Draft Accounts and Reports (Amendment) (EU Exit) REgulations 2018
Kelly Tolhurst Excerpts(5 years, 4 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 Accounts and Reports (Amendment) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Davies. Since the UK’s 2016 referendum decision to leave the EU, the Department for Business, Energy and Industrial Strategy has undertaken a significant amount of work on the withdrawal negotiations, preparing for a range of potential outcomes. We have been working, and must continue to work, to prepare for a no deal scenario.
The regulations aim to address failures of retained EU law to operate effectively, as well as other deficiencies arising from the withdrawal of the United Kingdom from the European Union, in the field of accounts and reports of UK corporate bodies. The law in the UK on the preparation and filing of accounts and reports for corporate bodies is compliant with the EU accounting directive. There is also a directly applicable EU regulation that relates to the preparation of accounts in accordance with international accounting standards—the so-called IAS regulation. Both the accounting directive and the IAS regulation apply throughout the European economic area. The Department intends to introduce a separate statutory instrument that will address how we intend to deal with the deficiencies presented by the IAS regulation after the UK’s withdrawal from the EU.
The fundamental elements of the current companies’ accounts and reports legislation will remain the same after exit. However, that legislation still needs to be amended to ensure that it works effectively once the UK has left the EU. An important component of the accounting directive, and therefore the UK’s company law, relates to reciprocal arrangements for company group structures—for example, exemptions permitted to businesses from producing consolidated accounts if the parent is registered anywhere in the EEA and is producing consolidated accounts that are compliant with EU law. In the absence of a negotiated agreement regarding the economic relationship between the UK and the EU, it would be inappropriate to continue with preferential treatment for EEA entities, or UK entities with EEA parents.
The statutory instrument will mean that businesses registered in EEA states will be treated in the same way as those from third countries. UK businesses with EEA parents will therefore no longer benefit from the exemption from having to produce consolidated accounts because their EEA parent company produces consolidated accounts. However, UK businesses with parent entities registered in the UK will not be affected by the changes.
The regulations do not create new criminal offences. However, the scope of the pre-existing criminal offences will be extended, in that some companies that previously benefited from an exemption will no longer do so. They will be exposed to the possibility of committing a criminal offence in a way that they were not before. Also, some businesses with links to the EEA will now fall within the scope of existing criminal offences in the UK for failure to file accounts and reports. For example, dormant companies with parent entities listed in the EEA will no longer be exempt from preparing and filing accounts with Companies House. Failure to do so would mean that they would be committing an offence, and they would be liable to incur fines and penalties. That is consistent with the approach for similar companies with parents outside the EEA.
Ian Murray (Edinburgh South) (Lab)
Will the Minister tell the Committee whether she anticipates, or has anticipated, more parent companies moving to the EEA from the UK as a result of the UK leaving the European Union?
Kelly Tolhurst
I do not have any indication of the number of companies that have stated that they would leave the UK after EU exit.
The accounting directive sets out the requirements for businesses to report payments to Governments worldwide relating to the extraction of natural resources by way of logging and mining. Alongside that, it provides a power for the Commission to grant equivalence to third countries for their systems of reporting payments to Governments regarding logging and mining activities. This statutory instrument transfers that power to the Secretary of State.
The Government have carried out a de minimis impact assessment of the regulations, because the overall costs to business were expected to be small. That confirmed that the impact on business would be minimal and that the resulting costs would be in relation to the company’s size. There is a small chance that certain second-order impacts may arise from changes to one of the exemptions. Currently, the ability to switch between accountancy frameworks—the requirements for the preparation of companies’ annual accounts—is limited to once every five years, unless the company de-lists from any regulated market in the EEA. The change made by this statutory instrument will mean that a company can only satisfy that condition by de-listing from the UK market.
Although we think the amendment is a minor one, it may provide an incentive for companies to de-list from the UK markets. Companies list their securities on capital markets primarily to access a larger capital and investor base—for example, because they are considering growing their businesses. They do not take de-listing decisions lightly. Given the scale of the changes introduced by this statutory instrument, it is very unlikely that they would do so to try to circumvent the reporting requirements.
The Government have worked closely with business and regulatory bodies to ensure that regulations achieve continuity wherever possible, while addressing the deficiencies arising from the UK’s withdrawal from the EU. My officials have benefited from the wisdom of our many stakeholders, and the statutory instrument incorporates their views. In the event that the UK leaves the EU without an agreement, the regulations will be critical in ensuring that UK accounting law continues to provide transparency and certainty to investors. The regulations will also ensure that companies operating in the UK have clear guidance for preparing and filing their accounts. I commend the regulations to the Committee, and I ask the Committee to support and accept them.
Kelly Tolhurst
I thank the hon. Member for Sefton Central for his usual thorough reading of the statutory instrument and preparation for the debate. I want to finish by reminding the Committee that the SI is being brought forward for a no deal scenario. As a Government, we are still working towards a deal, and that is what we hope we will have as we leave the European Union.
Ian Murray
I would hate to get into a debate about Brexit, because I am sure you would call me out of order, Mr Davies, but would it not be much better for the Government to rule out a no deal scenario? We could then spend most of our time in the House dealing with what we need to deal with, rather than preparing for no deal.
Kelly Tolhurst
Actually, I think it is quite right that as a Government we are preparing for no deal, and we will continue to do so. That is why I am here presenting a statutory instrument—so that in the event of no deal we will be able to give business confidence and clarity on what the outcome will be, whether it is liked or not, in a no deal scenario.
I will try to answer some of the questions that the hon. Member for Sefton Central posed about the statutory instrument. He asked about the total number of companies that might be affected. There are approximately 3.8 million active companies on the UK register as it stands, and 98.5% of them happen to be micro or small businesses. There are approximately 35,000 medium-sized businesses and 20,000 large entities on the register. We have assessed that fewer than 20,000 companies will be affected by the statutory instrument, with a range of sizes and set-ups.
I was asked what assessment we have made of de-listing. As I have outlined, we did not carry out a full assessment, because we established from the data we have that the burden and cost to business will be below £5 million. The burden on business will relate to the potential costs of having to file accounts and make preparations, where they had been exempt. Obviously, that is a small cost to a limited number of organisations.
Obviously the de-listing is very difficult to assess. It is very difficult to assess how many companies would take the decision to leave the UK based in a no deal scenario. As I have said, as a Minister I have not been made aware of any companies that have registered an interest in leaving the UK, based on the changes that we are considering. We estimate that the number of organisations that might decide to de-list would be very small, but it is a very difficult number to assess.
Bill Esterson
The Minister said that nearly 20,000 businesses would be affected by the regulations. The explanatory memorandum states that there is “no significant” impact on business. I just wonder whether she can tell me how many businesses it would take for the Government to decide that it was a significant number worthy of an impact assessment.
Kelly Tolhurst
As the hon. Gentleman knows, because I have just outlined it, we are talking about approximately 20,000 businesses that would be affected, out of the current 3.8 million businesses that are registered in the UK. That is a small number of businesses in relation to the total number of registered companies. However, we are talking about the cost, and the burden will relate to the potential extra costs in relation to accounting and reporting.
We must remember that, as Members will have read and as I have mentioned, dormant companies for example have been exempt. They will no longer be exempt, so there will be a cost to that under the regulations in a no deal situation.
Ian Murray
To follow on from my hon. Friend the Member for Sefton Central, there is an impact assessment that says that the cost to business is negligible, but will the Minister’s Department be producing an impact assessment of the cumulative cost to business of all the SIs that are going through in preparation for a no-deal Brexit, and when will we see it?
Kelly Tolhurst
I thank the hon. Gentleman for his question. We are assessing the impact as a Department in all ways, and we are doing that informally. We do it through working with stakeholders. These SIs are not just dreamed up. As I said in response to an earlier question, we have consulted our officials and worked with stakeholders. We have spoken to auditors and accountants—the people who will be responsible for imparting this information to the companies they work for and for understanding the true cost to business—so we are always assessing the impact of everything we do. Especially as a business Minister, one of my priorities is to make sure that when we do things around business, we reduce the burden when we can. The actual answer is that we need to prepare for scenarios, and in doing this we are aware of the potential outcomes and risks, which would affect 20,000 businesses.
Ian Murray
The Minister is being incredibly generous, and I am grateful to the Chair for indulging me on this point, but it is incredibly important. The Minister quite rightly says that the Government have not just dreamed these SIs up. Of course they have not, because there is a process that has to be run through if the Government decide that they wish to go down the route of a no deal Brexit. What is the cumulative effect on business of all the SIs that are currently before her Department? They have not been dreamed up, but they are there, they are measurable, and they can be added together to show the impact of the SIs that are currently on the table and their cost to business.
Kelly Tolhurst
I will try again to answer the hon. Gentleman’s question. There is no policy change in this SI: it is correcting deficiencies in the retained EU law. If he is asking about the impact of no deal, I refer him to the work that has already been done by Government on the impact of a no deal scenario versus a deal scenario, rather than these individual statutory instruments. As he will know, there are a number of statutory instruments across all Departments that may well affect businesses in different ways, which do not come under my responsibilities as a junior Minister in the Department for Business, Energy and Industrial Strategy.
Nick Smith (Blaenau Gwent) (Lab)
I just want to press the Minister on this point about the overall cost to business of the no deal planning that she has talked about. My hon. Friend the Member for Sefton Central has mentioned the specialist media coverage of the accounting requirements that have already taken place in one sector of the economy, and this is the third Delegated Legislation Committee on this topic in this week alone. By when will we receive from the Minister the true cost to business of these extra responsibilities and regulations from her Department?
Kelly Tolhurst
As the hon. Gentleman well knows, the assessments of the effect on business have been well reported. With this particular SI, we are talking about the impact on a very small number of businesses, compared to the 3.8 million that are registered. The vast majority of UK-registered companies will not be affected by the SI at all, because we are not changing the policy; we are correcting deficiencies so that we are legal and can operate correctly and efficiently in the case of a no deal scenario. Quite rightly, if we are able to establish a future relationship with the European Union—if we are in a situation where we have a deal—this is one of a number of elements that would be part of those ongoing negotiations. However, I am unable to give the hon. Member for Blaenau Gwent clarity on the direct question he asked regarding the total cost to business for all the SIs that have been passed or are coming up.
Kelly Tolhurst
If the hon. Gentleman is referring to accountancy, we are talking about the accountancy SI today.
Kelly Tolhurst
I am going to carry on, because I have given as full an answer as I am prepared to give.
As I highlighted in my introduction, and as I have reiterated, we are not changing the way in which we ask companies to report. We will work with Companies House, as we do already, to ensure that we identify all the companies that are affected by not having the exemptions, that we have the data, and that any guidance that is needed is issued well before the SI comes into effect.
On the extraction industries, the hon. Member for Sefton Central is right that currently the EU Commission has the power to grant equivalency to third countries. We are not changing any of the criteria for that; rather than the EU Commission having that power, the Secretary of State would have the authority to make those decisions in a no deal situation. As I outlined, the SI will correct the deficiencies in EU retained law.
Bill Esterson
I think my hon. Friend has anticipated my question. Will the Minister explain what the scrutiny process will be for the Secretary of State’s decision making in the event of no deal?
