Oral Answers to Questions
Kelly Tolhurst Excerpts(5 years, 1 month ago)
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Henry Smith (Crawley) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
We are backing young entrepreneurs by launching an independent review, led by the Prince’s Trust, to understand how we can better support them to turn their business dreams into reality. We are backing small and medium-sized enterprises with our spending power, with our ambitious strategy to ensure that at least £1 in every £3 we spend as a Department is spent with smaller businesses by 2022.
Ben Bradley
I thank the Minister for bringing forward the future high streets fund, which will be really important for small businesses on Mansfield High Street, and for the meetings I have been able to have with the Government about how to make sure that Mansfield can benefit. The council is now consulting with stakeholders on its proposals. Will Ministers agree to meet me so that I can make the case for Mansfield’s bid to the future high streets fund?
Kelly Tolhurst
My hon. Friend is right. High streets are changing, and the Government are committed to helping communities adapt. In the Budget, we set out our plan for high streets, with a £1.6 billion package to support the sustainable transformation of our high streets, which includes the future high streets fund. My hon. Friend is a passionate campaigner for his town, and I would very much welcome the opportunity to hear his proposals for the regeneration of Mansfield town centre, coupled with the investment and plans already being put in place through the growth deal.
Stephen Metcalfe
Will the Minister join me in acknowledging the welcome focus the Government have put on tackling late payment to small businesses? Will she confirm that improvement in payment times could release billions of pounds back into the economy to ensure that our SME sector remains vibrant and thrives?
Kelly Tolhurst
I thank my hon. Friend for his question, and he is quite right. Tackling late payments will indeed do just as he says. It is true that late payments can be extremely damaging for small businesses, and that is why we are committed to tackling it. In his first year, the Small Business Commissioner has managed to collect over £2 million owed to small businesses. In the spring statement last week, we announced a requirement on audit committees to review their payment practices. I look forward, in the very short term, to bringing forward a full package of policy measures to tackle just that.
Henry Smith
Last weekend, I was pleased to support High Street Saturday in Crawley town centre. Will my hon. Friend welcome the £900 million in business rate reductions, which is really starting to help small businesses on our high streets?
Kelly Tolhurst
I thank my hon. Friend for giving me the opportunity to welcome this cut in business rates. He will also be pleased to hear that, because of the updated forecasts from local authorities, the discount is now worth nearly £1 billion to retailers over two years, further bolstering this Government’s plan for the high street, which is now worth £1.6 billion, and directly benefiting some of our smallest retail businesses. My hon. Friend is a great campaigner for Crawley, and I am sure he will continue to ask questions on this subject.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
With just 10 days to go to a possible no-deal Brexit, only a third of the small businesses that trade exclusively with Europe have applied for and received their so-called EORI—economic operator registration and identification—numbers that will enable them to continue to do so. Those numbers could be allocated automatically by Her Majesty’s Revenue and Customs. Will the Minister lobby HMRC to tell it to do that, and back British business?
Kelly Tolhurst
The hon. Gentleman raises a very important point. It is true that we are making sure, as this Department is charged to do, that small businesses are absolutely aware of their obligations in regard to a no-deal Brexit. I would point out to him that HMRC is reissuing those numbers within 24 hours of small businesses applying.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Staff working insecure hours for the Hull-based small business Grotto Hire UK, which operates Santa’s grottos, have still not been paid, and many are owed thousands of pounds. The company owner offered to put the company into liquidation so that the staff could claim through the insolvency fund, but his appointed liquidators have now pulled out, leaving the company still running. Will the Minister please meet me to discuss this appalling situation and look at how the company can be wound up in the public interest?
Kelly Tolhurst
The point that the hon. Lady raises is really important, especially for her constituents. I will be more than happy to meet with her to discuss those issues.
Tim Farron (Westmorland and Lonsdale) (LD)
Small businesses and our high streets are hugely damaged by the closure of bank branches right across the country, which nets the banks, which we bailed out with taxpayers’ money, a vast amount of money in savings. Will the Minister consider a windfall tax on the banks to ensure that we redistribute some of that money back into our high streets to support small businesses?
Kelly Tolhurst
The hon. Gentleman raises an important point. Tax is a responsibility of the Treasury, but as he will know, including after our conversations yesterday—this was also alluded to earlier in questions—post offices are still an important part of our high streets, and the Post Office is currently negotiating a new banking framework. It is absolutely right that, when banks are pulling out of our high streets, the post offices that are delivering the services are remunerated correctly for that.
Bill Esterson (Sefton Central) (Lab)
The duty for large companies to report how quickly they pay their suppliers is of course welcome—80% of businesses that fail do so as a result of late payments—but to be effective, the new duty to report will need some teeth, such as binding arbitration and fines for persistent offenders. This Government’s use of sanctions against the poorest has been disgraceful, so how about using sanctions against some of the most powerful and making sure that large corporations treat their small business suppliers fairly?
Kelly Tolhurst
Late payments and the way that some large businesses have behaved in the past have been an issue for decades, and it is this Government who are prepared to make changes and bring forward policies to reduce them. We know that late payments can be incredibly damaging for businesses. That is the reason for the Chancellor’s announcement last week about the responsibility of committees to look at payment practices, and I look forward to making further proposals.
Steve Double (St Austell and Newquay) (Con)
Giles Watling (Clacton) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Our business environment is among the best in the world. By reducing corporation tax and investing in skills, innovation and productivity-boosting schemes, we are supporting businesses to compete in an ever-changing market. Ensuring that businesses can access finance is key, and the British Business Bank has the tools to make that happen, including its enterprise finance guarantee scheme, start-up loans and our export strategy.
Patrick Grady (Glasgow North) (SNP)
Kevin Hollinrake (Thirsk and Malton) (Con)
Kelly Tolhurst
My hon. Friend is a passionate campaigner in this area and for his constituents, and he knows that I would particularly like to tackle this matter. Insolvency practitioners must adhere to the insolvency code of ethics and must not allow conflicts of interest to override the fundamental principles of objectivity. Breaching the code may result in regulatory action, such as a fine, reprimand or, in the most serious of circumstances, the removal of a licence. The code is currently being updated by the recognised professional bodies that license insolvency practitioners, but I will continue the dialogue with my hon. Friend on this matter.
Carol Monaghan (Glasgow North West) (SNP)
Kelly Tolhurst
The hon. Lady raises an important point, but she knows we are doing a lot in this area to strengthen employment rights for people in the workplace. We have the good work plan, we are looking at flexibility, we are increasing holiday pay and we are always looking at how we can improve the situation for workers, whether the self-employed or general workers.
Vicky Ford (Chelmsford) (Con)
Maria Caulfield (Lewes) (Con)
Post offices are at the heart of our communities, so does the Minister welcome the news that Newick post office in my constituency, after being closed for months following the sad death of the postmaster, Terry, is set to reopen? Does she agree that we must do all we can to keep post offices open in our rural communities?
Kelly Tolhurst
I thank my hon. Friend for the work she has done with her constituents, the Post Office and the community to make sure that the post office in Newick is reopened. Post offices play an important role in our communities, and we are committed to maintaining the network of 11,500 post offices with the support of MPs like her.
Liz McInnes (Heywood and Middleton) (Lab)
Kelly Tolhurst
As the hon. Lady knows after our meeting yesterday afternoon to discuss this issue, we are committed to delivering and maintaining the post office network, which did not happen under the last Labour Government, when there was a reduction. As I have already outlined and made very clear, where there are concerns about specific branches, practices and consultations, I will personally raise them directly with the Post Office.
Martin Vickers (Cleethorpes) (Con)
Will the Secretary of State give an update on the next phase of the Greater Grimsby town deal?
Mr Virendra Sharma (Ealing, Southall) (Lab)
At the last general election, Labour promised to introduce a “Post Bank” to combat financial exclusion and ensure that everyone has access to banking services in their community. Does the Secretary of State agree that introducing a Post Bank to provide banking services in post offices would do wonders for the high street, as well as reducing financial exclusion?
Kelly Tolhurst
The hon. Gentleman gives me an opportunity to talk about the fact that we already offer banking services in our post offices. As I outlined earlier, we are doing the most we can to make sure that post offices and sub-postmasters are remunerated for the work they do.
Several hon. Members rose—
Stephen Crabb (Preseli Pembrokeshire) (Con)
Barclays has just announced another swathe of branch closures that affect my constituency, as the banks continue their flight from small towns and rural areas. Where does the Minister think all this will end? Does she agree that banks have a wider social obligation?
Kelly Tolhurst
I agree with my right hon. Friend that banks have a wider social responsibility. That is why I am committed to working with the Post Office to make sure that under the new banking framework post offices are remunerated correctly for the service they are providing for communities that the banks have moved away from.
Mike Amesbury (Weaver Vale) (Lab)
Fracking is bad for the environment, our health, our democracy, our landscape and even the courts. Does the Minister recognise that the Government are on shaky ground, quite literally, and will they ditch their support for this failing industry?
Dr Philippa Whitford (Central Ayrshire) (SNP)
A common feature of all patient safety scandals is that whistleblowers were ignored, intimidated or lost their careers, and were not protected by the Public Interest Disclosure Act 1998. Will the Secretary of State bring forward legislation for all sectors to ensure that that concern is investigated and that whistleblowers are protected?
Kelly Tolhurst
The hon. Lady addresses a very important area that I am extremely concerned about. The Department for Business, Energy and Industrial Strategy is working closely with the Department of Health and Social Care on how we can best strengthen the protection for whistleblowers within the NHS to support families and staff who raise concerns. This is a key area for us and I will continue to communicate with her on it.
Several hon. Members rose—
Draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019
Kelly Tolhurst Excerpts(5 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Mr Gray. Since the referendum decision to leave the EU, the Department for Business, Energy and Industrial Strategy has undertaken a significant amount of work on withdrawal agreements, preparing for a range of potential outcomes, including a no-deal scenario. This statutory instrument has a single, yet crucial, objective to continue to protect consumers and give businesses the clarity that is needed to operate under a no-deal scenario. It will ensure that in the event of no deal, the UK continues to have a robust and highly effective product safety and legal metrology regime.
The UK product safety and legal metrology regime is among the strongest in the world. The toys our children play with, the electrical items in our homes and the petrol pumps on our garage forecourts all rely on the legal framework carried by that legislative regime, and it is vital that post exit we retain such a robust system. This SI will not change the system or approach, which I know are supported by business and enforcement authorities.
The changes made by this instrument to 38 product safety and metrology laws will ensure that the UK’s product safety and legal metrology framework will remain as it is—as followed by the UK as an EU member state—but that it is converted into a UK regime. The changes include: retaining the requirement for conformity assessments to ensure products meet the essential requirements set out in the legislation; retaining the need for assessment by a third-party organisation to confirm that a product can be placed on the market, where it is currently required; retaining the standard systems to give rise to presumptions of conformity with the legislative requirements; and ensuring UK market surveillance systems will continue to work, to limit the number of unsafe and non-compliant goods available to UK consumers and businesses.
Without this no-deal SI, we risk disruption and confusion for businesses and enforcing authorities, limiting our ability to remove a wide range of unsafe or non-compliant everyday and high-risk products from the market, as there will be uncertainty about the extent, impact and application of the existing legislation.
Before I set out the key provisions in more detail, I will explain the approach we have taken and highlight what we have done to make an unusually large SI easier to navigate. We are laying a number of separate product regulations before the House together, because there are many cross-cutting issues that are the same for the majority of products featured. They have similar definitions, obligations and requirements needing similar fixes, and it made sense to group them together into one SI. For example, many of the product areas require third-party conformity assessment bodies to assess the products against the legislative requirements and some require the manufacturer to self-certify and mark the product, as confirmation that the product complies with the requirements. This similarity across the SI makes it easier to use for businesses that have to comply with the legislation and for the enforcement authorities, such as trading standards, which advise and enforce across the wide product safety system.
Another reason for the size of the instrument is the lengthy technical schedules that are included. These are widely used by industry. Including them together removes the effort for business and stakeholders in having to cross-reference separate EU directives and allows them to understand the requirements of UK law, given that they are all set out in one place alongside the related product schedule. Incorporating those annexes accounts for a third of the SI.
Throughout November, after the publication of the technical notices, the draft SI was shared with several stakeholders for information, via a series of reading rooms. The purpose of this exercise was to inform and update stakeholders on our plans for the product safety and legal metrology framework after exit. Stakeholders told us that this was a worthwhile exercise, reassuring them about our approach, which they supported. Furthermore, this engagement has meant that we have been able to understand the main requirements and concerns of businesses, industry experts and enforcement agencies, which were also able to give their feedback on some specifics about the draft SI, and which we welcomed, allowing us to make drafting amendments as appropriate.
Maria Eagle (Garston and Halewood) (Lab)
I am interested to hear the Minister refer to stakeholders and these reading rooms. It is all very well referring to business, but there are other interests—what about consumers? Were there any consumer organisations at these reading rooms? We do not have a number for how many stakeholders in each area were actually consulted.
Kelly Tolhurst
I thank the hon. Lady for that intervention, and I can answer her questions. We consulted with more than 6,000 business, which are quite important in this legislation as they have to understand and implement it, and are ultimately responsible for placing safe products in the marketplace. It was therefore vital that we could confirm that with stakeholders. I can reassure the hon. Lady that organisations such as Which? were invited to our reading rooms and fed into the process, and that consumer groups were given the same amount of access to the draft SI.
