National Minimum Wage Legislation

Lord Sikka Excerpts

Thursday 21st March 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

In the recent Supreme Court judgment on Uber, it was made clear that those who qualify as workers under existing employment law are entitled to core employment rights and that all gig economy businesses must ensure that they fulfil their legal responsibilities. We now have a situation in which the national minimum wage is two-thirds of hourly median pay, and under OECD rules that means it is no longer classified as low pay. We know that 5% of our workforce is on national minimum wage, which is a great success.

[Lord Sikka (Lab)]

Currys, EasyJet and Greggs are part of a parade of companies that never forget to pay bosses but somehow forget to pay the minimum wage to workers. Their memory can be improved by effective sanctions requiring that the fine for not paying the minimum wage must equal remuneration of the entire board, of which at least 50% must be paid personally by directors. When will the Minister introduce this sanction?

[Lord Offord of Garvel (Con)]

One of the sanctions available to the Government is the naming and shaming scheme, which is very successful. We have a large number of companies which have been subject to that, and we have therefore increased greatly the number of companies complying as a result. When HMRC finds employers which breach this, it can impose a penalty of up to 200%; the penalties are severe for companies which do not comply.

Horizon Scandal: Psychological Support Services

Lord Sikka Excerpts

Monday 4th March 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank my noble friend. I once again pay tribute to his continual scrutiny of this matter, and his vital role on the advisory committee. Currently, the compensation is directed to each claimant—a postmaster or postmistress—but the whole point of having the advisory committee is to have live discussions on this. I encourage him, in that capacity, to keep those discussions going.

[Lord Sikka (Lab)]

My Lords, last week I met several wronged sub-postmasters, most of whom were earning barely the minimum wage. They have been wronged by Ministers, senior civil servants, lawyers, Post Office directors and investigators, and executives at Fujitsu. Can the Minister explain what legal advice and financial help the Government have so far given, or will give, the wronged sub-postmasters to enable them to bring the culprits to justice?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. As I have said before from the Dispatch Box, there is help available as part of the compensation schemes for the claimants, to put their claims together and get access to lawyers and healthcare. As I said, 78% of claims have been settled. We are now dealing with the most difficult claims. In the meantime, there is a statutory inquiry going ahead, which will get to the bottom of this, and we will understand the full extent of how this sorry saga came about.

Employment and Trade Union Rights (Dismissal and Re-engagement) Bill [HL]

Lord Sikka Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I congratulate my noble friend Lord Woodley on this much-needed Bill, which will make the UK a better place for workers and businesses alike. As my noble friends Lord Woodley and Lord Hendy have explained, the Bill does not completely ban fire and rehire; it merely curbs the abuses and requires companies to properly consult employees on a statutory footing before any major restructuring that might lead to fire and rehire.

The Bill has reminded me of the words of a former US Republican President, who said:

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration”.


That President was Abraham Lincoln and his views are as relevant today as they were in 1861.

We all know that within our economic system there are antagonisms between labour and capital, but there is also a mutual dependence of the two. Workers’ rights are an indispensable part of wealth creation and building a sustainable economy. The Bill comes at a time when fire and rehire is being used as a bully-boy tactic to undermine workers’ pay and conditions across a number of industries.

A study by the Observer newspaper stated that 70% of employers using fire and rehire of staff on worse contracts maintained healthy profit margins and that, in most cases, also increased executive pay. British Gas used fire and rehire tactics to dismiss 500 engineers, but it has now reported a tenfold increase in profits in just one year. At Asda, some 7,000 workers are being impacted by fire and rehire as private equity owners seek to boost their returns.

We cannot build a sustainable economy by increasing worker insecurity. That has not been done anywhere, yet it is what the Government are trying to do here. Workers’ economic security is undermined wherever employers wield the capacity to demand, deny or discontinue work completely at will and with impunity. The Work Foundation estimates that in 2023, around 6.8 million workers—around 21% of them—were in severely insecure work, with wholesale and retail, agriculture, professional and scientific, and hospitality workers particularly badly affected. The Chartered Institute of Personnel and Development has reported that, since the pandemic, nearly one in 10 workers have been told to reapply for their jobs on worse terms and conditions or face the sack.