Kelly Tolhurst
I thank the hon. Gentleman for that question. As I outlined, the European Commission has the power to grant equivalency, and we are not changing any powers here. Having looked at this, we believe that it is small enough for us to have it in an Executive power. If the European Commission has those powers currently, it is right they would be transferred to the UK Secretary of State in a no deal situation. Scrutiny would operate exactly as it does currently.
Kelly Tolhurst
Absolutely, because the Secretary of State would make those decisions and grant those powers. Granting equivalency to third countries is obviously a small part of it.
Effective financial reporting underpins the success of every business. It helps to inform decision making, to improve performance and to promote confidence in a company’s future. As the UK exits the EU, it is paramount that we maintain the integrity of the UK system of accounting and reporting. The regulations will ensure that it remains coherent, operable and understandable for companies, users of accounts, and the general public, who rely on the transparency that it provides. I commend the regulations to the Committee.
Question put.
Draft Takeovers (Amendment) (EU Exit) Regulations 2019
Kelly Tolhurst Excerpts(5 years, 5 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 Takeovers (Amendment) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Mr Austin. The regulations will be made under powers in the European Union (Withdrawal) Act 2018. They amend part 28 of the Companies Act 2006, so that the United Kingdom’s corporate takeovers regime can operate independently in the event that the UK exits from the EU without a withdrawal agreement.
If the UK leaves the EU without an agreement in place, the instrument will provide legal clarity and certainty. The takeovers regime seeks to ensure that shareholders receive fair and equal treatment when the company in which they have invested is subject to a takeover bid. The effective operation of the takeovers regime is vital to business confidence.
Part 28 of the 2006 Act transposes the takeover directive 2004/25/EC into UK law. The directive was intended to harmonise certain aspects of takeover supervision across the European economic area. It created expectations of reasonable behaviour to which company shareholders could hold bidders. It also created a system of co-operation, in which member states’ regulators shared jurisdiction over a small number of cross-border takeover cases.
The 2006 Act requires the Takeover Panel to make rules to give effect to the directive in the UK. The panel has done so in the City code on takeovers and mergers. The regulations preserve the statutory underpinning of the code, and make only minimal changes to the way in which the UK regime functions. In developing the regulations, we worked closely with the UK’s supervisory authority, the Takeover Panel. The panel has published a consultation document on the changes that it will need to make the takeover code reflect the regulations.
The regulations make only three substantive changes to the way in which the UK takeovers regime functions. The rest of the regulations import and correct provisions from the directive that are necessary for the independent operation of the UK regime, but do not change how the domestic regime operates.
First, the EEA takeovers regime includes a system of shared jurisdiction for company headquarters that are listed in different countries. The supervision of a company captured by the shared jurisdiction system is usually done by two regulatory authorities: one in the country where the company has its registered office, and the other in the country where the company is listed. The shared jurisdiction regime ensures that there is clarity about which national takeover rules apply in such cases.
The shared jurisdiction regime works on a reciprocal basis. Since the UK will be outside that framework, the reciprocal arrangements will no longer apply after EU exit. The regulation will remove shared jurisdiction from the UK takeovers regime. The Act requires the panel to supervise UK companies with securities admitted to trading on a UK-regulated market. The panel may also choose to supervise companies that do not fall within that definition. The panel is currently consulting on the application of the takeover code in the light of the loss of the shared jurisdiction regime.
Nigel Mills (Amber Valley) (Con)
Will the Minister clarify what would happen if a takeover started before exit day, but had not been completed, and there was a co-operation arrangement, with two jurisdictions reviewing the proposed takeover? Presumably, after exit day, only one would be allowed to review it. Would a whole new process have to be started, or would one authority effectively just give up its scrutiny of the takeover?
Kelly Tolhurst
I thank my hon. Friend for his intervention; he raises a very good point. Although the statutory instrument will remove the shared jurisdiction, part 28 of the 2006 Act still places a duty on the UK to co-operate with any country or territory on mergers. While the SI will remove the reference to the EEA, we will not remove the continued co-operation of the UK regime with other countries and territories.
The panel is currently consulting on the application of the takeover code in the light of the loss of the shared jurisdiction regime. It proposes to supervise takeovers concerning only companies that meet the residency criteria set out in the takeover code.
The second feature of the draft regulations relates to the duty to co-operate. Section 950 of the Companies Act places a general duty on the Takeover Panel to co-operate with its counterparts and certain other regulatory agencies in any country or territory outside the UK. It also imposes a specific duty to co-operate with supervisory authorities in the EEA, which is derived from the takeovers directive 2004. After our exit, EEA member states will no longer be bound to co-operate with the UK under the directive. The draft regulations will therefore remove the specific obligation to co-operate with EEA supervisory authorities, as it will no longer be reciprocal. However, the Takeover Panel will still be required to co-operate with the authorities of EEA member states under the broader duty to co-operate with any international supervisory authority with an equivalent role. This change will not, in practice, constrain the panel’s ability to co-operate.
The final feature of the draft regulation relates to restrictions on the disclosure of confidential information. Section 948 of the Companies Act restricts the disclosure of confidential information obtained by the Takeover Panel during its duties and sets the conditions under which information can be shared. It applies to both the panel and the organisations with which information is shared. Breaching the section 948 restriction is a criminal offence.
The Companies Act provides an exemption from the section 948 restriction for EEA public bodies using confidential information disclosed by the panel for the purpose of pursuing an EU obligation. These EEA public bodies are bound by their own national laws and by EU law to prevent the inappropriate disclosure of information passed to them by UK authorities. After our EU exit, these reciprocal protections will no longer apply to the UK. The draft regulation will remove the specific exemption from the section 948 offence for EEA public bodies and ensure that there is a sanction to deter inappropriate onward disclosure of sensitive information.
Mr John Baron (Basildon and Billericay) (Con)
Just for clarity, once we leave the EU, will whatever duties there are on the UK to co-operate in a takeover situation be reciprocated by the EU, so that there is an element of co-operation on matters of this sort? In other words, will there be reciprocity across the divide?
Kelly Tolhurst
I thank my hon. Friend for his question. My understanding is that we are obviously bringing the EU regime as it stands into UK law, including the duty to co-operate with countries, and I expect that that will be the case.
Mr Baron
I thank the Minister; she is being very generous. I get that we will be taking EU law into UK law. We will co-operate, because we will have taken that legislation into our own, but I want clarity on whether the Minister is confident that there will be reciprocity when it comes to the EU co-operating with us? As the Minister well knows, takeovers can go both ways.
Kelly Tolhurst
It is my understanding that that will be the case. If I am incorrect, I will of course correct the record. As I have outlined, we currently have an obligation to co-operate, which is in the interests of those countries. However, we are talking about a small number of organisations that would fall under this requirement.
The regulations before the Committee are the product of close working with the Takeover Panel to provide a free-standing statutory underpinning for the UK takeover regime in the event of a no-deal exit. Corporate mergers and takeovers are an important part of a healthy economy. By encouraging efficiency gains, spreading knowledge and promoting innovation, they drive economic growth and job creation.
It is vital that we seek to safeguard the legal framework that gives companies and their shareholders the confidence to engage in merger and acquisition activity. The regulations achieve that goal by making only the changes needed to fix deficiencies in UK law arising from EU exit. They do not otherwise alter the operation of the UK’s takeover regime. They will have a negligible overall net effect on our economy. I commend the regulations to the Committee.
Kelly Tolhurst
I thank hon. Members for their contributions, and particularly the hon. Member for Sefton Central and my hon. Friend the Member for Windsor. This debate has highlighted that the absolute best outcome for us in exiting the European Union should be that we have a deal. We are now talking about a statutory instrument that relates to us leaving the European Union without a deal, so this is a no-deal SI.
These regulations will provide some legal clarity in respect of the takeover regime after the UK’s exit from the EU by correcting deficiencies and removing obligations that will no longer be reciprocated by EEA member states. The regulations do not represent a policy change in the operation of the UK takeovers regime; rather, they preserve as far as possible the rights, responsibilities and protections offered by the existing system.
I will now try to answer Members’ comments and questions, and if I miss some, they should feel free to intervene on me. Hon. Members have raised the question of what happens on exit day in terms of a situation of straddling jurisdiction and continued co-operation. As I outlined in my speech, we already have a duty to co-operate with countries that are not in the EEA, but that does not preclude us from co-operating with the EEA. It does not stop the EEA from co-operating with us bilaterally, in the way it would co-operate with any country that was not part of the EEA.
In regard to the number of companies, from my current figures, 25 companies have a registered office in the EEA and have traded securities in the UK. Eleven companies currently have a registered office in the UK and have traded securities in regulated markets in EEA countries. We are talking about a small number of organisations. Another statistic that may interest the Committee is that in 2017-18 there were 57 bids, and in the UK the panel dealt with 13 takeover cases relating to £1 billion. That demonstrates the importance of having the regulations in place. I believe I have answered hon. Members’ questions about the duty to co-operate, but they are welcome to question me further if not.
My hon. Friend the Member for Windsor asked what would happen to the draft regulations if we remained in the EU or reached a deal. In such an instance, the Government would lay a further statutory instrument before the House to take into account any deal that had been made that changed the position currently on the table.
The hon. Member for Sefton Central asked about the consequential amendments set out in paragraph 7.1 of the explanatory memorandum. As he will know from previous debates, we need to amend UK instruments to correct any deficiencies. I did not mention this in my speech, but the draft regulations make changes that relate to section 949 of the 2006 Act and criminal offences, and the references to the EEA have obviously been changed in this instrument. So a number of smaller elements have had to be changed through the law.
I think I have answered most of the questions that hon. Members have asked. The Government are committed to ensuring continued business confidence in takeover supervision. The draft regulations make only those changes that are required to effect the UK’s exit from the EU. The UK regime should therefore continue largely unchanged, and the net overall effect on the economy will be negligible.
I have just remembered a question that I have not yet answered about impact assessments, which the hon. Member for Sefton Central is particularly concerned about. An impact assessment was not carried out in this instance because the costs that companies are expected to incur as a result of this change are negligible. It affects only a limited number of companies, and the costs would relate directly to the compliance regimes within the other organisations, where they will have to get the supervisory authority. We assess that the financial obligation on businesses will be relatively small, so in this case an impact assessment was not carried out. I therefore urge the Committee to approve the regulations.
Question put and agreed to.
General Affairs Council: Cohesion Policy
Kelly Tolhurst Excerpts(5 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
My right hon Friend the Parliamentary Under-Secretary for State for the Department of Business, Energy and Industrial Strategy (Lord Henley) has made the following written ministerial statement:
I attended the General Affairs Council (Cohesion) on 30 November 2018. The meeting was held in Brussels and chaired by the Austrian presidency.
The meeting was dedicated to deliberations around the legislative package for post-2020 cohesion policy.
A provisional report of the meeting and the conclusions adopted can be found on the Council of the European Union’s website at:
https://www.consilium.europa.eu/en/meetings/gac/2018/11/30/
The General Affairs Council discussed the future direction of cohesion policy in the next multiannual financial framework. Ministers and their representatives from member states presented their positions on the legislative proposals for post-2020, with a view to influencing the Commission’s proposals and commenting on the views from the Austrian presidency.