I appreciate that there are concerns about the impact of such a significant instrument on business. Despite being de minimis, we have completed and published a full impact assessment given the importance of this SI and in the interests of transparency. During development of it, we have been mindful of the impact on business of the changes to processes as a result of the UK’s exit from the EU. Where possible, we have made specific arrangements, including an 18-month transitional period for importers regarding labelling and a 90-day transition period for notifying a new UK database of cosmetic ingredients. Businesses have welcomed that.
Having touched on process, I move on to addressing some more detailed points about the substance of the regulations, given the issues that cut across many of the individual schedules. The regulations provide for continued recognition of goods assessed against EU regulatory requirements, including continued acceptance of products lawfully carrying the CE marking and of product certifications carried out by EU recognised bodies. This means that products that meet EU requirements in these areas can still be placed on the UK market after exit. In the event the UK leaves the EU without a deal, this is intended to be for a time-limited period and will help minimise disruption to the public and business in the event of no deal. At the same time, the regulations establish an equivalent UK framework to ensure that the legislation functions domestically once we leave.
I will now turn in more detail towards some of the further elements of the framework, including the new UKCA marking and the establishment of UK approved bodies.
Hannah Bardell (Livingston) (SNP)
On the point about CE marking, I knocked a door in my local area at the weekend, in Livingston, and was met with a chap who worked for a mechanical engineering company. He was particularly concerned about this and asked how, despite the fact that the UK may want to have its own regulations, we will keep up with the EU and what impact that will have on businesses. Can the Minister tell us about what impact assessment she has done on that?
Kelly Tolhurst
I thank the hon. Lady for her intervention, particularly regarding CE marks, which I shall go on to discuss. I want to reassure her that part of developing this UK framework and having it all in the one place is to ensure that, in a no-deal scenario, we can improve and keep in step with any improvements in regulations. In fact, when scientific evidence suggests that we can make a change, powers that previously referred to the European Commission are given to the Secretary of State. In some respects, the SI gives us more flexibility to make those changes.
From my past knowledge, I can tell the Committee that we were part of the formulation of some of the regulations, particularly as regards some the areas covered and some of the technical and particular product requirements, when they were considered by the European Union. I am therefore confident that, with our focus on product safety and the development of requirements, that we in the UK will continue to operate as we always have done in this area.
The UKCA marking will cover most goods subjected to CE marking. Whereas the CE marking indicates compliance with EU rules, the UKCA marking will indicate compliance with UK rules. Products lawfully made and assessed against EU regulatory requirements, including those with CE markings affixed, will continue to be accepted on the UK market. The vast majority of businesses will therefore be able to continue applying the CE marking as they do now, and they will not need to use the new UKCA marking.
It is legally necessary to create the new UK marking as part of a domestic legal framework so that products can still be assessed by UK-based conformity assessment bodies, which will no longer be recognised as meeting the requirements of the EU legislation in a no-deal scenario, meaning that manufacturers using them will no longer be able to affix a CE marking to products.
There is a requirement that some of the products covered by the legislation should be assessed by third-party organisations, called conformity assessment bodies, before the product can be placed on the market. For most of the products within the scope of this legislation, the conformity assessment bodies are usually called “a notified body”, and they play a valuable role in ensuring products available to businesses and the public are safe, and are produced according to a legal framework.
The EU has made it clear that in the event of a no-deal exit, it would no longer recognise work carried out by UK-notified bodies to assess products for sale on the EU27 market. That is why we are putting in place a UK framework that will allow UK bodies to continue to assess products. This benefits not only the bodies themselves but also their customers, who might not be seeking to export to the EU and would prefer to continue to have their products assessed by a body established in the UK. Therefore, for areas within the scope of the legislation, UK-based notified bodies will automatically be given new status as UK-approved bodies. Products successfully assessed by these bodies will then be marked with the UKCA marking before being placed on the UK market.
A further common element of the product legislation covered by this SI is the use of authorised representatives, commonly known as ARs. These are natural or legal persons established in the European economic area who can be appointed by a manufacturer of a product to carry out certain tasks on their behalf. The regulations provide for the ongoing recognition of existing ARs in the EEA, however any new AR appointed after exit day will need to be based in the UK.
For cosmetic products, a different approach is being taken because of the risk they pose to human health. Responsible persons playing a key role in ensuring the safety of cosmetic products on the market will be required to be based in the UK rather than the EEA from the point of exit.
To conclude, the regulations establish a domestic product safety framework in the event that the UK leaves the EU without a deal. They are making only the changes to the framework that are needed to ensure the UK’s product safety and metrology system functions effectively and to the same high standard after exit; otherwise they maintain and secure the current system in domestic legislation. As hon. Members will recognise, it is essential that the UK has a functioning product safety framework in place in the event of a no-deal to prevent a flood of unsafe and non-compliant products into the UK market. I urge the Committee to approve the regulations.
Kelly Tolhurst
I thank Committee members for their contributions. I will correct a statement I made to the hon. Member for Garston and Halewood. I said that over 6,000 businesses had been part of the consultation, but the number was 4,000—I knew that, but I was thinking about a figure for something else. I apologise.
The reason the SI is 600 pages long is purely to allow us to bring changes across a number of pieces of product safety together into one bundle, to make it easy for businesses, trade associations, enforcers and consumers to go to one place to find all the legislation that affects similar and cross-cutting issues, in a no-deal scenario. There is absolutely no intention to use this process as an opportunity to reduce transparency or the amount of scrutiny that SIs receive.
The hon. Member for Garston and Halewood is quite right that the intention of the SI is absolutely not to change policy; it is about making the statute book function from day one, were we to leave the European Union without a deal. As a Minister responsible for this area, and having spent my whole life prior to entering the House working with products, whether in the European Union or the UK, I would not want my legacy to be to have done something detrimental to consumers or businesses in a no-deal situation.
Maria Eagle
The Minister is being generous in giving way. I accept that the regulations are all in one place, but does she accept my point that if a fictional local businessman from a microbusiness were to come along and think, “Well, I need to check what I am doing if there is no deal,” he would be unable to understand what on earth this meant. It refers to documents that are not attached to it. Anyone would need to have the House of Commons Library available in order to get all the documents together to cross-reference them and understand what on earth any of it means
Kelly Tolhurst
I understand the hon. Lady’s concerns, but the majority of the changes in this SI are fixes. I take her point; she is an experienced parliamentarian who has been a Minister in the past. I understand that I am doing things in a way that are not really up to the standard that she would have expected from me. However, on the issue of establishing a framework, businesses are keen to have all the information in one place, where it is simple to access. I know from my previously work that having to keep up to date with EU regulation, which changes every other week, can sometimes be a challenge. The beauty of this arrangement is that it is a UK framework. It does not make a policy change; it concerns a functioning statute book after exit.
We have consulted businesses and trade associations because, in the event of no deal, they are fundamentally responsible for product safety. We have engaged with business. I do not know whether members of the Committee have been lobbied directly by firms, but I have had MPs ask me when the mega-bundle is going through and the SI coming to the House, because they want assurances on EU exit, particularly on conformity. I know that what I am saying might not alleviate some of the Opposition’s concerns, but I want to make it clear that these provisions are about making the process easier for enforcers and businesses, so that we are able to maintain the high standards that we currently have in the UK.
I mentioned that there are no significant changes to elements of product safety. The measures are about fixes and making the process workable. Many of the businesses that will be interested in the SI, or need to understand its content, will not need to refer to all 600 pages. They obviously include the 38 different sets of regulations that cover different areas. We have put the schedules in with those 38 areas, alongside the changes, so that people can turn to the specific areas in the UK framework that interest them.
As for business impact, there will of course be an impact on business when moving to any new framework. In the event of a no-deal scenario, businesses or individuals may have to familiarise themselves with particular changes. To be frank, it is quite within the competence of organisations that are already adhering to the existing legislation to understand where the small changes have been made.
The hon. Member for Sheffield, Brightside and Hillsborough asked how we will assess the timeframe in which we will continue to maintain or accept the CE mark for products placed on the UK market. The timeframe is yet to be decided. It will be discussed in conjunction with businesses and interested parties. The focus is on making this an easy transition for businesses in the UK and for the flow of products. The intention is to have a UK mark so that UK manufacturers, when they have to place a product on the UK market, can establish that they are certified in the UK and meet the necessary requirements.
In a no-deal scenario, however, any UK business wanting to place a product on the EU market would still have to comply with certain regulations there. Currently, the EU has said that it will not recognise or accept the UKCA mark. Quite rightly, the EU has the CE mark to indicate conformity. Any acceptance of a UKCA mark would be part of further trade negotiations, into which the Government may or may not enter, regarding acceptance of our product standards in future. That would be usual in any trade deal as a third country, when operating not just with the EU but with any other country in the world.
The shadow Minister rightly pointed out the concerns about access to European databases. I must give her some comfort that we will still have public access to the RAPEX database, and we are already developing the three databases to do that. Market surveillance is carried out in a number of different ways, and is not reliant just on those databases; it also comes from border and customers, and we hold our own data. I am confident that we will be able to continue carrying out the same level of market surveillance, and it is in the UK’s interests to ensure that unsafe products that should not be here are not placed on the market.
The hon. Member for Sheffield, Brightside and Hillsborough asked whether I could give her details of the meeting on the consultation that was carried out. I would be happy to write to her about that. With regard to trading standards enforcement, we have had the debate about trading standards enforcement many times in the House in recent weeks. Although the shadow Minister is right to challenge me, I hope that she accepts that trading standards enforcement is a particular interest of mine as a Minister. I would therefore like to give the Committee some comfort by pointing out that the Office for Product Safety and Standards has trained over 600 local trading standards professionals in 200 local authority areas, and at no cost to the local authorities. They will ensure that we are preparing our enforcers in the event of no deal, and for the wider aspect of when we do leave the European Union.
With regard to planning and the future direction of the Office for Product Safety and Standards—as well as what we are doing on data and increasing surveillance—we are bringing in more investment: the £12 million is focussed directly on the Office for Product Safety and Standards and the work going on with the border project. I know that the hon. Member for Sheffield, Brightside and Hillsborough has looked into this in great detail.
On the impact on business, labelling is a key concern. That is one reason why we have given organisations 18 months to comply. As a Minister, I have taken an interest in the matter, as Committee members would hope and expect, and have challenged officials in many of these areas, including by asking them how we could do things better or give businesses more opportunities. We have struck the right balance there. It is feasible for even a small business to be able to comply with what we have been able to do, including by familiarising themselves with the legislation.
Again, I thank Committee members for their contributions and I understand their concerns. I reiterate that this is about ensuring that we are in the right place if we leave the European Union without a deal on day one. The regulations are essential to ensuring that people across the UK continue to have confidence in the safety of the products they buy and use every day. If this legislation is not in place, the UK’s product safety regime simply would not work if the UK leaves without a deal agreed by both sides.
Without regulation, unsafe products could more easily be placed on the market, with no effective mechanism for removal, with the result that the British public would have less protection from unsafe and non-compliant products than they do today. The UK product safety and metrology regime is currently among the strongest in the world, and it is vital to ensure that we continue to have an effective product safety and metrology legal framework post exit. Without this, we risk disruption and confusion for businesses and enforcement authorities. Most significantly, we would limit our ability to remove unsafe or non-compliant products from the market. I am disappointed that the Opposition will be voting against the SI today. Many stakeholders out there will be looking for the Committee to approve the SI so they can have assurances on the requirement if we leave the European Union without a deal.
Question put.
Draft Employment Rights (Miscellaneous Amendments) Regulations 2019
Draft Agency Workers (Amendment) Regulations 2019
Draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019
Kelly Tolhurst Excerpts(5 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Employment Rights (Miscellaneous Amendments) Regulations 2019.
The Chair
With this it will be convenient to consider the draft Agency Workers (Amendment) Regulations 2019 and the draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019.
Kelly Tolhurst
It is a pleasure to serve under your chairmanship, Mr Austin. These three statutory instruments contain five measures to clarify and extend workers’ rights, taking forward the Good Work plan—the biggest boost to workers’ rights in over 20 years. They demonstrate this Government’s firm commitment to upholding and improving workers’ rights as we leave the European Union.
The first SI is the draft Employment Rights (Miscellaneous Amendments) Regulations 2019. It would extend to workers the right to a written statement of employment particulars. Currently, only an employee is entitled to a written statement, and only after a month with the same employer. The current written statement provides an employee with information on the main conditions of their employment, such as their job title and a description of their work, how much and how often they will be paid, and the hours of work. Matthew Taylor’s review recommended greater transparency for extending to workers the right to a written statement. All workers should have the same clarity of information from which employees currently benefit.
We also laid the Employment Rights, Employment Particulars and Paid Annual Leave (Amendment) Regulations 2018 in December, which made written statements a day one right and extended the content of the written statement to include paid leave details, such as maternity and paternity leave, where applicable—specifics of when a worker is expected to work, whether the work is variable, and the benefits beyond pay for which the worker is eligible.
The changes that will be implemented by the draft Employment Rights (Miscellaneous Amendments) Regulations 2019 and the Employment Rights, Employment Particulars and Paid Annual Leave (Amendment) Regulations 2018 are crucial to achieving Taylor’s recommendation for
“greater transparency around the employment law framework to help ensure that legal rights and responsibilities are not misunderstood or exploited.”
