Corporate Governance and Insolvency

Andrew Griffiths Excerpts

Tuesday 20th March 2018 Commons Chamber

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

I am pleased to announce that the Government have today published a consultation paper on corporate governance and insolvency. Copies have been placed in the Library of the House.

The United Kingdom is recognised as having a leading international reputation for corporate governance. That gives us an international competitive advantage, and is an important factor in making the UK the best place in the world in which to invest and do business. The Government are determined to ensure that our corporate governance regime remains the envy of the world.

Large corporate failures rarely happen, but when they do, their effect on stakeholders such as employees and smaller suppliers can be very damaging. In those circumstances, it is important to ensure that those in charge of the company concerned act properly and fully discharge their responsibilities. The Government are determined to ensure that our corporate governance framework clarifies those responsibilities, protects the economy and enhances public confidence, while continuing to foster conditions for business to thrive.

Last year we announced a number of reforms to strengthen the corporate governance framework in relation to executive pay, the voice of employees and wider stakeholders in the boardroom, and corporate governance in large privately held businesses. Those are now being delivered, and all of them will contribute to more robust and well-founded decision making in our large companies. We are determined to learn the lessons from corporate failures such as Carillion. We believe that we can do more to strengthen the corporate governance framework as it applies in insolvency situations. We intend to reduce the risk of major company failures occurring through shortcomings of governance or stewardship, and to strengthen the responsibilities of directors of firms when they are in or approaching insolvency.

The consultation will focus on three specific measures. Considerable public concern arises when owners of a distressed business, including a business within a group of companies, sell it on without proper regard for its future prospects or the interests of its creditors and employees. We propose to require directors, including directors of holding companies in respect of sales of subsidiaries, to have a greater regard to any future consequences of the sale of an insolvent or near-insolvent company for which they are responsible. In doing so, however, we will ensure that we do not put barriers in the way of credible business rescue efforts. We do not want to make it impossible to rescue businesses in distress.

Considerable public concern has also been raised when a company in financial difficulty has been rescued by new investment, only to find when it subsequently fails that the new investors have set up a series of complex financial schemes to protect their investment or minimise their losses, at the expense of other creditors. The Government will consult on measures to give insolvency practitioners the additional necessary powers to claw back, for the benefit of creditors, money that has been siphoned off through complex financing arrangements.

Concerns have also been raised—by, among others, a number of hon. Members—about the difficulties that arise when a company has been dissolved, but it is then found that it has outstanding debts or there have been allegations of director misconduct. Those dissolved companies often reappear, phoenix-like, in a slightly different form and with a slightly different name, and start operating again. At present, the Insolvency Service does not have the necessary powers to investigate such cases, and we are determined to ensure that it does.

These measures will complement those published yesterday by the Department for Work and Pensions in a White Paper entitled “Protecting defined benefit pension schemes”, which provides for stronger powers for the Pensions Regulator to prevent and punish those who would deliberately endanger a defined benefit pension scheme.

Corporate failures such as Carillion have raised concerns about some other aspects of our corporate governance framework. I do not wish to anticipate the current investigations of the circumstances leading up to Carillion’s failure, but I intend to use the consultation to seek views on a number of areas in which we may be able to do more to strengthen the rules within which UK companies operate. Those areas include the questions of whether steps should be taken to improve governance, accountability and internal controls within complex company group structures, and whether there are further opportunities to strengthen the role of shareholders in stewarding the companies in which they have investments. While the payment of dividends should remain for the directors to decide, having regard to their obligations and guidance, there is the question of whether the legal and technical framework within which these decisions are made could be improved and made more transparent and fairer. There are also questions about whether the commissioning and use of professional advice by directors is done with a proper awareness of directors’ duties, and how the supply chain and other creditors can be better protected in the event of major insolvency while preserving the interests of shareholders.

The reforms we propose will help prevent corporate failure and will strengthen the UK’s business environment, contributing to the success of our industrial strategy, and will cement our reputation as one of the best places to work, invest and do business. I commend the statement to the House.

[Several hon. Members rose—]

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[Laura Pidcock (North West Durham) (Lab)]

I thank the Minister for advance sight of his statement and for making it in good time.

There are two substantive proposals: on clawback and on disqualification of directors. There is, however, already provision in insolvency law for clawback of assets, for example assets sold at an undervalue. There is also provision in company law for disqualification of directors due to incompetence or recklessness. The proposals set out by the Minister on clawback are extremely unclear. Can he explain how these provisions add to existing rights, rather than repeat them?

Secondly, there are a number of much vaguer promises. What do these mean? On giving the Insolvency Service new powers to investigate directors of dissolved companies, what will these new powers be and how would they militate against reckless behaviour? There is also the consideration of the legal and technical frameworks within which decisions are made on payment of dividends and how that can be improved and made more transparent. What does that mean? How can it be made more transparent, and how would greater transparency protect against greed and excessive payment of dividends, as we saw with Carillion? Then there is the strengthening of the role and responsibilities of shareholders in stewarding the companies in which they have investments, and, again, that is vague. What does it mean? Frankly, these are meaningless platitudes.

Thirdly, the Government again appear to be consulting, rather than acting. Do the Government agree that it is time for action, not consultation? They are also consulting on the Taylor review, which in itself was a consultation. What good are these consultations to people currently working in companies providing public services at risk of collapse?

Fourthly, the Government are certainly not known for being proactive; rather, they are always mopping up after the event. None of these problems is new. Companies going insolvent and leaving pension deficits and asset-stripping is not novel; we need only look at the case of BHS. These are problems that the Government should already have anticipated. Why has it taken the Government until now to begin to act, and why do they take only tentative steps?

Fifthly, we must have a bolder and more imaginative approach to corporate governance. Large companies are not the toys of directors and shareholders. They do not exist merely to make a small group of people excessively wealthy. They are the product of the hard work and effort of their workforce and suppliers, and they provide services that the public use. Short-termism is often at the heart of shareholder decisions. How do today’s proposals safeguard the long-term interests of companies, for the workforce and for the public good?

Sixthly, have the Government made any assessment of the viability of Interserve and any companies with public sector contracts? What steps are the Government taking to ensure these companies do not collapse? Will the Government institute project bank accounts for major public construction projects, mandate and enforce payment of public sector contractors within 30 days and set up a new model that allows them to step in when construction companies collapse, all of which Labour has called on the Government to do?

Lastly, how would any of these proposals meaningfully have helped the workers, pensioners and suppliers of Carillion? The amount paid in dividends at Carillion was the same as the pension deficit over the same period. Have the Government done any assessment of what more the workers, pensioners and suppliers would have received under these new plans, and if not, why not?

[Andrew Griffiths]

A little like a machine gun, those questions came thick and fast, and I thank the hon. Lady for them, but I am somewhat surprised. When Carillion went into insolvency the hon. Lady and her partner the hon. Member for Salford and Eccles (Rebecca Long Bailey) demanded that we learn the lessons from the Carillion failure. Today, just a few weeks later, we have come forward with proposals to prevent something similar from happening, yet she criticises us for a failure. Her colleague the hon. Member for Salford and Eccles criticised us in Labour’s press release today for yet another consultation, and then said that Labour has

“launched our own review into corporate governance”.

The Government’s measures will make a massive difference to prospects and the way in which our companies are regulated, to ensure a more robust and accountable regime within the boardroom. The hon. Lady fails to mention the fact that yesterday the Department for Work and Pensions brought forward a White Paper that introduces a huge number of extra regulations and gives powers to the Pensions Regulator to impose punitive fines, civil fines, criminal sanctions, and director disqualification. The hon. Lady asks what we have been doing during our time in office: we brought in pay ratio reporting, a new register of companies for significant shareholder opposition, and we have strengthened the voice of the employees and representatives in the boardroom.

The hon. Lady talks about Interserve. It would be inappropriate for me to give a case-by-case running commentary on the financial probity of private businesses, particularly as that could impact on their share price. I am sure somebody of the hon. Lady’s experience will understand that.

The hon. Lady talks about project bank accounts. As she will be well aware, in January, the Government consultation on project bank accounts closed, and we will be making our proposals in the coming weeks. She talks about payment in the public sector, and I can inform her that the special manager in relation to PwC has already agreed that companies providing services to Carillion will be paid within 30 days, and that is a requirement for all contractors who accept Government contracts. We will make further proposals about how we can improve that and make it robust.

The hon. Lady talks about disqualification. Directors can be disqualified for up to 15 years, and that prevents them from acting as a director, and taking part directly or indirectly. Anyone contravening a disqualification is committing a criminal offence, so these are real punitive powers.

The hon. Lady talked about dividends. There is nothing wrong with healthy companies paying dividends. In fact many of our pension schemes rely on the profits paid from dividends. The hon. Lady talks about dividends as if they are a dirty word, but in a healthy business they are something to be applauded.

The House can be reassured that this is just the next step in a robust, detailed, full review of our corporate governance regime to make sure that we protect the taxpayer, the pensioners and the workers in all those companies who do such a good job.

[Sir Desmond Swayne (New Forest West) (Con)]

What is the Minister’s ambition for when his excellent proposals will be implemented?

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[Andrew Griffiths]

As my right hon. Friend will know, we have not hung about in relation to improvements within the corporate governance structure. We will soon lay a further statutory instrument which will enhance even further the corporate governance measures we have introduced. The consultation will take place within the normal rules of a consultation, and we hope to bring forward proposals as a matter of urgency.

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

I thank the Minister for giving me advance sight of his statement. On engagement, will the Government consider proposals to force chief executives and company directors to engage directly with small business owners or groups of affected individuals? In the recent instances involving the Global Restructuring Group and the Royal Bank of Scotland branch closures, there has been a refusal on the part of directors to meet those affected. As my hon. Friend the Member for Glasgow North (Patrick Grady) pointed out, a lot of the problems that this consultation seeks to address could have been avoided simply through early engagement with those in charge.

With prohibitive costs often preventing individuals from pursuing legal options after being affected by insolvency, will the Government’s strategy look at ways of ensuring that legal recourse is available to those who will already be in financial difficulties as a result of insolvency? On contract and pensions protections, small businesses should not be the ones to suffer when a failed large company goes bust, and it should not only be in high-profile cases that the Government step in to protect pensions. What measures will this strategy take to ensure that small and medium-sized enterprises are protected when contracts or payments are halted due to a large company collapsing, and that any protection for creditors is mirrored by protection for workers and pension holders? These proposals are aimed at improving the range of options available following a company becoming insolvent. However, a proactive approach could help to prevent that from happening in the first place. Does the Minister agree that one way to ensure this would be for organisations to take profit warnings seriously and not to continue to hand out contracts to firms that issue them?

[Andrew Griffiths]

I thank the hon. Gentleman for his detailed and important questions, many of which related to small businesses. As the Minister with responsibility for small businesses, I take those questions extremely seriously. It is not just large corporate collapses, such as that of Carillion, that affect the thousands of small businesses in the supply chain. The collapse of a small business can affect other small businesses as well. We have all seen cases in our constituencies of small businesses losing money because of phoenix businesses that go into liquidation, change their name and reappear. It is the same people selling the same products, fleecing people time and again. We are giving the Insolvency Service the ability in this consultation to investigate companies that have already been dissolved, and that will go a long way towards sending the clear message to directors who think they can get away with fleecing small businesses in that way that the Insolvency Service will come and get them.

The hon. Gentleman talked about pensions. It is important that directors should clearly understand, through this White Paper and through the consultation, as well as through the Department for Work and Pensions White Paper, that there will be consequences if they fleece their pension fund, that there will be fines and penalties and that they could spend time in prison if they have been found to be fleecing their pension fund in an unacceptable way.

The hon. Gentleman also talked about the need for small businesses to be treated in an ethical way. In the spring statement last week, the Chancellor demonstrated a clear recognition and understanding that small businesses were being fleeced, particularly in relation to late payments. He said that he would consult on how we could end the “scourge of late payments”. If we could do that, we would see £14 billion taken from the pockets of big businesses and put into the pockets of small businesses. Also, when insolvencies such as that of Carillion do happen, payments will stay in the bank accounts of the company that had gone bust not for 128 days but for only 30 days.

[Craig Tracey (North Warwickshire) (Con)]

I welcome this announcement. As a former business owner myself, I have seen the impact, particularly on small businesses, of large companies becoming insolvent. Does the Minister agree that it is crucial that we protect the small businesses and employees in the supply chain?

[Andrew Griffiths]

I agree with my hon. Friend. This is why we are specifically consulting, in this document, about what more we can do to protect small businesses. In lots of these failures, we have seen clever directors with clever advisers, clever lawyers and clever tax accountants putting in place a regime that allows them to walk away scot-free while hard-working businessmen and women in our constituencies pay the price. This consultation looks at how we can put an end to that and be on the side of the small guy, not the big guy.

[Catherine West (Hornsey and Wood Green) (Lab)]

In the consultation, will the Minister consider extending the 30-day limit for late payments to other non-governmental contracts, to create a new way of doing business? Also, what will he do to protect apprentices who are often caught in the subcontracting chain and who lose their apprenticeships with SMEs, which are the lifeblood of our economy?

[Andrew Griffiths]

The hon. Lady asks two important questions. The Government have a role to play in this as a customer. We give billions of pounds of contracts and we have the power in our own hands to demand that the supply chain is treated properly. I can assure her that, in the very near future, we will be coming forward with a clearer set of principles and tools to ensure that the supply chain is treated properly and paid fairly, using the 30-day terms. That is what we expect of our suppliers. I agree with her point about apprentices. Unfortunately, we have to accept that there will always be businesses that go bust. That is one of the realities—[Interruption.] That is the way in which the business environment works. We are putting the employees at the heart of this consultation and at the heart of the decisions we make.

[Stephen Kerr (Stirling) (Con)]

I congratulate the Minister on his statement and on launching this much-needed consultation. As a member of the Select Committee that is inquiring into the collapse of Carillion, I should like to share with him the fact that one of the startling things we discovered was that the company could not even give the Insolvency Service the names of all the directors of all companies in the group. Does he agree that steps should be taken to improve governance and accountability in groups of companies with complex structures?

[Andrew Griffiths]

My hon. Friend has hit the nail well and truly on the head. I commend the work that his Select Committee has been doing in shining a light on the realities of the way in which Carillion operated. In the very early days of the Carillion collapse, when the Government were looking to protect those vital services that were being delivered and to protect the 18,500 people employed by the company, it became clear that it was a hellishly complicated business with a hellishly over-complicated structure. It is still proving a difficult job to untangle the web of the Carillion business structure. If it is difficult for the Insolvency Agency to do that, so many weeks on, how much more difficult must it have been to run the business? We need clear, accountable business structures in our businesses today.

[Sir Vince Cable (Twickenham) (LD)]

I welcome this sensible set of proposals, particularly those relating to value extraction through complex arrangements. What can the Minister currently do, and what will he be able to do in the future, in respect of companies such as Toys R Us? It had a management team, led by a man called Frank Muzika, which was able to loot the company over a long period of time and load it up with debt using complex instruments and tax havens, leaving behind a legacy of a £580 million pension fund and 3,000 redundancies. What can the Minister do?

[Andrew Griffiths]

I thank the right hon. Gentleman for his question. He clearly has a vast amount of experience as a former Secretary of State in our Department. He is right to identify the value extraction element in this document. When a business is taken over, we often see the directors of the purchasing company put in place complicated measures to protect their own backs, to ensure that, whatever happens to the business, they will not be impacted. The powers proposed in this consultation would allow us to recoup and recover the amount of money involved, not just for shareholders and directors but for contractors and creditors in the supply chain. In relation to Toys R Us, he will recognise that some businesses will always fail. However, the Government are clear that this set of measures will put an emphasis on the responsibilities not just of directors but of shareholders. It is an important point that shareholders—particularly institutional shareholders—should have a voice in the way in which these businesses are run.

[Jeremy Lefroy (Stafford) (Con)]

I commend my hon. Friend for his statement, for this consultation, and for standing up for small businesses. Will he extend the consultation—or perhaps have a future consultation—to look at the forced liquidations of often small and sometimes slightly vulnerable businesses by banks and other secured creditors, which are totally unnecessary, and could be resolved by other means, thereby maintaining jobs, employment and prosperity in our constituencies, as opposed to leaving bust businesses that should be thriving?

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[Andrew Griffiths]

In recent weeks, we have seen the impact that the banks can have on small businesses when they act inappropriately. I have been meeting the all-party parliamentary group on small and micro business recently to see how we can get more accountability; I know that my hon. Friend is a member of that group. My concern is that small businesses are shying away from finance—shying away from taking credit from the banks because of the way they have been treated. I would be delighted to meet my hon. Friend to talk about his ideas.

Unpaid Trial Work Periods (Prohibition) Bill

Andrew Griffiths Excerpts

2nd reading: House of Commons
Friday 16th March 2018 Commons Chamber

[Stewart Malcolm McDonald]

I never thought I would bring forward a Bill that encompasses Tory philosophy, but this is a Bill that makes work pay. I hope the hon. Gentleman will do everything in the short time left to make sure the Bill proceeds.

I want to bring my remarks to a close, to allow others to say what they wish. The hon. Gentleman’s first point was about whether the law works or not. I do not believe it does, but the Government do. I know that because they have made public statements and because I have had conversations with the Minister. I do not believe the law works, and the legal advice I have suggests that it does not. The trade unions do not believe it does. I shared all that advice with the Government after they asked for it and had no issue in doing so, but it does not seem to have changed their mind. If the law did work, there would have been one tribunal in 20 years of the law that the Minister says covers this, but there has not been. That, in itself, tells me that the law does not work.

I know the Minister believes that the law covers trial shifts and unpaid internships. He said to me, “Stewart, we have no wish to derail your Bill, but we think the law covers it already.” Let us split that proposition, because those two things cannot sit comfortably together. If the law as it stands covers this—if the Minister listens, I can educate him—there is a problem for the Minister, because I have found on the w4mp website an unpaid internship from 2012 in his office for three to six months.