Member states particularly focused on efforts for simplification, harmonisation, the strategic framework for future cohesion policy, and intervened on the partnership agreement and mid-term review. I intervened to support a link to the European semester, for further simplification and harmonisation, as well as outlining the UK position on the partnership agreement, the mid-term review and the proposals on European territorial co-operation.
The Austrian presidency provided an update on non-legislative and legislative items.
[HCWS1151]
Draft Competition (Amendment etc.) (EU Exit) Regulations 2019
Kelly Tolhurst Excerpts(5 years, 5 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 Competition (Amendment etc.) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship for the first time, Sir Christopher. Competition law exists to foster competitive markets to the benefit of consumers. Specifically, anti-trust law prohibits companies from engaging in anti-competitive agreements and abusing a dominant market position. Merger rules exist to ensure that mergers do not substantially lessen competition and harm consumers. The UK has a world-renowned competition regime, but currently the domestic system is highly integrated with the European Union competition system.
The primary aim of this statutory instrument, therefore, is to remove provisions in domestic legislation that are associated with being part of the EU competition system. Although the draft withdrawal agreement with the EU sets out separation arrangements on competition, the Government are preparing for all contingencies. Should we leave the EU without an agreement in place, this SI would minimise litigation risk for the Competition and Markets Authority and provide legal clarity and certainty for businesses and consumers. The SI has been the subject of extensive consultation with stakeholders, including the CMA, the Competition Appeal Tribunal and specialist competition lawyers. The views expressed were taken into account in developing the content of the SI.
The SI revokes the retained versions of EU competition legislation and switches off directly effective treaty rights contained in European economic area and EU treaties. They will become part of UK law as retained EU law at the point of exit, but they will be redundant, as the UK has its own competition regime, which will continue to protect consumers from anti-competitive behaviour. The SI makes amendments to the Competition Act 1998, the Enterprise Act 2002 and other primary and secondary legislation containing competition provisions. An impact assessment was not undertaken for the SI, as the impact for business and the Exchequer will be minimal.
The 1998 Act sets out the prohibitions against anti-competitive conduct in the UK and empowers the CMA and UK sector regulators to investigate and take enforcement action against infringements of those prohibitions. Under EU law and that Act, the CMA and sector regulators also have the power to investigate and take enforcement action against infringements of EU competition law. The Act also provides for investigation co-operation among the UK, the European Commission and member states’ national competition authorities. This SI amends the Act to remove the CMA’s power to investigate anti-competitive agreements under EU competition law, as it will investigate solely under UK law after exit.
Currently, section 60 of the 1998 Act provides that competition regulators and UK courts must interpret UK competition law in a manner consistent with EU competition law. This SI repeals section 60 and introduces a new section 60A. It provides that UK courts and regulators will continue to ensure consistency with pre-exit EU competition case law when interpreting UK competition law. However, they may depart from that case law, where appropriate, in specified circumstances.
This approach aims to provide consistency and clarity in the law for courts, regulators and businesses that look to legal precedent when interpreting the law. It also allows the competition regulators and UK courts to depart, where appropriate, from EU case law. Currently, claimants can pursue private damages claims in UK courts, based on enforcement decisions of the European Commission and the CMA. After exit, claimants will still be able to bring private damages claims in UK courts. However, UK courts will not be bound by the European Commission decisions. This approach aligns with the European Union (Withdrawal) Act 2018, which provides that UK courts will not be bound by decisions of EU courts after exit.
The European Commission makes block exemption regulations, which exempt certain categories of agreements from EU competition law where they are believed to have a beneficial effect on competition. Agreements which benefit from an EU block exemption are also exempt from UK competition law. At exit, all of the seven current block exemptions will be incorporated into UK law as retained block exemptions. Agreements that meet the terms of the retained block exemptions will continue to be exempt from domestic competition law. The SI amends and retains block exemptions so that they operate effectively in domestic law. It also empowers the Secretary of State to vary or revoke the retained exemptions.
The Enterprise Act 2002 contains the rules on mergers. Currently, the CMA is responsible for investigating mergers, to ensure that they do not have anti-competitive effects in the UK market. However, if a merger triggers the turnover thresholds set out in the new EU merger regulation, it is reviewed by the European Commission, including the UK aspects of the merger. After exit, the EU merger regulation will no longer apply in the UK, and the UK dimensions of mergers will be reviewed solely by the CMA. The SI amends the 2002 Act to remove references to the EU merger regulation and other provisions related to being part of the EU’s one-stop shop for merger clearance in the single market.
The SI also makes transitional arrangements for CMA anti-trust and merger cases that are live at the point of exit, so that those cases can continue to be managed effectively. It also makes minor amendments to two pieces of Northern Irish legislation, including removing references to the EU anti-trust prohibitions and amending a reference to section 60 of the Competition Act 1998. These changes align with changes being made to the 1998 Act and have been agreed with the permanent secretaries of the relevant Northern Ireland Departments.
Anti-trust law protects consumers from anti-competitive behaviour. The amendments contained in the SI provide legal clarity and continuity to businesses. Similarly, mergers are an important component of our healthy and growing economy. It is vital that we safeguard the legal framework that gives companies the confidence to engage in mergers in the UK. It is also important that consumers continue to be protected from mergers that diminish competition. This SI achieves those goals by maintaining the strength of the UK’s current competition system, while making only those changes designed to separate the UK competition system from that of Europe in a no-deal scenario.
Kelly Tolhurst
I was wondering whether I might be able to start by answering the hon. Member for Saffron Central.
Kelly Tolhurst
I apologise; I often get annoyed when people refer to my constituency as Rochester and “Stroud”, rather than “Strood”.
The hon. Gentleman asked what we would do with the regulations if we entered into a deal, bearing in mind that we are talking about this statutory instrument as a no-deal SI. This SI is about retaining EU law. Were we to enter into a deal, we would bring further SIs to the House to modify the current regulations.
The hon. Gentleman expressed concern about how we would work cross-jurisdictionally and is unsatisfied with the explanatory memorandum. The CMA, our regime and how the UK has dealt with competition law over the years have a high regard internationally. We co-operate and are part of a number of international bodies. We are regarded as having a world-class framework and operation. There is absolute commitment from the Government to ensuring that, where we can, we co-operate with other states and the EU. Even in a no-deal scenario, the intention will be to ensure that regulators at that level will be able to seek to enter into co-operation agreements bilaterally to ensure that consumers are protected. Ultimately, the European Union and the UK are committed to protection for consumers, as I have said a number of times over the past few weeks in Committees.
Bill Esterson
Is the problem not that, if there is no deal, by definition there will not be an agreement to ensure that co-operation? How does the Minister envisage the CMA and our competition framework coping in that situation?
Kelly Tolhurst
The hon. Gentleman is right: if we enter a no-deal situation, we will not have a deal with the European Union. However, our world-respected bodies, such as the CMA and other regulators, are communicating on a daily and weekly basis with their counterparts in not only Europe but other parts of the world. There is nothing to suggest that that co-operation, communication and co-working would change, and we would seek for it to be continued. We still want to co-operate with our international partners, and I cannot foresee a situation, with or without a deal, where that would not happen. That is my understanding.
With regard to the hon. Gentleman’s question about whether it is right that we are debating this big SI in a short Committee, I highlight that the SI changes two big pieces of legislation. Remember that we are retaining EU law, so the SI is not a change in policy; it is about retaining what we have, to make it fit so that on day one, were we to leave the European Union without a deal, our statute book would function.
The first piece of legislation is the Competition Act 1998, and the SIs that sit under it. We have all sat through a number of SI Committees. In the years I have been a Member of Parliament, many small statutory instruments have altered larger pieces of legislation. The second piece of legislation is the Enterprise Act 2002, and other SIs that have been introduced that relate to the EU, and to the block exemption that I mentioned. The “etc.” refers to the other pieces of legislation, consideration of which we have all sat through. From looking at a hard copy of the Bill, a number of minor changes are clearly being made. That gives Members an idea of why we are discussing this matter in Committee, as opposed to having a wider debate.
With regard to whether the CMA is capable of continuing to do its job given the potential increase of work in a no-deal scenario, we expect that the CMA might have an increased case load of between five and seven antitrust cases in a year. We have also assessed—working with the CMA, obviously—that the CMA might have to deal with between 15 and 30 extra merger cases over a year.[Official Report, 17 December 2018, Vol. 651, c. 4MC.] The National Audit Office has looked at the CMA and believes that it has robust plans in place to operate and function after we leave the EU.
As Members will know, in 2017 in the spring statement the Chancellor put £3 billion aside over a two-year period for funding our EU exit. In the spring statement of this year, the Chancellor announced just under £24 million extra for the CMA. The CMA is going through a recruitment process to increase its number of workers. That will constitute a substantial increase in the size of the CMA, and I am reliably informed that the CMA is working to plan, and recruitment is on target at the moment.
State aid is not part of today’s SI, but I am sure that the hon. Member for Sefton Central will be pleased to hear that the Government will soon lay an SI on that issue. I look forward to having greater conversations with him about the merits—or not—of state aid, and what he would like to see in the future.
Regarding divergence, as the hon. Gentleman explained and as I understand it, post-exit decisions in the European courts will be notable by UK courts, but not binding on UK courts. The idea that previous case law becomes part of UK case law history has come about because businesses need certainty and decision makers need to be able to look at that: it is quite right that pre-exit case law remains the bank of case law. However, as we have determined, UK courts will not be bound by that case law, although they will obviously have regard to it. Going forward, we need businesses to have assurance that previous case law has set the precedent, but as we have outlined in the SI, UK courts can diverge from it.
As regards the guidance that we will be giving on that point, it is case law: obviously, it will be defined by judgments. As the hon. Gentleman knows, markets, competition and things are changing all the time, so the guidance will also change over time. At that point, if necessary, we will give guidance to the relevant individuals. The hon. Gentleman mentioned bringing claims in the UK for things happening within the jurisdiction of the European Union. That is true: they will be brought here in the UK. I believe we can do so under UK law in UK courts. Also on that point, there is an ability to bring a civil, private claim in the UK under foreign tort law anyway.
My hon. Friend the Member for Harrow East asked what we will do to make sure that the UK protects its consumers from the big corporate organisations that are perceived to potentially cause restrictions and competition issues in the UK. As I outlined, our competition law in the UK is world renowned; we are respected internationally for the way we deal with such cases, and we already have great co-operation with international organisations.
To give one example, in the Google investigation a UK market was one of the main ones being investigated, and most of the claimants came from the UK market. I hope that gives my hon. Friend some comfort that, even if we are in a no-deal situation, if this SI is agreed we will be more than ready to take on those challenges and we will continue to maintain co-operation with our international partners and the European Union to make sure that the protection of UK consumers is at the heart of what they are doing.
Bob Blackman
I thank my hon. Friend for the explanation she has given. One aspect of European competition law is the economic assessment of what constitutes a monopoly. We could be in a position where something would not constitute a monopoly in the UK, but would be a direct threat to UK consumer interests, and would still be a monopoly in the European Union. What would be the position under the SI for consumers to gain protection as a result?