Women are 2.3 times more likely to be in insecure work than men. People from ethnic minorities, 18 to 25 year-olds and 1.45 million disabled workers are more likely to be in insecure work than any other sections of our population. Fire and rehire increases insecurity, anxiety and physical and mental health problems. Up to 300,000 people with mental health problems arising from their work situation lose their jobs each year. Around 51% of long-term sick leave is due to stress associated with work and insecurity. Since 2019, the total annual cost associated with poor mental health has increased by 25%. Employers are losing £56 billion a year because of the insecurities created for workers. Through this Bill, we can recover a part of that: it offers a road to economic recovery and improved labour supply.

A considerable body of scholarly research shows that improved worker rights and rewards provide a solid foundation for strong and stable economic growth by supporting demand and stabilising local currencies and financial systems. Better worker rights are essential for levelling up and result in higher productivity growth, thus leading to faster, stronger and sustainable economic growth. Improved worker rights result in a better distribution of income, both among workers and between workers and companies. In other words, better worker rights lead to a larger output that is more evenly distributed as well. As the benefits of faster growth are more evenly distributed, local demand tends to be stronger and more stable, preventing our town centres becoming economic deserts with swathes of empty shops.

In the face of fewer safeguards for workers, cuts in income reduce demand and Governments increasingly rely, as the current Government are doing, on a shrinking proportion of the population to reflate the economy. Households with unpredictable employment rights and loss of livelihoods resort to pawning things and borrowing money, which ultimately leads to lower spending, lower consumption, a higher risk of financial distress and higher risks to the financial system. We all know what happened before the 2008 banking crash; many people simply could not afford to pay their mortgages. That is one of the consequences.

In short, the Bill curbs the abuse of fire and rehire policies and facilitates economic benefits. I strongly urge all Members of this House to support it

Post Office: Executive Remuneration

Lord Sikka Excerpts

Tuesday 27th February 2024 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government on which dates since 1999 they exercised their right as the sole share- holder of the Post Office to (1) approve, or (2) disapprove, the executive remuneration policies and amounts.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

Under current arrangements, the Government, as shareholder, approve the targets underpinning executive performance pay. Targets are typically approved on an annual basis as these schemes are usually revised each year to ensure that targets are up to date. The Government also approve CEO and CFO remuneration, in principle before their formal appointment. For the CEO, this was provided in June 2019 and, for the CFO, in January 2015. Such approvals have historically been made in line with the Government’s guidance on senior pay in the public sector at the appropriate juncture.

[Lord Sikka (Lab)]

My Lords, it is shameful that year after year, the Government approved remuneration of Post Office directors boosted by a higher bottom line number and inflated by theft from sub-postmasters. Why has none of that so far been clawed back, and why have the Government approved bonuses for Post Office directors for appearing at the Horizon inquiry?

[Lord Johnson of Lainston (Con)]

I am very grateful to the noble Lord for raising this point. I think we all agree that this is an extremely distressing situation for the postmasters involved. A committee hearing is going on in the other place, which I believe we will discuss later this afternoon. I reassure all Members of this House that the Government never approved the bonuses for the section relating to co-operation with the Horizon inquiry. Frankly, the idea that you should reward executives for performing their duty is surprising, and we certainly did not confirm those bonuses. That is a very important point. The second important point to make is that the executives, as I understand it, have paid back the portion of the bonus relating to that, but that does not change the fact that we need to review how Post Office executive remuneration functions. There has been a number of different reviews of the governance of that, and the Government are taking significant note of them.

Post Office Governance and Horizon Compensation Schemes

Lord Sikka Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank my noble friend Lord Arbuthnot. I will take the second one first: there are live conversations going on right now, at great speed, to finalise the legal process with the Ministry of Justice, which will result in the overturning of all the convictions in England and Wales by an Act of Parliament, excepting that there may be some small number of people who, in fact, have had legal or safe convictions, but they will be overturned—as we discussed before—because the greater good is to wipe the slate clean as quickly as possible. That will be coming to this House in short order, and I imagine there will be unanimous support for that.

As for the timing and the finance, the finance for this will come ultimately from the Treasury. The Treasury has been funding DBT, in order for it to fund the Post Office, and, in the course of last year, under the chairmanship of Henry Staunton, £253 million was paid by the Treasury, via DBT, to Post Office Ltd, of which £150 million was for the compensation schemes—and £160 million has now been paid—and the £103 million was for the replacement of the Horizon system. There are regular funding lines going to the Post Office via DBT.