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

rose—

[Stewart Malcolm McDonald]

I will allow the Minister to respond; he does not need to get too excited. If it is the case that the law as it stands bans unpaid shifts and unpaid internships, either he has to refer himself to HMRC, or I am afraid I will have to do it for him.

[Andrew Griffiths]

I would be very interested to see that. I have never, ever had an unpaid internship in my office.

[Stewart Malcolm McDonald]

I can assure the Minister —I will send it to him when the debate concludes—that there is an unpaid internship advert on the w4mp website. I checked it just before the debate started and am happy to let him see it. I think he is looking it up as I make this point, but I assure him it is there. That is something that many parties in the House take part in. I think internships are enormously valuable, but if the Minister is so convinced that the law as it stands is functional, that raises questions for what he and others have done.

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[Dr Whitehead]

My clear understanding, which I think will be borne out by the hon. Member for Glasgow South, is that that is not what the Bill is about. It is not about work experience, or any of the other factors that the hon. Gentleman has mentioned.

[Andrew Griffiths]

May I clarify the position? As drafted, the Bill would exclude those factors. Anything, including making the coffee, briefly, would be outlawed. The Bill sets the threshold at zero. Any moment spent working would be caught by it.

[Dr Whitehead]

I am not sure, if I may say so, that the Minister has correctly put across the idea of what “working” is. Various activities that do not actually constitute work, but constitute other activities not related to work, would not be covered by the Bill. When what is clearly work is being undertaken, and that work is recognised in the normal sense of the word, it will be covered.

[Andrew Griffiths]

May I clarify the position again for the hon. Gentleman? That kind of trial, or test, would not be covered by the national minimum wage, so the payment would not be applicable anyway.

[Dr Whitehead]

I think the point of the Bill is that it is intended to close gaps in legislation in order to make it clear what people are doing when they are working and what constitutes trial work, and to ensure that that is much better defined and protected.

The Bill would require employers to pay applicants undertaking trial work periods at least the national minimum wage. Equally important is the clarity that it will provide about what a “work trial” is, and what is the relationship between the employer and the worker at that point. I am sure we all agree that many unscrupulous employers have taken advantage of that grey area to use unpaid labour when there has not been a job on offer, simply to cut staff costs. There is an element of coercion as well. A widespread response to the call for evidence was that many people who had undertaken unpaid work trials had felt that they could not refuse to do so or speak up because of a fear of jeopardising their chances of getting a job.

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[Dr Whitehead]

If, indeed, methods are being sought not to support the Bill because of quibbles about what is work and what is not work, and what are trials, and when someone is just doing a practice, that would be a great shame. We need to make it clear that this is about a principle and an area of bad practice that needs to be shut down.

There has been widespread public anger about the practice of unpaid trials. We have heard about the two Mooboo Bubble cafés in Glasgow, which sparked this Bill and campaign, and 13,000 people signed the petition objecting to that. Indeed, the petition calling on MPs to support the Unpaid Trial Work Periods (Prohibition) Bill has 137,000 signatures. It is therefore clear that the practice of unpaid work trials goes against the sense of natural justice that most people have.

There is also widespread public support to remedy this issue as soon as possible, through the clarification of the contractual relationship between the worker and the employer, and the amendment of section 54 of the National Minimum Wage Act 1998 to require the minimum wage to be paid to those who participate in work trials.

Of course, as I stated at the beginning of my contribution, the abuses associated with work trials are part of a much broader picture. The serious, long-term remedy for this all-too-common exploitation is a raft of worker protection measures. Right at the head of Labour’s manifesto commitment at the last election to a fair deal at work is our pledge to

“give all workers equal rights from day one, whether part-time or full-time, temporary or permanent—so that working conditions are not driven down.”

After years of diminution of workers’ rights, that will be no easy task, and we will be faced with many similar loopholes to close and abuses to tackle. I am pleased to offer Labour’s full support for this Bill, to deal with this particularly unjust form of exploitation, which, as my hon. Friend the Member for Midlothian (Danielle Rowley) mentioned, affects so many young people across the country at the start of their working lives. It gives them the impression that the world is perhaps stacked against them in their working career. If only for that reason, we need to ensure that this Bill progresses today.

[Andrew Griffiths]

On a point of order, Madam Deputy Speaker. May I clarify something? The hon. Member for Glasgow South (Stewart Malcolm McDonald) mentioned an advert for an unpaid internship. I can confirm that that position was never filled; it was advertised, but never filled. I am, however, reminded that a paid researcher worked for me for, I think, a brief 20 days of internship with travel expenses paid before she took on the role as a full-paid researcher. It was so brief that it had slipped my mind, but I apologise if I misled the House in any way.

[Madam Deputy Speaker (Dame Rosie Winterton)]

The hon. Gentleman has done exactly the right thing by clarifying that as quickly as possible and putting the record straight.

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

I congratulate the hon. Member for Glasgow South (Stewart Malcolm McDonald) on his success in the private Members’ Bills ballot. I am proud to serve as the Minister responsible for the national living wage and for workers’ rights. I am very pleased to respond to this important debate. We all want to see the rights of workers protected; none of us wants to see workers abused, mistreated or unpaid. That is why this Government are at the cutting edge of bringing forward new rights and protections for workers. The House will have seen, just a few weeks ago, our response to Matthew Taylor’s truly groundbreaking report, which not only looks at the modern labour force and how we treat people, but seeks to extend rights and protections to workers and employees who have never had those before.

The Government are proud to protect workers’ rights and are proving that we do not need the European Union to help us do that; we are doing it here in this Parliament. I am very keen to work with the hon. Member for Glasgow South to address the issues that he has raised today. There is a very clear way in which we can do that without the need for further regulations. The law is already very clear on this. These practices are outlawed under the current national minimum wage—

GKN: Proposed Takeover by Melrose

Andrew Griffiths Excerpts

Thursday 15th March 2018 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this important debate on a strategic issue. He raised the long-term aspects of GKN ownership, and gave a warning about the short-term or illusory interest that might be shown towards shareholder gain. He also gave a warning about the relative sizes of the companies and reflected on GKN’s sheer breadth of manufacturing interest in aerospace and automotive.

The hon. Member for Redditch (Rachel Maclean) rightly raised concerns about possible local jobs losses due to the takeover; she indicated that it is very important that pensions protections should be put forward, and I will come back to that subject later in my speech.

It is certainly worth underlining the need to invest in young people and in the future by investing in science, technology, engineering and maths skills. It would be remiss of me not to say that that should very much include girls and young women. It should be noted that GKN has committed to young people and STEM subjects. The hon. Lady clearly is not convinced by the proposed takeover by Melrose.

The hon. Member for Birmingham, Northfield (Richard Burden) mentioned the range of assurances that are required about jobs and research and development, which I will come back to. He certainly seems to have no confidence in Melrose. He rightly raised the concern of other local politicians who are involved, including the council leaders and the Mayor. Importantly, he touched on the need for urgent reform of the takeover rules. Perhaps that needs to be looked at a bit more urgently. He also touched on the German model. We know that German manufacturing has been extraordinarily successful because it has been able to take a more long-term view and make long-term investments.

My hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) got straight to the nub of the issue with what she said about the UK Government’s strategic positioning and industrial strategy. She rightly warned that without the proper resources and investment in manufacturing, the industrial strategy is very much at risk.

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

On that point, let me reassure the hon. Gentleman that the Government are committed to supporting the sectors that he talks about. We are investing £1.95 billion in aerospace and £1 billion in automotive research.

[Drew Hendry]

I am grateful for the Minister’s intervention. It is good to know that that is the intention, but as hon. Members around the Chamber mentioned, that investment could be lost with GKN. Members will be interested to know what assurances he can give that that money will actually stay in the UK’s economy.

My hon. Friend the Member for Paisley and Renfrewshire South clearly pointed out the grounds on which the Minister could intervene—I understand that he has difficulties in terms of what he can say about national security and financial stability—and mentioned the uncertainties of Brexit as context for the need to ensure that investment and stability are maintained. Importantly, she also mentioned that the chief executive of the Pensions Regulator wrote to raise his concerns about the long-term prospects for GKN’s pension scheme.

The hon. Member for Birmingham, Erdington (Jack Dromey) rightly talked about workers in his constituency, Airbus’s warning about taking a short-term approach and the need for a long-term strategic vision. He gave dire warnings from history about the severe jobs cuts at Dynacast and the FKI group. He, too, mentioned the GKN pension deficit. I must say that I am not as assured as he is about the pension fund. Whichever company is in control—GKN or Melrose—must ensure that it is properly funded so that people do not lose out. He underlined the fact that the Government have the powers, should they choose to use them in this case, and rightly talked about his pride in GKN.

The hon. Member for Caerphilly (Wayne David) concentrated heavily on the fact that Melrose is trying to buy a major player in an industry in which it has no experience. He warned about the potential loss of defence and intellectual property, which the Minister should consider very carefully. His point that this may be the last chance to look at that was poignant, and it should be considered. Several hon. Members mentioned that the benefits of automotive and aerospace are realised over decades. A long-term approach is not only required but demanded by the people who will depend on the jobs, by the companies that will need the skills and by the public purse, and therefore the public services, which will be funded by the tax that is paid. Again, the Government should concentrate heavily on that.

I share the concerns expressed by Members around the Chamber about the rights of workers in these companies and their jobs, and about the fact that we should seek to maintain industrial and engineering capabilities, jobs and skills. I underline again the concerns that were raised about the pension scheme: any diminution of the company’s ability to pay pensions would be deeply troubling. I will not go over the points that other hon. Members made, but that is critical: people who have given their lifetimes to working in the industry should not be abandoned when the time comes for them to draw their pensions. GKN has pointed out that its pension fund has been driven down by Brexit and currency fluctuations. Hon. Members’ national security concerns must also be taken seriously, especially given the intervention on that subject by the Minister’s colleague, the Secretary of State for Defence. The Government must carefully consider all the contributions we have heard in deciding whether they will intervene.

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

It is a great pleasure to serve under your chairmanship, Mr Stringer. I think that gives me nine minutes to cover the points and address the issues raised by hon. Members, so, to coin a phrase, I will crack on. I congratulate the hon. Member for West Bromwich West (Mr Bailey) not only on securing the debate but on the thoughtful, clear tone in which he made his contribution. He has no constituency interest but raises this issue because he cares passionately about the UK economy and our manufacturing industry in particular. I applaud him for that.

The context is important. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) said we want to be a nation of makers, and it is important to recognise that we have just seen the longest consecutive period of growth in manufacturing in the UK for 50 years. I am therefore pleased to report to the House that manufacturing is in rude health. The United Kingdom is a successful open economy and the Government’s industrial strategy, which has been discussed at length today, will build on our strengths and address our weaknesses to create a Britain fit for the future.

A key part of the UK’s dynamic economy is our mergers regime. Mergers and takeovers can bring benefits to both consumers and the UK economy. I can report to hon. Members that the UK has the third-highest foreign direct investment stock in the world, behind only the US and China. That investment means jobs in growing sectors and opportunities to develop skills, and it helps companies deliver products and services at competitive prices. Mergers and takeovers also provide important opportunities for companies to grow and innovate. Many of the UK’s most successful companies have grown through mergers and takeovers, both in the UK and abroad.

The UK’s merger regime is highly regarded the world over due to its design. The regime, based on transparent rules administered consistently by expert bodies, recognises that decisions are primarily a matter for the shareholders and restricts the role of Ministers to transactions that raise public interest concerns. As a result, the regime offers clarity for businesses and maintains investor confidence.

For example, the takeover code, administered by the independent Takeover Panel, provides a robust framework to ensure that takeovers of listed companies are conducted in an orderly manner with fair treatment of the shareholders. The Takeover Panel has repeatedly strengthened the code. Its most recent changes, which came into effect on 8 January 2018, require bidders to make earlier and fuller disclosure of takeover plans and to give companies subject to a bid more time to prepare their response—the question that the hon. Member for Newcastle upon Tyne Central raised earlier. Those changes have applied to the bid by Melrose.

[Dr Julian Lewis (New Forest East) (Con)]

I apologise for coming late to the debate. While what the Minister says is absolutely beyond question, does he accept that where the defence of the realm is concerned, certain other considerations must also apply?

[Andrew Griffiths]

I thank my right hon. Friend, who as always makes a salient and sensible contribution to the debate. I agree with him wholeheartedly that the defence of our nation is the most important point in any of these decisions.

As hon. Members have heard, the Enterprise Act 2002 grants Ministers statutory powers to intervene in mergers that give rise to public interest concerns only on the grounds of national security, financial stability or media plurality. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) raised the issue of that financial stability. It is the financial stability of the country’s economy as a whole. This Government take very seriously our responsibility to protect national security in particular, and we are robust in assessing any possible public interest concerns and carefully considering when those powers should be exercised. If necessary, they will be exercised.

I appreciate that there has been much speculation about the potential use of those powers in this case. However, as we heard earlier, public interest interventions are quasi-judicial in nature. It is therefore important that Ministers act, and are seen to act, impartially, on the basis of an open mind and of the evidence available. For that reason, it is not appropriate for me to comment on their use in this individual case. As hon. Members might expect, my right hon. Friend the Secretary of State and I have taken a close interest in events. He has spoken to the chief executive officers of both GKN and Melrose to understand their intentions and to make it clear that he wants an open line with the companies, consistent with his potential statutory role in the process.

The bid, however, is primarily a commercial matter for the parties concerned, and we wait to see how things develop. GKN shareholders now have until 29 March to decide whether to accept the Melrose bid. It has become clear that, regardless of whether the takeover by Melrose is successful, GKN will not be the same company we know today. Beyond the potential sale of the Driveline, both GKN and Melrose have outlined plans to sell the powder metallurgy business and other non-core businesses. There remains the distinct possibility that, irrespective of which party ultimately controls GKN after the resolution of the bid, it will choose to sell all or parts of GKN’s current business to foreign companies.

On 13 March, Melrose wrote to the Business, Energy and Industrial Strategy Committee at its request, setting out the company’s position on pensions and post-offer undertakings. In addition to the conversations held between the Government and the parties involved, the hon. Member for Newcastle upon Tyne Central, who raised the question of Unite, will be pleased to know that the Secretary of State has been in close contact with the union.

I know that some hon. Members have concerns about GKN’s pension schemes. Individual cases are a matter for the independent Pensions Regulator, but the Government are aware that the parties are in discussions with the pension trustees, who have made their expectations clear. The hon. Member for West Bromwich West raised the issue of R&D investment; Melrose has told the Business, Energy and Industrial Strategy Committee that it supports R&D and will maintain the level of investment in R&D that GKN has spent in the past, which I think was 2.2% of sales between 2014 and 2016.

The hon. Gentleman also mentioned the question of how France and Germany could block takeovers. The reality is that they cannot. The UK’s takeover rules are based on EU takeover rules, which apply to all European countries and limit the ability of national Governments to block mergers unless they are based on national security, financial stability or media plurality grounds. France and Germany would also be unable to block a takeover of that kind due to EU takeover rules.

My hon. Friend the Member for Redditch (Rachel Maclean) is a doughty fighter for her constituents, and I know how passionate she is about this issue. She asked whether we are confident about the assurances Melrose has given about the UK headquarters. Under the takeover code, companies can make legally binding post-offer undertakings, and that is an important element. The hon. Member for Paisley and Renfrewshire South raised the question of pensions. Of course, it is a matter for the Pensions Regulator and it would be inappropriate for me to comment; however, the Government understand that the Pensions Regulator is in discussion with all parties.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—I hope I got that right—asked what assurances we can give that Government R&D investment will stay in the UK. I can tell him that Government grants to support R&D are awarded on the basis of R&D carried out in this country, so the conditions of any contract with Government would mean that those responsibilities would transfer to the new company.

[Drew Hendry]

I appreciate the Minister’s giving way in the limited time he has. I want to make it clear that my concern was that the investment, and therefore the resulting intellectual property, might be lost elsewhere.

[Andrew Griffiths]

I understand the point that the hon. Gentleman makes.

Finally, my hon. Friend the Member for Redditch asks what the Government are doing to further strengthen the codes. I will highlight that the Government are exploring proposals to strengthen our powers to scrutinise investment for national security purposes, which would bring our regime in line with those of other developed countries. The national security and infrastructure investment review that my hon. Friend talked about closed in January, and the Government will publish its firm proposals in a White Paper this year.

The Government will continue to monitor the situation very closely over the days and weeks ahead, and I can assure hon. Members that we will always act in the best interests of the country.

Draft Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018

Andrew Griffiths Excerpts

Wednesday 14th March 2018 General Committees

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

I beg to move,

That the Committee has considered the draft Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No. 2) Order 2018.

It is a great pleasure to serve under your chairmanship, Ms Ryan. It is also a pleasure to bring the order to the House, because in doing so we are protecting the rights of thousands of workers and ensuring that everyone is paid fairly. In our response to the Taylor review of modern working practices, the Government agreed with the principle of increasing transparency for workers. Workers should have access to information on their rights and entitlements. In fact, today’s order goes beyond the recommendations made by Matthew Taylor in that review.

The order was laid alongside the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018. Together, the orders will give all workers across the economy the right to a regular payslip and require all employers to provide better information in those payslips to help workers understand what exactly they are being paid for. They will provide workers with more information on their pay and help workers spot if they are being underpaid. For example, the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 will require employers to increase the amount of information provided in time-paid employees’ payslips. That means employers will have to state clearly the number of hours that those workers are being paid for.

Put simply, if a worker receives a payslip recording 20 hours of work, when she or he has worked 25 hours, there is a clear case of underpayment. The transparency ensured by providing hourly information will assist workers in identifying and addressing cases of underpayment, including in some cases national minimum wage underpayment. Up to 1.6 million people will be entitled to receive information on the amount of time they are being paid for in their payslips.

The second order, which we are debating, extends the right to receive an itemised payslip to all workers. Currently only employees—a subset of workers—are entitled to a payslip. The order will mean that an estimated 300,000 workers who do not currently receive a payslip will start receiving one. These simple and practical changes will help workers up and down the country spot and address underpaid wages.