The second measure in the draft Employment Rights (Miscellaneous Amendments) Regulations 2019 would amend the Information and Consultation of Employees Regulations 2004, lowering the threshold for a request to set up an information and consultation arrangement in the workplace from 10% to 2% of the total number of employees. The Government agree with Taylor that engaging in dialogue is key to good work. The draft regulations would make it easier for workforces to request employers to be more open about what is happening in their workplace.
It is important to note that this SI would not change the important rights that the information and consultation representative has, including paid time off and protections against detriment. There would also be no change to the number of employers in the scope of the Information and Consultation of Employees Regulations: they would apply to employers who have 50 or more employees, and a minimum of 15 employees would be required for a request to set up an information and consultation arrangement.
Good employers engage regularly with their workforce. To quote Taylor:
“Well-run companies recognise the importance of the people who work for them. They invest time and effort in good management relationships”.
The third measure in the draft Employment Rights (Miscellaneous Amendments) Regulations 2019 would increase the maximum penalty available to employment tribunals where there has been an aggravated breach of workers’ rights. The maximum penalty of £20,000 would be applicable from 6 April 2019, quadrupling the current amount. The current maximum penalty of £5,000 does not always reflect the higher-value awards. The new maximum would align with the current maximum penalty per worker for non-payment of the national minimum wage. It is important that all parties are aware of this penalty. We have published guidance to increase awareness and highlight how tribunals can make use of these powers.
This measure is targeted at businesses that breach the law deliberately or maliciously. Compliant businesses will welcome this detriment against anyone seeking advantage by exploiting workers. The increased penalty is part of a wider package to deter repeated employment law breaches. We are committed to legislate to oblige employment tribunals to consider imposing additional sanctions against employers that repeatedly breach workers’ rights. We are also helping workers to receive tribunal awards promptly through the Department for Business, Energy and Industrial Strategy penalty scheme, which has recovered more than £1.5 million of unpaid awards so far. We will now also name employers that are not paying employment tribunal awards.
The draft Agency Workers (Amendment) Regulations 2019 would abolish the Swedish derogation. This reform has been welcomed across the House. It is a fundamental shift in agency workers’ rights, entitling all agency workers to the same pay as a permanent employee after 12 weeks in the same role with the same hirer. At present, agency workers can opt out of the entitlement to equal pay in return for pay between assignments through a Swedish derogation contract. Matthew Taylor highlighted that Swedish derogation contracts can be exploitative, and that workers sometimes do not receive the equal pay that they are entitled to. Our 2018 response to the Taylor review included a consultation on the Swedish derogation. That and earlier BEIS research uncovered cases in which pay between assignments was not given. We concluded that agency workers are not benefiting from the Swedish derogation, and we are therefore taking action.
The Joint Committee on Statutory Instruments drew the special attention of both Houses to this instrument, on the grounds that one aspect required clarification. My Department provided that clarification to the Committee. The instrument relies on powers in section 2(2) of the European Communities Act 1972. The Committee asked how the instrument would survive exit day, given that section 2(1) of the European Union (Withdrawal) Act 2018 saves legislation made under section 2(2) of the 1972 Act, as it has effect in domestic law immediately before exit day and this instrument does not come into force until after April 2020. The answer to that question is that this instrument would be on the statute book immediately before exit day and is due to come into force in April 2020. That effect is preserved in section 2(1) of the withdrawal Act, so the instrument will still come into force as intended.
The Committee accepted that that is one possible interpretation. It is the clear view of the Government that instruments such as this will come into force as intended. That can also be seen from the explanatory notes to the withdrawal Act, which confirm that legislation referred to in section 2(1) includes legislation that has been passed or made but is yet to be in force. The repeal of the Swedish derogation will make a significant positive difference to agency workers in the UK. We have listened to agency workers’ concerns and have taken firm action in response.
The draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019 would introduce a key facts page for agency workers who sign up to an employment business from April 2020. The Taylor review identified transparency of information, particularly around pay, as an issue of engagement with agency workers. The different ways that they can be paid are often confusing. Taylor was concerned that some workers were being exploited as a result. This regulation therefore requires a key facts page that will give agency workers more clarity over their pay, and some other key facts, before signing up with an employment business.
That reform was welcomed by unions, businesses and workers alike in our consultation. Employment businesses will give a key facts page to all agency workers signing up from April 2020. It will contain a number of largely pay-related facts, presented clearly. In particular, if an agency worker is paid through a third-party umbrella company, the key facts page will reflect that, including information about deductions that the umbrella may take and how they are calculated. That means that agency workers will have more information about who is responsible for paying them and how much pay they will receive for an assignment, enabling them to make better-informed decisions before they agree to take the work on. The regulation means that, before signing on with an employment business, agency workers have the information they need to make an informed choice.
With the exception of the quadrupled aggravated breach penalty, the measures I have outlined take effect from April 2020. That gives time for employers to adapt their systems, and time for individuals to understand the increased transparency and their rights.
I commend these three sets of regulations to the Committee.
Kelly Tolhurst
I respect the comments made by the hon. Member for Sheffield, Brightside and Hillsborough. I like to think that when I work with her in her role as shadow Minister we have quite good communication. I respect her position, and thank her for the tone in which she always presents her comments in Committee.
I am not embarrassed to be standing here today as the Minister; I am very proud to be the Minister responsible for labour markets, and to be introducing these three SIs on the back of announcing our Good Work plan at the end of 2018. In my view, as a 40-year-old woman—[Interruption.] Yes, everybody knows my age now. Most of my days in employment were under a Labour Government. I had a lot of different experiences, and saw what it was like to be a young person trying to follow a career. I then ran my own business, and I am now in a Conservative Government, looking at these matters. I am proud of this Government’s record in bringing forward the Good Work plan and in initiating the work that went into the Taylor review, to get to where we are now. To move to where we are going is a big step change. The initiatives that we have announced in the Good Work plan go further than before. We have expressed our intentions about what we would like to do going forward. These SIs are limited in scope to give us the ability to move quickly and make changes that enable our ambitions to be realised as soon as possible.
George Freeman (Mid Norfolk) (Con)
I echo the Minister’s comments. Many of us in this Palace, and all of us here today, care passionately about this issue—I do not think there is any disagreement about that—and bitterly resent the few examples of terrible employment practices that the Government are moving to clamp down on. I thought the shadow Minister’s comments were slightly old-fashioned. Those of us who have had a career in starting technology businesses—fast-growing businesses with modern workforces, where many women want flexible hours—understand that this is not about the trade union rep in a company with six employees. It is about good employers, good regulations and good standards in the modern workplace. We have moved on a bit from the 1920s.
Kelly Tolhurst
I thank my hon. Friend for his comments; I concur with them. Ever since I have had this role I have been committed to making sure that our workers are put at the centre of what we are doing around business, and making sure that, quite rightly, we listen to workers, businesses, unions and all kinds of representatives when we are formulating—hopefully—good legislation for the future.
We have, I believe, been seen to have a good record in what we have done in recent times. We have got a record-breaking number of people in work, and 80% of jobs created since 2010 were full-time jobs. We are continuing with our commitment to increase the minimum wage, with the new increased rate starting in April, when it moves to £8.21. We are committed to, and on track to meet the 60% of median earnings target.
I will turn to the questions that I was quite rightly asked by the hon. Member for Sheffield, Brightside and Hillsborough. She is quite right about employment status. That is something that came from the Taylor review and has been outlined in the Good Work plan. We are committed to aligning employment status with tax. There is evidence to suggest that that is what we need to do. We need to get it right, to consult properly and to make sure that anything brought in is done in the right way. The engagement that I have had with businesses and workers shows that they welcome this move. It has to be done correctly and in the right way. It has been expressed in our Good Work plan and it will be consulted on further.
On the unions and the Information and Consultation of Employees Regulations 2004, I make it clear to the Committee that the new regulations strengthen workers’ ability to request consultation in the workplace.
Peter Kyle (Hove) (Lab)
I am grateful to the Minister for giving way. It is interesting to listen to her. Her Department is running a series of adverts at the moment, under the headline, “Holiday pay: it comes with the job”. Underneath that is a photograph of a Deliveroo rider. Could she confirm that even after these regulations have been passed, Deliveroo riders and other people in the gig economy who are self-employed will not be entitled to statutory holiday pay?
Kelly Tolhurst
I thank the hon. Gentleman for his question. It is not a picture of a Deliveroo driver. As Members will be able to see, it does not say the word “Deliveroo”.
Peter Kyle
If somebody is wearing the uniform of a Deliveroo rider, has a backpack on their back that is identical to that of a Deliveroo rider, and is riding a bike, as Deliveroo riders do, does the Minister agree that most reasonable people looking at that advert will assume that it indicates that Deliveroo riders will get statutory holiday entitlements?
Kelly Tolhurst
I stand by what I said: it is not a Deliveroo driver. The hon. Gentleman may believe that it is a Deliveroo driver, or cyclist, but there are a number of players in that particular market.
Kelly Tolhurst
I am not going to name them here, because I am not here to talk about Deliveroo drivers—or any driver, for that matter. The essence of what the hon. Gentleman is trying to get at is that I will defend an advertising campaign by my Department to make it clear to people that they are entitled to holiday pay, which we are committed to delivering. Part of that is about making employees aware and raising the profile of that. I will defend our campaign, even though I dispute that the driver in the ad is a Deliveroo driver.
Kelly Tolhurst
To move back to union representation, about which the hon. Member for Sheffield, Brightside and Hillsborough feels strongly, it is true that the changes that we are making to the thresholds will ensure that workers are able to get consultation with the organisations in which they work. It is correct that in some workplaces there is contention relating to unions, and they are not necessarily representative of the whole workforce, so there is already a system in place—a threshold within unions, separate to what we are talking about with the ICE. Obviously, that is a different system. The changes that we are making will give people who are not part of a union the ability to have a conversation and consultation with the companies that they work for.
I personally feel very strongly about zero-hours contracts. I have seen many, many examples, as a constituency MP and in the working world, of zero-hours contracts being a perfect solution for people who want to be able to work. They give people the flexibility that they are unable to get in other forms of employment. It is a fallacy that every organisation that uses zero-hours contracts is bad, and that all zero-hours contracts are weighted against the worker. I can name a number of examples of where employers go much further to aid individuals and enable flexibility. The 80% increase in jobs has been in full-time employment. The Taylor report identified that keeping that flexibility in the workplace is really important. I understand that people have concerns about zero-hours contracts, but our intention is to strengthen them where we can. My narrative is that they are a good option for a lot of people who want to work. They are not always one-sided.
Gill Furniss
I just want to put it on the record that this obsession with zero hours seems very weird to me, because there are many other options for making jobs flexible. There are things like job shares and part-time appointments. It does not have to be a zero-hours contract. I would like the Government to take a look at that, rather than clinging on to the notion that zero-hours contracts are the only way of offering flexibility. In my book, they certainly are not.
Kelly Tolhurst
I actually agree with the hon. Lady. They are not the only way of offering flexibility. That is why we are bringing forward the proposals that we set out in the Good Work plan. We are moving towards giving workers the right to request a more stable contract and stable hours. Less than 3% of our workforce use zero-hours contracts, and there are many other ways to do it. In my view, the narrative that zero-hours contracts are all weighted against the employee is not always the correct interpretation of how they are used. However, we have tried to outline that, as a responsible Government, where we see any potential difficulty or breaches, we will always seek to close those gaps where appropriate.
I understand the hon. Lady’s concern about the timescale. She will be pleased to know, in the light of debates that we have had on certain other SIs, that impact assessments have been carried out. Because an impact has been assessed to business, these measures will come into force on 6 April 2020, giving businesses 12 months to prepare, giving us time to work with businesses on guidance and implementation, and giving workers an opportunity to understand what is coming forward.
The key facts page is a step forward, particularly for agency workers. When the regulations come into force, workers will be entitled not only to a written statement of rights but to key facts. The whole point of that is that when individuals go to agencies, they will be able to ask questions and make decisions about whether to take on work in an informed way, which we hope will ensure that there is no concern in the future. Also, where there are workplace issues, that will give individuals something on day one with which to hold their employer to account at a later date. It is a great way forward; it gives workers better information and provides transparency. Obviously, we will be working with employers over the next year to ensure that those key facts pages are implemented.
I like to think that the regulations show that we are absolutely committed to improving workers’ rights following the Taylor review. I would like to put on the record my gratitude to Matthew Taylor and his review colleagues, Greg Marsh, Diane Nicol and Paul Broadbent. I thank them for all their work in this area. It has been a pleasure to work with them over the last 12 months, even though I have only been in post since July.
As we set out in our industrial strategy, flexibility is an important UK strength. Over the past year, the UK has experienced its highest rates of economic activity and employment. The employment rate was estimated at 75.8%, the highest since comparable estimates began in 1971. We have also experienced the lowest rate of unemployment since the mid ’70s. There are now 32.53 million people in work. The strength of the jobs market in the past eight years means that over 3 million more people are in work, unemployment is lower in all regions and nations of the UK than in 2010, and wages are growing at the fastest pace possible.
The regulations implement the recommendations of the Taylor review. They will directly benefit all workers by giving them transparency about their rights on day one. We are removing the opt-out from equal pay for agency workers and giving them clear information to make informed choices about who they sign with. We are making it easier for the workforce to establish formal engagement processes for information and consultation, and we are empowering employment tribunals to impose greater penalties against the worst employers.
