward, sector-specific guidance written with small and micro-businesses in mind. The requirements are not new—minimum wage, holiday pay and sick pay already apply. When changes are made, SMEs will have clearer instructions, simpler routes to advice and a single enforcement body—the Fair Work Agency—rather than several other bodies that currently exist. We will work closely with representative bodies to ensure that small employers receive the practical help they need.

[Lord Carter of Haslemere (CB)]

My Lords, the Fair Work Agency and the Secretary of State are legally one and the same entity. Given the extent of enforcement and police powers which the agency will enjoy, will the service level agreement, which I assume will be agreed between the Secretary of State and the agency, ensure that the agency has full operational independence from the Secretary of State?

[Lord Leong (Lab)]

The noble Lord is absolutely right. The Fair Work Agency will be set up as an executive agency independent of the Secretary of State. However, it will have to report to the Secretary of State for its actions and enforcement. It will bring the four current enforcement units together into a single unit that all businesses should be able to address, and it will simplify the whole issue.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, many businesses of all sizes will welcome the simplification that the establishment of the Fair Work Agency represents in terms of the enforcement regime, but does the Minister share my concern about the spread of bogus self-employment through a range of sectors, from logistics to construction and retail? Does he share the view of the newly appointed chair of the Fair Work Agency that a priority must be a crackdown on sham self-employment in order that the Employment Rights Act is a success and that workers who suffer those contracts get the minimum wages and rights that they have earned?

[Lord Leong (Lab)]

My noble friend is right draw attention to this matter, on which she has long been a thoughtful voice. In 2024, the Low Pay Commission estimated that some 20% of workers paid at or around the wage floor were underpaid the minimum wage. Analysis conducted by the Resolution Foundation suggests that 900,000 UK workers per year have their holiday pay withheld, worth some £2.1 billion. A similar analysis published by the Trades Union Congress estimated that 2 million workers do not receive their holiday pay and entitlements amounting to more than £3 billion per year, and 1.8 million workers do not even receive a pay slip. My noble friend is absolutely right. We need to crack down on these shambolic practices, and the Fair Work Agency will address them.

[Lord Fox (LD)]

The Minister has already said that this new body will involve existing bodies, many pointing in opposite directions in their reporting. The Gangmasters and Labour Abuse Authority points to the Home Office, the Director of Labour Market Enforcement points elsewhere, and there will be bits of Treasury in there. This will not be a simple exercise in creating a new organisation. During the passage of the Bill, my Amendment 277 sought a full review of the process for this before the enactment of the Bill. The then Minister declined but undertook to do extensive consultation. Can the Minister confirm that that consultation will still happen? Can he give your Lordships’ House some idea of when the statutory instruments required to enact this organisation will come? When are the Government expecting it to be fully operational?

[Lord Leong (Lab)]

I thank the noble Lord for reminding us of his amendment in Committee. As far as I know, and I will obviously correct by way of a letter, the consultation is happening and statutory instruments—secondary legislation—will follow suit. We hope to get this up and running by April 2026.

[Lord Leigh of Hurley (Con)]

My Lords, the one thing one would have thought the Government had learned from the Budget is that business cannot deal with uncertainty. Most of the Fair Work Agency legislation is going to be in secondary legislation, so we need to know exactly when that is going to come out. Importantly, as my noble friend said, the SME community is very worried. SMEs employ 16 million people. Will the Government commit to set up a dedicated SME consultation panel to review the Bill’s rollout and try to avoid unintended consequences?

[Lord Leong (Lab)]

As I mentioned earlier, the intention is to have the secondary legislation in place and for this to be set up in April 2026. As for engagement with SMEs, we have stressed that there will be an advisory board within the Fair Work Agency made up of representatives from business organisations, big and small, trade unions and independent representatives so that they can feed in their concerns and so that the Fair Work Agency will be able to do its job.

[Lord Londesborough (CB)]

My Lords, the Minister just mentioned that as many as 400,000 workers are being paid under the minimum wage and another 900,000 are having their holiday pay withheld. Given the enormity of these numbers, how will the FWA be resourced to deal with the scale of its many responsibilities, particularly the delivery of an agile, fully-functioning and accurate database that has to cover more than 5 million businesses and 33 million workers to ensure that law-abiding businesses, particularly small and micro ones, are not unfairly targeted or indeed distracted from delivering growth?

[Lord Leong (Lab)]

The noble Lord is right to raise that concern, and I will set out the Government’s position. As I said earlier, the agency’s approach is proportionate and risk based. It does not create new obligations, and it consolidates existing rules into a clearer and simpler system. Micro-businesses up and down the country already comply with the minimum wage, holiday pay and sick pay, so there is no need for them to do anything else and they will see no changes to their day-to-day operation. Our focus is on serious or repeated abuse, not technical errors, and we will work with business groups to ensure that the transition is smooth and supportive for very small firms.

[Lord Hunt of Wirral (Con)]

My Lords, is the Minister aware of the words of the Chancellor of the Exchequer, who said that, too often,

“regulation … acts as a boot on the neck of businesses, choking off … enterprise and innovation”?

I acknowledge that the Minister has an impressive background in small business, building up businesses. How is he going to ensure that the Fair Work Agency is structured in a way that ensures that it does not become the kind of regulator against which the Chancellor of the Exchequer spoke?

[Lord Leong (Lab)]

I thank the noble Lord for giving me an opportunity to set out the Government’s position. As I say, we recognise the pressures on small firms. That is precisely why the Fair Work Agency consolidates the current four enforcement agencies into one, thus setting up a simpler and clearer regime. It reduces duplication, clarifies and enforces, and it provides a single point of contact for guidance and support. We aim to simplify rather than add more layers of regulation, while ensuring that responsible employers —and I mean responsible—are protected from being undercut by those who abuse and ignore the law.

[The Earl of Erroll (CB)]

My Lords, should we not remember Reagan’s great stricture that

“the nine most terrifying words in the English language are: I’m from the Government, and I’m here to help”?

[Lord Leong (Lab)]

Well, I am from the Government, and I am here to help. I am here to help those businesses that do well and behave themselves; for them, nothing will happen. If employers abuse the system, the Government will step in and take action.

As this is my last time at the Dispatch Box for 2025, I take this opportunity to wish everyone a merry and peaceful Christmas and a prosperous New Year.

Companies (Directors’ Report) (Payment Reporting) Regulations 2025

Lord Leong Excerpts

Wednesday 15th October 2025 Grand Committee

Moved by

[Lord Leong]

That the Grand Committee do consider the Companies (Directors’ Report) (Payment Reporting) Regulations 2025.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, late payments are estimated to cost the UK economy close to £11 billion per year. Small businesses are the backbone of our economy, employing millions of people and enriching our lives. Late payments lead to 14,000 business closures each year—an average of 38 businesses per day.

The Government have already taken action to improve payment practices. In February, the new Fair Payment Code was launched, and we introduced secondary legislation requiring construction businesses to publish reports on their retention payment practices. In July, we launched a public consultation considering additional legislative measures to hold businesses to account on payment performance. This will go even further and will be the most significant legislation to tackle late payments in over 25 years and will give the UK the strongest legal framework on late payments in the G7.

These regulations will further increase transparency around the payment practices of large businesses, building on existing regulations that have already helped to improve payment times across the United Kingdom. We want to continue that trend by introducing payment data headlines into directors’ reports. Large companies are already under a duty to report biannually on their payment practices and performance. These regulations will require large companies to disclose payment reporting data within a directors’ report required under the Companies Act 2006, further increasing the transparency of payment performance to their boards, shareholders and auditors.

As a former business owner myself, I know all too well the importance of paying small businesses on time, and that is why I am proud that the Government are bringing forward these regulations as a means to tackle this issue and to support small businesses across this country.

I will now outline the key elements of this statutory instrument. These regulations amend Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and introduce a requirement for large businesses to report information about their payment practices within their directors’ reports. The payment data headlines will include statements on payment practices, including the average time to pay, as well as the percentage and sum of payments made before 30 days, between 31 and 60 days, and after 60 days. It will also include the sum and proportion of payments that were not paid within the agreed payment period.

This data will publicly illustrate a company’s approach to payment. This is only a small ask for large businesses, which will help with the continuous improvement of payment times. The Government are committed to ensuring that this legislation continues to work, and this instrument will be subject to a review within five years. I hope that everyone present today can see the benefits that these regulations provide and agree with the introduction of this affirmative statutory instrument. I beg to move.

[Lord Sikka (Lab)]

My Lords, I thank the Minister for his introduction. I have a few questions for him, mainly because I have been unable to answer them for the businesses that have written to me about the statutory instrument.

First, can the Minister confirm that the payment practices disclosure regime—the PPRR—still remains in place, and that the directors’ report is an additional place where this information will need to be disclosed? If so, that means that SMEs will need to look in more than one place to find out what a particular large entity’s payment policy is. Would it not have been better to streamline the policy and have it all in one place? That would have at least reduced the search costs for businesses.

Secondly, this legislation appears to have a very limited scope. For example, it does not apply to the public sector. Do their SME creditors not matter? Do they not need to know the disclosures? The disclosures in the directors’ report regime do not seem to apply to medium-sized companies, which have thousands of SME creditors.

Thirdly, does this apply to LLPs? My reading of the SI appears to suggest that it does not. Private equity operates through limited liability partnerships, and some of those entities are larger than many of the large companies, yet they are not being required to disclose the payment policy either. Can the Minister clarify why the SME creditors of those entities should not be informed of the payment policies? The economic landscape is shifting and, in particular, private equity operating through LLPs is becoming more powerful. I hope that the Minister will not say that it would cost more to require medium-sized companies or LLPs to publish this information, because any business worth anything would already know the schedule and analysis of its creditors.

There is also an issue about who will check this. There is no check on the authenticity of disclosures. If the disclosures were in the notes to the annual accounts, external auditors would have to corroborate that information; in other words, they would need to verify whatever management has disclosed. However, the Government have chosen to put these disclosures in the directors’ report. The directors’ report is not explicitly subject to an audit, so anyone can dream up any number when they are analysing the age of the creditors and put it in the directors’ report—there is no way of knowing.

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[Lord Sharpe of Epsom (Con)]

My Lords, following on from the noble Lord, Lord Fox, so do we.

As the Minister rightly outlined, this instrument introduces new requirements for large companies to report annually, through their directors’ reports, on their supplier payment practices and performance. Although the content of these disclosures remains broadly in line with the existing reporting framework, the shift to include them in the directors’ report—alongside their existing publication on the government portal—is a notable development in terms of transparency and scrutiny.

We recognise the intent behind these regulations and support the objective of improving payment practices, particularly given the long-standing and well-documented impact of late payments on small businesses. At this point, I was going to take a detour into some statistics, but the noble Lord, Lord Fox, has shot my fox and quoted them already. We do have a few questions, though; they follow on from those asked by both of the previous speakers.

First, how will these new reporting obligations interact with enforcement? Transparency is important, but it must be coupled with accountability. Will the Government monitor compliance with these new requirements? Are there plans to review their impact in due course? I think I heard the Minister say that there is a plan to review these measures in due course; I would be grateful if he could confirm that.

Secondly, although the inclusion of this data in the directors’ report means that it will be seen by shareholders and auditors, does the Minister expect this alone to drive behavioural change? Beyond disclosure, what further steps are the Government considering to tackle poor payment practices where they persist?

Thirdly, we note that the instrument does not introduce changes to the underlying payment terms or practices; it merely brings reporting into a different format. Do the Government believe that there a risk that companies may comply in form but not necessarily in substance?