Whenever a worker thinks they may have been underpaid, I encourage them to raise it with their employer. Unfortunately for some workers, that is not always feasible. In those cases, workers should call ACAS for free and confidential advice. I commend the work of that organisation. However, although Her Majesty’s Revenue and Customs will look into potential national minimum wage underpayments, a worker will need to raise a complaint with an employment tribunal if they do not receive a payslip or the information to which they are entitled.

To develop the policy, we consulted widely with a variety of stakeholders, including employer and worker representatives and payroll and software providers. The exercise established that the majority of stakeholders supported the principle of greater transparency and sharing more information with workers. We are encouraged that the majority of employers already provide all their workers, not just those who are employees, with a payslip. Furthermore, some employers also include breakdowns on the hours worked by their staff. The orders therefore bring all employers under one set of standards.

[Sir Robert Syms (Poole) (Con)]

Will the Minister define what he considers a payslip? Is it a piece of paper or is it access to something online?

[Andrew Griffiths]

It is access to information on the amount that a worker or employee is being paid, so it could be paper or it could be electronic.

I have listened to the arguments for even greater detail in payslips, which I am sure hon. Members may want to make. It is important that we introduce the measure in a proportionate way that does not overburden employers who are trying to do the right thing.

The need to provide greater transparency over pay in workers’ payslips was first recommended by the independent Low Pay Commission. It said:

“We recommend that the Government reviews the current obligations on employers regarding provision of payslips and considers introducing a requirement that payslips of hourly-paid staff clearly state the hours they are being paid for.”

Bringing these orders into force is part of a wider Government crackdown on wage underpayment. Those aged 25 and over are entitled to the national living wage of £7.50 per hour, and I am pleased to say that the Government will increase that rate above inflation to £7.83 from next month. That is a pay rise of £600 a year for those on the national minimum wage. In all, increases to the national minimum wage and national living wage will benefit more than 2 million workers. It is a well-earned pay rise.

We recognise that, as the minimum wage rises each year, the risk of non-compliance increases. We are actively taking steps to tackle non-compliance and sending a clear message to employers that underpaying workers will not go unpunished. It is simply wrong and must end, which is why the Government continue to invest heavily in ensuring workers are paid correctly. We have doubled our investment in minimum wage enforcement and spend more than £25 million annually on investigating employers and ensuring they meet their legal responsibilities.

It is right that workers are provided with transparent information on their employment rights. It helps empower workers to hold their employers to account. It is essential for good work and underpins a productive and motivated workforce.

--- Later in debate ---

[Andrew Griffiths]

I thank the hon. Lady for the way in which she has engaged with the order. We are united in our desire to bring greater rights and greater protections to our constituents. We want people to be paid fairly, with good terms and conditions, and to be motivated and happy in their work, which is why, through the Matthew Taylor report, the Government will for the first time monitor and benchmark ourselves on the quality of work and not just the quantity. That is a huge step forward.

We share a desire to address the things that the hon. Lady talked about. In our positive response to the Matthew Taylor report, we looked to take forward all the issues—52 of the report’s 53 recommendations. We want greater clarity from day one, and a contract for people from day one, to ensure that agency workers and temporary workers have greater understanding of who employs them and what their rights are.

The hon. Lady mentioned the clarification of the status of workers, which is fundamental. As working conditions and the way we act as consumers change because of technology and so on, so people’s way of working changes. To ensure that they have the proper rights and protections and are paid properly, we need to clarify their status. It should not be that the only way for people who are unsure about their status—employed, self-employed or worker—to get that clarity is to employ a very expensive barrister and go to court. We want to make it simpler.

The hon. Lady talked about disaggregation—the technical term for the breaking down of hours—and I listened closely. I understand her points. What we are keen to do, and must do, is introduce that in an affordable way for employers, recognising the extra cost burden. As the Committee heard, we consulted widely with employers, trade unions, payroll specialists and the people who write the relevant software. They said that there would be an extra burden of cost that they felt unable to bear at this stage.

However, I am minded to ensure that all workers have greater transparency and greater understanding of how they are paid, as the hon. Lady said. That is not included in the draft order, but I am watching it closely and reserve the right to return to the House with further regulation if needed.

[Laura Pidcock]

In the Minister’s opening contribution, there was talk of the hours paid. That is where my confusion came from. To be clear, the itemised pay statement will not have to include the hours worked and the rate at which those hours are paid. Will the Minister acknowledge that that is a very important step for pay justice?

--- Later in debate ---

[Andrew Griffiths]

Let me clarify for the hon. Lady: payslips will need to include the total pay, deductions and the hours that the person is being paid for—a clear ability for anyone to ensure that they are paid correctly when they are being paid the minimum wage.

The draft order will extend the basic right to receive a payslip to all workers in the economy. The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 requires employers to support workers by providing a greater level of detail in payslips.

I am proud to bring these employment rights into force at a time when the Government are accused of being intent on slashing the rights of employees. It is said that, when we leave the European Union, there will be a bonfire of employment rights, starting a race to the bottom, to a Singapore-style economy. Through the draft order, the Government are clearly increasing the rights of workers. Through measures such as this and the Matthew Taylor review, we are showing that we do not need the European Union to ensure that we have worker protections and rights. We will enshrine them in this place. We will ensure that British employees and workers, and people working in the British economy, are properly protected and properly paid, and have their rights fully enforced.

We expect basic fairness in the workplace. The right to receive clear payslips is an important building block of what good work should look like—meaning work underpinned by fair and transparent employment practices, where workers can hold their employers to account for being paid fairly and for all hours worked. Upholding fair and transparent work practices is an integral part of the “good work” agenda that the Government and I embarked upon following the review of modern working practices. That is why last year we ensured that £10.9 million in arrears for 98,000 workers were clawed back for the minimum wage. We want everyone to have easy access to information about their working arrangements and the rights to which they are entitled.

[Laura Pidcock]

Will the Minister give way?

[Andrew Griffiths]

I was just about to finish, but I will give way.

[Laura Pidcock]

I am grateful to the Minister. Under the Employment Rights Act, the suggestion is that an itemised pay statement asks for the gross amount of wages or salaries, the amount of deductions, the net amount of wages and the amount and method of payment. Nowhere does it talk about the hours paid. I am just wondering where that will come. Is it in the draft order, because I cannot see it? How will the Minister monitor whether those hours are being captured on the pay statement?

[Andrew Griffiths]

The measure will be enforced. I urge the hon. Lady to read the draft order again, because it contains that completely. I have even received divine intervention that clarifies definitely—it is in the SI. Perhaps I can point it out to her after the event.

[Nick Smith (Blaenau Gwent) (Lab)]

The Minister said that he would be interested in monitoring whether the hourly rate of a worker’s pay should be included on payslips in future. How will he do that? We think that that important measure is worth introducing.

[Andrew Griffiths]

I agree. As part of my role, I meet regularly with unions, employers, and employer and employee organisations. Such transparency is the sort of thing that we are introducing through the Matthew Taylor review. There is a plan to engage with stakeholders over the coming weeks and months as this comes into force. Through such engagements, I will monitor the situation to ensure that the transparency and change in the relationship between worker and employee that we want are delivered. I therefore assure the hon. Gentleman that my beady eye will be trained. I will talk at length with the unions to ensure that we deliver fairness for workers, and that people are being paid correctly. The draft order forms a crucial part of our efforts to ensure that no worker is underpaid.

Question put and agreed to.

Oral Answers to Questions

Andrew Griffiths Excerpts

Tuesday 13th March 2018 Commons Chamber

[Alex Chalk (Cheltenham) (Con)]

19. What steps he has taken to support and engage with businesses affected by the liquidation of Carillion.

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

The official receiver and special manager are working to ensure an orderly transition by facilitating the transfer of contracts. As of 12 March, 8,521 jobs have been safeguarded and 1,536 people have been made redundant, sadly, through the liquidation. My right hon. Friend the Business Secretary has set up a taskforce, bringing together trade associations, bankers and representatives of Government to ensure that we support the Carillion supply chain. The taskforce has delivered a range of supportive measures, including more than £900 million of support from UK lenders.

[Gerald Jones]

Let me seek some further clarification. If there is any doubt that TUPE applies, can the Government confirm that they will instruct the official receiver to transfer employees on private sector contracts as if TUPE applied? Will the Government also ensure that trade union recognition is transferred with those staff?

[Andrew Griffiths]

I thank the hon. Gentleman for that question and refer him to the recent Westminster Hall debate, when we discussed at some length the legal responsibilities in relation to TUPE, which do not apply in many cases during a liquidation. Transferring employers may well decide to offer terms to transferring employees that recognise existing employment rights, terms and conditions. The Government are focused on ensuring that transferred employees are no worse off, and the official receiver is doing all he can to facilitate this wherever possible.

[Alex Chalk]

The Carillion collapse has exposed what can only be described as market abuse by lead contractors, with subcontractors in Cheltenham suffering as a result of the failure to adhere to best practice schemes such as the prompt payment code. What steps are the Government taking to ensure compliance with the schemes and more generally to stamp out market abuse?

[Andrew Griffiths]

My hon. Friend, who has met me on a number of occasions to defend the interests of businesses in his constituency, will know that the Government had two priorities: to protect the provision of vital public services and to do what we could to protect jobs in Carillion and jobs in the supply chain. We are clear that we must learn the lessons from the collapse of Carillion. This could be a catalyst for change for the good. We are concerned to ensure that we do all we can to learn the lessons on procurement, and we also want to do more to ensure that the supply chain is promptly paid and that small businesses are paid speedily. Looking at the prompt payment code is an important part of that.

[Rachel Reeves (Leeds West) (Lab)]

Following on from the question from the hon. Member for Cheltenham (Alex Chalk), when Carillion went bankrupt, many of the subcontractors had not been paid for 120 days. The money coming to Carillion was from the Government, so what are the Government doing to ensure that when they give contracts to big businesses, those businesses pay their subcontractors on time? Small businesses are the lifeblood of our economy and they have been destroyed by the collapse of Carillion.

[Andrew Griffiths]

I thank the hon. Lady for that question and particularly for the work that her Select Committee is doing in getting to the bottom of exactly what happened in Carillion. That is very important work. The Government are clear that with public sector contracts we pay in 30 days, and we expect tier 1 contractors to ensure that they pay their supply chain in 30 days too. We are determined to take action to ensure that this happens, and we are looking at what we can do to make sure not only that small businesses in the public sector supply chain get paid within 30 days, but that we do more to support private sector suppliers as well.

[Henry Smith (Crawley) (Con)]

What support has been given to British nationals working abroad who were with Carillion?

[Andrew Griffiths]

The main priority for this Government has been to protect jobs here in the UK and the continuation of public sector contracts and services. The special manager, of course, has a responsibility to wind up the business to get the best value for creditors, but he is responsible for dealing with businesses overseas.

[Eleanor Smith (Wolverhampton South West) (Lab)]

For the Carillion workers who were not transferred under TUPE, what was the degradation of their terms?

[Andrew Griffiths]

I have met the hon. Lady several times, and I know that she is working hard to ensure that her constituents employed by Carillion get all the protections possible. The Secretary of State has had conversations with the special manager to ensure that wherever possible when contracts are transferred employees get like conditions so that they are no worse off. As she will understand, this is a very complex and complicated business, and I do not at the moment have the specific statistics she requests.

[Andrea Jenkyns (Morley and Outwood) (Con)]

11. What steps he is taking to support self-employed people.

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

We want people to be self-employed when it is the right thing for them, which is why the Government have introduced new measures to ensure they are even better supported. These include improved support for embarking on self-employed careers, encouraging pension saving and supporting people to pay the right tax. From 6 April 2016, we have also given self-employed people the ability to build their entitlement to the new state pension at the same rate as employed people.

[Andrea Jenkyns]

Morley is lucky to have a thriving high street, which matters to me as an ex-retailer. During the recent cold weather, Apollo Fisheries in Morley handed out free food to cold residents. What are the Government doing to support our businesses on the high street, and will the Minister take this opportunity to congratulate Apollo Fisheries on its fine example of Yorkshire hospitality at its best?

[Andrew Griffiths]

I think the House will recognise that I am no stranger to a fish supper, and I would like to join my hon. Friend in congratulating Apollo Fisheries on the community spirit it showed. It clearly demonstrates that businesses contribute not just to the economy but to our society. The future high streets forum provides joint business and Government leadership to enable our high streets and town centres to adapt and compete in the face of changing consumer and social trends, but we want to go further, so last week I announced the establishment of the Retail Sector Council, which will bring together leaders in retail to help to develop policies and support for the vital retail sector.

[Ms Angela Eagle (Wallasey) (Lab)]

We all want self-employment to grow, but we also want to crack down on apparent self-employment, where people are forced to become self-employed by exploitative employers who then save on national insurance contributions while putting all the risk of that employment on often vulnerable individuals. What are the Government doing about that?

[Andrew Griffiths]

I am sure the hon. Lady will be delighted to know that the Government are taking forward the proposals set out by Matthew Taylor. We recognise that employment status—whether workers are employed or self-employed—is key to their getting not only the payments but the protections they deserve. That is why we have embarked on a full consultation with the intention of clarifying the status of workers, giving them extra protections and ensuring that if it looks like work and feels like work, it is work and they are paid properly.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

The Government’s response to the Taylor review did virtually nothing to tackle the challenges and insecurity that self-employed people face. Equally poor was the Government’s response to the treatment of gig workers.

“Don has died and they should be making changes”.

Those were the words of DPD gig worker Don Lane’s widow, Ruth. With this in mind and with Matthew Taylor himself last week rating the Government’s response to the Taylor review a shocking four out of 10, what score would the Minister give himself?

[Andrew Griffiths]

Seven weeks in, I think I would give myself 10 out of 10. The hon. Lady quotes Matthew Taylor. He has said quite clearly that this is a complex and complicated matter. He wants us to get the definition of status right, because the rights of thousands of gig workers depend on it. That is why in the passage the hon. lady quotes he also said that when we have finished our consultation, if we deliver what we have promised he would give us seven or eight. I want to go further; I want it to be 10.

[Rebecca Long Bailey]

Ten out of 10 indeed! The Chancellor today might attempt to laud employment figures as positive news, but he will fail to state that over 3 million people are in insecure work, and, according to a recent report by the Centre for Labour and Social Studies, over a third of all workers do not even earn enough to live. There are also real fears, despite the Prime Minister’s assurances, that the quality of work will worsen still, with reports that the Foreign Secretary and other Ministers are pushing for major employment law deregulation. Will the Minister confirm whether his Department is carrying out any work looking at the deregulation of certain employment rights?

[Andrew Griffiths]

The hon. Lady must have missed the intention behind what the Government were doing with the Matthew Taylor report. Not only are we committed to continuing the existing employment rights and protections, but we are going further and faster than anyone else—further and faster than our European colleagues—to give gig workers and others in vulnerable conditions, such as agency workers, greater protections than ever before. We are not just talking about it; we are protecting those workers.

[Stephen Hammond (Wimbledon) (Con)]

12. What steps he is taking to support growth in the small business sector.

[Mr Speaker]

I call the Minister.

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

Apologies, Mr Speaker. I was congratulating myself too much!

The Government-owned British Business Bank provides £4 billion to support more than 60,000 UK small and medium-sized enterprises. We plan to unlock more than £20 billion of investment in innovative and high-potential businesses, including a new £2.5 billion investment fund with the British Business Bank. The Small Business Commissioner helps with payment issues, dispute resolution, and the sourcing of advice throughout the UK. Through the industrial strategy, we are continuing to invest in 38 growth hubs across England, as well as the business support helpline.

[Stephen Hammond]

Of course I join in the congratulations to the Minister, but he will know that one of the crucial requirements for the success of the small business sector is access to and understanding of finance, and there is considerable evidence that there is currently a knowledge gap in the market. What are the Government doing to address that?

[Andrew Griffiths]

My hon. Friend has hit the nail on the head. We are concerned by reports that businesses, particularly small businesses, are reticent about coming forward to access finance that could help them to invigorate and grow. That is why the British Business Bank produces “The business finance guide”, in partnership with the Institute of Chartered Accountants in England and Wales and industry bodies. The guide explains the different sources of finance that are available to smaller businesses, and is also published online. The British Business Bank will launch a new digital platform in the spring to raise awareness even further.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Small businesses in Cumbria, particularly those involved in farming and tourism, were integral to the Lake district’s gaining world heritage site status last summer, a designation that could lead to a massive increase in the number of visitors to what is already Britain’s second-biggest visitor destination. Will the Government back those small businesses with the infrastructure investment that they need in order to cope and to grow? Will they, for instance, electrify the Lakes Line?

[Andrew Griffiths]

I am delighted to support the small businesses to which the hon. Gentleman has referred. He will be pleased to know that we are boosting infrastructure, including digital infrastructure, with more than £1 billion of public investment, including £176 million for 5G and £200 million for local areas to encourage the roll-out of full-fibre networks. I should also be delighted to meet him to discuss what more we can do for lakeside businesses.

[Bim Afolami (Hitchin and Harpenden) (Con)]

Hitchin and Harpenden, which are both small towns, have a thriving independent retail sector, but in recent months they have reported that things are getting harder for them. Will the Minister reassure me that the Government are doing everything they can to help independent small retailers in thriving market towns?

[Andrew Griffiths]

As the retail Minister, I recognise the real challenges faced by our high streets and, in particular, by independent businesses. In his spring Budget statement, the Chancellor announced a package of measures for business rate relief, including a £1,000 discount for pubs with rateable values below £100,000, £300 million for local authorities to fund discretionary rate relief, and a cap on rate increases, which means that businesses that lose their small business rate relief will not see their bills increase.

[Bill Esterson (Sefton Central) (Lab)]

The Minister should stop being quite so complacent. Carillion was a signatory to the prompt payment code; Interserve still is. Carillion suppliers were paid on terms of 120 days, while Interserve subcontractors say that they are being absolutely hammered by late payment. Yesterday the Federation of Small Businesses again highlighted the damage done to growth by late payment. When will Ministers support smaller firms in the public sector supply chain, and enforce the prompt payment code?