Members will know that the regulations are not the extent of our plans, as I hope I have laid out. Many of the other commitments in the Good Work plan are being taken forward. Last week, we launched the holiday awareness campaign, which was beautifully alluded to by the hon. Member for Hove. Our scheme to name employers that fail to pay employment tribunal awards is now live. Many of our ambitious reforms will require primary legislation, and I look forward to having further discussions with Members across the House as we bring forward further measures.
I commend the statutory instruments to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Employment Rights (Miscellaneous Amendments) Regulations 2019.
Draft Agency Workers (Amendment) Regulations 2019
Resolved,
That the Committee has considered the draft Agency Workers (Amendment) Regulations 2019.—(Kelly Tolhurst.)
Draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019
Resolved,
That the Committee has considered the draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019.—(Kelly Tolhurst.)
Workplace Harassment or Discrimination: Confidentiality Clauses
Kelly Tolhurst Excerpts(5 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government have today published a consultation on measures to tackle misuse of confidentiality clauses in situations of workplace harassment or discrimination. These proposals will boost understanding among workers and employers of their rights and legal responsibilities and is part of our modern industrial strategy to create a fairer workplace.
There is increasing evidence that confidentiality clauses are being abused by a minority of employers to intimidate victims and conceal harassment and discrimination in the workplace—including sexual assault, physical threats and racism. This is unacceptable. Today’s proposed reforms will help put an end to the unethical use of these agreements and encourage good practice from employers and lawyers. This includes:
Legislating that confidentiality clauses cannot prevent any disclosure to the police.
Requiring a clear description of the limits of confidentiality provisions within a written statement of employment particulars (in the case of confidentiality clauses in employment contracts) or within settlement agreements.
Extending the law that means a worker agreeing to a settlement agreement receives independent advice, by specifying that the advice must cover the limits of any confidentiality clauses in the settlement agreement.
Most businesses legitimately use non-disclosure agreement and confidentiality clauses in agreements to prevent the disclosure of confidential information. In addition, settlement agreements are often utilised to help resolve workplace disputes without the need to escalate matters further.
However, a minority abuse their power in the workplace to conceal victims of harassment or discrimination through NDAs or confidentiality clauses. For example, by suggesting that a worker cannot “blow the whistle”, despite the fact that no provision can remove a worker’s whistleblowing protections.
In addition, through an NDA or settlement agreement, employers could insist that a worker is unable to discuss an issue with other people or organisations, such as the police, a doctor or a therapist. This can leave victims afraid to report an incident or speak out about their experiences, leaving others exposed to similar situations, and putting customers and other businesses at risk. The proposals set out today will help end this unethical practice, through extending the requirement to receive independent advice to cover limits on confidentiality clauses, and by requiring that signatories must be provided with a clear overview of their rights.
Our modern industrial strategy is creating a fairer and more equal workplace, to boost productivity and earning power for all. Our proposals support this by helping to create a more level playing field between workers and employers, providing more understanding over rights and legal responsibilities.
The consultation period will run for eight weeks until 29 April 2019. The consultation can be found at: www.gov.uk/government/consultations/confidentiality-clauses-measures-to-prevent-misuse-in-situations-of-workplace-harassment-or-discrimination.
I am placing copies of the consultation in the Libraries of both Houses.
[HCWS1373]
Terms and Conditions of Employment
Kelly Tolhurst Excerpts(5 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the draft National Minimum Wage (Amendment) Regulations 2019, which were laid before this House on 28 January, be approved.
The Government want fair employment for all. Through our industrial strategy, we committed to boosting productivity and increasing earning power across the country. The way in which people work is changing, thanks to new technology and new employment models. We need to ensure that the labour market continues to work for everyone.
In December, we published the “Good Work Plan”, which sets out the biggest package of workplace reforms in over 20 years. This includes our vision for the future of the labour market and our ambitious plan for implementing the Taylor review recommendations. The important package will ensure that workers have access to the rights and protections that they deserve. It will also create a level playing field for employers, ensuring that responsible employers are not undercut by a small minority who seek to circumvent the law.
The national minimum wage and the national living wage are crucial to those commitments. They help to protect the lowest paid in our society. We can be proud of our labour market. Our employment rate of 75.8% is the highest since comparable records began in 1971. Unemployment is down to 4%. Since 2010, the national minimum wage has increased faster than average wages and inflation, meaning more money for the lowest-paid workers while employment continues to increase. This success means that we can continue to increase the rates above inflation. We will continue to work towards our target of the national living wage reaching 60% of median earnings by 2020, subject to sustained economic growth.
Andrew Griffiths (Burton) (Con)
The Minister is doing a brilliant job as the Minister responsible not only for small business but for the labour market. I was lucky enough to be the Minister when we brought forward the biggest increase in the national minimum wage for 10 years. Does she agree that the greatest beneficiaries of that are women in the workplace who tend to be the lowest earners, and that our actions in increasing the minimum wage on the scale that we have has gone a long way towards helping to reduce the gender pay gap?
Kelly Tolhurst
I thank my hon. Friend, my predecessor, for making those comments on what the Government have undertaken over recent years to increase wages for the lowest-paid workers. I agree with him that what we have done to increase the rate of pay for the lowest-paid workers has supported women in the workplace and has been able to help to reduce the gender pay gap. We also have other programmes coming forward, including our consultation on mandatory ethnicity pay reporting, which we will say more about soon.
The regulations will increase the rates of the national minimum wage and national living wage from 1 April. We estimate that this will lead to a pay rise for more than 2.1 million workers. I would like to place on the record my gratitude for the work of the independent Low Pay Commission, which recommends the rates, bringing together the views of businesses and workers, using research and analysis to inform its work and reaching a consensus on what the rates should be. I am delighted to say we have accepted all its recommendations for the increases to the rates from 1 April.
The regulations will increase the national living wage for those aged 25 by 38p to £8.21. This is an above-inflation increase of 4.9% and means a pay rise for a full-time worker of more than £690 a year.
Andrew Griffiths
May I too commend the work of Bryan Sanderson from the Low Pay Commission and his team? Given that he manages to bring together unions, labour market experts and businesses and get them to agree, does the Minister think we should get him involved in our European Brexit negotiations?
Kelly Tolhurst
I thank my hon. Friend for pointing out the good work of the Low Pay Commission and how it brings people together to come up with balanced proposals, such as those before us today, which the Government have accepted.
The regulations mean that a full-time worker will be more than £2,750 better off next year compared with the year the national living wage was introduced. The regulations also increase the rates for younger workers and apprentices. Those aged between 21 and 24 will be entitled to a minimum hourly rate of £7.70, which is a 32p increase; workers aged between 18 and 20 will receive an extra 25p an hour, taking their rate to £6.15; 16 to 17-year-olds will earn at least £4.35 an hour—a 15p increase; and apprentices aged under 19 and those in the first year of their apprenticeship will receive the largest percentage increase of 5.4%, meaning an hourly rate of £3.19.
Alison Thewliss (Glasgow Central) (SNP)
Does the Minister appreciate that that is not even enough to buy a Freddo?
Kelly Tolhurst
I point out to the hon. Lady that we are talking about the apprentice rate.
The regulations will also change the amount employers can charge workers for accommodation without it affecting their pay for national minimum wage purposes. From April, this will increase to £7 per day.
Changing the law is the first step, but we also need to make sure all workers know they are entitled to the national minimum age and that all employers know they must pay it. The Government run an annual campaign to increase awareness of the national minimum wage and the national living wage. Last year, we spent £1.48 million reaching workers and employers through posters and billboards as well as digital and online channels. We know that most businesses are good employers and pay at least the national minimum wage, but where non-compliance exists the Government will step in and make sure that money is recovered on behalf of workers.
Since 2015, we have doubled our investment in enforcement of the regulations to more than £26 million per year. More than 420 staff in Her Majesty’s Revenue and Customs are involved in the enforcement of the national minimum wage, and they follow up every worker complaint they receive. HMRC also conducts pro-active, risk-based enforcement in sectors or areas with a higher risk of workers not being paid the legal minimum wage, including those identified by the director of labour market enforcement. In this work, it co-operates with other labour market enforcement bodies to share information and conduct joint operations where that makes sense for businesses and workers.
Mike Wood (Dudley South) (Con)
When businesses are repeatedly found to have breached national minimum wage regulations, will the Minister ensure that HMRC proactively investigates other cases of staff employed on similar terms and with similar contracts, rather than requiring each employee to demonstrate separately that he or she has been underpaid?
Kelly Tolhurst
I assure my hon. Friend that we take HMRC’s enforcement of the national minimum wage very seriously. There are many actions that we can take when people breach the law and do not pay the minimum wage. We will prosecute companies that are found not to be paying it, but our priority remains ensuring that workers who have been underpaid receive the arrears owed to them, and in such cases companies must also pay a penalty. We are committed to the enforcement of the minimum wage, which is why we have doubled our expenditure on it.
Chris Stephens (Glasgow South West) (SNP)
How many people are currently employed in HMRC’s national minimum wage compliance unit, and how does that number compare with, for example, the number employed in the Department for Work and Pensions to chase social security fraud?
Kelly Tolhurst
Unfortunately I do not represent the DWP here, so I am unable to make comparisons at the Dispatch Box today. However, as I have just said, 420 staff are involved in enforcement, and we have doubled our spending on it because we are determined to ensure that businesses pay workers what workers are entitled to. We will continue to enforce that where we can.
Nick Smith (Blaenau Gwent) (Lab)
How many companies have been penalised for breaking the rules on the national minimum wage? How many prosecutions have been brought in the last year?
Kelly Tolhurst
There have been 14 prosecutions since the introduction of the minimum wage, and other companies are undergoing investigations. However, as I have said, our priority in regard to enforcement is to ensure that people who have been underpaid receive the arrears to which they are entitled, and the payment of those arrears is matched with a penalty of up to 200%. We can undertake prosecutions, among other actions, but that is our priority.
Nick Smith
The Minister replied to my question by saying that there had been 14 prosecutions since the introduction of the national minimum wage, but that was not the question I asked. I asked how many prosecutions there had been in the last year. Could the Minister clarify that, please?
Kelly Tolhurst
I will happily try to find some information for the hon. Gentleman. He referred to “the last year”; perhaps he will clarify which part of the year he was referring to, 2019 or 2018. I do not have the year-on-year breakdown, but I have told the hon. Gentleman how many companies have been prosecuted since the national minimum wage was introduced.
We will continue to help businesses to comply by issuing guidance, and through the advisory work of ACAS. Alongside these regulations, new legislation will come into force from April dealing with payslips. Under this, all employers must provide payslips to all workers. If a worker’s pay varies according to time worked, their payslip must show the number of hours worked. This will increase pay transparency and help workers understand and check their pay.
These proposed increases in the national living wage will keep it on target to reach 60% of median earnings by 2020. This Government have an aspiration to end low pay. In his 2018 Budget speech, my right hon. Friend the Chancellor of the Exchequer said that
“we will give the Low Pay Commission a new remit, beyond 2020.”—[Official Report, 29 October 2018; Vol. 648, c. 667.]
This will be set out in the Budget 2019. In developing this remit we will engage both with employers and workers to balance the needs of both.
These regulations make sure that the lowest-paid workers are fairly rewarded for their valuable contribution to the economy. The regulations contribute to our commitment to promote a labour market that increases people’s earning power and boosts businesses, and they will give over 2.1 million people a pay rise this year. I therefore commend these regulations to the House.
Kelly Tolhurst
I thank all Members who contributed to the debate. I was pleased to hear that the Opposition will not oppose this statutory instrument, although I was disappointed by some of the comments about the Government’s commitment to workers and, in particular, to young people—it seems to be a recurring theme, because some of these criticisms were levelled against me in a debate last week. This Government and the Prime Minister have been clear about our commitment, so I will take no lectures from the Opposition on supporting low-paid workers, and no suggestion that Government Members do not understand the real world. As I have said numerous times, I am proud to be a member of a Conservative Government who are committed to the biggest reformation of rights in the workplace in 20 years. I am proud to be a Minister who is part of that.
Andrew Griffiths
I thank the Minister for what she has said so far. We hear a lot about workers’ rights being eroded by us leaving the European Union, but are we not demonstrating, through the Taylor report, that we are actually going further and faster than Europe in guaranteeing new rights to the lowest paid and to vulnerable workers?
Kelly Tolhurst
I thank my hon. Friend for that point. He is indeed correct, because we have been clear that we will not be rolling back workers’ rights when we leave the European Union. That has been further guaranteed by the introduction of the “Good Work Plan”—I will say more about that later—and we have already laid three SIs dealing with workers’ rights. We are going further on workers’ rights and increasing the wages for the lowest paid. We are sticking to our commitment. I am proud to be part of a Government who have put workers’ rights and the lowest paid in our society at the top of our agenda, so I will take no lectures from the Opposition in that regard.
We will increase the personal allowance of the lowest-paid workers to £12,500 in April. That will take 1.7 million people out of tax. Since 2015, the national minimum wage has risen faster than average wages and inflation. For the lowest paid, there has been 8% growth, above inflation, between April 2015 and April 2018. I will therefore not listen to accusations that we have not continued to work towards our commitment to reach 60% of median pay by 2020.
Bob Stewart (Beckenham) (Con)
May I confirm that the lowest paid will get the same deal that they get now, or better, if Brexit happens, which it will?