None the less, from these Benches, we continue to press for action to support small businesses and ensure that they are paid fairly and on time. On that, we share the ambitions of the noble Lords, Lord Fox and Lord Sikka. The problem of late payment is persistent, and while the measure may support transparency, it must not become a substitute for enforcement or cultural change. On that basis, we do not oppose these regulations. We urge the Government to treat them as part of a broader, ongoing effort to improve business practices and protect small suppliers.

[Lord Leong (Lab)]

My Lords, I am really conscious of what is happening in the Chamber, so I will try to be as comprehensive as possible and brief at the same time. I am really grateful to noble Lords across the Committee for their contribution. It is evident that we all agree that tackling late payments is crucial for driving the economy forward and I thank all those who have spoken in this debate. I will try and answer as many of the questions as possible, especially those from my noble friend Lord Sikka. If I have not answered all his questions, I will go through Hansard and write to him.

My noble friend Lord Sikka asked why there are so many places where businesses have to report on their payment method. This gives businesses two places where they can look for the same information. It should not increase costs, and it basically gives flexibility and the choice for businesses as to where they look for this information. I would say it is good that there is not only one place but various places that they can look for such information.

The noble Lord asked who enforces company law. I am sure that he will know that Companies House is also an enforcement agency, and we have invested a fair bit to ensure that it is able to enforce company law accordingly.

The point about directors’ reports not being audited is not correct. Auditors do audit directors’ reports under the Companies Act 2006. They must say whether information in the directors’ report is consistent with the annual accounts and must highlight any material misstatements or inconsistency.

The noble Lord also pressed on the Reporting on Payment Practices and Performance Regulations 2017, which also applies to LLPs. This requires large business in the UK to publish information biannually about their payment practices and performance to the GOV.UK portal. Initially introduced in 2017, these regulations were amended in 2024 and 2025 following a 2023 consultation. The current regulations do not apply to LLPs because LLPs do not publish a directors’ report.

The noble Lord, Lord Sharpe, asked about enforcement. The Financial Reporting Council has a responsibility to review the annual reports and accounts of large companies for compliance with accounting standards under the Companies Act 2006. Where potential non-compliance is identified or suspected, the FRC can write to the company for further clarification and will aim for voluntary amendment of the disclosure in subsequent periods. Where this is not possible, Section 456 of the Companies Act 2006 gives the FRC the power to apply to the court for a declaration that the directors’ report does not comply with the Act. In such circumstances, the court can order that the preparation and distribution of revised accounts be carried out at the directors’ personal expense.

The data produced by this report is analysed by the Department for Business and Trade and used to evaluate whether payment practices are improving. We can use this information to determine how beneficial the relations have been and where we can do more to help improve payment times. This regulation will be subject to statutory review on or before 6 April 2029.

Further, the Reporting on Payment Practices and Performance Regulations 2017 requires that large companies report their payment performance twice a year.

[The Deputy Chairman of Committees (Baroness Fookes) (Con)]

My Lords, a Division has been called. The Committee will suspend for 10 minutes.

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[Lord Leong (Lab)]

My Lords, I want to add to the point about enforcement that the noble Lord, Lord Sharpe, asked about. We have stepped up enforcement of these regulations and are currently writing to companies that we have identified as failing to comply with their reporting requirements. Out of the more than 500 companies contacted so far, over half have already returned to compliance or committed to do so. If necessary, we will take forward criminal prosecutions for non-compliant companies, which could result in an unlimited fine and criminal records for responsible company directors.

The noble Lord, Lord Fox, and my noble friend Lord Sikka asked about public procurement. Ministers from the Department for Business and Trade and the Cabinet Office have jointly written to government departments reminding them of their obligations to comply with the Procurement Act 2023, which compels public sector bodies to pay their suppliers within 30 days. It is vital that government leads by example. Government departments publish information about their payment performance in line with transparency requirements. The latest report shows that the Department for Business and Trade pays 96% of invoices within five days and 99% within 30 days.

The noble Lord, Lord Sharpe, asked what additional measures we are taking. As I said in my opening statement, we launched a public consultation in July 2025, including primary legislation measures that have not been consulted on previously. In this consultation we are proposing to increase the role that audit committees play in assuring payment performance data and to introduce measures to set maximum payment terms at 60 days without exception. Furthermore, we are consulting on the mandatory payment of interest-only invoices. We are also consulting on strengthening the Small Business Commissioner with additional powers to investigate poor payment practices and resolve late payment disputes. More importantly, we are also consulting on the practice of withholding retention payments, especially in the construction sector, to either prohibit the use of retentions or require firms to protect retentions from insolvency or non-payment. We will do more and are consulting to do more.

This Government are committed to tackling late payments. We want to make the UK the best place in the world for businesses. We believe that this legislation is an important step towards improving businesses’ payment practices and tackling the scourge of late payments. Small businesses are the backbone of the economy and as part of these regulations and the wider package of measures, we are delivering the biggest reform to payment regulations in 25 years. These regulations are just the first step in a wider package of measures that will be the most significant legislation to tackle late payments. I commend them to the Committee.

[Lord Sikka (Lab)]

My Lords, may I take a few moments to respond to a couple of things that have been said?

[Lord Fox (LD)]

The Minister has sat down.

[Lord Leong (Lab)]

My noble friend must be very brief.

[Lord Sikka (Lab)]

I will be. A point was made about the auditors looking at the directors’ report. The law requires auditors to see that the directors’ report is consistent with the view given by the audited financial statements, but it does not require auditors to audit the directors’ report. There is a fundamental difference between examining and auditing. The Minister made a point about Companies House. Companies House is a giant filing box: it does not verify the contents of the financial statements, and no one at Companies House will be checking to see that the directors’ report has the information required by this statutory instrument.

[Lord Leong (Lab)]

I am afraid I disagree with my noble friend on the point about auditors. Auditors have to audit the entire company’s accounts and what is published in the directors’ report and form a view as to whether the directors’ report reflects what is happening in the company. On the point about Companies House, it is an enforcement agency and it has powers to enforce the law itself.

Motion agreed.

Jaguar Land Rover Cyberattack

Lord Leong Excerpts

Tuesday 14th October 2025 Lords Chamber

[Lord Fox]

To ask His Majesty’s Government what lessons they have learned following the Jaguar Land Rover cyber attack.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, the Jaguar Land Rover cyberattack has highlighted the vital need for robust cybersecurity across the UK’s economy, which is why today the Government have written to leading companies with advice on strengthening cyber defences using tools like the Cyber Essentials scheme and the Cyber Governance Code of Practice. We strongly recommend and encourage all companies to follow this guidance. We will also introduce very soon the cyber security and resilience Bill to raise cybersecurity standards in critical and essential services such as energy, water and the NHS.

[Lord Fox (LD)]

My Lords, with the indulgence of the House, let me say that this weekend I came back from the NATO Parliamentary Assembly, where there were heartfelt tributes to the work of my noble friend Lord Campbell of Pittenweem. He was held in very high esteem. It is one example of his dedication to defending our national interest.

One of the concerns of the NATO assembly was hybrid warfare. Attacks like that on JLR may come from nation states or they may come from individuals, but together they add up to a war on our economy that is costing billions of pounds. The National Cyber Security Centre chief executive Richard Horne said today

“Cyber security is now a matter of business survival and national resilience”.


As the Minister said, Minister Jarvis has written to large companies, but can he assure your Lordships’ House that the Government understand that information campaigns alone, like that which he has just described, are not effective? Can he tell the House that he realises that there needs to be a substantial change in gear, because attacks like the one we saw on JLR prove that what we are doing today just is not working?

[Lord Leong (Lab)]

My Lords, may I echo the words of the noble Lord about the late Lord Campbell? On behalf of the Government and this side of the House, I thank the late Lord Campbell for his public service to this country. He will be sorely missed in this House.

The National Cyber Security Centre has been working very closely with Jaguar Land Rover to provide support in relation to the incident. The NCSC response to the JLR incident is ongoing, but it is set to reduce as mediation takes place. Throughout the event, the NCSC has been capturing feedback to inform national and internal incident management practices. The NCSC will participate in a cross-government “lessons identified” process to review how best to improve the Government’s response, share information across partners and react to some of the unique pressures, such as those that the noble Lord mentioned. The NCSC would be happy to share aspects, depending on classification, of this process with noble Lords and other Ministers once it has been conducted.

[Lord Sharpe of Epsom (Con)]

My Lords, according to the National Cyber Security Centre’s latest report—and following on from the noble Lord, Lord Fox—in the year to September, there were 18 highly significant attacks, meaning attacks with the potential to have a serious impact on essential services. Given the increasing frequency of these attacks, can the Minister reassure the House that the Government’s plans for a centralised national digital ID database would not create a single point of potential failure, one breach away from exposing the entire British public to foreign espionage, hostile state interference or domestic data misuse?

[Lord Leong (Lab)]

I thank the noble Lord for that point. As far as private enterprise is concerned, the Government will not interfere in what private business organisations do. However, government can produce the tools and the guidance so that companies can have a more robust and resilient approach to cyberattacks. For example, the Cyber Governance Code of Practice shows a board of directors how effectively to manage the digital risks to the organisation. As I said earlier, all companies, if they have not done so, should conduct a comprehensive risk assessment of their digital and cybersecurity framework. They should apply for Cyber Essentials certification or the various other forms of certification and ensure that they have appropriate cyber insurance.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, I hope that my noble friend has had a chance to read an interesting article in this week’s New Statesman by Oliver Pickup about the people who have so far been arrested in relation to recent cyberattacks, particularly those on Marks & Spencer and Jaguar Land Rover, noting that they are very young and that, on the whole, they have learned their skills in hacking and cybercrime through their engagement with cybergames which they start very young. Will my noble friend have a look at that article if he has not had a chance to read it? Can he tell the House in what way the Government are aware of this issue and how they are addressing it within the education system and engagement with young people?

[Lord Leong (Lab)]

I thank my noble friend for that question. I have not read the article, but I will surely do so. The Government recognise the major role that UK cybersecurity professionals play in enhancing and protecting UK security, and it is vital that we support them. However, the defences are pretty complex, and we need to be very careful. While there are robust safeguards and oversight, we have concerns about how any defence could be exploited by cybercriminals and significantly hinder the successful investigation and prosecution of bad actors, so the Home Office is working closely with the National Cyber Security Centre, law enforcement and industry on this issue and will provide an update in due course.

[Lord Vaux of Harrowden (CB)]

My Lords, studies indicate that between 50% and 80% of cyberattacks result in the payment of a ransom. Ransom amounts are probably well over £1 billion a year, so it is no great surprise that cyberattacks are increasing: it pays well. Have the Government considered making the payment of ransoms by both public and private sector entities illegal?

[Lord Leong (Lab)]

The noble Lord makes an important point. I share with noble Lords that in the UK ransomware is considered the greatest of all serious and organised cybercrime threats and is deemed a risk to the UK’s national security by the National Crime Agency. In January 2025, the Home Office launched a consultation on a package of proposals to reduce the threat that ransomware poses to the UK economy. Alongside this consultation, significant stakeholder engagement also took place. Three proposals were consulted on: first, whether there should be a targeted ban on ransom payments to owners; secondly, a ransom payment prevention regime; and, thirdly, whether there should be a mandatory incident and reporting regime. The Home Office is progressing a new package of measures to protect UK businesses, and we will update the House accordingly.