Kelly Tolhurst
My hon. Friend is right when he talks about the thresholds. Obviously, for the UK to take a particular action, the monopoly would have to meet our threshold abilities. It would, however, be down to the CMA to take forward cases, based on a number of different assessments. We do not expect—I do not expect—that the regulations will put the UK in a worse place. In fact, we could argue that there are benefits: under the regulations, the UK will make those decisions directly for UK consumers, rather than the decisions being taken at a distance. I hope that reassures my hon. Friend.
I thank the Committee for its consideration of the regulations. I thank the hon. Member for Sefton Central for his contribution and for the questions that he has asked me. He is absolutely right to do so, because it is an important debate and we are talking about the protection of UK consumers.
The amendments in the regulations are essential. If they were not passed, businesses would lack clarity as to how to act, and the CMA’s decisions would face a considerable litigation risk. It is vital that consumers continue to be protected from anti-competitive behaviour in the event of no deal.
As I have outlined several times, the UK has a world-renowned competition system. The regulations make no change to that system beyond correcting the deficiencies in retained EU law. We can all agree that it is essential that the regulations are in place in the event of a no-deal outcome. The amendments will ensure legal clarity for businesses, reduce litigation and protect consumers. They will also provide a smooth transition from the current system in the EU to a stand-alone UK competition regime in the event of a no-deal exit. I trust that I have answered all the Committee’s questions and I hope the Committee approves the regulations.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Competition (Amendment etc.) (EU Exit) Regulations 2019.
Draft Package Travel And Linked Travel Arrangements (Amendment) (EU Exit) Regulations 2018
Kelly Tolhurst Excerpts(5 years, 5 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 Package Travel and Linked Travel Arrangements (Amendment) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Hosie. The draft regulations, which were laid before the House on 29 October, will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They form part of the wider programme of work to adjust our legislative framework in readiness for leaving the European Union.
If a withdrawal agreement is reached between the UK and the EU, the implementation date of this draft statutory instrument could be changed by any Bill that the Government introduce to implement the withdrawal agreement in UK law. However, it is sensible to prepare for all scenarios, and that is what we are doing by bringing this instrument before the Committee today.
The Package Travel and Linked Travel Arrangements Regulations 2018 came into force in the UK on 1 July this year. They implemented the European Union’s 2015 package travel directive, and expanded the definition of “package” to ensure that it encompasses modern methods of purchasing package holidays, online in particular. They also created the new concept of linked travel arrangements, which are looser combinations of travel services, and introduced limited protection for consumers who purchase them.
The 2018 regulations require the provision of information to travellers, so that they have clear information about their package holiday or linked travel arrangements and their statutory rights. They also require that organisers put in place adequate insolvency protection to cover the refund of payments made by passengers and, if necessary, their repatriation.
If approved, the draft instrument will make amendments to deal with deficiencies that arise from a possible UK withdrawal from the EU on a no-deal basis. The 2018 regulations implemented the mutual recognition requirement of the EU directive. That requires member states to recognise the insolvency protection put in place by traders under the law of the member state in which they are established. In consequence, the 2018 regulations exempt traders established in other member states from having to comply with UK insolvency protection rules. Upon EU exit, the UK will become a third country, and so will no longer benefit from the mutual recognition provisions of the directive. In consequence, member states will no longer recognise the UK’s insolvency protection under the 2018 regulations.
The draft instrument will remove the exemption that allows European economic area traders to sell in the UK as long as they meet the insolvency protection of the member state in which they are established. If they sell or offer for sale package holidays or linked travel arrangements in the UK, they will be required to comply with UK insolvency protection rules on the same basis as UK traders—and, indeed, traders established anywhere else in the world. That change is necessary, first, to ensure that UK travellers are fully protected by the 2018 regulations if they purchase a package from EU traders that choose to trade within the UK market; and, secondly, to ensure fairness for UK-based traders. EU-based competitors should not have the advantage of an exemption that is no longer reciprocal.
The 2018 regulations also required member states to establish central contact points, the main purpose of which is to facilitate information sharing between member states in relation to insolvency protection. The Civil Aviation Authority is the lead central contact point in the UK. Should the UK leave the EU without a deal, the role of the central contact point would become redundant. The draft instrument will revoke the function of the central contact point to reflect that. It does not affect the Civil Aviation Authority’s other enforcement functions in relation to the 2018 regulations.
The draft instrument will also change the obligations on UK retailers that sell packages put together by a non-UK organiser. Regulation 27 of the 2018 regulations requires UK-established traders selling a package put together by an organiser outside the European economic area to be responsible for the performance of the package. They must meet the insolvency protection obligations of the 2018 regulations, unless they can provide evidence that the organiser complies with those requirements. The draft instrument changes regulation 27, so that this responsibility is placed on UK-established retailers when selling a package put together by any organiser established outside the UK, including organisers established in the EEA. This change is important to ensure that UK travellers purchasing packages combined by EEA established organisers can continue to be confident that they would be protected by adequate insolvency cover in the event of the organiser’s insolvency.
Sir John Hayes (South Holland and The Deepings) (Con)
The Minister may be familiar with the role that I played when I was Transport Minister in doing exactly the sort of work and supporting the kinds of businesses that she is talking about. As she will know from the explanatory notes, one of the principal objectives will be to get those kinds of businesses, voluntary bodies and charities, to understand the changes. She is a competent and extremely diligent Minister, so I know that she will want to find means by which the Government can support that growing understanding. Will she agree to make provisions to get the word out among those kinds of businesses about what the changes mean?
Kelly Tolhurst
I thank my right hon. Friend for that point. If the draft statutory instrument is agreed to, and we move into a no-deal situation in which this piece of legislation is required, the Government are committed, as we have always made clear, to ensuring that consumers’ rights are protected. We are and will continue working with the industry, and with consumer representative bodies, to make sure that consumers are aware of what they need to be looking at, and that businesses operating in this area make sure that people are fully aware of the consequences of the draft instrument.
Finally, the draft instrument makes other technical changes to deal with references to EU legislation, for instance replacing references to EU directives with references to the relevant saved domestic legislation. Importantly, the instrument does not otherwise change the 2018 regulations, so that after EU exit, travellers will continue to benefit from all the protections in those regulations. Officials from the Department have undertaken the appropriate assessment of the impacts of the draft instrument. That has shown that there is likely to be a small impact on business in cases where UK businesses have to provide the relevant insolvency insurance.
The draft instrument is a sensible and necessary use of the powers of the European Union (Withdrawal) Act 2018 that will ensure that our consumer law continues to function effectively on exit day. I commend the regulations to the Committee.
Kelly Tolhurst
First, I reassure the hon. Lady that the 2018 regulations were implemented in July; we are making an amendment today based on a no-deal scenario. I thank her for her comments about the SI and the protections that we are trying to establish.
I will try to answer the questions raised by the hon. Member for Newcastle upon Tyne Central about the SI. As she will know, if a deal is agreed by this House, the Government will enter into a future economic partnership with the EU. This Government have been clear in their technical notices that consumer protection is at the forefront of what we are doing. Particularly in my role in the Department for Business, Energy and Industrial Strategy, consumer protection and what we are doing to support consumers is always at the forefront of our mind. I said it twice in two debates last week, and I say it again today: we are committed to continuing to deliver the highest consumer protections possible for the people of the United Kingdom.
The hon. Lady talked about consumer rights and different mechanisms as we move this statutory instrument forward. I alert her to the fact that in future weeks we will lay before the House an SI about mechanisms that we are working on for cross-border co-operation and redress in the event of no deal.
The hon. Lady talked about the impact assessment and mentioned a figure of £21 million. I am afraid I do not recognise that figure. Our assessment is that the potential cost to business is between £1.4 million and £1.8 million. As that falls below £5 million, a full impact assessment was not undertaken. I may need to make the Committee aware that the impact had already been established prior to 1 July, when the 2018 regulations came in, because UK businesses already had to provide protection for other holiday packages sold in the UK. We are pretty sure that our estimate of the burden on business will be at that level. In actual fact, we estimate that even if 70% of retailers currently supplying package holidays or linked travels arrangements in the United Kingdom were affected, it would still fall below the £5 million mark. More than 70% of retailers would need to be affected for that amount to be larger, and we think that the burden and the number of businesses affected will be reduced.
The hon. Lady also spoke about trading standards and enforcement. I take issue with her saying that trading standards have been decimated, and that the Government have not wanted to fund and have not taken seriously the enforcement of consumer rights. That is quite simply untrue. The priority given to trading standards locally is decided on at local level. Trading standards already enforce current regulations. We are committed to enforcement. We have National Trading Standards, and this year we put in the Office for Product Safety and Standards, which works very closely with National Trading Standards, and which obviously shows our commitment to delivering on product safety. We will continue, as ever, to maintain our trading standards capability.
As the hon. Lady knows, there was a Green Paper on consumer protections and enforcement. The Government are looking at that, and at how we can better our consumer protection and enforcement. I assure her that, as the Minister with responsibility for this area, I am committed to that. I reiterate that commitment, as I have in previous such Committees when consumer protections and enforcement have been raised.
I also highlight to the hon. Lady that, under the draft regulation, the CAA is still responsible for enforcement when flights are included. The Department for Transport is confident that even with the increased workload, it will be able to discharge its responsibilities under the draft regulation sufficiently well.
The hon. Lady also asked about the campaign that I agreed to. I did not agree to a marketing campaign; I do not think I spoke about a marketing campaign. I said that we will continue to work with consumer protection groups such as Which? and stakeholders. We have roundtables. We will also make sure that if there is a change and we are in a no-deal situation, the Government will work with our stakeholders, industry representatives, Citizens Advice, trading standards and all our usual stakeholders to make sure that the information is out there as prominently as possible. My right hon. Friend the Member for South Holland and The Deepings made the point that we have already had significant discussions with the industry and with stakeholders prior to laying this SI before Parliament.
We remain confident that we will reach a deal with the EU. However, it is of course important that we prepare the legislative framework to protect consumers and businesses in case we leave the EU with no deal. That is what this draft instrument will do. It does not make any substantial change to the regime for the protection of consumers purchasing package holidays or linked travel arrangements, or to the standards that travel operators are already expected to meet.
The draft regulations are essential to ensuring that the retained EU legislation that sets out those requirements continues to work effectively in the UK immediately after exit day. That is what they are designed to do. We need to make sure that we have the right regulatory and legislative framework to provide travellers with adequate protections, irrespective of the outcome of the negotiations. I therefore hope that the Committee approves the draft regulations.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Package Travel and Linked Travel Arrangements (Amendment) (EU Exit) Regulations 2018.
General Affairs Council (Cohesion)
Kelly Tolhurst Excerpts(5 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
My right hon. Friend the Parliamentary Under-Secretary for State for the Department of Business, Energy and Industrial Strategy (Lord Henley) has made the following statement:
A meeting of the General Affairs Council (Cohesion) will be held in Brussels on 30 November 2018.
The General Affairs Council will discuss the legislative package for cohesion policy in the next multiannual financial framework. Ministers from member states will present their positions on the strategic context and priorities set out in the legislative proposals for post-2020, with a view to influencing the Commission’s proposals.
The Austrian presidency will provide an update on non-legislative and legislative items.