Kelly Tolhurst
Absolutely. My hon. Friend is right. The rates that come into force in April will be the same whether we leave the European Union or not—[Interruption]—as we leave the European Union.
Those increases did not happen year on year under the last Labour Government. This Government have made and delivered that commitment. This year, we have come forward with another plan, which accepts the recommendations of the independent Low Pay Commission. It takes its job extremely seriously, produces great reports, consults businesses and workers, and ensures that its independent recommendations to Government are objective and fair.
Daniel Zeichner
Will the Minister remind the House who introduced the national minimum wage and the Low Pay Commission?
Kelly Tolhurst
I point out that we introduced the national living wage in 2016. As I said, we have made increases year on year and stuck to our commitment.
I want to answer a few more questions, particularly the question that the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) asked about pay for the Department’s security staff. We value all the staff, who deserve fair and competitive wages. The Department has agreed with its contractors to align the pay of cleaning, catering, mailroom and security staff with the median rates for those occupations. That will come into effect on 1 March.
Chi Onwurah
I thank the Minister for that clarification. Is she saying that all staff at the Department for Business, Energy and Industrial Strategy will be paid the London living wage from this financial year?
Kelly Tolhurst
I welcome the hon. Lady’s comment about the London living wage, and we value the work of the Living Wage Foundation. However, it is the Government’s responsibility to set the minimum rate and, as I said, it has been agreed that the wage rates will be aligned with the median rates for those occupations, and that will come into effect on 1 March.
As a result of the increases in pay that will come into effect in April, another 350,000 young workers will benefit. Nine out of 10 workers between the ages of 18 and 24 are paid more than the minimum rates. There has been much criticism of age-related rates, but they are not new. Age-related rates have been in place since the national minimum wage was introduced in 1999. In fact, this Government have asked the Low Pay Commission to review the youth rates this year to see whether they are fit for purpose, and it will report later in the year.
Chris Stephens
Surely the Minister must concede that the Government have made this situation worse by introducing the pretendy living wage rate for those who are 25 and over. Has that not actually increased age discrimination, and not reduced it?
Kelly Tolhurst
As I have already highlighted, age rates are not new to these regulations. We have asked the Low Pay Commission to review the age-related rates to see whether they are fit for purpose, and to report back later in the year.
As hon. Members have raised in the House, it is absolutely true that younger workers are the most vulnerable with regard to employment. I must point out that, from September and November 2018, 11.7% of 16 to 24-year-olds were unemployed, compared with 2.9% of over-25s. It is absolutely right, when these rates are set, that we have in mind that we want young people to be in work and getting experience in order to have the future earning capacity to reach their full potential and be able to fly. They can do that through work experience, and by getting into a place of work and gaining such experience, while in some cases they will get the entrepreneurialism they need to go on to do great things.
Kelly Tolhurst
I want to make one more point about the age-related model. This model has been in place since 1999, and it is used across OECD countries, so it is not specific to the UK.
I will move on quickly to enforcement. I have said at the Dispatch Box a number of times since I have had this role that we take enforcement extremely seriously. That is why we have doubled spending on enforcement to £26 million. In 2017-18, there were 810 penalties, totalling £14 million. This is five times more in penalties than were imposed in the last five years of the previous Labour Government. To level the criticism that we are not taking enforcement seriously is just factually incorrect.
Kelly Tolhurst
I am keen to make some progress because I know there is other business to be getting on with.
On enforcement, we are committed to making sure that anyone who underpays on the minimum wage will be investigated and penalised or prosecuted. As I have said, HMRC will always investigate every worker complaint and make sure there is compliance with the national minimum wage. This Government are clear, as I have been all the time I have had this role, that the enforcement of the national minimum wage is important and delivering this is central.
To level the criticism that we are deliberately discriminating against young people in the workplace is pure fantasy; we are not discriminating. In actual fact, this Government are taking forward plans and making progress with work to make sure that workers in this country are not discriminated against, and we are going as far as we can.
On the specific questions about the SIs that have been laid, three have been laid. In fact, the first will be debated on 6 March, and I am looking forward to bringing it forward in the House.
The national minimum wage and the national living wage make a real difference to the lives of millions of workers in this country. I am glad that there is agreement across this House that the lowest-paid workers deserve a pay rise, which these regulations will provide. These regulations mean that, on 1 April, over 1.7 million workers on the national living wage will receive a pay rise. A full-time worker will receive an additional £690 a year. Younger workers will also get more money, through increases to the youth rates. I hope we can do more in the future.
Our industrial strategy aims to build an economy that works for everyone, wherever they live and wherever they work. Creating good jobs and increasing people’s earning power is one of the pillars of our strategy. Having a UK-wide minimum wage, recommended by the independent and expert Low Pay Commission, makes sure that the lowest paid in society are protected in terms of pay. It also means that businesses compete on a level playing field.
The increases for this year will mean that wages continue to rise above inflation. We remain on track for the national living wage to reach 60% of median earnings by 2020. We also have the highest employment rate since comparable records began. We can be proud of our labour market, and we can be proud of these regulations. I commend them to the House.
Question put and agreed to.
Resolved,
That the draft National Minimum Wage (Amendment) Regulations 2019, which were laid before this House on 28 January, be approved.
Competition and Markets Authority: Contingencies Fund Advance
Kelly Tolhurst Excerpts(5 years, 2 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Competition and Markets Authority (CMA) has sought a repayable cash advance from the Contingencies Fund of £17,049,000 to ensure the CMA’s relocation to new offices remains on schedule.
The CMA will only receive its voted funding for this project at the supplementary estimate, and consequently may only draw the related cash from the Consolidated Fund after the Supply and Appropriation Act has received Royal Assent in March 2019. This requirement has arisen because the 2018-19 expenditure for the construction works at the CMA’s new offices is predominantly falling in the last quarter of this financial year.
The cash advance will ensure the project stays on track and on budget and ensure that the CMA also meets its operational needs.
Parliamentary approval for additional resources of £2,793,000 and capital of £14,256,000 will be sought in a supplementary estimate for the CMA. Pending that approval, urgent expenditure estimated at £17,049,000 will be met by repayable cash advances from the Contingencies Fund.
[HCWS1328]
Draft Employment Rights (Amendment) (EU Exit) Regulations 2019
Draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) Regulations 2019
Draft Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018
Draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) (No. 2) Regulations 2018
Kelly Tolhurst Excerpts(5 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Employment Rights (Amendment) (EU Exit) Regulations 2019.
The Chair
With this it will be convenient to consider the draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) Regulations 2019, the draft Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018 and the draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) (No. 2) Regulations 2018.
Kelly Tolhurst
It is a pleasure to serve under your chairmanship, Mr Evans. The draft statutory instruments were laid before the House on 14 January 2019 and on 31 October 2018 respectively. They are part of a package of measures that the Government have promised to introduce to make sure that we are prepared in the event that we leave the EU without a deal. It is important to remember throughout the debate that the changes will not be needed if a deal is secured.
The statutory instruments under consideration amend employment law to reflect the UK’s withdrawal from the EU. New directives agreed in the EU are transposed into UK law. The act of the UK leaving the EU therefore does not remove those rights, which are already in UK law. By passing the European Union (Withdrawal) Act 2018, Parliament gave the Government the ability to ensure that necessary changes can be made to keep the statute book in proper working order.
I can confirm that the SIs before the Committee make only minor changes to language to ensure that existing regulations will reflect the fact that the UK is no longer a member of the EU. Those changes are necessary to ensure that the statute book is accurate and clear. It is important that businesses, employees and citizens have clarity regarding their rights and responsibilities.
During the passage of the 2018 Act, some hon. Members raised concerns about the potential for the Government to use some of the powers granted by that Act to make more fundamental changes. I assure the Committee that the Government are not making any changes to employment rights or employment policy through these regulations. The Prime Minister, the Business Secretary and many other colleagues have been clear that there will be no roll-back on workers’ rights when we leave the EU.
Chris Stephens (Glasgow South West) (SNP)
Does the Minister not concede that, as a result of the regulations, in the event of no deal, employees and workers in the United Kingdom will not be able to set up a European works council?
Kelly Tolhurst
If the hon. Gentleman allows me to make some progress, I will come to that point. We should aim not to sensationalise the issue, but to provide clear answers to the public. It is our responsibility to be the guide during this unprecedented time.
The Committee will be aware of the programme of reforms that the Government are already implementing to strengthen workers’ rights and we are delivering on our commitments through the “Good Work Plan”. We do not need to be in the EU to have strong workers’ rights or to enhance them in the future. Indeed, we will continue to deliver the good work reforms after the UK has left the EU.
Far from being content with EU minimum standards, the UK has gone beyond them in a number of areas. Our maternity entitlements are nearly three times greater than the EU standard. In the UK, we offer 52 weeks of maternity leave, of which 39 weeks are with pay; the EU requires only 14 weeks of paid leave. We give fathers and partners the statutory right to paternity leave and pay—an entitlement that the EU is only now starting to consider. We allow eligible parents to share paid leave and thus caring responsibilities in the first year following birth or adoption; the EU does not provide for that right. We have given all employees with 26 weeks’ qualifying service a statutory right to request flexible working; EU law allows workers to make a request only if they are returning from parental leave. One of the EU’s own agencies, Eurofound, ranks the UK as the second best country in the EU for workplace well- being, behind only Sweden, and the best for workplace performance.
In our future outside the EU, the political declaration on our future relationship states that we will build on the withdrawal agreement commitment not to reduce our shared standards or regress from existing EU legislation. As my right hon. Friend the Prime Minister said in the House yesterday, we are prepared to commit to asking Parliament whether it wishes to follow suit whenever the EU changes its employment standards. I hope that that provides assurance to the Committee that the Government are absolutely committed to protecting and enhancing workers’ rights.
The statutory instruments are an important and necessary part of the work to protect rights in the event that we leave the EU without a deal. Of course I hope that the regulations will not need to come into effect, and that an agreement can be reached with the EU so they can be revoked.
Ms Angela Eagle (Wallasey) (Lab)
Will the Minister explain why the Government initially thought that the regulations should be subject to the negative procedure and not debated at all? We are obviously pleased that the Government changed their mind when the European Statutory Instruments Committee asked for the change.
Kelly Tolhurst
The statutory instruments that were laid subject to the negative procedure, which was changed by that Committee, relate particularly to Northern Ireland. They were upgraded to be debated, so we have the opportunity to debate all four sets of regulations in Committee today.
Although I hope that the regulations will not need to come into effect, because I hope that we can reach an agreement, in the event of no deal it will be vital that they are enacted. Failure to pass these largely technical regulations would result in uncertainty about workers’ rights and employers’ obligations, which could lead to disruption for business and citizens and an increased risk of litigation, which is in no one’s interest.
Against that background, I will explain one set of provisions about which hon. Members may have concerns. The Employment Rights (Amendment) (EU Exit) Regulations 2019 make changes to the rules on European works councils. Businesses and trade unions in the UK value the opportunity for employee engagement and consultation that the councils provide, and the Government recognise and encourage those benefits. However, withdrawing from the EU without a deal will mean that the UK is no longer covered by EU rules on European works councils.
In that scenario, it would be for the EU to give UK workers the right to be represented on the councils. It is an unavoidable and unfortunate truth that there is no way for the UK unilaterally to ensure that workers in this country retain that right without a deal. There is also no way to replicate the European works council system only in the UK, as their purpose is to enable cross-border engagement. That requires the same rules in all countries, which requires a withdrawal agreement.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The assertion that the UK cannot make those provisions is incorrect. In relation to financial services, for instance, the UK is unilaterally making provisions on payment services and hoping that EU member states will do the same. Is the Minister aware that what she is saying is incoherent and inconsistent with what is happening in other policy areas?
Is the Minister not concerned that we are, yet again, in Committee considering statutory instruments without impact assessments, which does not allow adequate scrutiny? I have raised the issue several times. Can she give an assurance that the next time she or her colleagues come before such a Committee, they will provide an impact assessment?
Kelly Tolhurst
All the regulations have had de minimis statements applied. Obviously, they have been cleared through the better regulation framework, because if the impact exceeded the de minimis threshold, full impact assessments would have been made. All regulations or SIs that we bring to the House will be looked at by the Department in a deep way to assess the impact.
The hon. Lady’s first point was on other regulations that may be passing through the House at the moment and that are not directly related to the draft instruments. It is clear that we are retaining EU law. The changes we are considering are mostly technical, apart from the changes to the particular area I am referring to at the moment. Rightly, we want to see co-operation and agreement in the future where it is necessary and achievable. That is why the Government are determined to deliver a deal, so that we can have those reciprocal agreements with other member states.
Chris Stephens
The Minister is being most generous in giving way. She will be aware that the European Parliament and European Commission are currently negotiating regulations for workers in the gig economy and for working parents that are far better and stronger than anything found in the UK Government’s “Good Work Plan”. Is the Minister saying to the Committee that if the European Parliament and European Commission agree those regulations, the UK Government will match them?
Kelly Tolhurst
I remind the hon. Gentleman that we are debating an SI that will be enacted if we are in a no-deal situation on 29 March. As I have already outlined, whether we decide in a future no-deal situation to align our laws with the EU’s is a different matter, but I repeat: we have the “Good Work Plan” and we are going further. We are still a member of the European Union, so we still take part in those conversations happening in Europe.