[Earl Russell (LD)]

My Lords, today is the last day of free support for Windows 10. It is estimated that 39% of our home computers will be impacted, as well as UK businesses, industry and our very national security. Why we are not requiring extended security updates for Windows 10, as are now required across the EEA?

[Lord Leong (Lab)]

The noble Earl makes an interesting point that I mentioned earlier. Companies using outdated systems should consider whether that is still appropriate. To do so, I urge all companies to conduct Cyber Essentials certification. Once they have the certification, they can ensure that their customers and whoever they do business with are protected against cyberattacks.

[Lord Grade of Yarmouth (Non-Afl)]

My Lords, perhaps I might pose a somewhat more prosaic but urgent question. The crisis at Jaguar Land Rover had immediate and predictable consequences for the supply chain. The immediate call was for the taxpayer to stand in. Do the Government have a view about whether the banks should play their part in supporting good customers such as the supply chain of Jaguar Land Rover, which has a very good customer in Jaguar Land Rover? The crisis was clearly going to reach an end. I do not understand why the banks do not stand by. Otherwise, what are they for?

[Lord Leong (Lab)]

Noble Lords will know that there are certain commercial aspects of Jaguar Land Rover that I cannot possibly comment on. However, that said, the Government have published a Written Statement today stating that we will guarantee JLR £1.5 billion to ensure that it has sufficient cash reserves to pay its supply chain creditors. It will work its way through the whole system, and we hope that, eventually, most supply chain creditors will be paid accordingly.

Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025

Lord Leong Excerpts

Wednesday 10th September 2025 Grand Committee

Moved by

[Lord Leong]

That the Grand Committee do consider the Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, in speaking to these amendments I will also speak to the Economic Crime and Corporate Transparency Act 2023 (Consequential, Incidental and Miscellaneous Provisions) Regulations 2025 and the Register of People with Significant Control (Amendment) Regulations 2025.

These instruments form part of the Government’s secondary legislation programme to implement the Economic Crime and Corporate Transparency Act 2023, which I will refer to as the 2023 Act. The 2023 Act delivers the most significant reform to Companies House in over 180 years. It is central to the Government’s efforts to combat economic crime, improve corporate transparency and increase trust in the UK’s business environment. Since the 2023 Act, Companies House has made great progress in implementing the reforms, including removing false and misleading data. For example, from 4 March 2024 to 31 July 2025, Companies House removed something like 113,300 registered office addresses, 88,000 officer addresses and 71,000 PSC addresses.

In April this year, Companies House launched its identity verification service. Hundreds of thousands of individuals have successfully verified their identities. This is a major milestone and ensures that customers and Companies House are ready for mandatory identity verification in November this year, a central pillar of our reforms. These regulations will support the delivery of identity verification, as well as other technical reforms relating to the people with significant control—PSC—framework.

I will briefly speak to each instrument in turn. The Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025 apply many of the reforms to companies contained in the 2023 Act to limited liability partnerships, also known as LLPs. Specifically, they introduce identity verification for LLP members and PSCs, prohibit disqualified directors from acting as an LLP member, and remove the requirement for LLPs to keep their own “local” registers of members and PSCs. Extending company reforms to LLPs will align requirements across corporate entities. This will reduce opportunities for misuse by criminals and ensure that LLPs, and those doing business with LLPs, benefit from a more transparent and reliable business environment.

The Economic Crime and Corporate Transparency Act 2023 (Consequential, Incidental and Miscellaneous Provisions) Regulations 2025 is a largely technical instrument that helps to underpin the smooth implementation of key elements of the 2023 Act. It makes necessary consequential amendments to primary and secondary legislation following the removal of the requirement for companies and other entities to retain their own local registers of directors, secretaries and PSCs. Instead, there will be one central register at Companies House. This will make life easier for users of the register, as they will know that the centralised register held by Companies House is the definitive version.

The instrument also introduces provision to support the rollout of identity verification through the mandation of unique identifiers. These codes are generated for each verified individual and will be used to prove an individual’s verified identity status. Without this instrument, crucial parts of the Companies House reform package would not be able to operate as needed. This instrument ensures consistency across the legislative framework and prevents references to repealed provisions from persisting in law.

--- Later in debate ---

We on these Benches support these measures and hope that the Minister will provide the further clarification that I have asked for, particularly around the definitions and the practical guidance for small businesses navigating these various measures.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who contributed to this short debate: my noble friend Lord Sikka, and the noble Lords, Lord Vaux and Lord Sharpe. These regulations are another step in the delivery of the Companies House reform programme and are critical in ensuring that it operates effectively. So I really do thank all noble Lords for their questions. I will respond to as many as possible and I will check Hansard to see whether I have answered all of them. If I have not, I will obviously write to noble Lords.

I will address my noble friend Lord Sikka’s forensic look at fake banks, late filing offences and all that. I will try to answer as many of his questions as possible. Regarding fake banks and fake filing offences, Companies House has new powers to query and remove false information. As I said earlier, from March 2024 to June 2025 it prevented some 14,000 suspicious filings. The regulation of banks is for the Financial Conduct Authority, as the noble Lord knows. Companies House has implemented checks on incorporation to prevent companies forming where they do not have regulatory approval to operate as a bank. It continues to work with the FCA on this issue. The filing of false information with Companies House is a serious criminal offence, and those who have done so will have the full weight of the law thrown at them. There is a basic offence of filing without reasonable excuse and an aggravated offence of filing knowingly, so it is a very serious thing.

My noble friend Lord Sikka asked about overseas persons and whether there are any identification checks. Companies House will be able to perform robust ID checks on overseas individuals via the Government’s One Login system, which is now operating. If noble Lords have not had a chance to look at it, I encourage them to do so. Before I was in government, I personally managed to get a One Login set up—it is very easy to register and does not take more than 10 minutes to verify yourself.

If an individual cannot verify their identity, they will not be able to incorporate a company or act as a director. Existing companies will be unable to file a confirmation statement, and this will lead to a strike-off. From November, all filings will have to have verification, and this will be rolled out over the next few months to ensure that, for every single confirmation filing, the people filing it will be verified. They can either do it themselves or they can do it via the ACSP.

I thank the noble Lord, Lord Vaux, for his question and his contribution, during the passage of the Act, on nominee shareholders. I will go through our position as far as they are concerned. The Government are aware of the misuse of nominee arrangements, including to avoid disclosure under the people with significant control regime. Work is ongoing with stakeholders to determine the scale of this issue, and the ECCTA provides the power to make regulations to enable a company to find out who its PSCs are in cases where shares are held by a nominee. The Government are wary of imposing disproportionate burdens on legitimate businesses and investors. So, before making any regulations, it is right that the Government work with relevant stakeholders to ensure that burdens can be targeted effectively. In the meantime, the Companies House intelligence hub will use data science to identify threats of economic crime on the register, including the threat posed by agents facilitating the criminal activity of others. Companies House will make this intelligence available to partners such as law enforcement and supervisory bodies.

In 2024-25, the average number of shareholders per company was something like 2.1 shareholders per company, and the average number of PSCs per company is something close to about 1.2, so it is actually quite small. But we still need to get to the bottom of this to see how widely it is misused. This is in line with expectations as the vast majority of companies are law-abiding SMEs.

My officials have been in touch with other countries to learn from their experience in the nominee shareholders’ space. Among others, this includes Singapore. In Singapore, companies are required to keep a register of their nominee shareholders containing the particulars of all their nominators. My officials will continue this engagement as they work better to understand the scale of the issue, as I said earlier, and the cost and benefits of the new nominee shareholders requirement. It is important to this Government that any reforms are proportionate and workable.

On the point made by the noble Lord, Lord Sharpe, about acting as a member of an LLP, the offence of acting as a member without being verified is explicitly defined. If one individual performs the functions of a member—that is, a director—or actions that relate to the running of an LLP, they are likely to be acting as a member. So IDV will apply to both members who subscribed their names to incorporation documents equivalent to the director of a limited company and ordinary members with lesser responsibilities, usually set out in LLP’s own members’ agreement. Obviously I will speak to officials, and if my answer to the noble Lord’s question is still not detailed, I will ensure that a letter will be sent to him.

On the point about limited partnerships, which I think the noble Lord asked about, Companies House is currently looking at it. Correct me if I am wrong, but I think there are something like 60,000 limited partnerships on record, and Companies House is trying to clean this up to see how many of these limited partnerships are still active. So, over the next few months, it will clean it up, and those that have not filed confirmation statements and all that will be written off. We recognise that there is a need for limited partnerships in respect of investment trusts, private equity, and so on, so we need to ensure that they are properly regulated as well.

Regarding identity and corporate LLP members, the Government will be reviewing which individuals will be required to identify where a position is held by a corporate entity and not an individual. So we are working on that, and I hope we will be able to inform the House when it is done.

I want to conclude by reminding Peers of the importance of these reforms. These regulations are necessary to make the UK a safer and more transparent place to do business. I commend these measures to the House.

Motion agreed.

Jaguar Land Rover Cyberattack

Lord Leong Excerpts

Wednesday 10th September 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, as the nature of the threat that we face is evolving and the lines between hostile actors are blurred, do the Government have any plans to centralise verification and procurement approval, so that the best available commercial solutions designed to be able to tackle, investigate, monitor and counter cyberthreats and, indeed, critical tools such as secure messaging, can be delivered to the various agencies that need them without the need for the usual lengthy processes?

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, before I respond to the noble Lord’s question, I take this opportunity to thank my noble friend Lady Jones of Whitchurch for her sterling worth as a Minister in this House. I am sure that all noble Lords will thank her for her performance at this Dispatch Box and her support to all Members across the House. I am sure that we will hear many more of her contributions from the Back Benches.

The new Commercial Digital Centre of Excellence for the UK central Government will substantially improve service delivery, enhance user satisfaction and drive efficiency, leveraging new procurement regulations. The provision of cybersecurity services is a part of this vision. In addition, through the Crown Commercial Service’s Cyber Security Services 3 agreement, we provide an official streamlined route to market for National Cyber Security Centre-assured services. I also need to say that the Government are working tirelessly to improve the cyber resilience of government systems, basing our efforts around the Government’s cybersecurity strategy. We have made important steps in understanding and mitigating cyber risks. We are now implementing a more interventionist approach to public sector cyber resilience to address key risks and better support departments.

[Lord Fox (LD)]

My Lords, some 40% of companies in the UK reported last year that they had faced some sort of cyberattack. High-profile attacks such as those on JLR, Marks & Spencer and the British Museum are just the tip of the iceberg. In the Commons, the Minister referred to legislation. Can the noble Lord confirm when the cyber Bill will appear? What methodology might the cyber Bill use to solve this? The Minister implied that this legislation would seek to cause businesses to try harder. The protagonists of this crime are not state-sponsored, but they are tolerated and supported by the regimes in which they exist and they are part of the asymmetric war that this country faces. Of course business has to defend itself, and the Minister has outlined what the Government are doing now, but it is quite clear that that is not enough. What will the Government do that is different from what they are doing now to defend ourselves from this ever- growing problem?

[Lord Leong (Lab)]

My Lords, the noble Lord made a couple of interesting points, which are crucial, and I will try to address them. Cybersecurity of the UK is a key priority for this Government. It is crucial to protect public services, the public, our way of life and a successful, growing economy. We have been taking significant action to help protect business from cyber- attacks.