[Andrew Griffiths]

We are certainly not complacent, which was why we set up the trade body group to assess the impact of Carillion. The hon. Gentleman will be delighted to know that yesterday I spoke to Phil King, who runs the prompt payment code, and I will be meeting him later this week to discuss how we can tighten up the code and give it real teeth. We are determined to help small businesses.

[Stephen McPartland (Stevenage) (Con)]

13. What plans he has for the future of local enterprise partnerships.

--- Later in debate ---

[Mrs Sheryll Murray (South East Cornwall) (Con)]

T2. Can my hon. Friend assure me that protected status for Cornish produce such as the Cornish pasty will not be compromised post-Brexit?

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

It is said that I am no stranger to the fish supper, and I also have knowledge of the Cornish pasty and, indeed, Cornish clotted cream. All those products will achieve UK geographical indications and will continue to be protected in the UK after our EU exit. As negotiations are ongoing, I cannot give my hon. Friend a cast-iron assurance right now that UK products will remain protected in the EU after exit, but I can categorically state that that is the Government’s clear objective.

[Graham P. Jones (Hyndburn) (Lab)]

T5. I am grateful to Carl Webb, my Communication Workers Union regional political officer, for bringing to my attention the BT Sport call centre in my constituency, which is paying the minimum wage to agency workers beyond 12 weeks using the Swedish derogation. The Taylor report talked about getting rid of the Swedish derogation, so when are the Government going to act to protect some of our lowest paid workers?

[Andrew Griffiths]

I assure the hon. Gentleman that we are acting right now; a consultation is under way with regard to the Swedish derogation. Firms and businesses should be in no doubt that this Government expect everyone to be paid either the national minimum wage or the national living wage. That is why we have doubled the amount of enforcement and protected the pay of 98,000 workers. We are absolutely committed to everybody getting paid the national minimum wage.

--- Later in debate ---

[Andrew Griffiths]

The south-west is indeed a great region in which to do business. Chambers of commerce including Barnstaple’s, which has been serving its community since 1911, have a valuable role to play in supporting local businesses and ensuring that their voice is heard. That is why I have met chambers of commerce 11 times in the seven weeks in which I have been the Minister for small business.

[Chris Law (Dundee West) (SNP)]

Solar power is the most popular source of clean energy and one of the cheapest, so why has it been excluded from clean power auctions for the past three years? Why oh why does it continue to be excluded, putting the industry at a clear competitive disadvantage?

[Kevin Hollinrake (Thirsk and Malton) (Con)]

T7. The banking scandals at RBS destroyed thousands of businesses, but the owners of those businesses have no means of seeking justice or recompense. Will the Minister support the proposal of the all-party group on fair business banking and finance for redress through an independent tribunal system?

[Andrew Griffiths]

I pay tribute to the work of the all-party group, of which my hon. Friend is a vice-chair. I met it just last week to explore the options. I share his aim that small businesses should have an accessible and impartial forum through which to seek redress when things go wrong. There is work to be done on how that would be paid for and on whether legislation would be required, but I look forward to seeing the research and to working with him.

[Richard Burden (Birmingham, Northfield) (Lab)]

The 220 people who work at GKN Aerospace in my constituency produce windshields for military and commercial aircraft, so is that not another indication that the hostile takeover bid raises national security implications? The Secretary of State has the power to intervene under the Enterprise Act 2002.

Hospitality Sector: Tipping

Andrew Griffiths Excerpts

Wednesday 7th March 2018 Westminster Hall

[Chris Stephens]

I have not, but it seems to me that if 208,000 workers are not being paid the national minimum wage and 56,000 workers are in accruals, who have been owed the national minimum wage, and if we compare those figures with the 4,504 full-time equivalents chasing Department for Work and Pensions social security fraud, we see that more resources should be put into ensuring that the national minimum wage is complied with. I think that the Minister is anxious to intervene.

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

Let me enlighten the hon. Gentleman. The Government have actually doubled the amount of money that we are putting into enforcement of the national minimum wage. We have increased that to £25 million, and in the last 12 months we have helped to secure £1.2 million of wages owed to people who had been unfairly treated by their employers.

[Chris Stephens]

I thank the Minister for that clarification. However, the facts speak for themselves. Written answers from the Government only a few months ago have told me that the national minimum wage compliance unit has no plans to fill the current vacant posts. I am happy to provide the House of Commons Library with that answer.

The Minister says that there has been increased investment, but the 208,000 workers who are still waiting to be paid the national minimum wage may have a different view, so let me ask him what representations he is making to Her Majesty’s Revenue and Customs to enforce the national minimum wage appropriately in the hospitality sector and what representations he is making to ensure that HMRC is fully staffed and equipped for enforcement of the national minimum wage in that sector. The Low Pay Commission estimates that 1.9 million workers in the UK are currently on or just above national minimum wage rates. That figure is expected to increase, by the year 2020, to 3.4 million workers earning the national minimum wage or just above it, so we need strong action from the Government to enforce the national minimum wage.

On the issue of tipping and gratuities itself, as the hon. Members for Bristol North West and for Hornsey and Wood Green (Catherine West) have outlined, the Government need to get a grip on what credit card payments mean for the workforce—what that means for the worker in practice needs to be made clear to consumers and others. In my view, it is certainly a breach of consumer protection regulations if consumers are being told that tips from credit card payments are going to staff when they are not. I think that the hon. Member for Hornsey and Wood Green has identified such a practice, and I hope that it will be brought to the attention of the House of Commons Commission. It concerns me; I think that if there are facilities in this place where that is happening, hon. Members have a duty and responsibility to ensure that the House of Commons Commission is aware of those allegations and they are fully investigated.

Will the Minister advise us of the steps that he is taking to tighten the regulations in relation to customer credit card payments? I ask because it seems to me that that is a device to ensure that money is not going into workers’ pockets and that the so-called tips are actually an admin fee, as the hon. Member for Bristol North West outlined.

--- Later in debate ---

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

It is a delight to serve under your chairmanship, Sir Roger. I congratulate the hon. Member for Bristol North West (Darren Jones) on his well-made speech. I am genuinely pleased that he has raised these issues in the House and given me an opportunity to consider them and respond to him.

I think this is my seventh week as the Minister for small business, who is responsible for this employment legislation. In that time I have had the Carillion case, the Matthew Taylor report and various other pressing issues, but I am delighted that the hon. Gentleman takes this issue seriously. He raises important points on behalf of his constituents—many of whom, as he rightly points out, are vulnerable—and gives us the opportunity to debate this issue today.

Conservative Members care passionately about the lowest-paid in society, particularly those on the minimum wage and the national living wage, which, as you will know, Sir Roger, was introduced by the previous coalition Government. The Government are committed to creating an economy that works for everyone. The low-paid workers who work hard at our restaurants, bars and hotels across the country should be paid fairly by their employers. There are no excuses for not doing so.

I gently point out to hon. Members, however, that the hospitality industry is a reputable industry that provides fantastic employment opportunities for many of our constituencies across the country. I declare an interest as the previous chairman of the all-party parliamentary beer group. I am a lover of our pubs and hospitality industry. Only yesterday, I spoke at an event, which many hon. Members came to, about apprenticeships in the hospitality industry. They are giving young people careers with great training and great opportunities to earn well and have a fulfilling career in an exciting and dynamic industry. We should not tar all employers who are working hard to build their business and employ people in fulfilling and well-paid jobs with the same brush as disreputable employers.

[Thangam Debbonaire]

I am grateful to the Minister for giving way, but I feel that I must register that I have sat here for almost all of this debate and I have not heard a single person tar the industry with any sort of brush. All Members have done is to be very clear that where egregious employment actions do take place, they need to be rectified. I welcome the hospitality industry in my Bristol West constituency, but I just want employers to pay their workers properly. Most do, but some do not.

[Andrew Griffiths]

I am glad that the hon. Lady and I have found common ground on that point.

The Government are committed to creating an economy that works for everyone. That is why I was extremely concerned to learn from the hon. Member for Bristol North West about the working conditions experienced by some low-paid workers in the hospitality industry. I recall the period of scrutiny that the sector faced in the summer of 2015. Several of our largest restaurants were discovered to be abusing tips earned by their staff. I will clarify for the hon. Gentleman that I recognise the point he makes about the cost of transactions. He will also recognise that income tax is due on payments where the employer acts as the troncmaster—a fabulous word, which I had never heard before I started to prepare for this debate. There is a responsibility on the employer to deduct PAYE, and we must take into consideration the fact that that will result in some payroll costs. Where the employer facilitates the amounts, national insurance contributions are also due. Clearly, it is important that any employer acting as a troncmaster fulfils their legal obligations in relation to the payment of both income tax and national insurance contributions.

The cases raised today are of exactly the same type as the 2015 cases, which are the reason why we had the consultation. I thank the hon. Member for Ellesmere Port and Neston (Justin Madders) for his contribution, in which he raised important issues including the cancelling of shifts. That is a real problem. People turn up to do an evening’s work only to find that if the restaurant or pub is quiet, they are sent home without any further pay by their employer. They expected to do a four or five hour shift, but they may get paid for only one. I am delighted to tell the hon. Gentleman that, in response to the Matthew Taylor report, we are looking at exactly that: the asymmetry between the flexibility required of workers, particularly those on zero-hours contracts, and the employers that can send employees home at will.

[Laura Pidcock]

Was that a sneaky preview of policy that will be coming from the Government? Are they going to ban zero-hours contracts?

[Andrew Griffiths]

I point out to the hon. Lady that for many people who are employed on them, zero-hours contracts are exactly what they want. I recognise that is not the case for everybody, but all the consultations show that for many people zero-hours contracts provide the flexibility that they are looking for. That is not to say there may not be an argument for some sort of enhancement or bonus for those workers’ flexibility. That is why, following Matthew Taylor’s report, we asked the Low Pay Commission to look at whether those on zero-hours contracts who have to offer such flexibility should receive an enhancement on their wages as a repayment for it.

[Chris Stephens]

The Minister is, rather suspiciously, discussing much of the content of the Workers (Definition and Rights) Bill, such as shift changes and zero-hours contracts. He has promised me a meeting, but I do not yet have an invitation to see him to discuss these matters. When should I expect to receive an invitation?

[Andrew Griffiths]

I am sure that, as we speak, an invitation is winging its way through the ether to set that up. It is always a delight to talk to the hon. Gentleman, and I am keen to talk to him about his Bill. Perhaps this is the perfect point for me to address some of the issues that he raised in his thoughtful speech, particularly the enforcement of the national minimum wage laws.

The Government have doubled our investment in enforcement of the national minimum wage to £25.3 million a year. That means we have recruited an additional workforce, and around 400 people now work on the enforcement of the national minimum wage. Recruiting additional tax staff takes time, and new vacancies appear. We are committed to continuing the high level of staffing to support those who are being denied the national minimum wage or the national living wage that they are owed. I am delighted to say that last year we assisted 98,000 people in recovering the payments they were owed —up from 58,000 in the previous year—and I am sure the hon. Gentleman will welcome that.

[Chris Stephens]

I did say in my contribution that the minimum wage compliance unit hired 399 people. The Minister has just said that it hired 400, so I am glad that one person has been taken on. Seriously, though, does the Minister not share this concern, which many of us have? The National Audit Office says that 208,000 people are not being paid the minimum wage, but if it was not for the investment that he says the Government are making, that number could have been a lot higher—400,000 or 500,000 people.

[Andrew Griffiths]

I absolutely agree. I take that as the hon. Gentleman welcoming the doubling of the investment in the enforcement of the national minimum wage.

I know that everybody is keen to hear my response, but before I go on I will deal with one further point that the hon. Member for Ellesmere Port and Neston made, which was about unpaid interns. I absolutely agree that people being employed to do work under the auspices of unpaid internships is—let me be very clear—illegal. That is why in the past couple of months HMRC has written to firms that are advertising unpaid internships, reminding them of their obligations. This is no way to avoid paying the national minimum wage. If we find that firms are doing it, they will be prosecuted for non-payment of the national minimum wage.

[Justin Madders]

Does the Minister agree that as Members of Parliament it is up to us to set the standards and not to recruit people on unpaid internships ourselves?

[Andrew Griffiths]

I absolutely agree. That old phrase, “Physician, heal thyself” applies here. We should set the same standards ourselves. I would point out, Sir Roger, that I do not employ an unpaid intern.

The Government are clear that all workers should be paid fairly and at least the relevant national minimum wage. For those aged 25 and over, that is £7.50 per hour. I am pleased to say that the Government will increase that rate above inflation to £7.83 next month, which I am sure all hon. Members will welcome. In all, increases to the minimum wages will benefit more than 2 million workers. That is a well-earned pay rise for them from this Government. I thank all the businesses that have stepped up to the plate and are working hard to pay the national minimum wage. The Government respond robustly to employers that fail to pay their workers correctly. We have doubled our investment in enforcement, as I stated.

A worker aged 25 and above must be paid that £7.50 by their employer. All income earned through tips must be over and above that sum. Let me reassure the hon. Member for Glasgow North East (Mr Sweeney) that any income earned through tips must be over and above the national minimum wage. If any employee is not getting that, their employer is breaking the law. They should report it, and HMRC will take action to ensure that is enforced.

The hon. Member for Bristol North West raised restaurants charging a 3% table levy to their workers. That is a proportion of whatever sales are earned on the table that worker has served. It should not be seen as a route through the national minimum wage, because it is not.

It is my top priority to ensure that the lowest paid workers are fairly rewarded for their work and contribution to the economy. It simply is not right for employers to keep huge proportions of the tips earned by workers. Accordingly, in the past two years the Government have run a call for evidence, as we have heard, and a public consultation to examine this in greater depth. The exercise established a very clear principle that I think the House will agree with: a majority of stakeholders agree that tips belong to the worker. I would like to make it clear that this Government will act should there be clear, ongoing evidence. This debate has added to that ongoing evidence. The principle is that no employee should be abused in this way.

[Laura Pidcock]

I do not want to disrupt the Minister’s progress, but the trade unions have been saying this for a long, long time. It should not take a Westminster Hall debate to legitimise the argument or add to evidence. They have all the evidence the Government need.

[Andrew Griffiths]

As the hon. Lady will know, at the end of last year Unite the union, of which she has said she is a member, worked alongside the Association of Licensed Multiple Retailers to produce a new code of practice. That was a joint collaboration, and I pay tribute to both the industry and Unite the union for working in such a proactive way to develop a voluntary code of conduct. I also recognise that a voluntary code of conduct works only if everybody sticks to it. As we have heard, there are still companies that are not sticking to it.

The agreement between the unions and the ALMR about the principles that underpin good tipping practices is clear, and it provides great guidelines for how to distribute tips fairly among all workers, not just those at the front of house. We must remember that those working in the kitchen or cleaning tables are just as much a part of the service experience as those waiting on tables and interacting directly with diners, so I understand the need for the tronc system where tips are spread more widely among staff in some circumstances.

Since 2015, we have seen another change, which is that employers are noticing. Poor employers who misuse tips now face tough scrutiny—not only in Westminster, but under the harsh media spotlight. I am encouraged that newspapers raise the issue on a regular basis and highlight the points made by the hon. Member for Bristol North West.

Hon. Members asked when the Government would formally respond to the consultation on tipping. I have listened to the calls for further action from the Government; many would like to see an outright ban on employers making deductions from tips or levying table charges. It is an extremely serious issue, and the Government reserve the right to take action or to legislate if necessary. The evidence that we have heard clearly indicates that the Government need to look at it very closely and to take action if necessary.

Let me be clear: we are not ruling out legislating to solve the problem. Workers should be treated fairly, and I am clear that it is unfair for employers to pocket a huge proportion of the tips earned by staff. Furthermore, employers who play fair are disadvantaged compared with unscrupulous employers. It is a competitive market. We have heard the figures for how much unscrupulous restauranteurs and people in the industry can make as a result of that kind of scheme, which provides them with an unfair advantage in the marketplace among their competitors who are doing the right thing. I am very mindful of that, so we will remedy the situation if the industry does not act on the abuses that are sometimes reported.

Naturally, all options for Government action carry costs and benefits. It is important to get it right so any action is targeted and benefits the workers, while burdens on legitimate, well-meaning businesses are minimised. Employers should not be out of pocket, and I entirely accept that they may need to retain a small proportion of tips to cover the administrative cost of processing them, as I said earlier.

There are many examples of good employers who act entirely fairly about their staff’s tips and who recognise that treating workers fairly is part of running a productive and happy workplace. Ultimately, it is up to employers to make a compelling offer if they want to attract and retain the best staff.

I thank the hon. Member for Bristol North West for securing the debate and for the collaborative way in which he has raised these issues. I look forward to working with him on them in the weeks to come. It is right to call out abuses of tipping and the exploitation of workers in the hospitality sector, and more widely.

It is the responsibility of all employers to pay their staff fairly, and at least to pay them the national minimum wage. Hon. Members should be clear that if that is not happening, the Government will act if necessary. Our policy is that employers should not make unfair and unreasonable deductions from tips. We reserve the right to introduce further sanctions against employers who fail to comply with that basic principle of fairness.

[Chris Stephens]

On a point of order, Sir Roger. I wanted to wait until the Minister had finished, so I apologise to the hon. Member for Bristol North West (Darren Jones). Some allegations were made in relation to hospitality establishments in this place. Could you remind us of what action you or other hon. Members can take to raise that with the Commission?

Carillion: TUPE

Andrew Griffiths Excerpts

Wednesday 21st February 2018 Westminster Hall

[Laura Pidcock]

Thanks for explaining the nature of conservatism. That was very welcome. I think the contracts made after three profit warnings tell their own story.