Justin Madders (Ellesmere Port and Neston) (Lab)
I would like some clarity regarding the Minister’s answer to the hon. Member for Glasgow South West. Is it the Government’s policy to match future EU advancements in worker protection laws?
Kelly Tolhurst
I assure the hon. Gentleman that we have been very clear that we will not roll back workers’ rights. In fact, we have made an express commitment to go further. As I outlined, we already go further than Europe in many ways. We have been feeding into the development of EU thinking on some of these policies, as some of the work we have been doing in the UK is particularly good. We are determined to continue on our path. Our ambition is that the UK continues to be a great place to work, with those protections continuing to be afforded to the people employed in this country.
Our domestic regime for employee engagement and consultation will remain in place, and we will encourage businesses to continue to allow UK workers to be represented on a voluntary basis in European works councils. We are retaining as many of the existing rules as we can to enable that. All existing protections for workers and for their representatives on European works councils—even those there voluntarily—will be maintained. Approving the draft regulations is the only way to ensure that workers involved in European works councils are protected if there is no deal. They deliver on our commitments.
Another area I am aware that Members may be concerned about is the changes being made to the TUPE regulations. In a dynamic economy such as the UK’s, there will inevitably be takeovers and mergers and contracts changing hands, which is good for the prosperity of our country; the best companies outdo the worst. We recognise that that must be combined with strong protection for the workers in those companies, for whom a change of employer may be a stressful and difficult experience. TUPE regulations are central to protecting workers from suffering as a result of being transferred.
The draft regulations are an important part of EU-derived employment law, which we have committed to retain. In the UK, we have gone further than required under EU laws and we have extended these important protections to other groups of workers. Not only will we retain the elements from the EU, but we commit to retaining the gold-plating. Only by making the changes contained in the draft Employment Rights (Amendment) (EU Exit) (No. 2) Regulations can we make sure that workers remain entitled to these protections. The changes are necessary to ensure that the Government retain our current powers to extend the protection provided by TUPE to other groups of workers. These powers have been used to protect workers where there is a change of service provider that is not also a business transfer—a situation that would not be covered by EU rules. That crucial gap can include situations where a business outsources or contracts out a service. The changes are technical, but it is important that I set Members’ minds at ease.
The current powers are defined with reference to the EU directive, which applies to the UK as a member state. When the UK is no longer a member state, if there is no deal the reference will no longer make sense, so the reference must be changed so that it does not rely on EU law. Without that change, the Government could not use the power or use this tool for protecting workers in future.
I have highlighted these areas as the other changes in the SIs are purely technical, made to reflect the fact that the UK will no longer be a member of the EU. I assure the Committee that the amendments made through these SIs deliver on our workers’ rights commitments, thus providing clarity to employers, workers and businesses, and confidence that the Government are prepared for a no-deal scenario.
Kelly Tolhurst
In the event of a deal situation, the SIs that have been laid and passed can be revoked, referred, or brought to a following end-date, so there is a range of options on the table in a deal situation. We have been passing the no-deal SIs, particularly those before the Committee today, to make sure that we are ready if we leave the European Union on 29 March without a deal. It is imperative that we have regulations in place to ensure that we have a functioning statute book and are able to operate in a correct way.
Kelly Tolhurst
I do not know the particular SIs that the hon. Lady is referring to, so I cannot comment on them. All I am commenting on are the ones that I have in front of me today.
Ms Eagle
Some provisions in the regulations that are scheduled to come into force came into force at the beginning of last December. Will the Minister explain why it was felt necessary to bring them into force well ahead of our leaving the European Union and then apply them retrospectively, which is not a good principle of law?
Kelly Tolhurst
That may be, but the measures that she is referring to have not been highlighted. I am not aware of the ones that the hon. Lady is referring to. I am referring to the SI that is in front of me today.
Kelly Tolhurst
I will happily write to the Committee if the hon. Lady outlines to me the SIs that became active on 1 December 2018, so that I can give her and the rest of the Committee further clarification on that.
It would be unacceptable not to provide clarity to businesses and workers, and I encourage the Committee to approve the instruments. I commend them to the Committee.
Kelly Tolhurst
I thank all Members who have contributed to the debate. As the Minister responsible, I am well aware how passionate Members are about the subject, and not just those on the Opposition Benches. Despite what has been said, there is strong support for these regulations on the Government Benches.
I am extremely sad that the Opposition will be voting against this SI. I remind the Committee that it deals with a no-deal scenario and would come into force only if we leave the European Union on 29 March without a deal. It ensures that our statute book is in working order. By passing it today, we are effectively guaranteeing workers’ rights. Voting against it puts workers’ rights in jeopardy in the event of a no-deal scenario.
I will address some of the points that have been made. We are lucky that a number of experienced and well-respected Members have taken part in the debate. As a Minister and a relatively new Member, I welcome the experience and comments of Members who have been around far longer than I have. I was elected as a Conservative Member in 2015, but some of the comments I heard this afternoon, about my party’s position on workers and its aspirations for their future in our economy, were contrary to what my party stands for.
The Prime Minister invited Matthew Taylor to undertake his review—it was our Prime Minister who brought that forward—and we will be implementing the majority of its recommendations, as published in our “Good Work Plan”. That plan will be the biggest reform of workers’ rights in a generation—that is the reality—and a Conservative Government will bring it forward. I respect the position of hon. Members who say that they do not feel that they have had clear assurances from the Prime Minister that in a deal situation we will not row back on workers’ rights, but the fact of the matter is that the Prime Minister has been clear. Not only have we announced the “Good Work Plan”, but we have already laid three SIs that further protect workers’ rights.
Chris Stephens
If the Minister wants to enhance and strengthen workers’ rights, the Government are welcome to support my Workers (Definition and Rights) Bill, which I can assure her is a beautifully written piece of legislation that deals with some of the issues. Does she not appreciate the criticism that the EU is currently negotiating regulations that give better and stronger workers’ rights than those set out in the “Good Work Plan”? If the EU pushes those through, can she give us an assurance that the UK Government will adopt the regulations?
Kelly Tolhurst
Let me be clear: the reality is that we are committed to going further on workers’ rights, as has been shown through our publication of the “Good Work Plan” and the laying of SIs. We are going further than any Conservative Government have, and I am very proud of that. I am extremely proud to be part of a Government who have put workers’ rights at the top of their agenda, particularly in my Department.
Justin Madders
Was the Minister proud when the High Court declared employment tribunal fees illegal?
Kelly Tolhurst
I am proud that this Government look at and deal with the issues that arise, and then look for ways of resolving them, which is exactly what we are doing with our “Good Work Plan” and the SIs that have already been laid. I understand the concerns of Opposition Members, but I am pleased to be extremely clear in saying that we are committed to maintaining workers’ rights and to going as far as we can. We talked about European Union committees and the work currently going on. We are still involved in those negotiations, are feeding into those negotiations and are helping the EU to formulate recommendations. The legislation that we are bringing forward will ensure that they are protected and will continue to be protected.
Kelly Tolhurst
I would like to finish my points and then get on to answering some of the questions I have been asked.
I was pleased that my hon. Friend the Member for Basildon and Billericay made his contribution. He was absolutely right, as was my hon. Friend the Member for Beckenham. I thank them for making their points. The accusations that the Opposition have levelled at our party and our Government this afternoon characterise a party that I did not join and I am not part of; they illustrate something that I do not think is the reality. I am the Minister responsible, and it is not what I think, so there we go. [Interruption.]
The Chair
Order. I think that the Minister is being heckled by her own side. Can we please have a bit of calm, so that she can focus on her response?
Kelly Tolhurst
Thank you, Mr Evan; I am so very lucky to have you in the Chair this afternoon.
I thank hon. Members for their contributions. I reiterate that these regulations are for a no-deal situation. The Government are still determined to get a withdrawal deal. I hope that the Opposition will be willing and open-minded, and will want to work with the Prime Minister to ensure that happens, to get to a position where they will support a deal so that the regulations do not have to come into force in a no-deal situation.
I will try to answer the questions I have been asked, but I am more than happy to write to hon. Members if I do not respond to all of them. Hon. Members suggested that we are not retaining workers’ rights in these regulations. The regulations are mainly technical; they introduce technical changes to ensure that current rights are retained and that we operate from a clear statute book. As hon. Members know, there was no provision in the European Union (Withdrawal) Act 2018 for us to make changes in policy. There was an element of the Act that enabled us to bring forward legislation to retain EU law and make modifications so that we would have a clear statute book.
The hon. Members for Wallasey and for Ellesmere Port and Neston raised the question of enacting such legislation. It is true that those elements were intended to correct redundant EU references, which is why they would come into force earlier. They are not a consequence of the UK leaving the EU; they would change out-of-date references in the legislation. I hope that my explanation has answered the hon. Lady’s question on that—the instrument does not actually have any relation to the UK leaving the EU.
Justin Madders
I am grateful to the Minister for explaining why there are different dates, but can she explain why some of them are retrospective?
Kelly Tolhurst
As I have outlined, it is because of out-of-date references to EU regulations in the legislation, which will be changed. On European works councils, it is true that the European Union could allow us to have a reciprocal agreement even in a no-deal situation. That could happen, but obviously we cannot guarantee that the EU will allow it. As it stands, the current laws and protections afforded to representatives on those councils and to employees will be retained. It will affect new works councils, but that might be resolved in a deal situation. In a no-deal situation, it does not stop the fact that there might be cross-border co-operation and reciprocal agreement. I can give hon. Members some comfort that, as I have outlined, anything that would allow us to continue in the same way and ensure that workers’ rights are protected would be a good thing.
Bob Stewart
Can I get this absolutely right? We are talking about taking employment rights from the European Union and putting them into UK law. Effectively, we are changing as little as possible, so that things do not change for workers. That is what the Conservative party would like to happen.
Kelly Tolhurst
I assure my hon. Friend that he is correct; that is exactly what we are doing. Failure to pass this no-deal SI would put workers’ rights in jeopardy. This SI would allow us to protect those rights.
Chris Stephens
I thank the Minister for that explanation, but paragraph 7.6 of the explanatory memorandum states something different, namely that
“the SI amends the TICE Regulations 1999 so that no new requests to set up a European Works Council or information and consultation procedure can be made.”
Therefore, the statutory instrument actually weakens workers’ rights. Deal or no deal, is it the Government’s position that UK workers will have access to a European works council where it applies?
Kelly Tolhurst
As I have already said, because we will no longer be a member of the European Union, it will be up to the European Union to decide whether it gives us reciprocal abilities to continue down that path. There are existing rules governing consultation for businesses and employers. There is already a UK system. I like to think that what I said about opportunities for us to have reciprocal rights was clear, but the SIs relate to a no-deal situation, and I was very clear in my opening speech that in such a situation some things would be a reality and would not necessarily be in our control.
It was suggested that we should not use the wording “TUPE-like”. We decided to use that wording to maintain the current scope of the powers.
The SIs make no change to the working time directive. It will not be scrapped or lost. That is not what the SIs are intended to do. As I tried to make clear, in a no-deal situation, these SIs would not all of a sudden roll back or strip workers’ rights. That is not what they are about; they are about protecting the situation as it stands. That is why I feel very strongly about them. There will not be a vacuum in workers’ rights in a no-deal situation, because the powers effected by the SIs will protect the status quo. In a no-deal situation, those rights will not suddenly disappear. There will not be a race to the bottom. The Government have no intention of that.
We need a statute book that is ready to protect workers and give businesses, workers and employers all the clarity they need if we exit the European Union without a deal on 29 March. I hope the Committee recognises that these important pieces of legislation provide such clarity, and that failing to do so could jeopardise the rights of workers. I do not believe the UK workforce would be happy if it was unclear about what would happen in a no-deal situation.
I absolutely accept the comments made today about the Government’s commitment to securing workers’ rights, and wanting to go further. I am sorry that the Prime Minister’s word has not been taken completely at face value, because I fundamentally believe that what she has said is the case.
As I have already outlined, we have submitted the three SIs dealing with, among other things, the repeal of the Swedish derogation, and fairer holiday pay. Obviously, there is legislation to come. In a deal situation, or even a no-deal situation, we are intent on going further and making sure that workers in this country are protected. That also means working with and reacting to businesses and the marketplace. When things change, a responsible Government will look at the challenges and find ways to resolve some of the issues that may affect the workforce. I firmly believe that the Government are trying with absolute focus to do that.
The Government are complying with our duty to ensure that the UK is prepared for every outcome, whatever happens in the EU negotiations, and not to roll back workers’ rights. I therefore hope the Committee will approve the regulations.
The Chair
May I explain the process to the Committee? I shall put the first question and if the Committee wants a Division, that will happen. Each statutory instrument will then be taken individually. It will be up to the Committee whether to divide, but they will be taken separately. For the three statutory instruments that have not yet been moved, the Clerk will read the title before I request the Minister to move them formally.
Question put.
Oral Answers to Questions
Kelly Tolhurst Excerpts(5 years, 2 months ago)
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Martyn Day (Linlithgow and East Falkirk) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Through the good work plan, the Government are strengthening employment rights for all workers. We are introducing measures that will support innovative businesses, while ensuring that workers of all ages have access to fair and decent work. In April, we will introduce inflation-beating increases to the national minimum wage rates, benefiting 350,000 young workers directly.