We are also providing businesses with the tools, advice and support to protect themselves from cyberthreats, including the Cyber Governance Code of Practice, which shows boards and directors how to effectively manage the digital risk to their organisation. The highly effective cyber essentials scheme prevents common attacks and reduces the likelihood of a cyber insurance claim by 92%. Before I was invited to be a part of the Government, when I ran my businesses I ensured that they all had a cyber essentials certificate. That is the basic requirement that you need to have. At the same time, businesses need to protect themselves by having sufficient cybersecurity insurance. There are a wide range of tools and support from the National Cyber Security Centre including training for boards and staff and an early warning system to get notified about cyberthreats to networks.

When parliamentary time allows, this Government will introduce the cybersecurity and resilience Bill to raise cybersecurity standards in critical and essential services such as energy, water and the NHS.

[Baroness Wheatcroft (CB)]

My Lords, does the Minister have any information about how many companies are paying ransom demands? To what extent do the Government deal with insurance companies, advising them whether to pay ransoms or not pay them?

[Lord Leong (Lab)]

I thank the noble Baroness for that. I am sure that most noble Lords will appreciate that it would not be appropriate for me to comment on any ongoing incidents. However, the Computer Misuse Act continues to enable the prosecution of those who have undertaken unauthorised access to computer systems for a range of malicious reasons including crime and espionage. The Government are in the process of reviewing the Act and the Home Office will provide an update on further proposals once they are finalised. In recent years, the Government’s policy has focused on supporting the insurance industry, to strengthen and grow the commercial cyber insurance market. Pool Reassurance, or Pool Re, was created to ensure the effective functioning of the UK’s terrorism insurance market. The Government do not have any plans to extend Pool Re’s remit to include further cyber-related risks.

[Lord Holmes of Richmond (Con)]

My Lords, the scale, sophistication and sources of cyberattacks are increasing exponentially. To that end, I ask again: when will the Government introduce the cybersecurity and resilience Bill? Will it be this autumn? When that Bill arrives, will it contain provisions for the wholesale reform of the Computer Misuse Act to enable our cyber professionals to do what they do best, which is protect this country and protect us as citizens?

[Lord Leong (Lab)]

My Lords, perhaps the noble Lord did not hear my last answer. Tackling cyberthreats and improving our national cyber defences is a priority for this Government. As I mentioned, when parliamentary time allows, the Government will introduce the cybersecurity and resilience Bill to raise cybersecurity standards in critical infrastructure and essential services such as water, energy and the NHS and, I am told, food security.

[The Lord Bishop of Oxford]

My Lords, on Monday the All-Party Parliamentary Group on Artificial Intelligence heard a striking presentation from the Polish Minister for defence and cybersecurity, who talked about the joined-up thinking his nation has developed on defence and commercial attacks of this kind. I ask the Minister what the Government are doing to join up thinking in defence and industry, in terms of cyber- attacks. In light of the Government’s promotion of artificial intelligence, do they consider that this increases the risk of cyberattacks of this kind? What steps are the Government taking to advocate responsible and cautious adoption of AI to mitigate this risk?

[Lord Leong (Lab)]

I thank the right reverend Prelate for that question. In 2024, the National Cyber Security Centre managed hundreds of incidents, 89 of which were nationally significant attacks. In 2025, the cybersecurity breaches survey shows that just less than half of businesses, about 43%, and around one-third of charities, about 30%, reported having experienced a cybersecurity breach or attack in the past 12 months. Cyberattacks do not happen just to big companies; they attack every company, all sizes and all types, and we have to be vigilant on that. The Government see the UK cybersecurity sector as a driving force in widening opportunities for our citizens. We have to ensure that this is protected. The Government have a plan and are working across departments putting a Bill together and we hope that parliamentary time will allow us to bring it forward.

[Lord Clement-Jones (LD)]

My Lords, I express my appreciation of the work of the noble Baroness, Lady Jones, which the Minister mentioned, and I wish her well in her non-ministerial capacity. Given reports that the attack has been claimed by hacker groups linked to Scattered Spider, which I believe is also responsible for recent attacks on UK retailers, including Marks & Spencer, what enhanced intelligence-sharing mechanisms are the Government establishing between business sectors to prevent co-ordinated attacks by the same threat actors?

[Lord Leong (Lab)]

My Lords, I am sure that the noble Lord will appreciate that there is only so much I can say about what the Government are doing, but I assure him that the Government are speaking to businesses of all types through various business organisations. The National Cyber Security Centre is working with businesses. It has previously worked with M&S and the Co-op and is now working with JLR to provide support in relation to whatever incidents have happened, including the current incident. As I said, we cannot comment further on specifics at this stage, including with regard to potential perpetrators. The National Crime Agency has warned of a rise in teenage boys being drawn into online criminal communities and is co-ordinating responses to online harm networks across the United Kingdom.

Employment Rights Bill

Lord Leong Excerpts

Report stage
Wednesday 23rd July 2025 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I listened carefully to the noble Lord, Lord Hendy, and the noble Baroness, Lady O’Grady of Upper Holloway, but I think that the argument fell rightly to my noble friend Lord Jackson of Peterborough, because he explained why we could not possibly accept this amendment. Therefore, I rise briefly to speak to Amendments 150B, 151 and 152.

With this Bill, the Government have chosen to make it easier to strike, lowering thresholds, relaxing long-standing restraints on picketing and removing vital safeguards. It is inevitable then that businesses, especially small ones, will find themselves bearing even greater burdens as a result of what is anticipated will be a new wave of industrial action. Amendment 150B would give employers a narrow and reasonable defence: where a decision taken during or immediately after lawful industrial action was strictly necessary to keep the business afloat, it should not be automatically treated as unlawful detriment. Without this amendment, we risk a situation where businesses face paralysis, exposed to litigation on one side and operational collapse on the other.

I believe that Amendment 151 is essential. It makes it clear that intimidation, harassment, damage to property and other coercive actions dressed up as industrial activity will not be protected under the law. Workers have the right to strike, yes, but they do not have the right to bully, vandalise or threaten.

To turn to Amendment 152, the Government may now claim that the Strikes (Minimum Service Levels) Act has proved ineffective, but we do not agree, not because we are ideologically wedded to it, but because it is simply far too early to make such a sweeping judgment. The Act has barely had time to be tested properly. Therefore, if the Government abandon the principle of minimum service, we look forward to hearing the Minister explain what the Government stand for instead.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to the noble Lord, Lord Jackson of Peterborough, and my noble friend Lady O’Grady of Upper Holloway, for contributing to this debate, and to the noble Lord, Lord Goddard, for setting out the Lib Dems’ position. I will now speak to Amendment 150, tabled by my noble friend Lord Hendy, and Amendments 150AA, 150B, 151 and 152 in the name of the noble Lord, Lord Sharpe of Epsom.

On Amendment 150, we are clear that industrial action should take place only where there is a dispute between a group of workers and their direct employer and we will not change this position. Secondary or solidarity action has been prohibited for several decades and the Government will not change this. Permitting secondary action would enable parties with no direct stake in a dispute to take co-ordinated action, increasing the risk of disruption to employers and the public, and would allow industrial disputes to escalate beyond the original context and across different employers. The Government are clear that we are compliant with our international obligations under ILO Convention 87, Article 11 of the ECHR and Article 6 of the European Social Charter, all of which protect the right to strike but also permit restrictions on industrial action necessary in a democratic society.

As noted by the European Court of Human Rights in the RMT case in 2014, there is a democratic consensus in the UK in support of the prohibition of secondary action and a broad acceptance of the public interest reasons for it, spanning the gamut of political opinion.

Furthermore, the UK is not an outlier. Similar countries such as Australia, Canada, Austria, France and the USA also prohibit or do not protect secondary action. The UK’s model reflects our unique industrial relations framework and economic context, and protects the ability to strike, while also protecting the rights of others. The Government have no intention of changing this.

On Amendment 150AA, 150B and 151, in the name of the noble Lord, Lord Sharpe of Epsom, Clause 73 of the Bill is required because the Supreme Court ruled in April 2024 that Section 146 of the 1992 Act is incompatible with Article 11 of the European Convention on Human Rights. That is because it fails to provide any protection against detriments—that is, sanctions short of dismissal—intended to deter trade union members from taking part in lawful strike action organised by their union or penalise them for doing so. I have no doubt that many Members of your Lordships’ House agree that the UK cannot continue to be in breach of our international obligations. The Bill will correct this by inserting new Section 236A into the 1992 Act, to provide that:

“A worker has the right not to be subjected … to detriment of a prescribed description by any act, or any deliberate failure to act, by the worker’s employer, if the act or failure takes place for the sole or main purpose of preventing or deterring the worker from taking protected industrial action, or penalising the worker for doing so”.


The prescribed detriments will be set out in secondary legislation following a consultation.

These amendments seek to prejudge a full and open consultation on this issue by setting out the circumstances in which the detriment protection—whatever the prescribed detriments may ultimately be—will not apply. Indeed, as part of the consultation, we look forward to hearing the perspective of employers on why they may consider detriments could be appropriate in certain circumstances.

I must also add that, importantly, the protection from prescribed detriment applies only where the sole or main purpose of subjecting the worker to detriment is to prevent, deter or penalise the worker from taking protected industrial action. For example, if a worker is subject to a detriment solely or mainly because they have damaged property, this protection will not apply. Moreover, the criminal law still applies to pickets and others taking part in industrial action, just as it applies to everyone else.

Finally, on Amendment 152, also in the name of the noble Lord, Lord Sharpe of Epsom, Clause 75 seeks to repeal the Strikes (Minimum Service Levels) Act 2023. The repeal of the strikes Act is a manifesto commitment that this Government have a mandate to deliver. Minimum service levels unduly restrict the right to withdraw labour and undermine good industrial relations, and our plan to make work pay pledged to repeal the Act. No work notice has ever been issued by an employer to seek to meet a minimum service level during strike action, and the legislation has never prevented a single day of strike action. Evidence suggests that this is due to employer concerns around worsening industrial relations and the complexity of implementing a minimum service level under the legislation. This demonstrates the futility of that Act and why we intend to repeal it upon Royal Assent.

We believe that negotiation and co-operation are better ways to ensure essential services continue during any industrial action, while respecting workers’ rights. Evidence given at the time the strikes Act was being introduced, including from employers, was that existing voluntary arrangements worked and ensured that vital services were able to continue during periods of industrial action. We are simply returning to this situation. We want to reset the relationship with both employers and trade unions to resolve disputes through meaningful negotiations. Repealing the rights of the strikes Act will help us to achieve that. I therefore respectfully ask my noble friend Lord Hendy to withdraw Amendment 150.

[Lord Hendy (Lab)]

My Lords, I am very grateful to all noble Lords who spoke in the debate on my amendment. I have a couple of words by way of reply.

I point out to the noble Lord, Lord Jackson, that the P&O Ferries scandal was not the basis of the argument that I advanced to the House but simply an egregious example of the absence of the right to take secondary action. Noble Lords will recall that that case involved some 800 seafarers who were sacked instantaneously and replaced immediately with agency crews recruited in third-world countries. In doing so, P&O Ferries knowingly and intentionally broke the law. It could do so because it knew exactly how much compensation it was liable for, and it paid it. The unions, on the other hand, were unable to call on fellow workers in the Port of Dover and other cross-channel ports to support them in an industrial dispute to reverse that decision. The seafarers themselves, of course, were on the stones; they were unemployed. A strike by the direct workforce would have been completely pointless. I mentioned it because that is the last example of the ILO commenting on the UK ban on secondary action. It said that the Government and social partners should sit down together and endeavour to negotiate some form of permissible secondary action. The ILO has been consistent on the position since 1989, repeatedly saying that the 1990 law to which my noble friend Lady O’Grady referred was incompatible with Convention 87.