That way of doing business is catastrophic for workers, and damages progress on desperately needed public infrastructure. Imagine all the investment that could have been made if even half the money that went to shareholders had been invested in public projects and workers. That is why the Labour party calls on the Government to bring the contracts back in house. The situation today, with potential mass job losses, is not the fault of the workers, so a degradation of workers’ rights as a result of Carillion’s collapse—which threw 20,000 workers into a future of chaos and worry—is a price they should not have to pay.

The Government are not powerless in this situation, given that they have 450 contracts with Carillion. They were a major customer of the company, with a considerable stake in the future of the contracts and what the new jobs will be like. If there is any doubt that TUPE applies —particularly regulation 4 on protection of contractual rights and regulation 7 on protection from dismissal—I should hope at the very least for a Cabinet Office statement of practice to be issued to ensure the transfer of all employees in Carillion public sector contracts as if TUPE applied. That statement of practice should also apply to all contracts relating to central Government, local government, the NHS and all public bodies. Similarly, could the Government instruct the official receiver to transfer employees in private sector contracts as if TUPE applied? They gave an instruction to prioritise the continuation of public sector contracts, which was a good thing. It is right, in addition, to issue similar instructions on behalf of private sector workers, whose livelihoods are, as we know, no less important than those of people in the public sector.

It is extremely important that when workers transfer to a new employer, their individual contracts of employment and trade union recognition arrangements should follow them. So far, 980 workers have been made redundant and 7,500 have been transferred, but after all these weeks thousands of workers still face great uncertainty, as has been recounted in personal stories from constituencies. The Government, alongside the official receiver and special managers, must provide certainty.

The Government have said that the majority of employees who have already been transferred are on similar terms and conditions. What does “majority” mean—is it 51% or 99%—and what does “similar” mean? With three Conservative Members in the Chamber, I do not want to be accused of being overly sceptical, but the Government are hardly seen as a bastion of workers’ rights, and it is therefore unlikely that in this instance “similar” would equate to an upgrading of workers’ rights. As to those who were not transferred with similar conditions, what degradation was there of their terms?

The full scale of the catastrophe cannot just be forgotten as another failure of outsourcing, especially when, rather than resorting wholesale to an alternative model, the Government are simply allowing a similar operation to bid for contracts. That makes me very concerned about the long-term security of the jobs. How will the Government track the long-term outcomes for Carillion workers in their new employment and training places, as well as those for the self-employed and employees of subcontractors?

As the Government know, regulation 13 of TUPE, which places a duty on the official receiver and the special manager to inform and consult employee representatives in relation to TUPE transfers, is still a requirement even if regulations 4 and 7 do not apply. It is therefore important in setting workers’ expectations and giving clarity about their future. It relates to information about whether there will be a transfer—and the transfer date—as well as the legal, social and economic implications for any affected employees. Have the official receiver and special managers been complying with that duty? That is not clear. Are those representatives being informed and consulted? Worryingly, I read yesterday that Unite the union has discovered that Carillion did not pay into the NHS pension scheme in December 2017, even though deductions were made from employees’ salaries. I should like to know what happened to those pension contributions.

My final point is that there could be an argument that regulations 4 and 7 of TUPE apply in the case of Carillion. I understand that the usual position when a company is put into compulsory liquidation is that trading ceases and operations come to a complete halt. In an ordinary liquidation, priority is given to paying off creditors, and therefore regulations 4 and 7 of TUPE do not apply. In Carillion’s situation, the Government made it clear that the official receiver should instruct some of the Carillion companies to continue with their operations—especially those relating to public sector contracts—so that the services being provided by Carillion could continue without a break. The Minister for the Cabinet office said:

“Let me be clear that all employees should continue to turn up to work confident in the knowledge that they will be paid for the public services they are providing.”—[Official Report, 15 January 2018; Vol. 634, c. 624.]

The official receiver’s decision that some Carillion companies should carry on trading to safeguard and maintain the services that they are providing means that the liquidation has been conducted in the same way as an administration, in which regulations 4 and 7 of TUPE would undoubtedly apply.

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

indicated dissent.

[Laura Pidcock]

The Minister shakes his head; if he does not believe me, I point out to him the d’Urso case—that was my northern Italian pronunciation and I am happy to provide the Minister with my notes afterwards. The case considered whether the Italian version of TUPE applied to transfers effected by a company that was subject to a special administration procedure for large undertakings in critical difficulty. The special administration procedure had many of the features of a compulsory liquidation. None the less, the European Court of Justice decided that the business transfers directive could apply if it had been decided that the undertaking should continue trading, for so long as the decision to continue trading continued in effect.

--- Later in debate ---

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

Thank you, Ms McDonagh; it is great to have time to breathe and to think about what I will say. It is a great pleasure to serve under your chairmanship. This is only my second Westminster Hall debate as a Minister, so please be gentle with me as we go.

I congratulate the hon. Member for Wolverhampton South West (Eleanor Smith) on securing the debate. I know that she has been incredibly concerned about her constituents. We have spoken. I called her on the very day when Carillion went into insolvency. We have met and spoken on a number of occasions. I know that she brings this matter to the House because she is deeply concerned about the impact that the Carillion insolvency will have on her constituents and the people who work at the Wolverhampton headquarters.

We all recognise the impact that the Carillion insolvency has had and the weight of it. The Government have taken decisive action to mitigate the effects of the Carillion insolvency on employees and firms in the supply chain since it became clear that the company was in severe trouble. Although our No. 1 priority was to protect the vital public services delivered by Carillion, we have also sought to minimise the impact on the private sector and all the jobs that rely on it. Where private sector clients want services to continue, pending transition to another supplier, and have agreed to pay for those services, the official receiver has agreed to maintain them. Through the official receiver and the appointment of special managers, we have ensured that vital public services have been maintained.

There was some suggestion earlier of public services being at risk. We have actually seen an orderly, smooth transition. We have managed to protect the hospitals, prisons and schools—all the public services that rely on the services that were being provided by Carillion. That was our major priority, but of course we have an added interest in doing all we can to protect not only all the thousands of employees employed by Carillion, but the many thousands of jobs in the supply chain—the contractors who, through no fault of their own, find themselves in a difficult position because of the Carillion insolvency.

To date, as I think has been mentioned during the debate, 7,610 of Carillion’s UK employees have transferred to new employers and 1,141 employees have, sadly, been made redundant. I will come on to the support that we are putting in place for those who are made redundant. Carillion had more than 18,000 UK employees, and we hope that the special managers will announce further transfers of jobs and contracts in the very near future.

On 26 January, the Ministry of Justice, for example, announced the creation of a new, Government-owned facilities management company. There has been some suggestion, raised earlier in the debate, that we should transfer wholesale all of these contracts back into public ownership, back into administration by the state. Our approach has been pragmatic: when we can have a smooth transition to new private sector providers that maintains jobs and services, and returns money for the creditors—we must not forget that one of the main jobs for the special manager is to protect the interest of all those creditors owed money by Carillion—we will do so. But when it is right that we take contracts back into public ownership and management, we will also do that. We have a pragmatic rather than a dogmatic approach.

[Laura Pidcock]

I thank the Minister for giving way so soon into his speech. I want to stress this point. The Government have essentially underwritten public sector contracts, so that they can continue, which I support. However, does he agree that that is not a usual feature of a compulsory liquidation? It is more like an administration procedure, and therefore TUPE regulations could apply.

[Andrew Griffiths]

That is the point the hon. Lady made in her speech. Let us be clear: Carillion is in insolvency, not in administration—there is a distinct difference in law. While the Government have stood behind Carillion to ensure that those public services continue to be delivered by the company during that smooth transition, in law, Carillion is in insolvency. I commend the hon. Lady on her Italian, but the point she makes is not relevant to the Carillion case, unfortunately. Later in my speech, I will explain why TUPE does not apply in this case.

The new company that I referred to, the GovCo from the Ministry of Justice, will ensure the delivery of, for example, prison facilities management previously provided by Carillion, including things such as cleaning, reactive maintenance, landscaping and planned repair building work. Those jobs have been taken in house to a GovCo. We have also seen positive signs regarding Carillion’s larger contracts.

As I said, a number of jobs have already been secured, but, as hon. Members will have seen, the media have recently reported on Serco’s and Brookfield’s interest in purchasing a number of contracts and transferring roughly 4,000 workers, although that is not yet confirmed. I understand that the official receiver and the special managers are working hard with customers to try to secure agreements, which will secure further jobs.

We also have to remember that some of these contracts are in the private sector and some are in the public sector. The Government were a customer of Carillion. We did not own Carillion. My hon. Friend the Member for Stirling (Stephen Kerr) rightly pointed out that we did not ride to the rescue and bail Carillion out. Our intention was to protect public services and, wherever possible, protect the jobs that relied on them.

The hon. Member for Barnsley East (Stephanie Peacock) has had to leave because of the Division, and I understand that. She mentioned in particular the issue of apprenticeships, which was also raised by other hon. Members. The Construction Industry Training Board, the CITB, has now conducted face-to-face discussions with all of the 1,400 Carillion apprentices and has so far found new employers for 725 of them. In addition, 180 of those were level 1 pre-apprenticeships, and those have been transferred to new training providers. The CITB is working to ensure that remaining apprentices are supported to find new employers and training providers. We are confident—the CITB is confident—that there will be opportunities and new apprenticeships for all of those apprentices who wish to continue with their studies.

As I said, we have had the question of whether TUPE should apply. While we welcome the protection of Carillion’s employees, and I fully understand the desire of the hon. Member for Wolverhampton South West to protect the terms and conditions of the staff that she represents, it might just help if I explain to hon. Members that there are over 300 companies in the Carillion group, of which around 200 are based in the UK. Currently, 27 companies are subject to compulsory liquidation proceedings in the UK. When these companies are responsible for employing Carillion’s 18,000 employees, it is simply a matter of law that some elements of TUPE do not apply. Protections for transferring employers is a well-established principle that, as we have heard today, derives from EU legislation dating back to the 1970s. However, there are good reasons why key TUPE provisions do not apply when a company goes into liquidation.

The reason why TUPE is not applied in various insolvency situations, including liquidation, is that it is considered an obstacle to rescuing the businesses and saving jobs. That has to be our priority, of course. We want to rescue and secure these jobs. A decision taken by policy makers and Governments of all colours not to apply TUPE provisions in these cases is well understood, as are the reasons behind it. As a result, regulation 8 of the TUPE regulations 2006, covers insolvency proceedings and provides that these provisions do not apply

“where the transferor is the subject of bankruptcy proceedings or…insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of an insolvency practitioner.”

That is exactly the case that we see here with Carillion.

There are two good reasons why the Government do not want to apply TUPE. First, it would undermine the intention of rescuing jobs, as I said. Secondly, to apply TUPE specifically to the present liquidation scenario would require an emergency Act of Parliament, creating a special statutory scheme for those named companies, having retrospective effects. That would cut across fundamental principles at the heart of our democracy. I am sure that no colleagues in Westminster Hall today would wish to do that. The compulsory application of TUPE to Carillion companies is not, therefore, a matter that can simply be agreed between the liquidator and the unions. There is legal precedence here that we cannot simply ignore.

[Stephen Kerr]

My hon. Friend is giving the position as it is, which is what has brought us to this debate. However, is it not possible for the Government, in relation to the public sector contracts, to stipulate, as the customer, that certain aspects of the contract roll over to the new company, such as the voluntary TUPE that has been referred to? Could they not insist on that?

[Andrew Griffiths]

My hon. Friend makes a fair point. As we heard previously, the Secretary of State for the Cabinet Office has explicitly said that we wish to ensure that, wherever practical and possible, workers are not worse off. In fact, I can share with the House that the Secretary of State for Business, Energy and Industrial Strategy has had conversations with the special manager to implore him, wherever possible, to protect workers in that way.

However, as I said, we also have to be aware that a large proportion of these contracts are actually private sector. Of course, the legal requirements and stipulations on the special manager, in order to be able to fulfil his duties and protect the interest of the creditors, are paramount here. It would be inappropriate for Ministers or any politician to try to interfere with that. As a result of agreements that we have seen in the press and entered into over the past few weeks to purchase contracts held by Carillion, we have secured those 7,500 jobs.

The hon. Member for North West Durham (Laura Pidcock) mentioned that we are on record as saying that most employees who have transferred so far have done so on existing or similar terms. The official receiver has worked to do that. I know that she would like more details—she would like an exact percentage, but she will also understand that given Carillion’s size, complicated governance and business structure and the difficulties in relation to managing the smooth transfer of these contracts, we do not yet have those exact figures. However, I am sure they will be available to her as soon as we have them.

In her speech, the hon. Member for Wolverhampton South West raised the issue of support for employees. Understandably, this remains a very troubling time for employees and we will do everything we can to help those affected. Unless told otherwise, employees who are working will continue to be paid by Carillion during the liquidation. My hon. Friend the Member for Stirling used the phrase “justice”—he wanted there to be justice for Carillion workers. It is not their fault that they find themselves in this perilous situation. I can say to him that those employees transferring across will still be eligible for redundancy payments. So if he is looking for justice, he may find that those payments go some way to delivering that.

Through the special managers, the official receiver has contacted all employees to explain the action being taken by Government and where they can seek advice and support. For example, the special managers and the Pensions Advisory Service have set up dedicated telephone support services. The special managers have a process in place to inform employees being made redundant in a timely fashion, and to give information about their employment status.

There was some suggestion earlier about delays in people being given the required information to be able to claim redundancy. We are in close contact with the special managers, and while we cannot guarantee that everybody has had the information as quickly as we would hope, there is a great imperative in these very difficult times for workers to ensure that they get access to the money that they have a right to receive. So we are working incredibly hard to try to ensure that happens as a matter of urgency.

We are also ensuring that practical support is available from Jobcentre Plus’s rapid response service. Hon. Members might be interested to know that so far Jobcentre Plus reports that it has had 34 claims by Carillion staff and 65 claims by individuals made redundant by firms in the Carillion supply chain. So thus far we have seen a small number of people turning up at Jobcentre Plus and claiming benefits.

I think the reason for that, in reality, is that these workers are incredibly valuable. They are a skilled, trained workforce in a tight jobs market. We have seen today that we have record employment in this country—unemployment is at levels not seen for 40 years. That is a great economic success, but it means that as the jobs market tightens the workers who we are talking about are greatly in demand.

[Eleanor Smith]

I have heard from my constituents that they have not received proper communication; I think that has been said across the different workforces. The fact that there are over 20,000 and only 20 have gone says something about the communication, which is not going to everybody.

[Andrew Griffiths]

I can honestly tell the hon. Lady that the rapid response team are exactly that. They give a report to the taskforce, which she asked about and I will come to. The rapid response team are working alongside the special managers. When people are made redundant, the team have all the details of the people involved and are proactively doing that. In addition, they are going into Carillion offices and, without causing concern, proactively advising people about opportunities and jobs that are available, and helping those people to prepare should they be made redundant.

In addition, the team are offering help with job searches, help to identify transferrable skills and training to update skills. This is a Rolls-Royce service. I can say hand on heart that the rapid response team are really excellent. If the hon. Lady has specific examples, I would be delighted to take those up on her behalf and to ensure that if somebody has been missed, we get in touch with them as quickly as possible.

Finally, I would like to set out the support that we are giving to those businesses affected by Carillion. We recognise that while the mass and the attention is on Carillion, the impact in the supply chain is huge. As hon. Members, we will probably all have people working in the supply chain in some way. As the hon. Member for Wolverhampton South West mentioned, we have set up a taskforce; I think it was set up three days after Carillion went into liquidation. The taskforce includes representatives of small business and the TUC. She referred to a letter from Frances O’Grady; Frances sits on the taskforce, which meets at least weekly. We have the Federation of Small Businesses, the Department for Work and Pensions, the Cabinet Office, the Local Government Association and the Construction Industry Training Board. We are working across Government to address the challenges and to come up with solutions that will support affected businesses.

The Business Secretary and I are in regular contact with the construction industry and all of the relevant trade bodies. I meet them weekly to properly understand and respond to their concerns. Following the Business Secretary’s meetings in the aftermath of Carillion’s insolvency, when we called in the banks to ensure that they were providing the necessary support and help to the supply chain, the banks made nearly £1 billion available. That was from lenders such as HSBC, Lloyds, the Royal Bank of Scotland and Santander in the form of loans, credit facilities and further financial support, to ensure that the contractors in the supply chain that are affected get the help and support that they need.

For those companies that may have lost money as a result of Carillion’s collapse, the most important thing is their ability to continue earning. While they may have lost sums as a result of Carillion’s collapse, by standing behind Carillion we have allowed certainty for those businesses. I assure the House that while there have been some concerns about the payment terms of up to 126 days that we saw with Carillion, the special manager has entered into an agreement that he will pay contractors still providing services to the Carillion network in 30 days. That will go a long way towards helping those businesses—small businesses, in particular—that are struggling for cash flow. Her Majesty’s Revenue and Customs is also helping businesses with its Time to Pay scheme.

The hon. Member for Ellesmere Port and Neston (Justin Madders) mentioned apprenticeships, which we have covered. The hon. Member for Glasgow South West (Chris Stephens) made a number of points, but most importantly referred to two things. He referred first to the contracts awarded to Carillion after the profit warnings. The first thing to understand is that issuing a profit warning does not mean that a business is on the verge of imminent collapse; if that were so, we would have seen the collapse of Tesco and of Marks and Spencer. It is exactly that: a profit warning to the City and to investors to say that the profits that the company is about to issue will not be as large as expected.

In relation to the award of contracts after those profit warnings, Carillion announced that it had won eight public sector contracts after its first profit warning in July last year. Three of those, for facilities management, were for defence establishments. They were actually awarded before the profit warning, but Carillion chose to make its announcements some weeks later.

Two of the remaining five contracts were awarded by HS2 Ltd to a joint venture including Eiffage, a major French construction firm, and Kier, as well as Carillion. The three companies bid together as a consortium, and as a result all shared responsibility for completing the work. After the profit warning, we asked each partner’s board for written assurances that if one partner failed, the others had a contractual obligation to pick up the work. Those assurances were given. Since the announcement of Carillion’s liquidation, Eiffage and Kier have confirmed that the contracts will continue uninterrupted and that the former Carillion employees working on those contracts have been offered jobs with those new partners.