[HCWS1120]
Fireworks: Public Sales
Kelly Tolhurst Excerpts(5 years, 5 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
It is a pleasure to serve under your chairmanship, Mr Howarth. I pay tribute to the hon. Member for Warrington North (Helen Jones) not only for introducing the debate on behalf of the Petitions Committee but for her thoughtful and informative speech. I also thank all hon. Members who have taken part in today’s debate. It is great to see such a highly subscribed Westminster Hall debate. I am also grateful to those who signed the e-petition that has brought us here today.
As has been discussed, a very similar debate took place in January, following a petition that also sought to
“Change the laws governing the use of fireworks to include a ban on public use”.
That debate took place because 113,000 people signed that petition. Today, we are debating a petition that has received over 280,000 signatures. Again, it calls for a ban on the sale of fireworks to the public and for displays at licensed venues only. I am also aware that there are campaigns under way regarding the use of fireworks, such as the one organised by the Royal Society for the Prevention of Cruelty to Animals, and a further petition, under the change.org banner, has received over 330,000 signatures. The issues have been debated thoroughly, both today and in January.
Let me also offer my thanks to the hon. Member for Glasgow Central (Alison Thewliss), who had a debate on this issue scheduled for tomorrow but who, because of today’s debate, has decided to combine it with this one. I thank her for forfeiting her debate.
I empathise with the concerns that have been raised, and the Government understand the strong feelings that many people have about fireworks. For those reasons, I do not want to simply restate what the law is, although I will do so briefly for the benefit of hon. Members. We have legislation in place to regulate the supply, storage, possession, use and misuse of fireworks, to help to ensure public safety. These powers include powers to prosecute those who use fireworks in a dangerous or antisocial manner. Together, the restrictions set out in the Fireworks Act 2003, the Fireworks Regulations 2004 and the Pyrotechnic Articles (Safety) Regulations 2015 provide the regulatory framework that seeks to support the public’s enjoyment of fireworks while effectively managing the risk of fireworks harming individuals, property or animals.
Retailers may sell fireworks without the need for a specific licence during short windows of time around the traditional fireworks periods of 5 November, new year’s eve, Diwali and Chinese new year. However, if they wish to sell fireworks at other times of the year, they must seek a licence from their local authority. Age restrictions are in place to prevent the sale of fireworks to those under the age of 16 or 18, depending on the classification of the firework. There are further restrictions on the public possession of most fireworks by those under 18. Local authority trading standards officers have the powers to take action against those who sell fireworks illegally, including those selling fireworks without an appropriate licence, outside the normal selling period or to under-age children. Those powers also cover the sale of illegally imported fireworks and internet sales.
I recognise that the noise from fireworks can be distressing to some people and animals, and many Members today have shared their experiences and the concerns of their constituents. That is why there is a noise limit of 120 dB on fireworks available for consumer use. Consumers can also choose to buy from the wide range of low-noise or silent fireworks that are now available, as some hon. Members have highlighted.
I want to reassure hon. Members that the Government continue to take the enforcement of firework safety seriously. Trading standards can order the removal of unsafe products from the market and can take action against retailers who flout the law by selling fireworks to under-age children or who fail to abide by the licensing rules. The police do take action to combat antisocial behaviour and the dangerous use of fireworks by individuals, and many hon. Members today have described the illegal sale and use of fireworks. The hon. Members for Glasgow Central and for West Bromwich West (Mr Bailey) described serious criminal activity involving fireworks that has happened within their constituencies. Quite frankly, they outlined some disgusting behaviour by individuals in their use of fireworks. Such incidents are investigated by the police, leading to fines and in some cases imprisonment, so although I recognise hon. Members’ concerns, I do not accept the premise that the police do not investigate what I would call criminal activity.
Helen Jones
Can the Minister tell us whether her Department now collects statistics on the number of prosecutions for fireworks offences? If it does, what is the trend? Are prosecutions going up or down?
Kelly Tolhurst
I thank the hon. Lady for making that point. As some hon. Members have already outlined, when the last debate on this subject took place in January, we were just setting up the Office for Product Safety and Standards. We talked then about the collection of data, and my Department is working with National Trading Standards to consider ways to collect data to back up any proposed changes.
To recap, criminal events in which people use fireworks are investigated by police, if they are reported. In some cases, they attract fines and, in others, imprisonment.
Mr Bailey
I do not think that anyone would say that the police do not investigate. We are saying that the level of resources is such that they are not often able to carry out the sort of investigation that enables them to identify the perpetrators and bring them to justice. Can the Minister give me an indication of just how many investigations have taken place, how many fixed penalty notices have been given and how many perpetrators of serious firework-related crime have been prosecuted?
Kelly Tolhurst
I would like to refer to the hon. Gentleman’s comment and also to his earlier remark about an incident in which a firework was thrown into a pub. He suggested that it was not investigated—
Kelly Tolhurst
Perhaps I misunderstood, but that is what I heard from this end. My suggestion is that the police do take such matters seriously, in any constituency. Regarding any criminal activity that is identified as serious, the police absolutely attend.
Patricia Gibson
If I heard the Minister correctly, she suggested—if she did not say—that the work of the Office for Product Safety and Standards is ongoing. I think that is what she said—what I understood. If the office is not yet in a position to tell us how it will proceed on fireworks, with all the concerns around them, do we have a timeframe for when it might bring forward its own conclusions or proposals about how we move forward?
Kelly Tolhurst
I will move on to that reference later in my speech, and to how potentially I, as the Minister responsible, and in line with the Office for Product Safety and Standards, would like to take the matter forward. If the hon. Lady would bear with me, that would be great.
The hon. Member for Glasgow Central suggested that it was not possible to seize fireworks in some cases. I would like to reassure her that fireworks can be seized under the Consumer Protection Act 1987 and the Explosives Act 1875. Just to give her an example, Greater Manchester seized 50 kg of bangers last year and 36 kg of category 4 fireworks, and Worcestershire seized fireworks from two different premises.
Alison Thewliss
I am not aware of the circumstances that the Minister mentions. Were those fireworks seized from commercial or residential premises? On bonfire night, Police Scotland deployed public order specialists in Pollokshields. They arrested people, and they are still arresting people and investigating. The problem is not the police’s response but the source of the fireworks.
Kelly Tolhurst
To answer the hon. Lady’s direct question, I have the data regarding the volumes as opposed to how many premises or individuals—[Interruption.] The volumes that I said, the 50 kg of—[Interruption.]
Mr George Howarth (in the Chair)
Order. I do not think we can have mumbling from a sedentary position.
Kelly Tolhurst
I said that the information I have is in regards to the volume and not to how that volume is made up.
Although only a minority of users of fireworks misuse them, I understand that one individual can have a massive impact on a community. That is why the Government continue to believe that the best way to continue to reduce any distress caused by fireworks is to work with industry, retailers and others to promote their safe and responsible use through guidance and public education and to ensure that appropriate action is taken against those who break the rules.
At the previous debate in January, the then Minister with responsibility for fireworks had just announced the creation of the new Office for Product Safety and Standards, and I am delighted that the office is already working with industry, retailers, charities and others, including the Royal Society for the Prevention of Accidents and Netmums, to promote the safe and responsible use of fireworks and raise consumer awareness of firework safety. The campaign that the office has undertaken, with its partners, has reached more than a million people through social media, GP surgeries and post offices. The office has also been providing access to expert advice to support trading standards work in enforcing the regulations, including through the funding of the testing of potentially unsafe fireworks.
Jeremy Lefroy (Stafford) (Con)
Has there been any investigation of the issue of inspections by trading standards, as opposed to by the Health and Safety Executive? Two people lost their lives in a firework explosion in my constituency a few years ago, and it was implied that although trading standards are allowed to inspect places where up to 2 tonnes of fireworks are kept, they did not have enough expertise to deal with an amount of explosive that was greater than that which Guy Fawkes used in these Houses of Parliament. Would it not be better for the Health and Safety Executive to come in at a much lower level than 2 tonnes, which I believe is the law at the moment?
Kelly Tolhurst
I thank my hon. Friend for highlighting his constituency concern. As he outlined, local trading standards and local authorities license the storage of fireworks, but the Health and Safety Executive ultimately has responsibility for the health and safety of all premises—the overriding health and safety regulations—whether it be for work or storage. Since I have been in post as Minister, I have not had any representations made to me on the storage of fireworks; they have been more about their use. From my personal experience, I can say that if there are operations within individuals’ constituencies, or even if the general public have any concerns about where fireworks are being stored, they are absolutely to contact the local authority and trading standards, but I suggest that they also contact the Health and Safety Executive, which has the responsibility for carrying out investigative work when complaints have been made.
Jeremy Lefroy
If I may just follow up on that, in metropolitan areas the fire and rescue authorities usually have responsibility for the inspection of storage and they have real experience in that area. Would it not be better to ensure that not just in metropolitan areas but in county authorities a similar regime was put in place under the overall provision of the HSE, but involving fire and rescue authorities right from fairly low levels of firework storage?
Kelly Tolhurst
I thank my hon. Friend for his suggestion. I know that local forces work well with local authorities and other agencies on how best to implement regulation, control local problems and carry out enforcement. My hon. Friend makes a very good point and it is something we would have to discuss with those agencies and the local authorities involved.
During the debate in January, the then Minister agreed to meet with hon. Members who had an interest in the matter and discuss their concerns. As I said in response to a Business, Energy and Industrial Strategy question last week, I am open to hearing more and to receiving information and evidence on firework safety issues. This debate has certainly provided much information for further consideration.
Patricia Gibson
The Minister is being extremely generous with her time. I just want to ask her the question that I think everyone in this room wants to ask, and probably every member of the public who has an interest in the issue. Is she minded to have a consultation? I hear what she says about what has been going on, but is she minded to proceed down the path of a consultation on the sale of fireworks? I think that is what a lot of people want to know.
Kelly Tolhurst
I hope to have a meeting, which I think may also have been offered by my predecessor, with hon. Members who are interested. That will be an opportunity for them to discuss this issue with me, because what has come out today is that there is no consensus. There are different elements, and a number of issues and different opinions have been discussed. That is absolutely fine—that is what a debate is about—but it is not something that we could run with. As the Minister responsible, I would like to come up with a suggested way forward, looking at things in a more organised way. That is why I suggest a face-to-face meeting with hon. Members to discuss their concerns and suggest how we might take this matter forward.
Following the January debate, officials were tasked with reviewing the guidance. In order to ensure that all views are taken into account, I have asked those officials to connect constructively with key stakeholders during the next steps, addressing any awareness or information gaps. The creation of the Office for Product Safety and Standards has given us the opportunity to make the best use of scientific evidence, incident data, risk and intelligence in our decision making. As a result, we are now in a much better position to ensure we have the right evidence-based approach to firework safety, and to commission new evidence where necessary. That will ensure we have a thorough understanding of the issues with the safe sale and use of fireworks.
I will respond to a couple of questions. The hon. Members for Sheffield, Brightside and Hillsborough (Gill Furniss) and for North Ayrshire and Arran (Patricia Gibson) have asked about the consultation on fireworks, and I will happily meet Members to discuss a way forward. As I have already outlined, the Office for Product Safety and Standards is gathering data and looking at ways in which we can acquire the thorough evidence that we will need to back up anything we introduce. As for enforcement, I am personally committed to making sure that we enforce the law in this country, as the hon. Member for Sheffield, Brightside and Hillsborough knows and as I highlighted last week.