The noble Lord, Lord Jackson, pointed out various circumstances, which I will not debate with him now, that would make the return of secondary action in this country unacceptable. The point is that special circumstances are not a legitimate justification for a state not to comply with its international obligations. That point was made clear by the noble and learned Lord the Attorney-General in a speech that he made about a month ago, but it is a fundamental principle of international law.

Finally, I say to the noble Lord, Lord Jackson, who commented on the suggestion that the phrase “connected with” ought to be brought back, that phrase is the one that was deployed in the original drafting of the Trade Disputes Act 1906.

I thank my noble friend Lady O’Grady for her support and for reminding the House of the fragmentation in employing enterprises, often precisely to achieve and exploit the bar on secondary action, to weaken workers. I thank the noble Lords, Lord Goddard and Lord Hunt, for their comments.

To the Minister, my noble friend Lord Leong, I make three quick points. First, I am afraid I do not agree with his comparative law analysis. I have done some work on this over the years, and it is not the case that the countries that he mentioned bar secondary action—at least, not all of them do, although the United States does. Secondly, I accept, as I did in Committee, that we are not in breach of Article 11 of the European convention, but I simply cannot see how it can be argued that we are not in violation of ILO Convention 87 and the European Social Charter’s Article 6.4. The supervisory bodies have said so over and over again. Thirdly, of course I recognise the Government’s position, and my noble friend will not be surprised to hear that I do not intend to test the opinion of the House. I respectfully ask to withdraw my amendment.

Employment Rights Bill

Lord Leong Excerpts

Report stage
Monday 21st July 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, Amendment 127A in my name is a milder attempt to deal with the pressing issue of pay inequality and soaring executive pay in our society than the amendment I tabled in Committee, which was to provide for a 10:1 maximum pay ratio for enterprises. I hope this one has a slightly less inflationary impact on the blood pressure of the noble Lord, Lord Hunt of Wirral, while dealing with the excessive boardroom remuneration referred to by the noble Lord, Lord Monks, two groups ago.

The amendment simply seeks to put in the Bill a review of the impact of pay inequality in large enterprises, as defined by the Companies Act 2006—those with net turnover of more than £54 million, assets of £27 million and more than 250 employees. I hope that the Government will seriously consider this approach. It is not my intention to put this to a vote, but I want to be helpful to the Government here and offer them some constructive ways forward.

The noble Lord, Lord Katz, in part made the argument for this amendment for me in Committee when he said that:

“It is right that companies should be sensitive to wider workforce pay when setting pay for those in the boardroom and other senior leadership positions”.—[Official Report, 24/6/25; col. 201.]


However, suggesting that companies be sensitive is not really going to do it. That seems to be the Government’s position. I noted that the Water Minister, Emma Hardy, on LBC this morning, urged water company bosses to “read the room” and refuse huge wage hikes. Well, the room has been sending a very clear message about water company bosses’ pay for a long time and the voluntary approach has simply not worked.

We are talking here about the right of lower-paid workers not to be disrespected—insulted—by the soaring pay in the boardroom while they struggle to meet their basic needs, pay their bills and put food on the table. This is action that clearly needs to be taken, not just words of gentle encouragement.

As I said in Committee, the security and catering company Mitie, with a 575:1 ratio between its top-paid employee and the median employee, and a large number of low-paid workers, tops the High Pay Centre’s FTSE 350 companies hall of shame. I note that this month, the Labour Party postponed a London drinks reception for north-west MPs sponsored by Mitie after a backlash over the company’s employment practices. Unison had planned to picket the event. You have to question why it was ever planned in the first place.

A review such as the one proposed in the amendment could be a start towards the Labour Government generating policies such as those recommended by the High Pay Centre in its useful list of proposals—I recommend it to Ministers as a crib sheet, since the current Government were elected with so few policies of their own in place—such as all-employee profit-sharing or share ownership schemes. As the centre notes:

“One of the reasons why … the pay ratios between workers and CEOs are so wide is that CEOs receive large share-based payments in addition to their regular salary while workers do not … In France all companies are required to share an element of profits exceeding a set amount calculated using factors including taxable profits, net equity, wages and added value with their workforce”.


This has actually reduced inequality.

Another timely proposal from the centre, which again a review might throw up, is a cap on CEO-to-worker pay gaps for public service providers, such as water companies—here we have another way forward—or social care providers. The claim made by the noble Lord, Lord Katz, in Committee, that high pay means

“companies can compete for the best business talent in the UK and globally”,—[Official Report, 24/6/25; col. 202.]

certainly does not stack up in the water sector, if one looks at its outcomes. Fat cat pay has delivered only underinvestment, pollution and ill health for those unfortunate enough to have to rely on the services of the privatised companies.

Finally, I note that, responding to the call for even higher executive pay from the UK capital markets task force—drawn from the City of London and big business—a letter written by 20 leading academics specialising in executive pay, corporate governance and economic inequality made a number of points, including that there is a very “questionable” link between

“higher executive pay and better business performance”,

that any claim that there is a

“shortage of capable candidates for executive roles should … prompt scrutiny of companies’ leadership training and development processes”,

and that the “opportunity costs” of high top pay have impacts

“in terms of … pay for low and middle income workers or investment in the business”.

It is interesting that polling by the High Pay Centre suggests that the overwhelming majority of the public think that CEOs should not be paid more than 20 times more than their typical employee. If the Government want to consider the politics of this, I point to the conclusions in the report, The Spirit Level at 15, by Professors Kate Pickett and Richard Wilkinson, which articulates many of the ways in which inequality strengthens far-right politics. Executive pay is only part of that story, but it is a very visible part. This amendment offers the Government a way forward to start to tackle that political problem, as well as the economic and social issues. I beg to move.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I thank the noble Baroness, Lady Bennett of Manor Castle, for tabling Amendment 127A. Although it rightly raises the important issue of pay inequality, it effectively duplicates a review process that we are already undertaking.

It is undeniable that average salaries have stagnated. In fact, they have barely increased from where they were 15 years ago. Had wages continued to grow at the rate seen prior to the 2008 financial crisis, the average worker would now be over 40% better off. This is not just about stagnant wages; it is about persistent and deep-rooted inequalities.

The UK’s income inequality remains above both the OECD and G7 averages. In the financial year 2022-23, the richest 20% of the population received 44% of the UK’s gross income, while the poorest 20% received just 7%. The OECD has noted that higher inequality can lead to underinvestment in human capital and slower adoption of new technologies. It estimates that rising inequality between 1990 and 2010 resulted in UK output being nearly nine percentage points lower than it might otherwise have been.

As I said on day 2 on Report, in one of the world’s wealthiest nations, workers are still turning to food banks. Many cannot afford rent, let alone a mortgage. Morale is at rock bottom and motivation is vanishing. The noble Baroness is right: executive pay keeps climbing. In 2023 the average FTSE 100 CEO earned 118 times more than the median UK worker, up from 50 times in the late 1990s. This is not sustainable or fair.

The UK exhibits greater regional disparities in productivity, pay, educational attainment and health than many other developed nations. This Bill, by benefiting lower-paid employees most, will help reduce these disparities, not only in terms of income but in the quality of work experienced. Supporting this, analysis published in 2019 by the World Bank found that employment protections can play a significant role in reducing income inequality.

As I have previously outlined, we already have robust monitoring and evaluation mechanisms in place. By reinforcing the framework that supports our workforce, we are making work more secure and predictable. We are also putting more money into the pockets of working people by making wages fairer. I therefore respectfully ask the noble Baroness, Lady Bennett of Manor Castle, to withdraw Amendment 127A.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for his answer, although I have to express disappointment that none of the other Front Benches wanted to engage with the issue of high pay. The Minister very much acknowledged the issues around low pay and talked about robust monitoring and evaluation of high pay, but he did not speak about any action on it nor even about any plans for action on it. We have a real problem with the inequality that has seen those executives’ salaries—those fat cat salaries—rise and rise. As I said in my introductory remarks, there is an opportunity cost where those resources are going to that, as well as, of course, the sense in society that there is a deep unfairness and the Government are not doing anything about it.

I remain disappointed. This is certainly an issue that I and the Green Party will continue to work on but, in the meantime, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Goddard of Stockport (LD)]

My Lords, I have to say that this is probably the most difficult summing up from our group of all the amendments throughout Committee and Report, because I can see the merits of both sides of this argument.

On the one hand, the noble Lord, Lord Hunt, is quite right. We are naturally suspicious of any new amendments on Report, as they have not had consultation or examination. Having said that, as a group, we have to be consistent, and our approach is that SMEs need the most support. They are the people who are the most insecure and who email me more than anyone else, and so you might think that I would be minded to support these amendments.

However, on the other hand, these amendments, in our view, would create the two-tier employment situation which we have consistently opposed throughout the legislation. I have stood here night after night saying that I cannot agree with amendments because we want one set of legislation for the entire SME sector. A two-tier arrangement would throw more upheaval and uncertainty on small SME businesses, leading them to wonder whether or not they qualify and whether they are in or out.

On balance, and probably for the first and only time in this Chamber, if this issue is pushed to a vote, our group will, unusually, abstain. That does not mean that I am not supportive of the thought behind the amendments, but we feel very strongly that there could be unintended consequences. The legislation should be clear, concise and uniform. This would cloud it a little, as it is looking for a two-tier arrangement. On balance, we are unable to give this group of amendments our full support tonight.

[Lord Leong (Lab)]

My Lords, I am grateful to all noble Lords who have spoken. I may not agree with some of the sentiments of some noble Lords, but I have listened to all the arguments in the last few years, such as when minimum wage was debated. The scaremongering that businesses will go bust does not hold water with me.

We are not anti-business; you cannot find someone more pro-business than me. I have started businesses and been a small business person myself. I strongly believe that this Bill works for workers and for business.

Before I address the amendments in the names of the noble Lord, Lord Sharpe and Lord Moynihan of Chelsea, let me say this: the Government are committed to supporting SMEs. We accept that they have been subject to a challenging operating environment and global uncertainty. That is why the Government have set up the new business growth service, to streamline access to support, and why the new strategy will span key areas, including access to finance, market expansion, business capability development, entrepreneurship, and the creation of a strong and stable business environment. In combination with our industrial strategy, trade strategy and, I hope, our SME strategy, which will be published shortly, it is a key part of this Government’s plan for change to encourage growth and put more money in people’s pockets.

Let me turn first to Amendments 132, 133, and 134. We introduced a streamlined route through the Central Arbitration Committee, which was established in 1975. It is a decision-making process for model access proposals to ensure that genuine and reasonable requests for access are not subject to unnecessary delay, while maintaining appropriate safeguards where complexity or dispute remains.

Regarding Amendments 129, 131 and 145, we believe that strong trade unions are central to tackling issues of insecurity, inequality, discrimination, enforcement and low pay across the economy. Right of access is key to this. The access framework allows for flexibility for SMEs. Unions and employers can negotiate an access agreement and employers may challenge proposals they consider unsuitable. Where an access agreement cannot be agreed, the CAC determines whether access should be granted, and this decision will be guided by matters prescribed by the Secretary of State.