Martyn Day
Despite the PM promising on her first day in the job to tackle burning injustices, this Government have consistently refused to introduce a real living wage for all, with the under-25s particularly hard hit. If Government will not act, will they devolve these powers to Holyrood?
Kelly Tolhurst
I point out that some of the highest unemployment rates are among that age group so our priority is to make sure that young people are able to gain secure work and experience. In actual fact, nine out of 10 workers between the ages of 18 and 24 are paid above the national minimum wage rate, and we are continuing to work towards increasing that year on year.
Kerry McCarthy (Bristol East) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The retail sector is the UK’s largest private sector employer and recognises that it has a responsibility for this issue, and it is pioneering responsible sourcing practices. The Government welcome campaigns such as the British Retail Consortium’s “Better Retail Better World” and Oxfam’s “Behind the Barcodes”. The Government remain determined to eliminate exploitation, and the landmark Modern Slavery Act 2015 increases specialist support for victims and places requirements on businesses to be transparent about their supply chains.
Kerry McCarthy
I secured a debate last year on this issue, highlighting the shocking extent of modern slavery in our supermarket supply chain. Will the Minister tell me what action has been taken since then?
Kelly Tolhurst
I thank the hon. Lady for raising this question and for giving us an opportunity to talk about this matter. The retail sector regards human rights and supporting sustainable markets as fundamental principles within its psyche. The British Retail Consortium has played a pivotal role, and it was a founder member of the “Stronger Together” scheme. Under the Modern Slavery Act, there is a duty on employers to submit modern slavery statements, and they should be doing so by the end of March.
Michael Fabricant (Lichfield) (Con)
May I invite my hon. Friend to meet Sir Charlie Mayfield, who is the chairman of the John Lewis Partnership, which of course includes Waitrose? She will know that it has an audit trail to ensure that all its goods are produced ethically. When can she meet him?
Kelly Tolhurst
I thank my hon. Friend for his question and say that we meet Sir Charlie Mayfield regularly. This gives us a great opportunity to highlight the fact that there are thousands of businesses really stepping up to the mark on this issue. ASOS and Co-op are leading the way on transparency, and are identifying risks and taking action. M&S, Unilever and Tesco are also signing up to the employers’ pay principles.
Jo Swinson (East Dunbartonshire) (LD)
We all want to be able to buy food in the supermarkets without trampling on the human rights of the people who produced it. Yet less than half of all agricultural companies are complying with their requirements under the Modern Slavery Act 2015, so what changes will the Government make to ensure that companies properly report what they are doing to tackle problems with human rights in their supply chains?
Kelly Tolhurst
I thank the hon. Lady for her question. The Home Office has written to more than 17,000 businesses reminding them of their obligations to submit their modern slavery statements. We are committed to the Guiding Principles for Business and Human Rights, a UN initiative, and we are proud to be the first country to have an action plan in place, but, as with all these things, we will continue to keep them under monitoring.
John Howell (Henley) (Con)
In my role as the Prime Minister’s trade envoy to Nigeria, I am aware that Guinness Nigeria is being sold by Tesco. Is the Minister aware that Diageo and other companies in Nigeria have pledged to eradicate modern slavery from their supply chains?
Kelly Tolhurst
I thank my hon. Friend for his suggestion. He is quite right. That is just another example of where the sector, working with Government, is taking action to stamp out these practices where they identify them and telling us how they are taking action to eradicate them.
Liz Twist (Blaydon) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
We are committed to protecting consumers and providing clear information so that they understand their rights. That is why we have launched a public information campaign to reach out to consumers, citizens and businesses. As part of that, we have provided tailored information to consumers about their rights after EU exit. We are working closely with partners such as Citizens Advice on this issue.
Kelly Tolhurst
The hon. Lady raises an important point. Every piece of no-deal legislation that we have brought through the House has had an impact assessment, and we have already submitted five pieces of legislation. We have been very clear that consumer rights will be protected when we leave the European Union, and I am committed to doing that.
Stephen Kerr (Stirling) (Con)
In the Minister’s estimation, what has the Office for Product Safety and Standards achieved in its first year of existence?
Kelly Tolhurst
My hon. Friend is right to highlight that the new Office for Product Safety and Standards has got its strategy plan together. We are working through that, working with data-led intelligence to ensure that we tackle product safety inequalities when they appear.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
As the Government continue to threaten the public with a catastrophic no-deal Brexit, which they admit themselves would be detrimental to consumers, a report by Which? shows that a staggering 82% of people said that the Government had communicated either too little information or no information at all about the impact of such a Brexit. Will the Minister tell the House whether that is a result of sheer incompetence, or is it simply that the Government no longer care about consumers?
Kelly Tolhurst
This Government are committed to retaining the high levels of consumer protection that we have. We have been very clear about that; we set out our intentions in the consumers Green Paper. We have launched advertising campaigns and published guidance on the Government’s website regarding certain elements of consumer rights. We are working closely with the Consumer Protection Partnership, which brings together the enforcement and the information bodies that work with consumers. We are committed to delivering for consumers, and that will not change—in or out of the EU.
Giles Watling (Clacton) (Con)
Maria Caulfield (Lewes) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government recognise the importance of post offices to rural communities across the UK and are committed to the post office network’s future. The Post Office offers targeted financial support in recognition of the unique challenges of running a rural post office. Postmasters who run community branches that are the last shop in the village can receive packages combining fixed and variable remuneration to reflect their special circumstances.
Maria Caulfield
Post offices in my rural villages of Newick, East Dean and Alfriston are still temporarily closed because the Post Office local model, on a transaction-fee basis, is not enticing potential postmasters. Will the Minister look at returning to a community-based Post Office model to help these post offices to reopen?
Kelly Tolhurst
The Government have invested significantly in post offices in recent years. While there is no programme of post office closures, some unexpected closures, for some reasons beyond the control of the Post Office, as in my hon. Friend’s constituency, can occur. Work is currently under way in regard to her constituency, and there is hope that the services will be restored. I will also ask the Post Office to liaise directly with my hon. Friend on those issues.
Gareth Thomas (Harrow West) (Lab/Co-op)
Given that many rural post offices are barely profitable if they are profitable at all, is it not time for Ministers to consider giving business rates relief to all rural post offices—in particular, those housed by the Co-op movement, which continue to provide a service to local communities?
Kelly Tolhurst
The hon. Gentleman will know that the Government have doubled permanent small business relief and increased the threshold at which businesses pay business rates. We are investing in community branches. The Post Office has launched a smaller community branch development scheme, which is guaranteed to benefit another more than 700 post offices. We will keep working with the Post Office to make sure that we maintain our network of 11,500.
Several hon. Members rose—
Kevin Foster (Torbay) (Con)
Kelly Tolhurst
It is true: it has been too long since I have had the opportunity to visit my hon. Friend’s part of the country. I have met some of his colleagues to talk about post office opportunities in the south-west. As I have already reiterated, we are committed to delivering those rural post offices.
Sir Edward Davey (Kingston and Surbiton) (LD)
As the Minister will be aware, in the Postal Services Act 2011 the House has already given its in-principle agreement to mutualise the post office network. Will she indulge a former Post Office Minister and agree to meet me to discuss how the powers in sections 4 and 5 of the Act could be used to take forward this exciting policy innovation?
Kelly Tolhurst
The right hon. Gentleman is quite correct: the Post Office is at the forefront of looking at new ways in which it can modernise and increase the services delivered through our post offices. I will be more than happy to listen to any suggestions that he has—so, yes, of course, at some point I will meet him.
Peter Heaton-Jones (North Devon) (Con)
Kevin Hollinrake (Thirsk and Malton) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
In the past five years we have halved late payments and through our call for evidence we are looking at what more we can do to end the scourge of late payments affecting small businesses. In January, we announced £2 million of funding for our business basics programme, supporting 15 innovative projects. We continue to do that as we try to improve productivity.
Peter Heaton-Jones
Many of the excellent small businesses in North Devon are in the hospitality sector. Will the Minister assure me that the Government will continue to support those excellent small businesses, which give such good service to our visitors and tourists?
Kelly Tolhurst
My hon. Friend is absolutely right. North Devon is a wonderful part of the country. The tourism sector is particularly important for our economy, providing 1.6 million jobs across all regions and contributing £67.7 billion in gross value added. The Government are committed to supporting the sector and to continuing to work with small businesses through our industrial strategy and the sector deal that is under way.
Kevin Hollinrake
Sadly, HBOS managers were found guilty of defrauding their own small business customers, yet the Financial Reporting Council has steadfastly refused to seriously consider whistleblower evidence that KPMG and the bank colluded to cover up bank losses partly attributable to that fraud. What will my hon. Friend do to ensure that this matter is seriously investigated?
Kelly Tolhurst
My hon. Friend raises a really important question. There have been several criticisms of the FRC, which is why the Secretary of State commissioned Sir John Kingman to lead a review of the regulator. We are taking forward Sir John’s recommendations to create a stronger regulator with stronger powers. I assure my hon. Friend that I will continue to meet him on the particular issue he raises, so that we can find a resolution.
Stephanie Peacock (Barnsley East) (Lab)
Does the Minister agree that we should support workers who keep small businesses like cafes and pubs going? In his so-called “Good Work Plan”, the Business Secretary boasted that the Government will ensure that all tips go to workers in full. Where exactly is the Bill that was first promised three years ago?
Kelly Tolhurst
The hon. Lady is quite right. In October last year, we announced that we will bring forward legislation regarding tipping in the next Session. We are committed to doing that. It is this Government who have brought it forward.
Bill Esterson (Sefton Central) (Lab)
The Secretary of State for International Trade seems to be hell-bent on destroying our businesses, judging by his support for zero import tariffs. Can the Business Minister confirm that she understands the damage that unilaterally imposing zero import tariffs would do to businesses and jobs in this country? Will she confirm whether she or the Business Secretary will remain as members of the Government if that policy is adopted?
Kelly Tolhurst
I am glad the hon. Gentleman has raised this issue. We engage with the small business community, the wider business community and all business representation organisations on a weekly basis. It is quite right that we consult a plethora of businesses throughout the UK on any decision that will be taken on customs and tariffs. We will take into consideration their views when we set our policy, which will be announced in the near future.
Rosie Cooper (West Lancashire) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The Government are committed to supporting working families. We are conducting a short and focused review of the provisions for parents of premature, sick and multiple babies, focusing primarily on barriers to the labour market. I have met colleagues, Bliss and The Smallest Things.
Rosie Cooper
In response to the Minister’s reply, may I ask when that review will commence and when we can expect its conclusions?
Kelly Tolhurst
I thank the hon. Lady for allowing me to talk about this issue. A short internal review has been carried out by my officials and I expect to receive information on that shortly. I have already committed to keeping cross-party colleagues updated and I happily extend that commitment to her.
Mrs Pauline Latham (Mid Derbyshire) (Con)
Will Quince (Colchester) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I thank my hon. Friend for that question. Let me be clear: pregnancy and maternity discrimination is unacceptable and illegal. That is why, last month, the Government announced a consultation on pregnancy and maternity discrimination. The consultation seeks to extend redundancy protection for pregnant women and it seeks views on what the Department is doing to tackle pregnancy and maternity discrimination. I point out that this will go beyond what the EU currently allows.
Jo Platt (Leigh) (Lab/Co-op)
Derek Thomas (St Ives) (Con)
Kelly Tolhurst
I would love to come to Penzance if time permits—it is an area of the country I would love to visit—and I will continue to work with my hon. Friend to deliver post office services in his region. He is a passionate supporter of the Post Office and I welcome his support for me in my role as the Minister in that area.
Louise Haigh (Sheffield, Heeley) (Lab)
Neil Gray (Airdrie and Shotts) (SNP)
Kelly Tolhurst
I recognise the distress felt by constituents in cases of insolvency and where companies cease to trade. The redundancy payment service, operated by the Insolvency Service, has already made statutory redundancy payments to 157 eligible employees. Payments in respect of unpaid wages cannot be made while the company is still not in formal insolvency procedures, but we remain ready to act.
Luke Graham (Ochil and South Perthshire) (Con)
My office has been meeting representatives of the Coal Authority to talk about geothermal opportunities in Clackmannanshire in my constituency. Will my right hon. Friend meet me to discuss these opportunities?
Unpaid Work Trials
Kelly Tolhurst Excerpts(5 years, 3 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Glasgow South (Stewart Malcolm McDonald) on securing this important debate. I am proud to serve as the Minister responsible for the national living wage and workers’ rights, and I am pleased to be responding to the debate. I fully agree with the hon. Gentleman that it is wrong to exploit workers through unpaid work trials at the outset of their employment. Workers have the right to be paid the minimum wage when they are deemed to be working, and this must be upheld.
The Government are committed to building an economy that works for everyone through the national minimum wage and the national living wage. We will continue to ensure that the lowest paid in our society are rewarded fairly for their contribution to the economy. All businesses, irrespective of their size or sector, are responsible for paying the correct minimum wage to their staff. The vast majority of responsible employers ensure that they get it right.
The hon. Gentleman and other hon. Members raised examples of constituents and others who had been disadvantaged. Having heard the details, I can say that it is highly likely that those practices were illegal. An individual’s entitlement to the minimum wage depends on whether they are deemed to be a worker. If they are a worker, their employment must pay at least the relevant national minimum or national living wage. Our legislation is clear on that.