We are also committed to consumer protection. I made my interest in that area expressly clear in two different debates last week, as well as my interest in the data and the work that we are doing. The Office for Product Safety and Standards and the Department are using data scientifically to make better decisions on consumer protection and safety.
Gill Furniss
It is really generous of the Minister to offer to meet those of us who have taken part in the debate. However, as I said earlier, it is 13 years since the last regulations were instated, so does she agree that a complete review of the situation is now timely? Things have changed since then. We have heard about the fireworks that sound like bombs, the high decibel levels, and the different lengths of time that things take, so it would be nice if the Minister could confirm that when she meets us, it will be with a view to reviewing the entire situation surrounding fireworks.
Kelly Tolhurst
I thank the hon. Lady for her thanks for my suggestion that we should have a meeting. However, as I say, I have been in this role since July, and before I commit to anything, I need to be confident of what we would achieve and how we would achieve it. I am sad to say that I will not use today as an opportunity to confirm what the hon. Lady has asked for, but I have open ears and an open mind on what hon. Members might want to highlight.
Susan Elan Jones
If I were to attend the meeting with the Minister, I would say to her that for me, the most important item is restricting to certain dates the use of fireworks outside of organised displays. I think that every Member would have a different view on that, but the reason I am going to push the Minister a bit further about a public consultation is that the more views we have, the more informed the Government will be.
Kelly Tolhurst
I thank the hon. Lady for her comments, but as I have highlighted, I will not commit to a consultation until I have met hon. Members, spoken with my officials, and worked out with them what the best way forward is. I will be quite frank: I am not for moving on that today. However, as I have highlighted, I have open ears and an open mind, and it is obvious from today’s debate that there is a range of differing views.
To highlight two elements of the debate, I support hon. Members on the question of the problems they have raised, and to pay tribute to our emergency services. We have heard about how our emergency services have been targeted, with people using fireworks in a criminal way against those charged with protecting us. Like anyone listening to the debate and to the stories that hon. Members have recounted, I think it is disgusting that anyone working in the emergency services might be threatened with fireworks, even on a firework night. That is totally disgusting, and I share hon. Members’ concerns about that.
I will also highlight hon. Members’ concerns about animal welfare. We have heard personal stories about hon. Members’ pets and the disastrous things that have happened to horses, and I can recount stories from years ago. I was pleased to hear that the hon. Member for Newport East (Jessica Morden) did not have a story about a hamster, and it was nice to hear about her father and his desire to have fireworks in their yard. My father would not, because the Catherine wheels that were available in the 1970s, when I was small, were dangerous: half of them did not finish or go off. Product safety has moved on significantly in the past 30 years, and although we are still targeting people who use fireworks incorrectly, the products have improved vastly. We recognise people’s concerns about their pets and animals, but it is a difficult debate.
We have heard that we should move people to public displays, rather than their having fireworks in their garden. However, we have heard complaints about public displays as well as informal ones, so the question of what people want is complex. There are many differing opinions, and we will have to make judgments about how far we need to go and what the right balance is. Legislation and enforcement always involves a balance: ensuring both that people’s rights are protected and consumers are safe, and that people are able to enjoy the things that I am sure everyone loves about fireworks.
Alison Thewliss
If the Scottish Government’s consultation comes back next year in favour of greater restrictions on sale, will the Minister devolve the powers to the Scottish Parliament?
Kelly Tolhurst
I am afraid that I cannot commit to that today, because I do not know what the Scottish Government’s review will say. If I am still in post, I will happily look at it at that time.
I thank everyone who has taken part in the debate. I reassure the Chamber that I am clear that the safety of our constituents remains a priority, and I will consider the work of my officials and look at the evidence base. I encourage everyone present who is interested and has contributed to the debate to meet me for a proper discussion, which will enable the Government to look at the problem and decide on the correct way forward. I also thank you, Mr Howarth, for your patience this afternoon.
Helen Jones
I take this opportunity to thank all Members who have participated in the debate and made some very useful contributions to it. I would like to be able to thank the Minister, but in 21 years I have seldom heard a response that took so little cognisance of the debate that had just happened.
We have now had three e-petition debates on the issue, yet the Government have taken no account of the public views that have been expressed time and time again. I remind them that the petitions system was set up as a joint system between Parliament and Government in the expectation that Government would take it seriously, and they clearly are not. The Minister has talked about enforcement, but she will not commit more resources to it.
Helen Jones
One moment. The Minister has said—[Interruption.] No, I am not giving way; I have not finished my sentence. She has said she believes that she needs to collect more data and that there has been no unanimity in this debate. This debate was unanimous about wanting more controls on fireworks. She said that she is sorry for our emergency services, but she has put forward no way—
Helen Jones
I have two minutes to wind up. The Minister has said that she wants to protect our emergency services, but she has come up with no way of doing that. She has said, “We want to work with the industry.” I wonder whether that will be as successful as the Government’s obesity strategy has been in working with the industry concerned.
My constituents and other Members’ constituents are clear that they want action. I know the Minister is a junior Minister and is unable to promise much herself, but the Home Office has to start taking this matter seriously or we will be here debating it time and time again until it does. My Committee will certainly want to look at it again. These are serious issues about people being injured, emergency workers being attacked and people’s lives being made a misery. It is time that the Government started to take it seriously.
Question put and agreed to.
Resolved,
That this House has considered e-petition 231147 relating to the sale of fireworks to the public.
Draft Timeshare, Holiday Products, Resale and Exchange Contracts (Amendment etc.) (EU Exit) Regulations 2018
Kelly Tolhurst Excerpts(5 years, 5 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 Timeshare, Holiday Products, Resale and Exchange Contracts (Amendment etc.) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Pritchard, and to introduce the regulations, which were laid before the House on 22 October. The regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They form part of a wider programme of work to adjust our existing legislative framework in readiness for leaving the European Union next year. If approved, the regulations will make minor and technical amendments to the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010, to correct deficiencies that would arise from the United Kingdom’s withdrawal from the European Union. The Government maintain that the best outcome for the UK is, of course, to leave the EU with a good deal. If a deal—and therefore a withdrawal agreement—is struck, the implementation date of the draft instrument could be changed by any subsequent Bill that the Government introduce to implement the withdrawal agreement in UK law. It is, however, the duty of a responsible Government to prepare for all scenarios, which is what we are doing by bringing the draft instrument, and other secondary legislation, before the House.
The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 transpose into UK law a 2008 EU directive on timeshare and long-term holiday products, and improve consumer protections for those investing in timeshares across European economic area states, aiming to increase consumer confidence in the industry. That was done through a number of new rights and obligations on traders. Those regulations included greater requirements on timeshare sellers to provide key information to consumers before the contract, including the consumer’s right to withdraw and the requirement that the information and the contract be provided in the language of the member state in which the consumer was resident or of which they were a national. The regime also extended consumer protections to a much broader range of holiday-related services, including resale contracts, exchange contracts and long-term holiday contracts, as well as timeshare contracts. Those services are all characterised by long-term commitment or significant financial risks for consumers.
If approved, the draft regulations before the Committee will make minor, technical amendments to the 2010 regulations, to correct deficiencies that would arise from the United Kingdom’s withdrawal from the European Union. The draft regulations amend references to the EEA states and to the existing language requirements, and include amendments that ensure that contracts governed by UK law are still protected when the UK is no longer a member state, and that widen the scope of the regulations, so that certain contracts governed by the law of EEA states will now be subject to the same regime as contracts currently governed by the law of third countries. In addition, language requirements are amended so that key information must be provided in English rather than in the language of an EEA state.
In practice, most of the protections of the 2010 regulations will continue, except that contracts applying the law of an EEA state will now be subject to the same requirements as contracts applying the law of a third country. The draft instrument will save the current regulations, so they will remain the same for UK consumers buying timeshares and other long-term holiday products in the UK and from UK companies, where the contracts are governed by the law of the United Kingdom. Where UK consumers buy certain timeshares and other long-term holiday products governed by the law of an EEA state, those contracts will now be treated in the same way as contracts applying the law of a third country, as EEA states will now be third countries.
The new regime generally will not cover contracts where UK consumers purchased timeshares and other long-term holiday products from EEA traders when they are in an EEA state. Generally, those contracts will be subject to the laws of that member state, as a UK consumer will no longer be a citizen of an EEA state. An EEA state’s law might not apply to UK consumers in the same way as it did previously. Although UK and EU law is highly aligned, we encourage consumers to be aware where possible of the protections offered by the specific seller and by the member state where the seller is located. That would help to clarify whether the level of protection is different from that of the UK.
The draft regulations ensure that the contract and mandatory pre-contractual information are provided in English, but allow them also to be provided in another language, irrespective of whether it is an official language of the EEA state. An assessment of the impact of the statutory instrument has concluded that it does not represent a policy change. It is expected to result in little or no wider impacts or transfers and to have a minimal effect on UK businesses and consumers or on the wider society, environment and the rest of the economy—as I previously set out, generally the terms of the draft regulations will remain the same for timeshare and other long-term holiday products sold in the UK.
This Government believe that the draft regulations are a sensible and necessary use of the powers of the European Union (Withdrawal) Act 2018 and will ensure that our consumer law continues to function effectively on exit day. I commend them to the Committee.
Kelly Tolhurst
I thank hon. Members for their contributions. As I have said, we remain confident that we will reach an agreement with the EU, but it is important to prepare our legislative framework, in case we leave the EU with no deal, to protect our consumers and businesses. That is what this instrument is doing. I have demonstrated that the proposed regulations do not make any substantial changes to the existing regime for the protection of buyers of timeshares and other long-term holiday products in the UK, nor to the general standards that timeshare traders are required to meet when trading in the UK. I might add that the regulations do not extend the Secretary of State’s power in any way. They are essential to ensuring that the retained EU legislation that sets out these requirements continues to work effectively in the UK immediately after exit day. That is what the instruments are designed to do.
I will address the comments of the hon. Member for Edinburgh East regarding the wider issues around timeshares. The current timeshare regime provides adequate protection for timeshare consumers at the point of sale, although many pre-2010 timeshare contracts pre-date the current regime. Those contracts, which are becoming less common, are not covered by the rights and protections introduced in the 2010 regulations. I understand the points that the hon. Gentleman made about any future changes to regulations and what he would like to see. What we are doing with the process in this particular SI is to save UK law with EU law. If this SI came into force, in the event of no deal, it would be purely down to the UK Parliament to decide if we wanted to change any future laws, in which case we would be looking at some of the matters he has spoken about.
With respect to the wider scope of the regulations and engagement with them, the CMA is the enforcer of the regulations in the UK. While the Department has not carried out an impact assessment, we have consulted two key bodies—the Resort Development Organisation and KwikChex—which are both members of the Chartered Institute of Trading Standards. We have had conversations with them. As hon. Members may know, the Consumer Protection Partnership, which met in the summer, fed into the draft regulations. We also had a consumer roundtable.
In response to some of the points that have been made, the Government always have high standards of consumer protection in mind. That is an area that I am responsible for and in which I take a personal interest, so I am always willing to look at new evidence, advice and opinions on changes that we could make to give consumers the protections that they need, but that needs to be done in the proper way.