On Amendment 128, the intention behind this measure is to ensure that all workers are informed of their legal rights at work without imposing undue burden on employers. Making it a requirement for employers to inform workers of their right to join a trade union is about fundamental fairness and transparency. Too many people, especially in low-paid or insecure jobs, do not know that they have this right. We are not telling anyone to join a union; we are simply making sure that they know it is an option. Just as employers are expected to inform staff about health and safety rules or their right to paid leave, they should also be clear about the right to union representation.

[Baroness Lawlor (Con)]

Will the Minister agree that it is a bit heavy-handed to require an employer to furnish a new employee, at the same time as giving them the agreed terms and conditions of employment letter, with a statement on their right to join a trade union? I cannot see that that is proportionate.

[Lord Leong (Lab)]

It is just like any other right that employees expect, such as health and safety, annual leave and all that. The right to join a union does not mean that they have to join a union; it is still their choice. It is a small step that empowers workers and supports a fairer and more balanced workplace.

The statement of trade union rights will be provided at the start of employment, alongside an existing written statement of particulars already required under Section 1 of the Employment Rights Act 1996 and at other prescribed times. Given that it builds on an established process, we believe that this measure places minimal burden on employers, including many small businesses. We will consult on the practical details of Clause 55 before this is set out in secondary legislation.

On Amendment 130, the right to access is a complex policy and will involve detailed practical consideration. We will therefore provide for the operational details of a responsible and regulated access framework in secondary legislation. Ahead of doing so, we will publicly consult on the operational details this autumn, including on model access terms that the CAC must consider reasonable for both employers and unions to comply with, and the appropriate amount of notice a union must give before access takes place. Consulting before setting out these operational details will ensure that we cater for a variety of scenarios and workplaces and will ensure that these measures are fair and workable in practice. We believe that providing for this operational detail now, ahead of consultation, would be premature. I therefore respectfully ask the noble Lord, Lord Hunt, to withdraw Amendment 128.

[Lord Hunt of Wirral (Con)]

My Lords, I say with great regret that the response we have received today is totally unconvincing. At no point throughout the progress of the Bill have Ministers offered a satisfactory explanation as to why sweeping changes to trade union access rights, including digital access, were introduced on Report in the other place, with no consultation, no impact assessment and no regard for the realities facing small and medium-sized businesses. There has been no clarity whatever regarding how these measures will work in practice.

How right the noble Lord, Lord Londesborough, is to stress that there has been no recognition of the burden they will place on the thousands of small and medium-sized employers across the country. There has been no proper answer to my noble friend Lord Moynihan of Chelsea, who was supported by my noble friends Lady Lawlor and Lord Leigh of Hurley. I have no need to reply to the noble Baroness, Lady O’Grady of Upper Holloway, as she was shot out of the water by my noble friend Lord Hannan of Kingsclere. All I will say is that there has equally been no proper consideration of the broader impact these changes could have on the labour market, particularly on hiring, retention and business confidence, at a time of economic uncertainty.

I regard the noble Lord, Lord Goddard of Stockport, as consistent, but I disagree with him fundamentally. I hope he will issue a detailed explanation to the Federation of Small Businesses as to why he has felt unable to follow its guidance that there has to be a recognition of the special needs of small and medium-sized enterprises. I can well understand that the arguments that the noble Lord, Lord Londesborough, introduced in support of Amendment 129, together with Amendments 131 and 145, provide a simple and proportionate safeguard. Given the seriousness of these issues and the complete lack of justification for how this has been handled, I shall seek to test the opinion of the House on Amendment 129, but, in the meantime, I beg leave to withdraw Amendment 128.

Employment Rights Bill

Lord Leong Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I shall speak to Amendments 105, 107 and 159 in my name. On Amendment 105, the Government are well aware that this Bill, in particular Part 1, will have a detrimental effect on seasonal work and seasonal industries, but they have failed to provide any clear definition of what seasonal work is. We therefore think it is essential that the Bill includes a precise definition to protect those vital sectors to ensure that the law reflects their unique and fluctuating nature. We are discussing the lives and livelihoods of thousands who work not in rigid year-round roles but in the beating heart of seasonal industries, such as agriculture, hospitality, tourism and the performing arts. Their work ebbs and flows with seasons, festivals, harvests and holidays, not according to neat quarterly reporting periods. Yet, under the present draft, a 12-week reference period is being proposed as a basis for determining what constitutes an established pattern of work.

Let us pause on that. Twelve weeks—barely three months or, one might observe, the precise duration of just one of the four seasons—is being treated as a sufficient measure for sectors whose very nature is defined by unpredictability and periodic intensity. That is not only an inadequate metric but, in many cases, an actively misleading one. A fruit farm may employ hundreds in May and none by August. A theatre technician might work flat out during festival season and then have no engagements for months, or be working elsewhere. A seaside hotel may be bustling in July but deserted in November. To take a short-term temporary rise in demand and then draw long-term legal assumptions from it about continuity of work is not merely a flawed approach but deeply unfair to both employers and workers.

Businesses cannot predict with such precision. They cannot bind themselves to a rhythm that the market does not keep. If they are forced to do so, they will, understandably, become more cautious. They will hire fewer people, reduce opportunity and retreat from flexibility altogether. Flexibility is not a sin, nor is it bad for an economy. In many cases it is the only practical means by which people—students, carers, parents and artists—can participate in the labour market. We must not make mistake irregularity for instability, nor seasonal work for insecure work.

This amendment does something elegant and essential: it defines seasonal work in clear, practical terms; it captures its recurring yet temporary character, grounded in the real operational rhythms of key sectors; and, crucially, it instructs the Secretary of State to have regard to this definition when drafting regulations. That is not an escape clause; it is a safeguard against blunt policy-making. We are not asking for a loophole; we are asking for recognition that not all labour is uniform and not all employment patterns can or should be squeezed into the same regulatory mould. If we pass this Bill without such a safeguard, we risk chilling seasonal hiring altogether—not protecting workers, just denying them opportunities.

I am grateful to my noble friend Lord Roborough for signing Amendment 107 and I look forward to hearing the answers to the questions that he asked, particularly on the suicide statistics. I hope the Minister is able to address those. Before turning to the matter at hand, I must begin with an unequivocal condemnation of the Government’s recent family farms tax policy. This disastrous measure has placed an unbearable strain on family farms, which are the very foundation of our rural communities and the heart of our national food security. Instead of supporting these hard-working families, the Government have chosen to punish them with policies that threaten their very existence. I urge the Government to commit today to reversing this tax immediately for the sake of our farmers, our countryside and our country.

Having said that, I turn with equal concern to the Employment Rights Bill. Although this Bill’s goal is to enhance worker protections, which is commendable, it tragically fails to take into account the unique realities of farm businesses and seasonal work. As we have heard, farming is unlike any other industry. It is defined by seasonal peaks and troughs, by work that is dictated by the weather and the cycles of nature, and by labour demands that can change from one week to the next. To impose inflexible employment rights designed for stable year-round jobs on these seasonal industries is to misunderstand them fundamentally.

Take, for example, the proposal to extend unfair dismissal rights from day one of employment, which we have just discussed, or the Bill’s restrictions on zero-hours contracts, which would further exacerbate some of these issues. Zero-hours contracts in agriculture are not a tool of exploitation but a necessary mechanism for managing the ebb and flow of seasonal labour. Moreover, the proposal to require compensation for cancelled shifts fails to consider farming’s intrinsic unpredictability. Decisions about work can hinge on weather conditions that change with little notice. To expect farmers to pay for cancelled hours when fields are unworkable is simply unrealistic and unfair.

Even the Bill’s provisions on the right to request flexible working place an undue burden on farmers. Agricultural work is highly seasonal and task driven, as my noble friend Lord Roborough explained. That makes flexible working requests difficult to accommodate in practice. Raising the threshold for employers to refuse these requests will hamper farms’ ability to plan and respond to fluctuating labour needs.

That is why Amendment 107 is not merely desirable but essential. By introducing a clear baseline definition of seasonal work, the Bill can be tailored to reflect the cyclical, temporary and weather-dependent nature of agricultural labour. This amendment recognises the reality of these industries, allowing for the necessary flexibility that the Bill currently denies.

Without this amendment, the Government risk imposing a one-size-fits-all regime that will force many farms to cease hiring, increase costs or even close altogether, yet again devastating rural communities and endangering our food security. I urge people around the House to support this amendment and send a clear message that the law must work with and not against the realities of seasonal work. Yes, we must protect workers, but let us also protect the farms and farmers who feed this nation.

I am grateful to the noble Lord, Lord Londesborough, for supporting Amendment 159. A few years ago, in a remarkable TV interview, a one-time Labour shadow Chancellor could only suggest “Bill somebody” when asked to name a business leader who supported Labour’s policies. Sadly, this Government’s Employment Rights Bill risks the same fate. Ministers cannot name a single small business that supports all the measures contained within it—if any exist at all. This Bill is being rushed through with little regard for the very businesses that form the backbone of our economy. The Government’s own impact assessment hints at a looming disaster but fails to fully capture its devastating effects.

The Federation of Small Businesses warned that this Bill is weighing heavily on the minds of small business owners, already forcing them to put investment and job creation on hold at precisely the moment when they are most needed. The noble Lord, Lord Londesborough, cited the ICAEW, and the Institute of Directors recently revealed that 72% of businesses believe this Bill will harm growth with 49%, so nearly half, saying they intend to hire fewer staff as a direct result.

Yet the Government insist that businesses will simply absorb these costs—a statement that is not only unrealistic but dismissive of the precarious financial position many small enterprises face. Larger firms may weather the storm but small businesses often survive on razor-thin margins, and their survival will come at the cost of lower wages, reduced opportunities, or a reluctance to hire new staff at all. The Office for Budget Responsibility has warned that these sweeping new regulations will likely have

“material, and probably net negative, economic impacts on employment, prices, and productivity”.

That, I fear, is masterly understatement.

Crucially, the Government have missed one vital fact—competition between employers, not simply regulation, best protects workers’ rights. Employers who want the most productive, loyal and committed workers must offer better pay and conditions to attract and then keep them. This natural market dynamic encourages fairness and opportunity far more effectively than heavy-handed mandates. This Bill would distort competition by imposing complex rules and costs that distract businesses from focusing on growth and innovation. Instead, they will divert precious resources into managing compliance and legal risk, and into erecting barriers rather than enabling opportunity. Ironically, this will lead to fewer businesses competing for talent and therefore fewer jobs being created.

The Government claim that these rules will improve job security and working conditions, but the reality is that the increased costs and risks will force many small businesses to rethink their hiring plans altogether. The FSB says so. They will either hold back on creating new jobs or cut existing ones, and some will reduce wages or cut hours to survive. The intended protections risk backfiring, making work less secure and less rewarding. Ultimately, the costs imposed by the Bill amount to a stealth tax that will fall directly on the workers themselves—an opportunity tax. Employers faced with higher compliance costs, the risk of costly tribunals and the restrictions on flexibility will have little choice but to pass these expenses down the chain. This means lower wages, fewer hours and fewer job opportunities, ensuring, paradoxically, that work simply does not pay.

I will say a quick word on my noble friend Lord Leigh’s Amendment 106. This Government like a consultation, but they have been unable to name any business they have consulted in relation to Part 1. My noble friend’s amendment is therefore elegant in its simplicity. It channels the Government’s enthusiasm and corrects their omission. I will support it if he chooses to divide. Finally, I remind the noble Lord, who I think is answering, that the noble Lord, Lord Howard, asked a very good question. Lest he has forgotten it, I would like to re-ask it.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to all noble Lords who have spoken in this debate. Amendment 94 from the noble Baroness, Lady Noakes, would exempt specific groups from all or some of the provisions within Part 1. Since the 1980s, UK reforms have stripped back workers’ employment rights and turned the country into an outlier among advanced economies. The UK’s productivity has stalled more sharply than in other economies, with millions trapped in low-paid, insecure and poor-quality jobs. What is the result? Less money in working people’s pockets.