Many individuals participating in work trials would be considered to be workers. Therefore, they are already protected under existing legislation and are eligible to be paid the minimum wage from the start of their employment. An employer may wish to test an individual’s skills using a range of kitchen knives in a restaurant kitchen. That would probably have little or no value in terms of work for the employer, so would not require payment at the relevant minimum wage rate.
Clearly, the circumstances of each particular case would need to be considered to confirm entitlement to the minimum wage. However, the case of the 40-hour unpaid trial is, in the view of my Department, likely to be excessive and, therefore, against the law. Similarly, new recruits who are required by their employers to spend time at the outset of their employment undertaking training are entitled to the minimum wage for that time.
The hon. Member for Glasgow South raised the issue of exploitative unpaid work trials in his private Member’s bill of March last year. The Government recognised that concerns had been expressed in the House and in the media. Therefore, we issued new guidance on unpaid work trials on 3 December last year, to provide further clarity for employers and workers. The guidance aims to ensure that workers, especially young people in the hospitality and retail sectors, are not exploited through unfair and excessive unpaid work trials. The guidance sets out a number of relevant factors that should be taken into account, such as the duration of the trial and whether the employee is deriving economic value from the activity.
The Government have clarified their view that work trials that are reasonable, not excessive and clearly part of a legitimate recruitment exercise do not require payment at the relevant minimum wage rate. For example, an employer may wish to test an individual’s skill in a restaurant kitchen through a short trial before hiring that person. That would probably have little or no economic value for the employer, so would not entitle the applicant, but it may well lead to a job offer for the individual. However, unpaid trials are not permitted if they are part of a genuine recruitment process, if they are excessive in length or if they are simply for the financial benefit of the employer.
Stewart Malcolm McDonald
I have no quarrel or disagreement with anything that the Minister has just outlined. The guidelines that she has produced are, no doubt, admirable. What is her objection to underpinning them in statute?
Kelly Tolhurst
As I have already said, we have an enforcement system for the national minimum wage, which, with the guidance, is focusing on targeting the employers that we need to target. We need to recognise—I was going to come to this point later—that in 2017-18, Her Majesty’s Revenue and Customs investigated and took action against more than 1,000 employers, raising £15.6 million, and affecting over 200,000 workers. That shows that the enforcement work is taking place. HMRC will investigate every worker complaint.
Stewart Malcolm McDonald
I am glad that HMRC investigates, but how many of the cases that the Minister has mentioned, in which money has been clawed back by workers who have been deprived of money to which they were entitled, took place in a period that would be considered a work trial, as opposed to when the worker had formally signed a contract and started a new job?
Kelly Tolhurst
As part of HMRC’s involvement and enforcement of the national minimum wage, it investigates a number of breaches, including unpaid trials. I can tell the hon. Gentleman that HMRC is currently actively investigating companies in which there is a suggestion of unpaid work trials. Obviously, those investigations are currently ongoing, on the back of the legislation and the guidance that we offered.
Several hon. Members rose—
Kelly Tolhurst
I will make some progress. I encourage any worker who has concerns about unpaid work trials to call ACAS for free confidential advice, or to contact HMRC via its online complaints form. ACAS advisors will explain the general position in terms of entitlement to the national minimum wage and advise an individual based on the circumstances of their case. If the caller then feels that they may have been entitled to the minimum wage, the ACAS advisor will explain their options for taking the matter forward, which include contacting HMRC about formal national minimum wage enforcement.
Several hon. Members rose—
Kelly Tolhurst
I will carry on, because I want to give the hon. Member for Glasgow South time to wind up at the end.
HMRC investigators consider work trials on a case-by-case basis. They explore the precise detail of the arrangements, including what the worker is being asked to do and for how long. Where they come to the view that the arrangements constitute work under national minimum wage regulations, they will require the employer to repay any arrears and will impose a fine. HMRC has taken enforcement action where workers were expected to complete an unpaid work trial.
The Government are actively taking steps to tackle non-compliance with the national minimum wage, and to respond robustly to employers who fail to pay their workers correctly. We have doubled our investment in enforcement since 2015-16 and we now spend more than £26 million every year to ensure that employers meet their legal responsibilities. Employers who are found to be underpaying their staff must repay arrears and pay a fine of up to 200% of the underpayment, and may be eligible to be publicly named by the Department.
The hon. Member for Glasgow East (David Linden) mentioned that there had been only 14 prosecutions. As I have already outlined, the figure is actually more than 1,000 businesses in one year. The stat is not 14 but 1,000 in one year.
David Linden
On the issue of enforcement, does the Minister believe that the team in HMRC is adequately resourced?
Kelly Tolhurst
From the feedback I get from business, and from some of the work that I know is going on, I would say absolutely yes. We are enforcing and doubling investment, and we are making sure that HMRC investigates the case of every worker who complains. As the Minister with responsibility for the national minimum wage, that is exactly what I would like to carry on seeing.
I want to answer some of the questions that have been put to me during the debate. I also want to reassure hon. Members that workers’ rights are a big priority for the Government and particularly for me. In the advent of the Taylor review and the good work plan, we have seen a step change in a generation in terms of workers’ rights. We have announced that we will ban tipping, which will come further down the line, and we have laid legislation to firm up workers’ rights.
I thank the hon. Member for Glasgow South for securing the debate. It is essential that workers are paid the minimum wage. The Government have listened to concerns relating to work trials and issued new guidance, which, combined with robust enforcement, will help to ensure that workers are not exploited through unpaid work trials.
Draft Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019
Kelly Tolhurst Excerpts(5 years, 3 months ago)
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Fiona Bruce (Congleton) (Con)
May I draw attention to an interest recorded in the Register of Members’ Financial Interests? My law firm, of which I remain a partner, is a limited liability partnership.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the Committee has considered the draft Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Ms Buck. The draft regulations, which were laid before the House on 10 January, will address deficiencies in retained EU law in relation to the Companies Act 2006 and supporting secondary legislation. They will ensure that UK law in the area continues to function after exit day. Hon. Members will notice that their provisions cover many different areas; I shall briefly summarise them.
The changes to the 2006 Act and the supporting secondary legislation will ensure that the system of regulation underpinning how companies report to and register with the UK companies registrar, Companies House, makes sense after we have left the EU and the European economic area. They will also remove the UK from ongoing participation in two EU-based processes in the field of company law: the cross-border mergers regime and the business registers interconnection system.
The draft regulations also cover other matters. They include a small number of amendments to address how businesses with membership, access and listing on EEA-regulated markets are dealt with; they will remove preferential treatment in such instances and in relation to EEA entities where there is a potential breach of the World Trade Organisation’s most favoured nation rule. Where there is no such breach, and where it is appropriate to do so, we have maintained the status quo to offer certainty and consistency for business, including EEA businesses.
The main practical changes for business that stem from the draft regulations will be filing changes with an impact on some UK and EEA businesses after exit day, including a requirement for UK companies with an EEA-based corporate secretary or director to file two additional details with Companies House. Additionally, after exit day, EEA companies on the overseas companies register will be treated in exactly the same way as non-EEA companies, meaning that EEA companies that register with Companies House will be required to provide some additional details, while EEA companies that are already registered will have three months to provide the additional information required by the draft regulations. Linked to these filing changes is a requirement for EEA-based companies on the overseas companies register to provide additional minor details in their public-facing material, such as their website and letterhead; again, the draft regulations provide three months from exit day for the affected companies to do so.
In line with those changes, the draft regulations will also revoke legislation on two EU-based processes or systems currently administered by Companies House. The first is the cross-border mergers regime. Hon. Friends and noble Lords in Committees of both Houses have drawn attention to the removal of the current process for UK companies. I understand their concern, because I know that certain companies welcome the fact that it allows companies to merge across EEA jurisdictions. However, that is possible only under the EU cross-border mergers regime, which requires legal entities based in two EEA states. As the UK will no longer be an EEA member after exit, it will not be possible to continue to allow cross-border mergers, but companies will be able to transfer assets and liabilities using contractual arrangements.
The other system of which the UK will no longer be part after exit is the business registers interconnection system—a very new system, introduced only in 2017, that is used mainly to identify companies undertaking a cross-border merger or foreign branches of companies. All the information currently provided publicly on the Companies House register will still be available; the only thing that will cease is Companies House’s access to the register to register connections across the EU.
I will now explain the changes made as a consequence of the insertion of a new definition of “regulated markets” into another statutory instrument, in line with regulations that Her Majesty’s Treasury has laid before the House, and its effect in certain sections of the Companies Act 2006. In most places where it occurs, the change will have no material effect. There are only two occurrences where we have made the decision to apply the same requirements to EEA companies as we do to third-country companies. We judged that without such a change, there would be a risk of breaching the World Trade Organisation’s most favoured nation rule.
The practical effect of each change is that certain intermediaries who deal in securities will no longer be able to hold shares in their parent company where they are a UK-based holding company. This benefit will, after exit, be extended only to intermediaries with access to UK-regulated markets. We are providing a one-year transition for that change. Certain investment companies will no longer be able to benefit from some relaxations on controls on their distribution of profits unless they have access to a UK-regulated market. In addition, we will treat EEA-based credit reference agencies in the same way as third-country credit reference agencies after exit. Companies House will no longer be able to send the protected information that it holds on directors to EEA credit reference agencies and processors.
My officials have worked extensively with Companies House throughout the development of these regulations, and I thank them for their expertise. It is also relevant to point out to hon. Members that this has been done alongside ensuring that the UK’s company registry fully reflects the UK’s departure from the EU on exit day. That includes updating all relevant forms that companies use to file information, as well as updating guidance. That should be emphasised, because it means that companies will have certainty and clarity on what they need to do when the UK leaves the EU. We completed a de minimis impact assessment of the regulations, which shows that the overall costs to business are expected to be small.
As the Committee has heard, the regulations provide numerous technical changes to the operation of UK company law, and they respond to the reality of the UK’s leaving the EU. They are not overly burdensome for business and they will ensure that the UK has coherence in its approach to overseas companies. I therefore commend the regulations to the Committee.
Kelly Tolhurst
I thank the hon. Gentleman for his comments. I said that the measures give clarity and confidence to business. This statutory instrument is intended to do exactly that for company law, and to provide companies with clarity about how retained EU law and the register will operate if we leave the European Union in a no-deal situation. Although the hon. Gentleman thought I was joking, I actually meant what I said.
Let me pick up a couple of the points that the hon. Gentleman has made. He mentioned EEA companies, and I assume that he was talking about EEA corporate appointments. A UK company that makes a corporate appointment of a director or a secretary will have to file two extra pieces of information, which we have identified as being of low cost to business. Some 1,900 of those businesses have already been identified by Companies House, and they will all be written to. We have already updated the advice and guidance from Companies House on that. The regulations also refer to EEA companies that will register on the UK overseas companies register, and we estimate that to be 3,200 companies. Again, Companies House will write to the companies affected, and the guidance has been updated. As he will have seen from the regulations, those companies have to provide more basic information to Companies House, which is an administrative task. As I mentioned in my opening comments, the front-facing aspects—the websites and letterheads—will also need to show additional information. The guidance will be updated.
BRIS is a publicly accessible database, and the hon. Gentleman is correct to say that we will no longer be part of it if we leave the EU in a no-deal situation. Currently, people outside the EEA can access that information via the website, as we do in the UK through Companies House, so access is not restricted.
I could not find the paragraph in the explanatory memorandum that the hon. Gentleman mentioned that referred to a small number of companies. I think he was referring to the number of companies affected by the changes in the regulated markets.
Bill Esterson
I am happy to help. Paragraph 7.8 says:
“This measure applies to very few companies, but transitional provisions have nevertheless been provided that will allow sufficient time for impacted companies to consider the impact of the change on their operations and take appropriate action”.
My question was about how many companies she means by the phrase “very few companies”, which refers to:
“Investment companies that only have shares admitted to an EEA market”.
Kelly Tolhurst
I thank the hon. Gentleman for that clarification; that was the area I was thinking of. As far as intermediaries are concerned, five companies would be affected, but our records show that no investment companies have been identified as being affected.
On consultation, as I outlined, we have consulted, worked with and used the expertise of Companies House to ensure that we are making the best provisions to enable UK companies to implement the regulations that we require for them to be legal if we leave the European Union without a deal. By working with those experts, we believe that we have devised the simplest and best way forward.
As I set out, the changes in the regulations cover a variety of amendments to the UK company law framework, so that, on exit day, the UK statute book is workable and coherent. It should be emphasised that certainty is crucial for business confidence. In some cases, the changes are not material and will have no impact on business; they are simply provisions to tidy up the Companies Act 2006 and related secondary legislation. The communication of pre-emption offers to shareholders is one example. The changes are no less important for that reason, however, and they will mean that UK statute is on a stable footing on exit day.
As I have set out, other areas will have an impact. They include the level-down approach for EEA companies in relation to certain filing requirements for the register, as well as the changes for some entities in relation to benefits that are currently based on access to EEA-regulated markets. The removal of the cross-border mergers regime is another example of where businesses will notice a change to processes that existed as a result of our membership of the EU.
The regulations cover many different changes, but, taken individually, their impact on business will be small. My officials are working with Companies House and others to ensure that the register will be operational for exit day, and that will significantly reduce the impact felt by companies that are affected by the changes. Overall, the regulations will ensure that the UK’s company law framework remains coherent, operable and under- standable for business, and I commend them to the Committee.
Question put and agreed to.