Following the announcement of the profit warning, a further assurance came from external due diligence commissioned by HS2 Ltd. That revealed that at the time of the award in July last year, Carillion had the financial capacity to continue with its part of the contract. HS2 Ltd let the two contracts to the joint venture because it was confident that the joint venture arrangements were robust. That has proved to be the case.

The remaining three contracts were with Network Rail. They were not new contracts, but variations of contracts let some three years earlier, in 2014. Two were for electrification work. In a similar construct to the HS2 network, they were lets to joint ventures between Carillion and the electrification specialist, SPL Powerlines.

[Chris Stephens]

Some of the information that the Minister has given will be helpful for tomorrow’s Select Committee inquiry, and I thank him for that. When a company that is applying for a Government contract issues a profit warning, what checks do the Government put in place and what checks is a public body expected to put in place to ensure that that company is solvent? We now know that after the first profit warning, the alarm bells should have been louder than they were.

[Siobhain McDonagh (in the Chair)]

Order. I wish to point out that the debate will finish at 4.16 pm and I hope to give Eleanor Smith, as the mover of the motion, a couple of minutes to sum up at the end.

[Andrew Griffiths]

Thank you, Ms McDonagh. I reassure the hon. Member for Glasgow South West that stringent checks are consistently carried out by the Cabinet Office and across Government. That preparedness ensured that there was a smooth transition, that contracts have been maintained and that public services have not been put in jeopardy.

I congratulate the hon. Gentleman on the important work that the Select Committee has done. We have written to the Financial Reporting Council to ask it to look at the audit process to ensure that it is rigorous and fair, and to the Insolvency Service to ensure that it looks at things such as bonuses paid to current and previous directors so that, if necessary, we can claw them back.

In relation to pensions, the Pensions Regulator has oversight of pension schemes. As the Pensions Regulator is independent, it would be inappropriate for me, as the Business Minister, to comment, but I am sure the Select Committee will do further work to get to the bottom of the issue.

Finally, I reassure the hon. Member for Wolverhampton South West that we in Government have done all we can to protect public services, support businesses in the supply chain that have been put in peril and secure jobs for all the hard-working people employed by Carillion. In terms of procurement and payment for small businesses, we will learn the lessons to ensure that we protect them as best we can in future.

Parental Bereavement (Leave and Pay) Bill (Second sitting)

Andrew Griffiths Excerpts

Wednesday 7th February 2018 Public Bill Committees

[David Linden (Glasgow East) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Gray. I warmly commend the hon. Member for Thirsk and Malton for proposing this Private Member’s Bill. I also pay tribute to the hon. Member for Colchester, who proposed a similar Bill in the last Parliament. I am glad to see that the Bill has finally got Government support. I congratulate the Minister on his appointment to his post—we have had an exchange in the Chamber only this afternoon.

I rise to speak to amendments 3 and 10 in the name of myself and my hon. Friends the Members for North Ayrshire and Arran and for Paisley and Renfrewshire North. I also support amendments 11 and 20 in the names of the hon. Members for North West Durham and for Eddisbury. As my hon. Friend the Member for North Ayrshire and Arran set out, we in the SNP believe that this is fundamentally a good Bill. We welcome it, although we feel it could be strengthened to go even further.

Before speaking to the amendment, I pay tribute to Shaun Walsh of Together for Short Lives and Priyanka Patel of CLIC Sargent, who were both kind enough to brief me about the Bill and other issues, particularly those relating to children’s palliative care. I have been fortunate to visit CLIC Sargent’s social work team at Southern General Hospital in Glasgow, in my constituency.

Broadly, my interest in the Bill stems from two reasons. First, I have a longstanding interest in children’s palliative care policy. I declare an interest, as my mother is a children’s palliative carer for Icare Scotland. My second reason stems from my personal experience of becoming a father. Originally, my wife Roslyn and I were led to believe that having children would be very difficult, if it was possible at all. In February 2015, after some blood tests, we were told that Roslyn was in fact 19 weeks pregnant, and that due to her Type I diabetes it would be an incredibly complex pregnancy. Essentially, every time my wife injected insulin, which is required to keep her alive, our baby grew bigger; and as a result, so did his chances of dying. A couple of weeks later we were called in to Southern General Hospital and told that, due to the increasing size of our son, we had to brace ourselves for the possibility of a stillbirth. It was the hardest conversation we have ever had with anybody in the medical profession and as a married couple; it felt as though a train had hit us.

In the end, our son Isaac was born, almost two months premature and significantly overweight. He spent the first two weeks of his life in intensive care at Southern General Hospital, before moving on to special baby care. The doctors, nurses and staff at Southern General could not have been more loving and supportive. I know that all of us in this room have nothing but admiration and respect for the national health service staff who look after us. Many Members of this Committee have already shared their own deeply personal experiences of losing a child and I am incredibly mindful of the fact that our wee boy pulled through. For that I am nothing but thankful to God. It was during the darker times of being told to prepare for a stillbirth, and when Isaac was whisked away to intensive care after his birth without us, that we were left in shock and contemplating what losing a child could be like, on every level possible—be that practical or emotional. It is for that reason that we have come together on the Committee to ensure that a good Bill becomes an even better law.

Amendment 3, in my name and those of my hon. Friends the Members for North Ayrshire and Arran and for Paisley and Renfrewshire North, would extend the period within which bereavement leave must be taken from 56 days to 52 weeks. The rationale behind the amendment is to give more flexibility to parents who lose a child. Through my fundraising work with children’s hospices across Scotland, I have had the opportunity to visit Robin House in Balloch and meet parents whose children have a life-shortening or life-limiting condition. I have also spoken to families who have experienced the loss of a child. One of the clear messages and asks they have of us as policy makers and legislators is to allow more flexibility in when they can take bereavement leave.

My friend, Maria McGill, the chief executive of Children’s Hospices Across Scotland, often speaks of the importance of marking a child’s birthday and other such anniversaries, which is a significant part of the grieving process. If the Committee agrees to the amendment, parents would have more flexibility in the first year, rather than the first month or two, following their child’s death. In the grand scheme of things it would not cause a lot of difficulty to employers, but it would make a massive difference to families who have experienced bereavement.

The amendments in this group seek to make a good Bill and a better law. I ask the hon. Member for Thirsk and Malton, and all right hon. and hon. Members, to support amendment 3 in particular.

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

Thank you for your continued chairmanship of this important Committee, Mr Gray. As I was listening to hon. Members debate these issues, I was thinking about how in this Committee it feels like we are never more than a word away from a tear. The palpable emotion we all feel in the room is powerful. I strongly commend all hon. Members who lay themselves bare by talking about their personal experiences; I know it is not easy at all.

From the hon. Member for North Ayrshire and Arran, it is easy to see the pain that remains. My hon. Friend the Member for Eddisbury introduced me to this issue when she spoke so movingly in the Chamber, as have my hon. Friends the Members for Banbury and for Colchester. Even last week, we saw the emotion of the hon. Member for Washington and Sunderland West (Mrs Hodgson) when, in the debate on the Civil Partnerships, Marriages and Deaths (Registration Etc.) Bill, she spoke about the loss of her child.

As you know, Mr Gray, my wife is seven months pregnant. We are overjoyed at that prospect, although Mrs Griffiths is getting slightly more uncomfortable and is daunted by the imminent arrival of Griffiths Jr. This debate makes us think about things we do not want to contemplate, and it is brave of hon. Members to lay themselves open to that. As Members of Parliament, we have little privacy these days. We regularly feel as though our every movement is laid bare to the public—we cannot even fall asleep in a hotel without someone taking a picture and putting it on Twitter.

To the point of the matter, I understand what colleagues are trying to achieve in the amendments. The period of time in which leave is taken, which amendments 3 and 20 seek to address, is key to getting the framework right. The time needed by each individual will vary according to their own way of dealing with the grief that comes from the loss.

As my hon. Friend the Member for Thirsk and Malton said, there is a balance to be struck, and I understand my hon. Friend the Member for Colchester when he says that we need to strike a balance between flexibility and certainty. I believe his approach to the Bill has been always to mirror existing provisions in legislation so that we do not create precedents, to ensure a smooth passage for the Bill. That is the right approach. It eliminates a lot of difficulties that might be the unintended consequence of what we agree in Committee. It also makes it easier for officials, business and the general public to understand the marrying of rights. In that respect, I agree that maintaining the suggested timeframe of at least 56 days, to maintain consistency with the other provisions, is a sensible approach.

However, I recognise that it would not be right if sticking to 56 days meant that the provision in this Bill did not do what we intend it to. The reason we are here today is to ensure that the leave suits and supports the bereaved parents and allows them what they need to grieve properly. For that reason, it is absolutely correct that we consult on this matter.

I know that the hon. Member for North West Durham would point to the fact that this is yet another consultation; pursuant to my urgent question earlier we had some exchanges on the merits or otherwise of consultation, but I want to be clear with members of the Committee about what the consultation is. It is our intention to launch the consultation in May, and I make a pledge to the members of the Committee that if they agree to it, it will report before Third Reading of the Bill, so that all members of this Committee and all Members of the House will be able to assess the consultation and see the range. Even in this room today we have a range of different views about how long the time should be.

We want to get it right and ensure that the time we put on the face of the Bill is the right time. Within that consultation, we will be able to talk to all the groups that have been mentioned today, and others, to get a proper understanding of the best timescale in which to deliver this.

[Laura Pidcock]

I know we are not talking about new clause 2, because that is gone and it would be terrible, but last week there were assurances that following the Taylor review, which is relevant to the amendments we are talking about now, it would respond to a lot of the concerns contained in new clause 2. Now there is a suggestion that there will be a consultation on this group of amendments. If the consultation comes back and says that, yes, flexibility is needed and it needs to be over six months rather than two months, will the Minister give us assurances now that the Government will accept those consultation findings?

[Andrew Griffiths]

I am sure the hon. Lady will accept that, obviously, I cannot write a blank cheque. If the consultation came back and suggested something that was simply unworkable or impracticable, of course I could not commit to that. What I can commit to is that the process will be open and transparent, and that all hon. Members will be able not only to contribute, but to see the evidence that is presented. It will be open and transparent.

[David Linden]

Given what the Minister is saying about the consultation process, will he give us a timeline on that, particularly for those members of the Committee who have been asked to withdraw amendments?

[Andrew Griffiths]

As I say, we will launch the consultation in May and it will report well in advance of Third Reading. If, at Third Reading, hon. Members are not satisfied with what we have agreed to on the consultation, they will be able to table amendments and we can have the debate on the Floor of the House. We can have a Division, and the whole House in its entirety can decide which of those dates—

[The Chair]

Order. To clarify, if the Minister will forgive me, I think he means on Report rather than at Third Reading.

[Andrew Griffiths]

I do indeed, Mr Gray; thank you for your sage advice.

[Victoria Prentis (Banbury) (Con)]

As always.

[Andrew Griffiths]

“Elders and betters” is the phrase that springs to mind.

Clearly, at that stage hon. Members will be able not only to question me, as the Minister at the Dispatch Box, about the content of that consultation, but if they so wish, to table their own amendments and make their case to the House. I think that is the most equitable way for us to proceed and it shows an understanding of the real and positive intentions behind the amendments tabled today. I am just getting some divine inspiration; I need to clarify something I said. The consultation will actually be launched on Third Reading in May, so the Government’s report will be published before the Bill completes its passage through the House. I hope that is clear, and that I have clarified my position.

[The Chair]

Order. If the consultation is launched on Third Reading, it is not possible for its outcome to be considered before the completion of the Bill’s consideration. I suspect that the Minister means the Bill’s passage through both Houses.

[Andrew Griffiths]

That is exactly what I mean. I also commit to revisit this, and to see if there is a way that we can publish the consultation earlier and allow it to report before Third Reading. I will do my level best and I will talk to officials and see if that is possible. I want as wide a consultation as possible.

[Patricia Gibson]

For clarity—I ask the Minister to forgive me if he has already said this—is he saying that although he will not accept the amendments today, he is not closing the door and is vowing to return to them?

[Andrew Griffiths]

The hon. Lady hits the nail on the head. I want to make sure that we get this right. We have already heard that we have a number of different views on the number of days, so I want to allow everybody to consider, in a very calm way, the best advice possible and to come to a definitive decision about the days. I am closing nothing down. I am saying that all these options are on the table, and I am happy to consider all of them, should they be recommended by results of the consultation.

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to see a fellow west coast Scot in the Chair, Mr Gray.

[Gavin Newlands]

Hear, hear. I thoroughly commend the hon. Member for Thirsk and Malton for bringing forward a very commendable Bill, which Scottish National party Members have no problem whatever in supporting.

I will speak briefly to amendments 3 and 10 in the names of my hon. Friends and me. However, before I do, I am pleased to hear that the Minister is in listening mode. Given the exchange that just took place, I urge him to try to bring that consultation forward, so that we in the elected body can perhaps influence those decisions. Obviously, the SNP does not have any Members in the House of Lords, so we would like to influence the Bill on this side of its passage, if at all possible.

[Andrew Griffiths]

We can negotiate on that.

[Gavin Newlands]

Well.

I pay tribute to all Members who have shared their experiences of the tragic loss of a child, and who are using those painful experiences to make such a traumatic and tragic period just a little bit easier for those who follow them. Sadly, just under a fortnight ago, along with hundreds of others in Renfrew, I attended the funeral of little Layla Greene, who at just three years old was one of the latest victims of the scourge of childhood cancer. The Minister was obviously correct earlier on. Her parents had been told that she had weeks and months to live, so as a community we fundraised to help make memories for Layla and her family. Sadly, she was only to live for just one more week, but we will continue to fundraise in her memory.

Anything that we can do to reduce any unnecessary stress on families such as Layla’s is not only something that we should do but something that we must do. I speak to amendments 3 and 10 not only because I think they are the right thing to do, but because of my experience as both an employer and a friend. I obviously cannot speak as powerfully, or share deeply painful and personal experiences, as my hon. Friend the Member for North Ayrshire and Arran and others have.

Similar to my hon. Friend the Member for Glasgow East, my interest in this issue stems from a close-run thing. My wife had to give birth to my oldest daughter six and half weeks prematurely, by emergency caesarean. We were the lucky ones because thankfully, they are healthy, but since then I have been interested in trying to advance these issues.

Having said that, unfortunately I have shared the pain of friends who have had to go through this experience. One of those friends was an employee. I struggled to separate my roles of friend and boss. I was somewhat constrained in the paid support that I could technically offer within the company’s employment regulations at the time. I could offer her as much unpaid leave as I saw fit at my discretion, but ultimately, that does not pay the bills.

In many ways, if we are honest, two weeks is a totally inadequate period of time in which to recover from the death of a child sufficiently to return to work. I tried to find ways around it, whether through holiday pay or sick pay, which from memory was £85 a week—it is not much more now. She was signed off for periods as well, although she did not want to do that. Financial distress is the last thing that anyone needs on top of the most traumatic experience of their life, so the premise of paid leave is a very good thing.

To address the flexibility issue raised in amendments 10 and 3, I would say that people deal with trauma in different ways. No one will ever forget such a traumatic experience, but I am told by my friend that after a time, it was possible to compartmentalise, to work and to concentrate on the job at hand. Others will go through periods of struggling to cope after returning to work and might need time off as a result. Flexibility about the period in which people can take any leave might suit a lot of parents in this situation.

As has already been outlined, another reason is to ensure that paid leave can be taken around significant dates. For example, my friends visit the grave marker at specific points every year. Anything that helps to make those difficult journeys that bit easier is to be welcomed.

The compassionate leave policy at my old employer has significantly improved, and that is the case at many employers in the UK now, but it is our job in Parliament to ensure that everyone is covered appropriately.

[Patricia Gibson]

As has already been said this week and last week, we are all treading very carefully on broken glass. We are terrified to do or ask for the wrong thing, in case it upsets the whole apple-cart. I draw comfort from the fact that the Minister is not saying no. From what I understand, he is saying not yet.

[Andrew Griffiths]

I think maybe.

--- Later in debate ---

[Andrew Griffiths]

I thank my hon. Friend the Member for Colchester for that important point. We want to ensure that we get the best deal for bereaved parents and that through all these deliberations we come out at the end giving as much support as possible. There are unintended consequences, as he has pointed out, that we need to take into consideration.

It may help the Committee if I explain that consultations with employers’ groups took place last summer. Those groups indicated that the majority of their members already had a bereavement leave policy in place. That is great; we are all very pleased about that. The Chartered Institute of Personnel and Development’s survey found that two thirds of businesses that responded already provide bereavement leave—that would be at the full pay that my hon. Friend alluded to—and that 40% give five days paid, and 25% give three days paid. Businesses also often provide more generous unpaid leave entitlement. At the discussions, employers’ groups also gave reassurances that employers welcome the introduction of the Bill.

[Patricia Gibson]

I just wanted to suggest to the Minister that if employers are already quite generous and understanding in such tragic circumstances, it shows that there is a recognition that such space should already be provided by the law, rather than employers having to make up policy for their own businesses. As a Parliament we should be taking a lead in saying that we recognise that employers, on the whole, realise and understand that this has to be done, so let us enshrine it in law because we all seem to agree. If there is the odd rogue employer that does not—you know?

[Andrew Griffiths]

What we would not want though is a situation where employers say that they do not need to have a policy in place because there is already a statutory requirement. In other areas, such as maternity, there is a statutory pay period and some businesses enhance that, but the vast majority do not. We need a consultation to properly understand, because I would hate for this to be the minimum and for that to be what is expected, rather than businesses stepping up to the plate and offering the generous terms that they already do. The hon. Member for North West Durham is itching to—

[Laura Pidcock]

I am not—I was just stretching!

[Andrew Griffiths]

I was about to say that the hon. Lady is itching to intervene, but actually she was just itching.