This money has been ring-fenced and identified by the Government—it sits within the Treasury—but we have also had conversations in this House about the fact that there may be some other sources of compensation to be had from other places, and why it should not necessarily be just the taxpayer who picks up the bill for this when there are perhaps other stakeholders involved in this sorry saga who should pay their part. It may well be that that the taxpayer can be relieved of some of the £1 billion ring-fencing because it may be that we can get other sources, not least Fujitsu, to pay for that.

The commitment given by my department—we are working flat out on this—is to get 90% of the claims processed and settled within 40 working days. There is no going back from that; as we have said before, 78% of postmasters and postmistresses—a figure of 2,270—have been fully paid and settled. We are now at the sharp end of this process for those who were treated the most egregiously. Therefore, those cases are more complex, and perhaps need more time—not demanded by the Government—for the process of how they put their claim together. We have a situation where it is openly known that Mr Bates has submitted his claim and is not happy with the response: that is part of the process that we are in, and it will go on. We will move as quickly as we can to make sure that everyone is restored to the position that they should be in.

[Lord Sikka (Lab)]

My Lords, I have a question about the undated letter from Sarah Munby to Mr Staunton that has been released. It asks him to focus on

“effective management of legal costs”.

Can the Minister explain what those legal costs are? What does that mean? Such a letter could not have been written without consultation with lots of colleagues as to what kind of terminology to use. Will the Minister ensure that all the back-up notes to this letter are put in the public domain?

[Lord Offord of Garvel (Con)]

This is very straight- forward. If I am appointed as the new chairman of a company in this situation and, of my three priorities, the No. 1 is to manage a legal process to get compensation quickly to postmasters, I would expect to be told that formally by the Permanent Secretary and to be held accountable to manage those costs effectively. That does not mean to minimise or delay; it means to manage the process effectively to get compensation to the postmasters. What has been put into the public domain makes it very clear that there has been no dragging of feet and no instruction to the contrary on this matter.

As we have discussed many times in this Chamber, we now have a full statutory inquiry. The judge, Wyn Williams, will pick through this in fine detail. We are all very impatient and frustrated because we want the answer now, but we got into this mess because we jumped the gun before, and we are not going to do so again.

Post Office Horizon Scandal: Racism

Lord Sikka Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I share the noble Lord’s frustration with this process. There was indeed offensive language used in the official documentation, which had not been updated since the 1980s and for which the Post Office has clearly apologised. As far as the culture in the Post Office is concerned, there is a rebuilding job required. The chairman has been removed and live conversations are going on right now to appoint a new chairman. My department is fully focused on rectifying this sorry situation.

[Lord Sikka (Lab)]

My Lords, none of the racist terms in the report, codenamed Project May, could have been used without the approval of directors, all of whom were appointed by the Government. Rather than hiding behind the claim that the Horizon inquiry might look at it, the Minister needs to be accountable to Parliament. An inquiry is not a substitute for parliamentary accountability. So, can he tell us when he first became aware of these racist terms and why he has not already referred the Post Office to the Equality and Human Rights Commission for investigation?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. He is referring to the historical document that was released under the Freedom of Information Act in 2023. It has clearly been identified to have offensive language in it, which had not been updated since the 1980s. There is an ongoing inquiry into this. We all want to know the answer. The reason we got into this position in the first place is that people were deemed guilty rather than innocent without due process. Let us not do the same thing again.

Registered Office Address (Rectification of Register) Regulations 2024

Lord Sikka Excerpts

Monday 19th February 2024 Grand Committee

[Lord Sikka (Lab)]

My Lords, it is pleasure to follow the insights of the noble Lord, Lord Vaux. I will speak to the second SI, the Limited Liability Partnerships (Application of Company Law) Regulations 2024. I broadly welcome the thrust of the proposals but I have a number of questions; I hope that the Minister will be able to answer them.

First, the words “company law” appear in the statutory instrument, obviously, but can the Minister tell the Committee whether there is in the UK any central enforcer of company law—or for LLPs, for that matter? I have not been able to find one in all these years, so it would be helpful to know where the buck stops. Who, in the final analysis, is responsible for regulating these entities? This matters, especially when companies and LLPs engage in unlawful practices such as paying dividends without sufficient distributable reserves—something that damages the interests of creditors, including pension schemes with a deficit.

Let me go back a little while, because I have always been interested in this topic. In a Written Question on 14 September 2017, Kelvin Hopkins, the then Member of Parliament for Luton North, asked the Business Secretary

“what checks his Department carries out to ensure that dividends paid by companies do not exceed their distributable reserves”.