We are now paying the price. Millions of working people cannot afford basic living costs. In one of the world’s wealthiest nations, workers are still turning to food banks. Many cannot afford rent, let alone a mortgage. Morale is at rock bottom; motivation is vanishing. Average salaries have barely increased from where they were 14 years ago. The average worker would be over 40% better off if wages had continued to grow as they did leading into the 2008 financial crash, yet executive pay keeps climbing. In 2023 the average FTSE 100 CEO earned 118 times the pay of the median UK worker, up from 50 times in the late 1990s. This is not sustainable, not fair and no way to build a healthy, productive economy. The UK must stop treating worker protections as a drag on growth. They are the foundations of it.

More than 2 million people could benefit from guaranteed hours and rights to payment on zero-hours contracts. More than 9 million people would benefit from protections against unfair dismissal from day one. Up to 1.3 million employees will get a new entitlement to statutory sick pay. These new rights, entitlements and protections provide a baseline minimum standard for security and dignity at work. They should not be something the Government of the day can freely take away. Furthermore, exempting any category of person that the Secretary of State deems fit will ultimately create a two-tier system of employment rights based on the politics of the day. While I understand the noble Baroness’s intentions, I reiterate that these provisions were manifesto commitments.

Business confidence is at a nine-year high, according to the Lloyds Business Barometer—

[Noble Lords]

Oh!

[Lord Leong (Lab)]

Noble Lords opposite may laugh but this is the Lloyds Business Barometer, which I am sure many noble Lords across the aisle will know—with a second consecutive rise in workforce projections for the coming year. Deloitte recently ranked the UK as the joint top destination for investment.

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, if the noble Lord starts throwing statistics around, I can throw statistics at him as well. As I said earlier, the Deloitte survey shows that the UK is the top destination for businesses. In fact, the Chancellor’s speech at Mansion House yesterday was very much welcomed by the City of London. All the financial services say that London will be the destination for fintech investment. Furthermore, KPMG’s recent consumer index says that people are feeling that they have more money in their pocket and are starting to plan holidays for the summer—good for them.

[Lord Leigh of Hurley (Con)]

I am sure the Minister will want to be very clear on this. I think the Deloitte survey he refers to was in respect of inward investment only, probably because the UK is regarded as a cheap place, given what has happened to us in the last month, whereas the chartered accountant survey is specifically on business confidence, which has fallen every quarter for the last four quarters. One wonders what happened four quarters ago to prompt that.

[Lord Leong (Lab)]

We got into government one year ago, after 14 years. Business confidence was very low then, and at the same time unemployment was on the rise. At the end of the day, we are making progress. The figures will take time to change, but I am confident that confidence will grow. Inward investment is coming in, which means more investment in business and growth. Furthermore, the FTSE index reached the 9,000 mark yesterday. What does that say? People have confidence to invest in British companies, so let us not talk down the economy.

[Lord Sharpe of Epsom (Con)]

My Lords, I cannot let that pass. The noble Lord will know that the FTSE represents mostly foreign earnings. It is not a domestic index.

--- Later in debate ---

[Lord Hunt of Wirral (Con)]

My Lords, we are very grateful to my noble friend Lord Moynihan of Chelsea for his amendments. I thank the Minister and her team for the way in which they have entertained and thought through some of the key points made by my noble friend. As he rightly pointed out, collective redundancies are, sadly, not uncommon in cases of employer insolvency. In such circumstances, the role of the insolvency practitioner, which my noble friend has outlined so clearly, is both time-critical and highly constrained. The legal duties placed upon practitioners can come into direct tension with the obligation to consult collectively with employees, a tension that is not merely theoretical but is borne out time and again in practice.

I say to the noble Lord, Lord Goddard of Stockport, that the amendment does not seek gratuitously to diminish the rights of employees. My noble friend has drawn the Government’s attention to a genuine gap in the law, one that has become more acute in the light of the changes that the Bill introduces. As it stands, the duty to consult can place insolvency practitioners in an impossible position, bound by law to take urgent decisions to preserve value or manage a collapse while also facing legal jeopardy for failing to comply with collective consultation obligations that were not, and never were, designed with insolvency in mind.

We have to be realistic. Where a company is collapsing, consultation—however desirable—cannot always be carried out in the prescribed way. It is in nobody’s interests, least of all that of employees, to put insolvency practitioners in a position where they are forced to choose between compliance with employment law and their fiduciary responsibilities.

I believe that the Government should take my noble friend’s arguments seriously. This is not a theoretical concern; it is a matter of practical urgency. I therefore urge the Minister to reflect carefully on the implications of the clause and to engage with my noble friend’s proposal in the constructive spirit in which it is offered.

[Lord Leong (Lab)]

My Lords, I am grateful to all noble Lords who have spoken. Amendments 108 and 109, tabled by the noble Lord, Lord Moynihan of Chelsea, would amend Clause 27. I thank the noble Lord, as well as the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, for their engagement in this matter when we met.

On Amendment 108, the clause as drafted does not alter how collective redundancy obligations apply to insolvent employers. It is right that, when employers know that their business is in trouble and redundancies will be necessary, they should be required to do as much as possible to collectively consult on those redundancies. That was the case before and it will be the case after this legislation comes into force, so nothing has changed.

Employers should consult when they propose to make a qualifying number of redundancies, and they will face penalties if they do not. However, crucially, as my officials and I have discussed with noble Lords, those penalties are set by a tribunal, which will take into consideration the seriousness of the employer’s default, as well as any mitigating factors. The amount set out in legislation is a maximum award, but tribunals may award less where the employer or insolvency practitioner has taken all reasonable steps to consult for as long as possible in the circumstances.

Section 188(7) of the Trade Union and Labour Relations (Consolidation) Act 1992 already affords flexibility for employers who cannot fulfil their collective consultation obligations. It allows employment tribunals to assess on a case-by-case basis whether there are special circumstances which make it not reasonably practicable for an employer to comply with their collective consultation obligations.

--- Later in debate ---

[Lord Moynihan of Chelsea (Con)]

I apologise for intervening, but is the Minister saying that R3 stated that it was against this amendment?

[Lord Leong (Lab)]

The R3 website said that it was concerned about the amendment because it may devalue a company’s valuation on an ongoing basis because of the day-one rights accorded to employees. That is what it said on the website.

[Lord Moynihan of Chelsea (Con)]

I do not want to detain the House, but I am in ongoing discussions with R3, and it has never said this. Is the Minister quite sure that it is not saying that it is concerned about the clause, rather than the amendment?

[Lord Leong (Lab)]

I may be wrong. Sorry: it is not the noble Lord’s amendment; it is the clause. I apologise for that. But it is the same thing: if it is against the clause, it is because it is concerned about the valuation of the business. My point is, why should the employees suffer because of the taking into account of day-one rights?

On Amendment 109, I inform the noble Lord that the notification period in the current law aligns with the consultation period. This means in practice that whenever an employer begins a collective consultation, they must also notify the Secretary of State at that point. Setting these periods at different times could cause confusion for employers and increase the risk of non-compliance. The objective of the notification provision is that such notifications may be distributed to appropriate government departments and agencies that are best placed to support affected employees. This amendment would mean that those agencies would be less prepared to support large volumes of individuals who have been made redundant. We have had extensive engagement with employers throughout the passage of the Bill, and the notification timeline has not been raised as a concern. Therefore, this amendment is unnecessary.

I take this opportunity to say to the noble Lord that we will engage with the Insolvency Practitioners Association, raise and discuss the issues that noble Lords have raised, and listen to what it has to say. With that in mind, I ask the noble Lord to withdraw Amendment 108.

[Lord Moynihan of Chelsea (Con)]

I thank noble Lords for their patience in enduring at this late hour this somewhat arcane discussion. The noble Lord, Lord Goddard, emphasised the importance of consultation and, indeed, the essential nature of it, and said how vulnerable employees are. But they are not vulnerable in this particular circumstance; they have priority as creditors above all other creditors. If there is money, they will get it. If there is no money, they will get it from the Redundancy Payments Service. But why, having got their full amount of redundancy money, should they then scoop the pot and get three times as much because of a flaw in the law that will leave, for example, small trade creditors not receiving anything and possibly facing bankruptcy? That is not to mention the fact that a lot of this money will usually come from the taxpayer—ultimately, the source of funds for these penalty payments—via HMRC, where the Redundancy Payments Service is, thus increasing the deficit. It would create a mini black hole, if I could be so foolish as to mention that.

My noble friend Lord Hunt of Wirral ably reinforced the need for this amendment. The Minister emphasised the importance of consultation. I understand that, but I believe Hansard will show that I have already dealt with most of the items in his response. I will not delay noble Lords any longer by going over that ground again, except to say once again that when he asks why employees should suffer, the answer is that they will not suffer. I hoped I had explained that. I am chagrined to understand that I have not. They have total priority above all other creditors in receiving their full redundancy payments.

All I ask is, why should they, as a result of a glitch in the law, receive in total three times that much as a so-called penalty payment? They will not be paid by the employer because the employer will be long gone. They will not be paid by the insolvency practitioner, in facing the impossible task of obeying both laws at the same time. They will be paid mostly by us, first through HMRC and through it the taxpayer.

The hour is late and so, if only on compassionate grounds, I beg leave to withdraw my amendment.

--- Later in debate ---

[Lord Hunt of Wirral (Con)]

My Lords, I thank the noble Lord, Lord Goddard of Stockport, for his important words when he talks about the impact of the Bill on small and medium-sized enterprises. The fact is that while the Government recognise the impact, they have not really taken enough time and trouble to identify the extent of that impact. The Government may argue that they cannot predict the future. We are not asking them to, but we are asking for greater effort in understanding the likely incentives that their policies will create and for a thorough, transparent review of the impact on small businesses. Only then can this House exercise proper scrutiny and ensure accountability.

I will now deal primarily with Amendment 166 in the names of my noble friend Lord Sharpe of Epsom and the noble Lord, Lord Londesborough. The Regulatory Policy Committee has given the Government’s existing impact assessment a red rating. We have referred to this before, and the Government have never denied that rating. The rating means that they have failed to provide an adequate analysis of most of the Bill’s provisions. The Government talk about the Bill representing the biggest upgrade to workers’ rights in decades, and one that is long overdue. If that is indeed the case, we should expect a comprehensive, evidence-based analysis of its effect, in particular on small businesses, which make up 99% of all businesses in the UK.

Amendment 194 is not a wrecking amendment. The fact is that the Government have provided no evidence of any tangible benefit from their proposed trade union reforms—we will deal with those in much more detail on our next day on Report. The Government optimistically suggest that the changes might improve industrial relations, but no one seriously believes that—I doubt that even the trade unions do. We have seen the chaos that these types of measures have caused in the public sector. Our worry is that the Government now want to import that chaos into the private sector. Even if strike days are reduced, it will come at a high price: unaffordable pay rises and extreme regulatory burdens designed to placate union demands. That will ultimately harm hiring, weaken competitiveness and make the UK a far less attractive place in which to invest.