We all know too well that the realities of bereaved parents are sometimes very different. The fact is that those who work for less accommodating employers need this Bill the most. I understand the point that is being made. My hon. Friend the Member for Thirsk and Malton also pointed out existing leave provisions, which are already helpful and should not be ignored. The Bill will provide an important statutory minimum that employers must adhere to, giving key legal protections to parents who suffer a tragic loss. This policy sets an important benchmark without preventing employers from enhancing it if they wish. We know that the majority of employers try to do the right thing.

I hate to use the defence that I have used at other times during this debate, but a consultation is being held. This will be part of the consultation, which will report before the end of the Bill’s passage. With that in mind, and bearing in mind the points that have been made, I ask that the amendment be withdrawn.

[David Linden]

I find myself in a difficult position. I am minded to press the amendment to a vote, but it would be the first time I have divided the Committee, which in the light of my earlier comments is not something that I want to do. A lot has been said about the fragility of the Bill and the difficulty of getting it through Parliament, but one thing that has not been acknowledged is that we are in a two-year Parliament, so it is not as if we have to get the Bill passed before Prorogation in March.

--- Later in debate ---

[Patricia Gibson]

I would not want to diminish in any way the loss of a husband or wife, but the Bill was introduced in the first place because of the particularly unnatural order of circumstances in which someone buries their own child. It is entirely different. I do not pretend to judge whether one grief is worse than the other, but it goes against nature for someone to bury their own child. It does not necessarily go against nature to bury a husband or wife. That is in the normal scheme of things that we ultimately all have to face, but nobody expects to bury their own children. A child is a person’s investment in the future. I really do not see the equivalence; otherwise, we could have a Bill about bereavement, not a parental bereavement Bill. It is a parental bereavement Bill because we, as a Parliament, recognise the particular circumstances of someone burying their own son or daughter. I hope that I have answered the question that the hon. Gentleman put to me.

I really hope that the Minister and the whole Committee will reflect on this matter, and consider my amendment a worthy addition to the Bill. As I said last week, the benefits, both social and emotional, will surely outweigh any financial costs, which I really do not think will be significant in terms of overall Treasury spend. The Minister will no doubt want to correct me on that.

[Andrew Griffiths]

The hon. Lady says she does not think it will be significant. Does she have any evidence or figures to back up her amendment?

[Patricia Gibson]

I would simply refer the Minister to what I said last week: we know that people who lose sons or daughters are eight times more likely than their peers to divorce. We know that there is a social cost of divorce. There is also a cost to the Government in terms of economic activity if people fall out of the workforce because they are not coping. That is why support is so important at that critical stage of vulnerability and grief.

--- Later in debate ---

[Antoinette Sandbach]

I saw the hon. Lady’s amendment and given that the Minister is consulting on a number of matters, I hope he might consider extending the consultation to the amendments. Where there is a high level of recognised dependency, the bond between parent and child is very high, largely because parents in the main, although it is often women who do this, have been carers at a level not necessarily offered in other circumstances.

I am not saying that the grief is any less, but that level of contact with the child will extend beyond the age of 18, whereas in other circumstances many children will have left home and be living independent lives. This is a probing amendment, but one the Government would do well to address, because I suspect there will be easily-available figures from Government data for the number of people covered. The Minister should be able to find that information fairly easily, although there might be implications for that extension.

[Andrew Griffiths]

This has been a very thoughtful and interesting debate. I draw the Committee’s attention back to the first speech by my hon. Friend the Member for Colchester. I think he used the phrase “do not let the perfect be the enemy of the good”.

Members new to the House might not realise that this is the third time that an hon. Member has tried to take through a Bill on parental bereavement leave. The first attempt by Tom Harris was unsuccessful, as was the next by my hon. Friend the Member for Colchester. This is the first time not only that such a Bill has got to this stage, but that any Government have given it backing.

Many Members will say it is outrageous that in 2018 we do not have those rights in statute. I would agree, but the reality is that we do not. There are many reasons for that, given by many Governments of many colours and of different make-up, and for why such a Bill has been resisted. We have an opportunity this time to get a Bill across the line. I politely say to the hon. Member for Glasgow East that, although I understand his desire to press his amendment, he will risk the passage of the Bill if it is used as a Christmas tree on which to hang all our aspirations.

The Bill provides the minimum that we would like to see for bereaved parents in this area, but we need to get it on the statute book. We can have as many lofty aspirations as we wish and we can desire to set the bar as high as we like, but we need to make this real. Various Governments of various colours have been unable to commit to do that, and this is the first time that a Government have committed to support the legislation and make it law. I politely and gently encourage hon. Members to think about that before they decide to press amendments that could risk the Bill’s potential.

To speak to the substance of the amendments, where to draw a line on age was always going to be difficult. I recognise why hon. Members suggest the dates they do. A lost life is always terrible, even more so when a child has not had the chance to live to adulthood. The loved ones who survive that child are left rebuilding and coping in a way that is difficult to imagine for those of us who are fortunate enough never to have been in that position.

Amendments 6 and 7 propose to extend this provision to parents of children of any age. The Bill applies to parents of children under the age of 18. Much as I agree with my hon. Friend the Member for Thirsk and Malton, and would like the Bill to cover parents of all children who have passed away irrespective of age, to do so would have financial implications that cannot be ignored. I draw the Committee’s attention to the Exchequer estimate that the annual cost of statutory bereavement pay would be between £1.2 million and £2 million, with a best estimate of £1.77 million. The estimated cost to business––the employer––is £1.45 million and we estimate that, as drafted, the Bill will cover 5,600 parents.

The hon. Member for North West Durham sheepishly proposes the numbers in the Library note that she has received, and I do not disagree with those: she estimates 29,000 parents for children up to the age of 40. Look at the magnitude of the change from 5,600 to 29,000, when the cost is £2 million for the lower figure. We see how the cost of the Bill suddenly begins to increase dramatically. I urge caution, because there are other things to consider when we look at the Bill’s viability and future. The broader the Bill’s coverage, the more it will cost both the state and employers, in terms of absence costs. I therefore believe that the right balance is to ensure that parents of children up to the age of 18 are covered by the Bill.

I do not for one second underestimate the devastation of a parent losing a child at any age. I look to my own experience. My Auntie Ann had a seriously mentally and physically handicapped daughter called Margaret, who died at the age of 56. She had never been out of a wheelchair in her life, and my Auntie Ann was by then a widow in her late 70s. She was absolutely devastated by the loss of Margaret. As a family, we had always assumed that Auntie Ann would go and we would make provision to care for Margaret. The shock when Margaret was diagnosed with cancer and died very quickly hit the whole family. I do not for one minute underestimate the loss of a child at any age, but, for the sake of securing the Bill, I think we have to draw a line.

[Laura Pidcock]

I do not wish to use the other side’s argument against myself, and perhaps I could have done this in a slightly different way, but the point has been made that there might be someone who has only their parents to sort out all the arrangements after that person’s death. Does the Minister acknowledge that that may be the case with someone who has had a lifelong dependency on their parents and that that requires consideration?

[Andrew Griffiths]

I understand the hon. Lady’s premise. I understand that, looking from the outside, it is easy to make bespoke cases for bespoke situations. All those are valid and have strong reasoning behind them, but I return to the point made by my hon. Friend the Member for Colchester: we cannot let the perfect be the enemy of the good. Unfortunately, we have to draw a line in the sand.

--- Later in debate ---

[Andrew Griffiths]

I hope I can give some comfort to the Committee. I begin by echoing the sentiments of my hon. Friend the Member for Thirsk and Malton and pay tribute to those who have had the strength and courage to share with us some very moving experiences. Any death is difficult to comprehend, and stillbirth is no different.

My hon. Friend included in the Bill a power to extend the entitlement to include the parents of stillborn children, and explained, very clearly, the rationale for doing exactly that. I have thought about this long and hard, and I am supportive of the rationale and the position. The reasoning, to my mind, was clear, coherent and sound. I just add that, by including stillbirth—which affects 3,300 children a year—more than 6,000 additional parents will be covered by the provisions in the amendment.

My hon. Friend the Member for Colchester was right to ask whether a line should exist in terms of the provision for a child who has been born still and a child who has taken a single breath and then died. What a conundrum, what a decision—to differentiate between the griefs of a parent whose child has taken a breath and one whose child has not. I speak as somebody who is eagerly awaiting that first breath. I cannot imagine the anguish and devastation that would come.

My hon. Friend was right to recognise that in asking that question. He did not have the answer, and therefore a delegated power was the most sensible option—I understand that. However, amendments have been tabled, and we have had the chance to further debate this, and I thank my hon. Friend in particular for the constructive way in which he has engaged with me, as the Minister, on the Bill, together with my hon. Friend the Member for Thirsk and Malton.

I have to say that the Government have changed their mind, and I have changed my mind. We have come to the point where we agree with my hon. Friend’s conclusion. Whether parents take time off is not a decision for any of us in this room to take; it is to be made by those in that position at the time. If they require the time, they should have the option to take that time. If they do not require that time, they do not have to take the time off. Following the decision of my hon. Friend the Member for Thirsk and Malton to accept the amendment, the Government accept it as well.

[Kevin Hollinrake]

I am very grateful to the Minister for his consideration. This is something that we have discussed much in our deliberations, both with Committee members and in the House at various stages.

Stillbirth was first brought to my attention because of my constituents Annika and James Dowson—my hon. Friends the Members for Banbury and for Eddisbury are very aware of their case—and their little daughter, Gypsy. They said they had never heard their baby cry, which must be a desperate state of affairs for anyone who has been through those tragic events. They directed their grief into a very positive campaign to raise money to fund a bereavement suite at Scarborough hospital. It is tremendous to see the resilience and determination that people show in these circumstances; I am not sure I could do the same.

Luke and Ruthie Heron are also constituents of mine. Their little son, Eli, was brought into this world at 23 weeks and six days. He lived for two days. He was stillborn. Had he not lived for those two days, it would have been defined as a miscarriage. This is being discussed in relation to legislation going through the House at the moment. I have constituents who have experience of this.

I am delighted that the Government have agreed to support the amendments. The hon. Member for North Ayrshire and Arran was the first hon. Member to table an amendment on the matter. I am sure that the Government’s support for the other amendment is a purely technical decision, not a political one—it is about drafting. They have done a tremendous job of ensuring that we get the legislation right, so that we do not suffer any negative consequences later on. I ask the hon. Members for North Ayrshire, for Glasgow East and for Paisley and Renfrewshire North not to press their amendments and instead to support the amendment tabled by my hon. Friend the Member for Colchester.

--- Later in debate ---

[Laura Pidcock]

I want to echo the sentiments of the hon. Member for Glasgow East and probe a bit further on this issue. I am obviously not going to talk about the Taylor review, but we want to think about day one rights. I am still not clear who will qualify for what. Were the amendment agreed, it would provide an exceptional right that could not be applied to other bits of legislation. I completely understand why holiday has to be accrued, but the provision is exceptional.

To ground the Committee, the right would apply to such a small amount of people in the grand scale of the population. It seems morally absurd that someone employed for 24 weeks, 18 weeks or even four weeks could not qualify. No one plans for their child to die. People take a job in the good faith that they can do that job. It would be remiss of us not to include the amendment. That is my feeling.

[Andrew Griffiths]

I thank my hon. Friend the Member for Thirsk and Malton again for his comments on the amendments. I agree with the points he made. It is right that the Government maintain a consistent approach across employment rights, because that reduces familiarisation costs for employers and ensures that they are operating within a framework they understand. Let us keep it simple and straightforward.

The hon. Members for Glasgow East and for North West Durham are right. They mentioned the Taylor review. I am proud that this Government are trying to enhance the protections for workers and their eligibility to rights within the workplace. We are looking at day one rights within the work of the Taylor review. Taylor is looking at extending the break-in-service provisions from one week to four weeks, but the 26-week qualifying period will remain. Within Taylor we are consulting and looking to bring forward greater rights, but when dealing with this Bill it is important that we do not reference a Bill that is behind us in the sausage machine. We have to have consistency now. We can only be consistent with the legislation as it stands; we cannot look over the horizon at what might be coming.

[Gavin Newlands]

I understand the Minister’s point, but can he clarify one thing for me? A situation not dissimilar to this happened before I came to this place. If an employee happens to work for 15 years for one employer without a single day off—they are an exemplary employee—and then seeks to advance through employment elsewhere and works for that new employer for 25 weeks, they would not fall into the scope of bereavement leave. Another employee, who has been in employment for 27 weeks with an entirely blemished record—perhaps they have received verbal warnings or taken days off here and there without permission—would be covered by the Bill. Will the Minister clarify that that that would be the case?

--- Later in debate ---

[Andrew Griffiths]

I understand the point that the hon. Gentleman makes, but he also must understand that there are costs involved with all these things. While in an ideal world—funds permitting—we would wish to extend all these kinds of benefits to allow greater access, we have to cut our cloth. While I understand his point, the qualifying periods are long established for many of these benefits. I hope he understands that.

In my capacity as the Minister responsible for small business, I keep on getting speeches that say I am the small business Minister. I told the Secretary of State for Wales that he was better qualified for that title than I, but he did not see the joke either. Because I talk to organisations such as the FSB on a daily basis, and to small and medium-sized enterprises up and down the country, I am particularly aware and conscious of, and attuned to, the effects that these amendments may have on small business. I think everybody in the room will be attuned to those too.

--- Later in debate ---

[Laura Pidcock]

I shall be brief. I probably will not speak again, so I want to place on record again my thanks to the hon. Member for Thirsk and Malton for this Bill and the passion and discipline that has been shown to try to get it through Parliament. I agree that something is better than nothing—for those in the grieving period, £148.98 is definitely better than £0 in a week—but I want to place on record that we must acknowledge that for the lowest paid, taking that time, just like going on to statutory maternity pay, has a financial impact and that exacerbates the difficult situation people may already be in. We also have to acknowledge that in the worst case situation, some people might not actually take that entitlement at all, because they could not afford the impact on their pay in that week. We have to acknowledge that, however brilliant the premise and skeleton of this is, it will exclude some people on the lowest pay for financial reasons.

[Andrew Griffiths]

My hon. Friend the Member for Thirsk and Malton raised a good point about mirroring existing legislation in order to make the familiarisation process for employers more straightforward. We have heard that time and time again throughout this Bill. It is an important point and one I agree with. Managing bereavement in a workplace is not an easy task, so keeping it simple, stupid, is a good mantra. The Bill should be viewed as a base-level right for those who find themselves in this position. My hon. Friend said quite clearly that this Bill does not prevent employers from enhancing their offer, if they would like to make full pay. I hope that hon. Members will agree that this amendment should not be pursued and that the hon. Member for Glasgow East is content to withdraw it.

[David Linden]

I have listened to what the hon. Member for Thirsk and Malton and the Minister have said. On that basis I am happy to withdraw the amendment. This is probably the last contribution that I will make in this Committee. I found serving on this Committee a challenging experience for a number of reasons, but I want to pay tribute to all members of the Committee. This has been an incredibly difficult topic to go through and on the whole it has been done with a degree of courtesy on all parts. I look forward to the Bill returning to the House. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 28, in the schedule, page 9, line 18, at end insert

‘(see also section 171ZZ15 for the application of this Part in relation to stillbirths)’.

This amendment is consequential on Amendment 29.

Amendment 29, in the schedule, page 10, leave out lines 40 to 46 and insert—

‘171ZZ15 Application in relation to stillbirths

In this Part—

(a) references to a child include a child stillborn after twenty-four weeks of pregnancy, and

(b) references to the death of a child are to be read, in relation to a stillborn child, as references to the birth of the child.’

This amendment extends the provisions about statutory parental bereavement pay to bereaved parents of stillborn children.

Amendment 30, in the schedule, page 11, leave out line 3.—(Will Quince.)

This amendment is consequential on Amendment 29.

Schedule, as amended, agreed to.

Bill, as amended, to be reported.

Modern Working Practices

Andrew Griffiths Excerpts

Wednesday 7th February 2018 Written Statements

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

On 11 July 2017 the Government published the review of modern working practices, which was led by Matthew Taylor (Chief Executive of the Royal Society of Arts) at the request of my right hon. Friend, the Prime Minister.

The Government set out in the industrial strategy, published in November, a long-term plan to boost the productivity and earning power of people throughout the UK by focusing on the five foundations of productivity: ideas, people, infrastructure, business environment and places.

Good work and developing better jobs for everyone in the British economy is at the centre of our industrial strategy vision.

Building on the industrial strategy, today the Government are publishing a full response to the Taylor review, setting out how we intend to develop further the strength of the UK labour market and ensure it meets the challenges and opportunities presented by new ways of working and innovative business models. Alongside the full response, we are publishing four public consultations, which seek views on how to implement a series of proposals to enhance workers’ rights and ensure that the labour market is working for everybody.

The four consultations cover proposed changes on agency workers, employment status, enforcement and increasing transparency.

We are taking forward work on the vast majority of the review recommendations, and the plans we are outlining build on our pledge to not only protect, but enhance, workers’ rights. Copies of the Government response and consultations will be placed in the Libraries of the House.

[HCWS455]

Taylor Review

Andrew Griffiths Excerpts

1st reading: House of Commons
Wednesday 7th February 2018 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the Government’s response to the Taylor review.

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

I am delighted to set out the Government’s response to the review of modern working, which was led by Matthew Taylor. He set out his ambition that the Government should place as much emphasis on creating quality jobs as they do on the number of jobs. Good work and developing better jobs for everyone in the British economy are at the centre of the industrial strategy vision.

The Prime Minister has repeatedly said that, as we leave the European Union, there will be no roll-back of employment protections, but today we are committing to go further and to seek to enhance rights and protections in the modern workplace for even more people. We will support employers who give individuals their correct employment rights, but we will prevent undercutting by unscrupulous employers who try to game the system, by clearly defining who is employed and who is not. We will extend the right to receive a payslip to all workers, including a statement of the hours that they work. We are requiring employers to clearly set out written terms from day one of the employment relationship, and to extend that to all workers. We are taking forward 52 of the 53 recommendations in the Taylor review, and all but one of the recommendations from the joint report of the Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee.