This was the reply, on 12 October 2017:

“The Department is not responsible for carrying out checks on dividends paid by companies to ensure that they do not exceed their distributable reserves”.


That is still the position. Nothing has changed. We still do not know who is responsible for looking at these things.

In recent years, companies such as Domino’s, Dunelm, Games Workshop and Hargreaves Lansdown have admitted to paying dividends that were, strictly speaking, unlawful; after a while, they noticed that they were unlawful. They therefore paid illegal dividends but, in the absence of an independent enforcer of company law, no one really examines such instances. The Business Department has long washed its hands of such matters. I hope that the Minister can tell us where the buck stops and which external agency is responsible for enforcing both company law and LLP law. That is my first question.

Secondly, LLP and company financial statements are prepared in accordance with what are sometimes called generally accepted accounting principles—or GAAP, although there are many variations on that—and are promulgated by the Financial Reporting Council in the form of accounting standards. They have an important bearing on whatever counts as an asset, a liability, income, an expense, wages, a tax, liquidity, accountability and much more. Ultimately, the rules or standards have a bearing on the distribution of income, wealth and risks.

In a democratic society, only Parliament has the social mandate to adjudicate on competing claims concerning the distribution of income and wealth. However, that authority has been subverted by the Government, and none of the accounting standards issued by the Financial Reporting Council is ever debated in Parliament. Why is that? Why has Parliament’s authority been subverted? I hope that the Minister can explain why the Government do not bring accounting standards to Parliament for approval because they affect the distribution of income and wealth and form the basis of taxation.

Thirdly, through the FRC, committees dominated by partners of LLPs make their own accounting and disclosure rules. They operate through a private company, which is named CCAB Ltd and is dominated by the accountancy bodies. No one in the Government has ever suggested that the hungry should set food standards, the homeless should set housing standards or the poor should set the minimum wage, but the partners of LLPs are allowed to make their own accounting rules without any kind of parliamentary oversight.

If noble Lords look at LLPs’ accounts, they will see that these LLP partners do not like transparency. For example, LLPs are not required to disclose their partners’ share of profits, which is the nearest equivalent to director remuneration in limited liability companies. We do not know their exact share of the profit, even though they may be enjoying government or other public contracts. Why is the partners’ share of profits not disclosed in LLPs’ financial statements, and why is setting the rules for LLP accounting and disclosure considered private? Surely it is not.

[Lord Fox (LD)]

My Lords, as someone who has spent a lot of his professional life working on annual reports, I have often had questions about GAAP, but the Minister will be pleased to know that I will not ask them today.

The four SIs before us are to be welcomed. They are steps on the way from our discussions on both the last economic crime Bill and the one before that. We are moving forward, in a sense. I am glad that the noble Lord, Lord Vaux, introduced what I call the Knighton collection of companies that were registered to a terraced house in the Welsh borders, not far from where I live—as I believe does the noble Lord, Lord Bourne. I would like some reassurance that the statutory instrument on registered office addresses would deal with that.

As the noble Lord, Lord Vaux, eloquently set out, there are a lot of steps to go through to eliminate falsely registered companies. It comes back to the question of whether Companies House is capable of really handling this, ceasing to be a filing cabinet and starting to be an investigative organisation. To echo the point made by the noble Lord, Lord Vaux, it would be very helpful to have an update on how the huge cultural change that Companies House needs is going. Many of us were impressed by the team that we saw, but also a little frightened by the huge task that it has in front of it to make these SIs and the next 51—or however many there are—come to life.

I have some trepidation on the second of these SIs, on limited liability partnerships, because the noble Baroness, Lady McIntosh, seated opposite, is our Scottish legal expert. I wondered where Scottish partnerships come in, because the territorial extent of that statutory instrument is the whole UK. Where do Scottish partnerships sit within that?

The service address and principal office address regulations are useful and important too, but expose the central weakness that is still within our system. After all the work we did on the Bill, those with control still have the ability to hide that control. We welcome the Service Address (Rectification of Register) Regulations and the Principal Office Address (Rectification of Register) Regulations, but can the Minister set out, either now or in writing, how we are going to eliminate the cancer within this system of people obscuring the real ownership of assets to the authorities and wider society? With that, we welcome these four statutory instruments.