I know that the hon. Member for Sheffield, Brightside and Hillsborough is concerned about cross-border co-operation and redress. The Government will present future draft instruments to deal with that. I can assure her that, while that is not dealt with in this particular statutory instrument, it is something that we are working on in the Department. Which? has been working with officials to feed into no-deal work being done at the Department for Business, Energy and Industrial Strategy, and is doing its own piece of work with regard to the Government’s preparedness for a no-deal scenario. Which? is working with us and we are listening very carefully to anything that it has to say.
If the draft secondary legislation is not agreed today, it will cause part of the legislation to be inoperable, which is not in the interests of UK consumers. We must ensure, in the event that there is no agreement with the EU, that the right regulations and legislative framework are in place to provide buyers of timeshares and related products with adequate protection. I thank hon. Members for their time and for indicating their support for the SI.
Question put and agreed to.
Oral Answers to Questions
Kelly Tolhurst Excerpts(5 years, 5 months ago)
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Stewart Malcolm McDonald (Glasgow South) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
We are committed to ensuring all employers pay their workers correctly. As part of our enforcement strategy, Her Majesty’s Revenue and Customs targets employers with information and advice. In April 2018, we launched a £1.48 million campaign to raise awareness of the national minimum wage rules, particularly in sectors with a high risk of non-compliance. HMRC contacted over 617,000 employers prior to April 2018, reminding them of their responsibilities to pay the higher rate.
Stewart Malcolm McDonald
The Government are failing thousands of workers who are falling victim to unpaid trial shifts. The law is extremely grey, and despite my efforts to clear it up, the hon. Lady’s Government talked out my Bill. We know that the guidance the Government produce and reminding employers is not enough. As we go into this Christmas period, when this will be another employment epidemic, will she pledge to make this the last Christmas of the unpaid trial shift?
Kelly Tolhurst
Short unpaid trials as part of a genuine recruitment process can be legal. However, longer trials with no prospect of employment are illegal. Individuals working on illegal trials are workers and they are entitled to the minimum wage. I can inform the hon. Gentleman that, as per the communication I have had with him in recent months, I have indeed, with my Department, just reviewed and finalised new guidance on unpaid work trials and work experience for interns, which will be published in the next few weeks.
Stephen Kerr (Stirling) (Con)
Does the Minister agree with me that the payment of a living wage is actually in the best interests of employers because it encourages engagement, loyalty and productivity?
Kelly Tolhurst
I thank my hon. Friend for highlighting that point, and it is absolutely true. This Government are committed to increasing the rate of pay for the lowest-paid workers. I do agree with him that this of course encourages employee loyalty to employers that do so.
Ruth George (High Peak) (Lab)
Kelly Tolhurst
Let me be clear: it is illegal not to pay the national minimum wage to workers who are entitled to it. This Government have been very clear. We are looking at and currently reviewing the Taylor review recommendations—we will be implementing the majority of them—and the Government will be responding soon with what we will do.
Rachel Reeves (Leeds West) (Lab)
Following on from the question from my hon. Friend the Member for High Peak (Ruth George), last week yet another employment tribunal found in favour of workers getting the minimum wage and other workplace rights—in this instance, at Addison Lee—but too many firms continue to label workers as self-employed when they are not. When will the Government finally bring forward this long overdue legislation and—as the Taylor review, the GMB union and the Business, Energy and Industrial Strategy Committee have argued—ensure that all workers are paid the minimum wage?
Kelly Tolhurst
The hon. Lady will remember that it was this Government that set up the Taylor review. We have been very clear. We are committed to enforcement; we have doubled the enforcement budget for the national minimum wage. In fact, the arrears recovered in the last year totalled £15.6 million, affecting more than 200,000 workers. This Government are committed and we will respond in due course. We are committed to making all workplaces fair for all.
Mr Dennis Skinner (Bolsover) (Lab)
If the Minister is very keen on the national minimum wage, what is she saying to Mike Ashley, who has 3,000 workers at Shirebrook, most of them on zero-hours contracts? They do not get the national minimum wage. There are only a handful. Is it not time that this Government, instead of talking about the national minimum wage, did something about it?
Kelly Tolhurst
I say again: we are committed to enforcing on underpayments of the national minimum wage. We have doubled the enforcement budget. We are delivering for those individuals. And zero-hours contracts do not necessarily mean that there will be a breach of the national minimum wage. We are committed to delivering.
Sarah Jones (Croydon Central) (Lab)
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Sainsbury’s has confirmed that there are no planned store closures as a result of the merger. The independent Competition and Markets Authority is investigating the effects on competition and has until 5 March 2019 to report. The CMA’s investigation is independent of Government and we must not pre-judge the inquiry. The Secretary of State wrote to the CMA in May on this issue and I met with the CEO of Sainsbury’s last month.
Gerald Jones
Sainsbury’s has indicated that it will look at price cuts of 10% under a merger with Asda, but it has also indicated that it would make efficiency savings of around £500 million. I know from this Government’s record that efficiency savings often mean cuts somewhere down the line, so what discussions has the Minister or the Department had with trade unions to ensure that all jobs—not just in store, but in distribution and warehousing—are safeguarded?
Kelly Tolhurst
The hon. Gentleman is right to raise concerns, because any merger and change will of course concern the workers in the organisations, but I have spoken with Sainsbury’s and it has been clear that the pay and reward structure that is already in place is not affected as part of the merger. We will continue our communications with the stores. As he will know, the CMA is currently looking at the merger and is due to report. We will be monitoring this, as we would in any such circumstances.
James Cleverly (Braintree) (Con)
The National Farmers Union has expressed disquiet at this proposed merger. Will my hon. Friend give an assurance to me and to the House more generally that the Government will always promote competition both to improve choice for the consumer and to improve options for people in the supply chain, particularly in farming?
Kelly Tolhurst
I thank my hon. Friend for his question. He is absolutely right: one of the things that we are committed to is making sure that we continue with our world-renowned competition regime. It is right that, even at a ministerial level, we are independent of the CMA, but we work very closely with the CMA on priorities, and looking at supply chains is a key area for all mergers, as is how we protect consumers and markets in future.
Kevin Brennan (Cardiff West) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
My Department and the Department for Work and Pensions recently met Parental Pay Equality, which is campaigning to extend shared parental pay to self-employed parents through changes to maternity allowance. We are exploring ways to support self-employed parents further.
Kevin Brennan
I thank the Minister for that answer. Has she read the recent “Balancing Act” report from Birkbeck University and Parents in Performing Arts, which shows that 72% of freelancers would like to take shared parental leave if they were allowed to? This policy would not cost anything, but it would improve equality and productivity at the same time. Will she—not just officials—undertake to meet the parental pay and leave campaign and listen to my hon. Friend the Member for Batley and Spen (Tracy Brabin), who has a ten-minute rule Bill on this issue?
Kelly Tolhurst
I will always engage with anyone who has a view on this particular issue. We are evaluating shared parental leave and pay to look at the barriers to take-up, including those affecting self-employed people and mothers, particularly, who qualify for maternity allowance. We are currently evaluating that and we will be reporting on that next year. However, I will meet with those people.
Ben Bradley (Mansfield) (Con)
I recently met Mike Watkinson from Nottinghamshire’s Federation of Small Businesses to discuss a number of challenges facing business in Mansfield, one of which was support and access to benefits for self-employed people. Does my hon. Friend agree that, as the party of business, it is absolutely vital that we help small business owners and support them to keep the show on the road when they need it?
Kelly Tolhurst
Self-employment does allow the flexibility that some employed workers are unable to take advantage of, but it is right that we work on this and consider the consequences for the self-employed and small businesses. When we are evaluating and looking at how we move forward—as this Government are committed to doing—it is right that we look at this in the round, in the context of tax, benefit and other such things, but particularly, to support small businesses to continue providing the employment that we need.
Tracy Brabin (Batley and Spen) (Lab/Co-op)
I thank my colleague and friend, my hon. Friend the Member for Cardiff West (Kevin Brennan), for raising this question. On my ten-minute rule Bill on shared parental leave, the Minister will have heard across the House the frustration with the Taylor review—that it has been a year and a half and we have not had any implementations of those recommendations. This was one of them; it is cost-neutral. Does the Minister agree that this could be the engine of change—it could be the outlier—that actually gets those recommendations put into place?
Kelly Tolhurst
I am grateful to the hon. Lady for highlighting this issue through her Bill. We have not yet had the opportunity to debate it, but I know she met Ministers earlier in the year to discuss it. She has mentioned the Taylor review. We are committed in the very near future to doing that, and we are considering self-employment, especially with regard to shared parental leave, how we can benefit and more people taking it up.
Damien Moore (Southport) (Con)
Ian C. Lucas (Wrexham) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
While the Government set the strategic direction for the Post Office, they allow the company the commercial freedom to deliver this strategy as an independent business. The 74 Crown branches are being franchised to WHSmith, either on-site or through relocation to a WHSmith store. There will be no reduction in the number of branches from the franchising with WHSmith.
Hugh Gaffney
I am a proud member of the Communication Workers Union and a former postal worker. The Minister has said in written answers to Members that the privatisation of the Post Office is a commercial decision for the Post Office and that the Government only set the strategic direction. Nevertheless, the Post Office has decided to privatise these Crown branches and is using tens of millions of pounds of public money to bankroll it. This is a disgraceful situation. When will the Government start exercising some basic financial oversight?
Kelly Tolhurst
I am sorry, but I entirely disagree with the hon. Gentleman. We have no closure programmes. I should add that under Labour’s management of the Post Office its network shrank by 37%, which resulted in 7,000 closures, and that in the first five years of Labour Government the Post Office went from being in profit to having losses of more than £1 billion.
James Frith
Let us have another look at this, shall we? Seventy-four of the public’s post offices are being privatised without the permission of the public. WHSmith is already advertising minimum wage part-time roles to take over post office counters, while consultations on those jobs have yet to be completed. Can the Minister imagine what it must feel like for your job to be under consultation and to face possible redundancy, with the job already advertised for someone else? Will she intervene and call this practice out, as a matter of principle?
Kelly Tolhurst
Let me first highlight the fact that there are no Crown post offices in the hon. Gentleman’s constituency.
Franchising is one of the measures to support and maintain the long-term sustainability of our network of 11,500 post offices throughout the country. As I said, the network was reduced under the last Labour Government, but we are committed to the Post Office and to keeping those branches open.
Ian C. Lucas
Restrictive practices are preventing my constituent Mr Avi Bungar from providing various post office services because he runs a sub-post office. Why are the Government giving big business WHSmith a sweetheart deal and preferential Crown post office terms, and preventing sub-postmasters from having the same?
Kelly Tolhurst
I respect the fact that the hon. Gentleman has experienced issues in his constituency in relation to a particular post office, but to set a long-term sustainability programme for the Post Office against potential postmasters is quite frankly wrong. This is part of a sustainable programme that will enable us—this Government—to keep 11,500 post offices open, to increase, via the Post Office, the pay to which post office workers are entitled, and to give them longer hours and better locations.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
Pubs make a major contribution to the economy and to community life. That is why the Government are supporting pubs through measures such as the beer duty freeze and the business rates retail discount announced in the Budget.