As for Part 5 of the Bill, the Government are proposing to hand sweeping powers to the new fair work agency without any meaningful safeguards. Will a minor accounting error mean that family-run businesses face raids from civil servants and property seizures? Will everyday employees with small workplace grievances, who simply want to resolve them informally, find themselves sidelined as the Secretary of State pushes their case to a tribunal, without their knowledge or consent?

Let us be clear: when the Conservative Party wins the next general election, we will repeal these sections and restore a labour market rooted in growth and prosperity.

[Lord Leong (Lab)]

My Lords, I am grateful to the noble Lord, Lord Hunt of Wirral, for his contribution and to the noble Lord, Lord Goddard, for speaking to his amendment.

Amendment 194, tabled by the noble Lord, Lord Sharpe of Epsom, seeks to repeal Parts 4 and 5 of this Bill, as well as Sections 149 and 150 at the end of this Parliament. In Committee, we debated at length the merits of Part 4 and 5 of the Bill, as I am sure we will again next week, as the noble Lord, Lord Hunt, mentioned. Parts 4 and 5 are key to delivering the biggest upgrade in workers’ rights in a generation, so I do not wish to repeat myself to your Lordships’ House tonight.

Amendment 166, also tabled by the noble Lord, Lord Sharpe of Epsom, proposes a review process that effectively duplicates what we are already doing. As I have outlined previously, the Government already have robust monitoring and evaluation plans in place. The Government’s impact assessment sets out how we will review the Bill and any secondary legislation that follows, including effects on small businesses, which we know are vital to the economy. The recently published road map shows that implementing this Bill will take several years and its full effects will not be realised until long after Royal Assent. Significantly advancing a post-implementation review would not allow for an effective assessment of its impact, including on small businesses.

On Amendment 111, moved by the noble Lord, Lord Goddard of Stockport, this Government know the importance of making sure that employers of all sizes are supported in preparing for employment rights reforms. As set out in our road map, the Government are committed to ensuring there is sufficient support and guidance for employers of all sizes. As set out in paragraph 24 on page 8 of the road map, we will be working closely with ACAS and others to develop codes of practice and guidance on measures where these are needed. We have committed to ensuring time is built into our implementation plans to allow stakeholders, including many small businesses, to familiarise themselves with changes in law, codes of practice and guidance. Many of the measures in the Bill build on existing legislative provisions which already have guidance and codes of practice. When we make changes to regulations, we will also work to update relevant guidance and codes of practice as a result.

We know one of the main places that people turn to for reliable, accurate information on legal requirements is GOV.UK. Work is currently under way to ensure that our digital content is usable, easy to navigate and accessible for all stakeholders. In addition, we have engaged, and will continue to do so, with stakeholders of all sizes to understand what support will be useful for them in implementing these changes.

The noble Lord’s amendment is unnecessary and duplicative. An additional code of practice on top of the guidance and support that the Government have already planned risks causing confusion among stakeholders as to where they should turn for clarity and certainty. I therefore respectfully ask the noble Lord, Lord Goddard, to withdraw Amendment 111.

[Lord Goddard of Stockport (LD)]

I thank the Minister and the other speakers in this small group. Although it is three minor amendments and it is 11 o’clock at night, for us, and, I think, for the Conservatives, small businesses are the heartbeat of the economy in this country. We will keep nagging about small businesses, and we want clarity and certainty.

Yes, codes of practice are great. I have read the road map; it is very interesting. I understand the direction of travel with the road map. It requires patience, trust and a little bit of honesty about what is deliverable in time periods. The road map is a good thing, and I recommend people to read that road map.

Small businesses need to know now the impact of this proposed legislation. Asking for reviews of that, after a period of time, does not seem unreasonable to this group. We are not being awkward for the sake of being awkward, we are just trying to protect small businesses and small companies that are, quite frankly, bewildered. They do not have a political view on the Employment Rights Bill. They are bewildered as to how someone can come in and affect how they try to make a small profit and a small living.

We will continue to probe, not forcing votes for the sake of votes. I speak to Ministers regularly, probably more with these Ministers than on any other Bill—apart from the football Bill, perhaps, with the Minister who is sat next to the noble Lord. The Ministers have been really helpful and supportive, and I appreciate that. I think they understand where we are coming from on this—we are not trying to be obstructive, but we are just trying to tease out a little bit more detail and promise of certainty for people. At the moment, life is difficult, and to put more uncertainty in front of people who are trying to do the things the Government want them to do—grow their business, employ more people and create GVA—those things have to be compatible with the things they are trying to do for the employees. On that basis, I will stop wittering on, and I withdraw my amendment.

Companies House: Filing of Annual Accounts by Small Companies

Lord Leong Excerpts

Tuesday 8th July 2025 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government what plans they have for implementing, modifying, or repealing any part of the Economic Crime and Corporate Transparency Act 2023 dealing with the filing of the annual accounts by small companies at Companies House.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, this Government are committed to implementing the Economic Crime and Corporate Transparency Act 2023. The reforms in the Act aim to improve the accuracy of Companies House data, strengthening the UK’s reputation as a place where legitimate businesses can thrive while driving out dirty money. These changes aim to improve transparency and combat economic crime. The Government are engaging with stakeholders and Companies House to ensure effective implementation while minimising burdens on small businesses.

[Lord Sikka (Lab)]

My Lords, the secrecy afforded to small companies has incubated financial crime. Just last month, HMRC said that 40% of corporation tax due from small businesses is not being paid. Numerous money laundering, sanctions-busting and employment scams are fronted by small companies; therefore, we need far more information publicly filed by small companies at Companies House. So, further to his reply just now, can the Minister say that the Government will fully implement all the public filing requirements which apply to small companies under the Economic Crime and Corporate Transparency Act 2023?

[Lord Leong (Lab)]

My Lords, the reforms under the Economic Crime and Corporate Transparency Act 2023 represent the largest changes to the UK’s financial framework for registering companies in over 180 years. With the help of new powers, Companies House has already prevented some 14,600 suspicious filings and queried and removed false, misleading or incorrect information impacting some 106,000 companies. Furthermore, since the introduction of new data-sharing powers in March 2024, Companies House has shared approximately 800 intelligence reports with partners, who can use this to complement their own intelligence picture or take immediate action to disrupt illicit activities. We recognise recent concerns and will set up next steps to address specific concerns raised.

[Lord Popat (Con)]

My Lords, we as a country are heavily legislated for small companies. We see a large number of UK companies leaving the London Stock Exchange for New York, and a large number of people leaving the country for good. We do not celebrate wealth creation any more. To further burden small companies that create wealth and jobs for our country will be a bit too much. Can we look at watering down some legislation and encouraging small companies to grow?

[Lord Leong (Lab)]

I thank the noble Lord for that. I hope that he has read our industrial strategy. We aim to reduce something like 25% of regulation on businesses. Currently, as it stands, as the noble Lord will know, most companies have to file abbreviated accounts with Companies House. So what we are asking is nothing more than what they are already doing, so we are not adding additional burdens on small businesses.

[Lord Vaux of Harrowden (CB)]

My Lords, thanks to the efforts of this House, the Economic Crime and Corporate Transparency Act introduced a new power for the Government to regulate in order to find out about people holding shares as nominees for other people, which is one of the easiest and most common ways by which beneficial ownership of companies can be hidden. A whole industry has built up to facilitate this. What assessments have the Government made of the misuse of nominee shareholders, and what plans do they have to use those regulations?

[Lord Leong (Lab)]

The noble Lord makes a very interesting point. Let me just give your Lordships an insight into what Companies House has done since the Act came into force. We have been cleaning up the Companies House database, and we have a five-year timeframe to really clean it up. The first thing we will do is to verify those individual directors. There are something like 7 million directors at Companies House and, currently, some 250,000 directors have voluntarily verified themselves. Towards the autumn of this year, through the GOV.UK One Login, we hope to have close to all the 7 million verify who they are, so that we can get to the bottom of whether who they say they are is exactly who they are.

[Viscount Hanworth (Lab)]

My Lords, the registration is wholly inadequate. Independent research suggests that numerous UK-registered companies have no UK resident director. Such companies are 17 times more likely to commit fraud, as the Government are in no position to impose UK law on directors living abroad. How will the Minister curb the frauds of such companies?

[Lord Leong (Lab)]

The noble Viscount is absolutely right. We obviously do not have jurisdiction on foreign companies or companies registered outside the UK. Let me share some facts with the noble Viscount. Since 4 March 2024, Companies House has made significant progress in tackling false and misleading information on the register, using the new powers under the Act. Companies House has removed some 220,000 false and inappropriate addresses, some 52,000 people named on incorporations without their consent, and over 13,000 documents from the register, including something like 800 false mortgage satisfaction filings that previously required a court order. So we have come some way, but there is still a lot more to do, and Companies House is getting on with it.

[Baroness Kramer (LD)]

My Lords, perhaps the Minister can help me, because I have become very confused. Like the noble Lord, Lord Sikka, I understand from the Financial Times and others that the Government have decided to shelve the reforms in filing for small companies, even though most of those companies have upgraded their software already in order to meet the requirements of Making Tax Digital, so there is very little additional cost to a proper filing. Could he explain that, and also pick up on the pt made by the noble Lord, Lord Sikka, which is that there is broad evidence now that organised crime is increasingly using tools such as AI so that it can front various scams and sanctions-busting by using small companies?

[Lord Leong (Lab)]

The noble Baroness has obviously read various newspaper reports. I suggest to her, “Don’t believe everything you read from the papers”. As it stands now, most companies have to file abbreviated accounts, which, as the noble Baroness will know, is just a balance sheet. We are asking under this Act for them to file accounts. As I said earlier, we recognise the concerns raised by various stakeholders and we will set up next steps to address those recent concerns. When this happens, a statutory instrument will be placed and noble Lords can debate it.

[Lord Sharpe of Epsom (Con)]

My Lords, obviously, we welcome sensible steps to reduce unnecessary burdens on small business, but, given the alleged decision to reverse the reforms to small business account filing, have His Majesty’s Government done the necessary work to ensure that reduced financial transparency does not damage creditor confidence, does not hinder investor due diligence and does not restrict access to finance for small companies?

[Lord Leong (Lab)]

The noble Lord is absolutely right. It is important that people must be able to rely on the data that is on file with Companies House, whether they are doing business with a particular company or to determine whether the company’s financial statements are accurate. Most companies file their accounts on time and accurately. A small minority of companies do not file their accounts on time or, perhaps, properly. This Act hopefully will go after those small companies. We are not imposing burdens on small businesses. We just want to tackle economic crime.

[Lord Hain (Lab)]

My Lords, on the Economic Crime Act 2023, can my noble friend explain what the Government are doing to block the £90 billion that is laundered through the United Kingdom annually, often by kleptocrats buying properties or via “onshore London” as a means of tax avoidance in UK Overseas Territories or Crown dependencies, labelled “Britain’s second Empire”, such as the Cayman Islands, the British Virgin Islands especially, the Bahamas, Gibraltar, Bermuda and the former UK colonies of Singapore and Hong Kong?

[Lord Leong (Lab)]

My noble friend makes a very important point. The cost of economic crime and financial opacity is staggering. It costs something like £350 billion a year to this country. Tackling illicit finance has been a top priority for this Government from day 1. We welcome the progress that has been made by many overseas territories in improving access to beneficial ownership registers to boost transparency. For those that have yet to deliver, we have made clear the importance of meeting their agreed-upon commitments and have offered technical help. However, our position is firm. Rapid and robust action is expected. The UK will not tolerate any part of its network being used to conceal dirty money or hinder law enforcement.