Post Office Ltd

Lord Sikka Excerpts

Tuesday 30th January 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

To clarify, the Post Office is constitutionally set up to be arm’s-length and will remain so. We are now talking to the Secretary of State about tightening the governance of that. The key position is the chair, who runs the board and is accountable to the shareholders. We will appoint an interim chair as soon as possible, with a view to getting a new person in post this year. That will coincide, I hope, with the inquiry coming through at the end of the year.

[Lord Sikka (Lab)]

On 22 January, I tabled a Written Question about possible conflicts of interest associated with the position of Henry Staunton, the former chairman of WH Smith, which operates Post Office franchises. I have yet to receive and Answer. Mr Staunton has now gone—nothing to do with me, I am sure. First, can the Minister publish the conflict-of-interest assessment made when Mr Staunton was first appointed as chair of the Post Office? Secondly, can the Minister explain how it is that Simon Jeffreys is a director of the Post Office and the Crown Prosecution Service? How did that happen?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for those questions. The removal—the resignation by mutual consent—of the chairman, Mr Staunton, is clearly an ongoing HR issue and we have been clear that we are not going to comment on that in public. That will now take place and no compensation will be paid, but that is still in process in terms of taking action. As far as the rest of the board is concerned, we are happy with the three new non-executive directors who came in in 2023. We have two sub-postmaster representatives, and we are looking for a senior independent director, which will further strengthen the board.

Alan Bates and Others v Post Office Limited

Lord Sikka Excerpts

Wednesday 24th January 2024 Lords Chamber

Asked by

[Lord Sikka]

To ask His Majesty’s Government, following the December 2019 High Court judgment in the case of Alan Bates and Others v Post Office Limited, how many Post Office directors have been charged for breach of statutory duties under the Companies Act 2006, or for conspiracy to pervert justice.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank the noble Lord for his Question. I can confirm that no prosecutions have been brought against Post Office directors to date. The Horizon inquiry will establish the facts of what went wrong. It would be wrong to take action before we have all the evidence. Punishing people without looking at all the evidence first is how this scandal started. We should not repeat that error.

[Lord Sikka (Lab)]

My Lords, I remind the Minister that the Government have the sole responsibility for law enforcement. It is no good saying that they are relying on some committee to turn up evidence; they have had 49 months, and in that time little has happened. The Government need to take steps to charge people for violation of the Companies Act, false accounting, lying under oath and conspiracy. After six years, they have not even yet managed to deal with the directors of Carillion. That does not inspire much confidence that they will be able to deal with the Post Office directors. The whole thing is being kicked into the next decade. Rather than hiding behind this inquiry, will the Minister now publish a schedule showing a timetable for the Government’s actions?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that. I know that there is a lot of frustration in this House and the other place on the timelines. This has been going on for a very long time—almost one generation. However, we have been very clear that we have to separate the two elements of this sad story. The immediate action we are taking is to overturn convictions and give compensation. We then come to accountability. A statutory inquiry is in place, and it will look at all the facts of the matter. At that point, a cascade of actions will be taken by the various bodies concerned. We need to understand the role of directors, the ministerial oversight and the role of Fujitsu and the auditor, EY. All that will be done once the facts are established and the Williams commission has reported.

Regulatory Approval for New Products and Services

Lord Sikka Excerpts

Monday 22nd January 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I am grateful for those important words and I absolutely agree. There are issues in ensuring that regulators’ mandates are properly focused. It is important to get a balance between, for example, investment, growth and the other regulator duties. I look forward very much to working with the regulators when we assess the responses from the consultation that is currently being undertaken—some were completed last week—to bring together a suite of solutions to ensure that we can continue to grow our economy and regulate it properly.

Let me just add that our regulators are some of the best in the world. From travelling around the world, I know that a number of jurisdictions literally cut and paste our regulatory texts so that they can copy what we do because they admire it so much. That does not mean we should be complacent, but it does ensure that we should focus very much on the opportunities that the growth agenda will give us.

[Lord Sikka (Lab)]

My Lords, perhaps I might urge the Minister to think about regulatory approval in a different way, by reminding him that Warren Buffett said:

“Derivatives are financial weapons of mass destruction”.


We have seen so many financial products mis-sold in this country. Can I urge the Minister to ensure that regulators road-test all financial products before they are unleashed on the unsuspecting public?

[Lord Johnson of Lainston (Con)]

I am grateful for that comment; of course, I would contact the Treasury about it, since that is its specific focus. I totally agree that we need to have trust in financial markets for them to function properly. That also entails significant responsibilities towards the consumer.