For workers on zero-hours contracts, we are creating a right to request a stable contract. For the first time, the state will take responsibility for enforcing a wider set of employment rights, including sick pay and holiday pay, for the most vulnerable of workers. Employers who lose tribunal claims against staff and are found to have had no regard to the law will face fines of up to £20,000, quadrupled from the current £5,000. We will also ensure that employment tribunal awards are paid correctly.

The Government are very grateful to Matthew Taylor and his panel, as well as to the many individuals and organisations who contributed to the review. I would also like to thank the BEIS, Work and Pensions and Scottish Affairs Committees for their contribution to this work. Through our response, we are acting to ensure good work for all, to protect the rights of those on low pay and to ensure that more people get protection, security and certainty in the work they do.

[Rebecca Long Bailey]

The tragic case of Don Lane, a DPD gig worker, epitomises the precarious and unstable working life many people face and the failure of the Government to protect workers. They needed to do something bold today, but it appears that they are simply papering over the bleak realities with rhetoric. Launching four consultations, merely considering proposals, and tweaking the law here and there is not good enough. How would any of this have actually helped Don Lane? It simply would not—that is the fact of the matter.

So I ask the Minister: which rights will apply to which workers from day one? How will they be quantified for zero-hours workers? Why, despite public support, have the Government not protected agency workers by abolishing undercutting through the Swedish derogation? How does a right to request more stable hours differ from the current position? Without an obligation on the employer to accept such a request, it is meaningless. Why have the Government not brought forward any meaningful proposals to protect gig workers? Defining working time misses the point. We needed clarity on workers being paid when they are logged into apps waiting to receive jobs, as well as clear and urgent direction on the legal status of gig workers. Why was there not even one mention of trade unions? On the genuinely self-employed, we see the creation of a website allowing the self-employed to talk to each other—well, bravo! Why is there no system of support and no recognition of the precariousness of their situation? This is simply window dressing.

What we needed today was radical new architecture of the law at work to protect workers, in which the genuinely self-employed are offered key protections and the involvement of workers through their trade unions is crucial. We saw none of that, and to miss those things out of any recommendations is to miss the ocean and look at the pebbles underneath.

[Andrew Griffiths]

I have to say that I share the hon. Lady’s desire to improve the rights and protections for the workers we represent in our constituencies. It is disappointing that in her long response she was unable to welcome any of the steps we are taking. As a result of the actions set out in our response to this review, millions of workers will have greater rights and access to more protection. Indeed, I argue that we can rightly claim to be leading the world in improving the quality of work for our constituents.

The hon. Lady seems to argue that it is wrong to be consulting on these issues. I hope the House will understand that in addressing the issues she raises—such as employment status in the gig economy, the rights of agency workers and better transparency in the workplace—we are modernising employment law to make it fit for the future world of work. We are seeking expert views on how to do that, which is absolutely right. Our intention is clear, and we are consulting the experts on how we deliver on that promise. Matthew Taylor himself has said that these issues are complex and we must take time to get them right, but the House should be clear that we are consulting on them in order to act. Rather than rolling back employment legislation, which we are sometimes accused of, we are improving the rights of workers and the enforcement of those rights.

The hon. Lady mentions the very regrettable case that has been in the newspapers over the past few days. I extend my sympathies to the family of the individual concerned. I cannot speak about individual cases, but I direct her to page 15 of our response. It clearly sets out what we are going to do to ensure we have the correct definition of workers’ status, so they can have access to the kind of things she is talking about—sick pay, days off and the ability to attend doctor appointments if necessary.

[Sir Desmond Swayne (New Forest West) (Con)]

Is competition for workers in a fully employed market not the best engine for driving forward improved conditions?

--- Later in debate ---

[Andrew Griffiths]

I thank my right hon. Friend for reminding us that we have record numbers of people in work. Unemployment is at its lowest rate for 40 years. It is true to say that the labour market is tightening, but I see that as an opportunity. Businesses are realising that if they want to retain their best workers they need to offer the best possible arrangements for those workers. We are also clear that whatever the situation, we want to act to protect the most vulnerable workers in our society. That is what we are doing in the Matthew Taylor report: we are giving them the protection they need.

[Chris Stephens (Glasgow South West) (SNP)]

The Government’s response does not address the issue of bogus self-employment, which affects 1.8 million workers. The right to request is different from an actual right enshrined in law. Has the Minister looked at the contents of the Workers (Definition and Rights) Bill, in my name, which addresses many of these issues? Will the Government look at simplifying the definition of a worker to one definition, to eradicate bogus self-employment? Will they look to legislate to ensure that workers have a fixed and regular-hours contract? Will they address the issue of late-notice shift changes and cancellations, which affect those with caring responsibilities? What protections are there for workers under contractor liability where an employer ceases trading or absconds?

[Andrew Griffiths]

I thank the hon. Gentleman for that question. What I would say is that this is addressed in our response to the Matthew Taylor review. What he is talking about is the need for a better definition of workers’ status, be that employed, self-employed or worker. We are consulting to make sure we address those points, and I am very happy for him to be a part of that consultation. I am very happy to talk to him and to talk about his Bill, but we are clear that by having a definitive definition of people’s employment status we can solve some of the problems he highlights.

[Heidi Allen (South Cambridgeshire) (Con)]

Having sat on the joint BEIS and Work and Pensions Committee, I am really pleased to hear from the Minister today that the Government will adopt its recommendations. The area of case law on the meaning of “worker” is really complicated, so I understand the need for consultation to understand it. We heard evidence of Uber and Deliveroo not treating their self-employed workers as if they were employees. It is a complex area. I urge the Minister to do this as quickly as possible, because there are other issues to consider, such as national insurance contributions and how the Child Support Agency deals with self-employed earners. This is a big, big area, so getting that clarification quickly would be welcome.

[Andrew Griffiths]

My hon. Friend makes that point very clearly, and I thank her for the contribution that she and her fellow members of the Committee made to our decisions. She is absolutely right that we need to get on with it, and that there is huge complexity in relation to people’s status. If the only possible response, as it is at the moment, is to engage lawyers, go to the courts and undertake expensive litigation, that will not help the people she highlights at Uber, Deliveroo and so on. We are very clear about our intention, and we are getting on with the job to make it a reality.

[Rachel Reeves (Leeds West) (Lab)]

I welcome the response to Matthew Taylor’s review—seven months after he published it. The Minister’s response today seems to be “we are now consulting the experts”, but that is exactly what the Government did when they asked Matthew Taylor and his panel to undertake their review. I am afraid there is very little from the Government’s response today that will do anything to genuinely help the bogus self-employed, including Don Lane, who are crying out for desperately needed reform. The Work and Pensions and BEIS Committees produced a Bill that the Government could take through Parliament, with cross-party support, to sort this out. The country is crying out for change. I urge the Government to be a little bit more ambitious.

[Andrew Griffiths]

I can reassure the hon. Lady that we are hugely ambitious. These proposals will help millions of workers. I pay tribute to the recommendations that her Committee and the Work and Pensions Committee made, and we are accepting all but one of the recommendations contained in that report. She will understand, as I think Matthew Taylor said when he gave evidence to the Committee, that this is hugely complicated, and we need to consult further. We are not consulting about whether we should do this; we are consulting about how we do it. I thank her for her contribution and reassure her that our ambition is strong.

[Robert Halfon (Harlow) (Con)]

I strongly welcome the measures set out by my hon. Friend. Alongside the living wage, they give the belief that we are the true workers’ party of the United Kingdom. Do the proposals also apply to apprentices, some of whom are not even paid the right apprentice wage?

[Andrew Griffiths]

I thank my right hon. Friend for his response and for the work he does to ensure that the Conservative party is the party of the worker. He is absolutely right: this Government are committed to ensuring that people get fair pay. That is why are putting a record amount—£25 million—into enforcing the living wage and the national minimum wage. As a result of that record commitment, we have seen a record £11 million of wages recovered for some of the most vulnerable and low-paid workers in our society. I assure him that all workers, including apprentices, are on our radar. We are beefing up the enforcement teams, and we are going to make sure that workers get the pay they deserve.

[Frank Field (Birkenhead) (Lab)]

As the Prime Minister established the Taylor review in response to a report written by Andrew Forsey in my office, I thank the Minister for his statement. Previously the Government rejected one of the Taylor recommendations, which was that if workers in the gig economy were required to turn up to work at their employer’s request in times of low demand, they should still be paid the minimum wage. The Government rejected that proposal, thank God. Will the Minister again affirm that that is the Government’s position?

[Andrew Griffiths]

I place on record our thanks to the right hon. Gentleman for his continued work in this area. He is right to say that that continues to be the Government’s position. However, we are consulting. The benefit to the employer is flexibility, but we have asked the Low Pay Commission to look again at whether people on zero-hours contracts should get some preferential, extra payment to compensate for the inconvenience.

[Nigel Mills (Amber Valley) (Con)]

Can the Minister confirm the Government’s plan in relation to employers’ national insurance contributions, to ensure that the tax system is not incentivising unscrupulous businesses to pretend that their employees are self-employed?

[Andrew Griffiths]

Clearly that is very high on the agenda. The work we are doing in relation to status will ensure that people who are genuinely self-employed are classified as such. Employers who are trying to game the system by pretending that someone is self-employed when in fact they are working will be addressed. The reality is that if it looks like work and feels like work, it is work, and people should be paid in the same way.

[Sir Vince Cable (Twickenham) (LD)]

The Minister will recall the Government’s awkward embarrassment when they tried to align national insurance for the employed and the self-employed. Can he explain how the Government propose to deal with that outstanding anomaly?

[Andrew Griffiths]

I thank the right hon. Gentleman for that question. The Chancellor set out our approach to those matters, and I have nothing further to add at the moment.

[Jeremy Lefroy (Stafford) (Con)]

I welcome the Government’s position on this and urge them to make quick progress, but there is one area in which employment rights are potentially about to be seriously damaged: the right of British citizens to work in 30 other countries in the EU and the European economic area as we leave the EU. What are the Government doing to ensure that young people and others have the opportunity to go and work overseas, bringing great benefits to their own career and, when they return, to their businesses or the companies for which they work, which they have enjoyed for many decades?

[Andrew Griffiths]

I wondered how long it would be before we got on to the “B” word, Brexit. I know that my hon. Friend is hugely concerned about that, as are businesses large and small up and down the country. He will have to wait a little bit longer, I am afraid. That announcement will, I am sure, be made by someone higher up the food chain than I, but I can assure him that the concerns of workers and British business are being heard by Government.

[Ms Angela Eagle (Wallasey) (Lab)]

Zero-hours contract carers get paid for face-to-face work, so they get paid for every 15-minute visit, but none of the travelling time in between. They often have fragmented contracts and have to be available for work throughout the seven days of the week, and they do not have proper time off. That is one example. Then we have couriers, who have to deliver more than 100 packages a day for 48p a package. They often have to keep driving 15 hours a day, six days a week, and they are called self-employed. Surely the Minister has got to end that appalling practice by properly defining and enforcing employment law. Nothing he has said today has reassured me that he is going to help the 3.2 million people who are missing out on their basic employment rights.

[Andrew Griffiths]

Allow me to try to reassure the hon. Lady that those issues are being taken care of. She will be aware that a Green Paper on social care is imminent, and those social care issues will be covered within it. She talks about when workers in the gig economy are clocking on and off and what constitutes their working time. If she has read the report, she will know that we recognise that the law should be clearer about when people are being paid and the hours that they work. We will address that within the consultation and come up with firm proposals.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

I warmly congratulate the Minister on the positive way he is taking forward the Taylor review and the Government’s ambitions. Back in May 2014, I brought forward a ten-minute rule Bill to ban unpaid internships. In 2016, I introduced a private Member’s Bill to ban unpaid internships—which the Labour party did not support, I hasten to add. When the Minister is dealing with the section of the Taylor review on unpaid internships, I urge him to liaise closely with our noble Friend Lord Holmes of Richmond, whose private Member’s Bill on that issue is in Committee in the other place at the moment.

[Andrew Griffiths]

I thank my hon. Friend for the great effort and the huge amount of work he has put into standing up for the rights of those young people who are being abused in relation to internships. He has raised that issue many times in the House, and I can reassure him that we are cracking down on sectors where unpaid interns are doing the job of a worker. There will be proper enforcement, and young people who feel they are being abused in that way will be covered. The enforcement will be strengthened, and we will ensure that those people get the wage they deserve.

[Tracy Brabin (Batley and Spen) (Lab/Co-op)]

While I of course welcome the publication of the Taylor review, may I press the Minister a little bit further? As my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) said, the Taylor review recommends ending the Swedish derogation that allows agency workers to be employed for extended periods on worse terms and conditions than the person working by their side on a more permanent contract. Is the Minister still considering that recommendation, or is he going to ignore it?

[Andrew Griffiths]

I can be absolutely clear with the hon. Lady that we are very attuned to the impact of the Swedish derogation and how it can be used unfairly on workers.

[Ms Angela Eagle]

What are you going to do?

[Andrew Griffiths]

The hon. Lady asks me what we are doing about it: we are specifically consulting. In the report, she will see that there are four consultations, and one specifically comes forward with proposals. [Interruption.] She may sigh, but we have to listen to the experts, and then we will deliver. We recognise the difficulties in relation to the Swedish derogation. We want to extend the support both for agency workers and those who feel that they are being disadvantaged—[Interruption]—on terms and conditions, exactly—and we will be taking this forward with firm proposals.

[Mark Pawsey (Rugby) (Con)]

Is it not the case that the Government asked Matthew Taylor to undertake a report, Matthew Taylor brought forward some recommendations and the Government are getting on with implementing what Matthew Taylor asked the Government to do?

[Andrew Griffiths]

My hon. Friend has hit the nail on the head. We can see from the response of Opposition Members that they realise this Government are bringing forward protections for millions of workers. This Government are providing them with sickness pay and holiday pay, and the enforcement needed to make sure that those vulnerable people on the lowest pay get the pay they deserve.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

When Matthew Taylor came before the Scottish Affairs Committee, he spoke of the inspiration he derived from the Scottish Government’s fair work convention. Will the UK Government be implementing something similar?

[Andrew Griffiths]

I thank the hon. Lady for that question, and for the work that the Scottish Affairs Committee has done. We took a great deal of interest in that work, which raised some very interesting points. She raises the issue in relation to Scotland. Our focus is clear: we are delivering on the commitments—the 52 commitments—in the Matthew Taylor report, and we will be doing so as a matter of urgency.

[Ruth George (High Peak) (Lab)]

While I am sure that millions of low-paid workers will welcome the fact that the Government are going to issue four consultations, they may well be more concerned that the Government’s own impact assessment on our leaving the European Union included the assumption that employment rights would be deregulated. Will the Minister tell the House which employment rights were included in the assessment, and whether the Government will make an ongoing commitment to maintain at least current employment rights?

[Andrew Griffiths]

I am sorry, but the hon. Lady clearly missed the three times I have said in response to this urgent question that not only are the Government committed to maintaining employment rights as they are currently set out, but we are going further in extending rights and protections to millions more workers. As a result of what we are doing by taking forward the brilliant work of Matthew Taylor, we will have employment protection that is not just as a good as in the rest of Europe, but the best in the world.

[Dan Carden (Liverpool, Walton) (Lab)]

Opposition Members have a longer memory than Government Members, because we remember that this Government took away employment tribunal fees support and disallowed people even from accessing justice in the workplace. This is too little too late—four consultations—because we need transformational politics when it comes to employment regulations in this country.

--- Later in debate ---

[Andrew Griffiths]

I do have a long memory. I have a memory of the recession brought on by the previous Government, and I have a memory of the millions of people unemployed as a result of their policies. We are talking about memory, but the hon. Gentleman seems to forget that today we have one of the most dynamic economies in the world, record employment, record low unemployment, a minimum national living wage of £7.50 that was introduced by this Government, record numbers of women in work and an economy that is the envy of many.

[Liz Twist (Blaydon) (Lab)]

The general secretary of the TUC, Frances O’Grady, has said that these measures will do nothing to tackle the problem of what she describes as

“the hire and fire culture of zero-hours contracts or sham self-employment.”

I know my constituents in Blaydon, many of whom work in the gig economy, will be disappointed that the Government have not taken a more dynamic and firm approach in tackling such basic rights and are putting this out for a further period of consultation.

[Andrew Griffiths]

I would just remind the hon. Lady that if she actually reads the report, she will see that we are asking the Low Pay Commission to consider higher minimum wages for workers on zero-hours contracts—

[Laura Pidcock (North West Durham) (Lab)]

Consider!

[Andrew Griffiths]

The hon. Lady says “Consider”, but I would have thought she was a supporter of the Low Pay Commission and that she would think this was a good idea.

We are creating a right for all workers on zero-hours contracts to request a more stable contract, and the Government want to go further than the Matthew Taylor report to address the issues of exclusivity of agency workers or those on zero-hours contracts. I would have thought that the hon. Member for Blaydon (Liz Twist) welcomed that; I know many in the trade unions organisation do.

[David Linden (Glasgow East) (SNP)]

One of the issues not within the scope of the Taylor review was that of unpaid work trials, which is regrettable. However, on 16 March my hon. Friend the Member for Glasgow South (Stewart Malcolm McDonald) is bringing forward his Bill to end exploitative unpaid work trails. Will the Government be supporting it?

[Andrew Griffiths]

I thank the hon. Gentleman for his question. I am happy to meet his colleague to discuss his Bill.

Bill Presented

Vagrancy (Repeal)

Presentation and First Reading (Standing Order No. 57)

Layla Moran, supported by Caroline Lucas, Wera Hobhouse, Christine Jardine and Jo Swinson, presented a Bill to repeal the Vagrancy Act 1824.

Bill read the First time; to be read a Second time on Friday 16 March, and to be printed (Bill 162).