Toby Perkins
That does not really answer the question of why 7,000 pubs have closed since 2010, so I encourage the Minister to address that when she returns to the Dispatch Box. To be more positive, she will have seen that the all-party parliamentary group on pubs is bringing about a parliamentary pub of the year award, so I encourage her to nominate a pub in her constituency and to join us and the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Rossendale and Darwen (Jake Berry), on 15 January to find out which is Britain’s greatest parliamentary pub.
Kelly Tolhurst
I recognise the hon. Gentleman’s concern and his work in this area over a long period of time. He is a champion for the sector. There are several reasons why there may be pub closures, which is why we are acting to freeze beer duty and address small business rate relief. We estimate that 75% of pubs will benefit from the reductions announced in the Budget. To answer his second point, I will happily attend the event on 15 January, if possible.
Several hon. Members rose—
Stephen Timms (East Ham) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
The right hon. Gentleman raises a great question, and this is one of the things we are working on. The British Business Bank is working on start-up loans, and there are initiatives that work on enterprise in the school setting. I left school and went into an unofficial apprenticeship, and I think that we should all get behind such schemes and apprenticeships, because getting into work really can deliver the entrepreneurial spirit that people need.
Kevin Foster (Torbay) (Con)
Last week, the first new major hotel to be built on Paignton seafront in decades was approved, bringing with it £40 million of investment. What role does my right hon. Friend see the industrial strategy playing in supporting more high-value investment in Torbay’s tourism industry?
Neil Gray (Airdrie and Shotts) (SNP)
Kelly Tolhurst
I thank the hon. Gentleman for his question, which is timely just after fireworks night. The Government do not have any plans to change the legislation, but I am always willing to look at new evidence and to discuss the issue with hon. Members.
Steve Double (St Austell and Newquay) (Con)
Lithium extraction has the potential to make a significant contribution to the aims of our industrial strategy, as well as being a huge boost to the Cornish economy. May I invite the Secretary of State to meet businesses that are seeking to exploit this new opportunity? If he would like to come to Cornwall to do that, he would be very welcome.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
The post office in my home town of Tain was closed and moved into a newsagent. There is not room to swing a cat there, although the staff are excellent. Will Her Majesty’s Government look again at the dimensions and layout of post offices as and when they are amalgamated with retail businesses?
Kelly Tolhurst
I do not know the particular setting that the hon. Gentleman refers to, but I am more than happy to meet him to discuss the matter so that I can raise his concerns directly with the Post Office.
Kirstene Hair (Angus) (Con)
We recently heard the disappointing news of the closure of the Michelin factory in Dundee, with the company citing cheaper imports as the reason. It will cause the loss of 845 jobs, many of which will be in my constituency. Will my hon. Friend assure me that the industrial strategy will look into ways to support traditional industries as well as new technologies?
Jim Shannon (Strangford) (DUP)
What a challenge, Mr Speaker. Small and medium-sized enterprises create lots of employment throughout the whole United Kingdom of Great Britain and Northern Ireland. What is the Minister doing to improve broadband so that SMEs can improve and employ even more people?
Kelly Tolhurst
The hon. Gentleman is quite right that we need to improve broadband, which is an integral part of delivering our productivity challenge. We are making sure that businesses have in place all the infrastructure they need to thrive and survive.
Tom Pursglove (Corby) (Con)
Will the Minister update the House on recent progress towards a steel sector deal?
Lisa Nandy (Wigan) (Lab)
For 134 years, Wigan Crown post office has been the anchor of our high street and the beating heart of our community. It survived two world wars and one global financial crash; why can it not survive eight years of Tory Government?
Kelly Tolhurst
As I have said repeatedly during this questions session, we are not closing post offices. If the hon. Lady has a particular problem in her constituency, I am more than happy to hear her concerns about that individual case, but we are not closing post offices. We are taking a sustainable approach to make sure that we achieve and maintain those 11,500 branches throughout the UK.
Bob Blackman (Harrow East) (Con)
What action is the Minister taking to promote the development of small-scale modular nuclear reactors so that we can diversify the energy supply?
Draft Textile Products (Amendment) (EU Exit) Regulations 2018
Kelly Tolhurst Excerpts(5 years, 5 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 Textile Products (Amendment) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Hosie. The draft regulations, which were laid before the House on 10 October, will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They form part of the wider programme of work to adjust our existing legislative framework in readiness for leaving the European Union. While we remain optimistic of reaching a Brexit deal that is of mutual benefit to the UK and the EU, it is the duty of a responsible Government to prepare for all scenarios. That is why we are bringing the draft regulations, and other such instruments, to the House. The regulations are part of contingency planning to ensure that our consumer legislation continues to function effectively after exit day.
Maintaining a comprehensive framework of consumer rights is crucial for prosperity. Household expenditure accounts for about 60% of the UK economy. In 2016, retail sales stood at £800 million for textile stores and £40 billion for clothing stores. Confident consumers help to raise productivity and deliver an economy that works for everyone.
The draft instrument amends EU regulation 1007/2011 on textile fibre names and related labelling and marking. The EU regulation prescribes labelling or marking that must be applied to textile products to inform consumers of the product’s textile fibre composition and the presence of non-textile parts of animal origin, such as fur.
Gareth Thomas (Harrow West) (Lab/Co-op)
Confident consumers need confidence that regulations are enforced. Will the Minister explain how the regulations are enforced at the moment, and how she envisages the draft regulations being enforced if they are needed?
Kelly Tolhurst
The EU regulations are currently enforced by the individual member states of the European Union, of which we remain one. Our enforcement is currently carried out via trading standards at regional and local level, in conjunction with our National Trading Standards force. That is the system that will be in place if we approve the instrument.
The EU regulation also empowers the European Commission to approve new textile fibre names and to modify technical provisions, such as testing methods. The draft regulations also modify the Textile Products (Labelling and Fibre Composition) Regulations 2012, which set out enforcement provision for the EU regulations in the UK.
The European Union (Withdrawal) Act retains in UK law EU regulation 1007/2011 in its entirety on exit day, but once the UK leaves the EU, the EU regulation will no longer apply to textile products placed or made available on the UK market. To maintain high consumer protection, the draft regulations make essential changes to ensure that requirements to indicate the fibre content of textile products and non-textile parts of animal origin continue to apply after our exit from the EU. The draft regulations also remove provisions that will no longer be relevant, such as requiring a label to be in an official language of the European Union. After exit, the label must be in English.
The draft regulations also transfer the power currently exercised by the European Commission to approve new fibre names, tolerances—the difference between the fibre composition on the product label and the actual composition demonstrated through testing—and testing procedures to a UK Secretary of State. This is necessary because after the UK leaves the EU it will no longer be appropriate for the European Commission to approve new textile fibres for the UK market. Repatriation of the functions will enable the UK to amend its textile labelling requirement to take into account innovation and technical advances in the textiles sector.
Chris Stephens (Glasgow South West) (SNP)
My question is similar to that asked by the hon. Member for Harrow West. Will the Minister give us some assurances about what protection there will be against cheap textile copies being imported if the UK leaves the European Union?
Kelly Tolhurst
As I outlined, we already have a strong enforcement regime exercised by trading standards at local level. Also, trading standards and the Office for Product Safety and Standards work at the borders making checks on products coming into the marketplace that may not be legal under the regulations. That will continue.
After EU exit, businesses will be able to apply to a UK Secretary of State to have a new fibre name adopted for the UK market, just as they can now apply to the European Commission. Finally, to maintain higher levels of consumer protection, the powers and penalties applicable to breaches of the EU regulation will be retained after EU exit. The regulations make only minor amendments to the UK textile labelling regulation to ensure that there are no references to the EU process: for example, they remove the need for the Secretary of State to have regard to the penalties for breaching the EU regulation in EU member states when carrying out a review of the regulation.
The draft regulations deliver certainty and stability for consumers and business—a key objective for the Government.
Gareth Thomas
Further to my earlier intervention, and the intervention by the hon. Member for Glasgow South West, trading standards has been one of the areas of local authority services hardest hit by cuts. Do the Government have any plans to increase funding for trading standards, so that consumers can genuinely have confidence that in the brave new world that hon. Lady imagines, consumers will not suddenly lose out?
Kelly Tolhurst
The hon. Gentleman raises an important point. It is true that the Government are committed—I am particularly committed—to enforcement and to a trading standards service that carries out its required role. There is, as the hon. Gentleman knows, a consumer Green Paper. We are looking at ways to improve services, and a key priority for me is how trading standards are working nationally. I am extremely aware of the issue, and I recognise the importance of the service as we leave Europe, in whatever way that happens.
Gareth Thomas
The hon. Lady has given an interesting answer—but to a different question. I asked specifically whether she envisages more funding for trading standards, and I press her gently to be more specific.
The Chair
Order. I think we will make that the last question specifically about trading standards, as it goes slightly beyond the scope of the regulations.
Kelly Tolhurst
The hon. Gentleman has asked about funding and, as I outlined in my previous answer, this is an area I am particularly interested in and focused on in relation to trading standards enforcement. We will be looking at the consumer Green Paper, and if I envisage changes being made, I will bring them to the House.
Consumers will experience no practical change as a result of the draft regulations, as after EU exit textile products will continue to be labelled as they are now. Businesses sourcing textile products from UK manufacturers, or importing those products from outside the EU, will experience limited change in the labelling regulations that they must comply with. That will also be the case for UK manufacturers. Businesses importing textile products from within the EU will become responsible for ensuring the accuracy of the labelling or marking of textile products. However, as the UK and EU textile labelling regimes will be very similar at the point of exit, UK businesses can import textile products safe in the knowledge that EU suppliers understand the shared requirements of the UK regulations.
To support innovation, businesses wishing to have a new fibre name approved will need to apply to a UK Secretary of State. It should be noted that in the last seven years, only two new fibre names have been adopted by the European Commission.
Guidance for business and consumers on the changes that the regulations will bring into effect has already been published in the consumer technical notice. The explanatory memorandum also provides business and consumers with further details of the changes that would be made in the event of a no-deal scenario. To help businesses to understand how to comply with the requirements of the regulations, further guidance will be published in due course
In conclusion, the regulations are a sensible and necessary use of the powers in the European Union (Withdrawal) Act 2018 that will ensure that our consumer law continues to function effectively on exit day. I therefore hope that the Committee will approve the regulations.
Kelly Tolhurst
The draft regulations are made under the powers conferred by the European Union (Withdrawal) Act 2018. They form part of the wider programme of work to adjust our existing legislative framework in readiness for leaving the EU.
As the talks progress, we have made a decisive step forward. We have agreed in principle the terms of the UK’s orderly exit from the EU, as set out in the withdrawal agreement. We have also agreed the broad terms of our future relationship, as set out in the outline political declaration. This puts us close to a Brexit deal—a deal that realises the benefits of Brexit and lets us focus on the big domestic issues that face our country. While we remain optimistic of reaching a Brexit deal that is of mutual benefit to the UK and the EU, it is important and prudent to have in place a regulatory and legislative framework should we leave without a deal. This draft instrument ensures that.
I have demonstrated that the draft regulations are necessary to ensure that textile labelling requirements continue to work effectively in the UK immediately after exit day. The draft regulations deliver vital certainty and stability for consumers and businesses alike. Consumer spending is, and will continue to be, critical to the United Kingdom’s economy. In 2016, retail sales stood at £800 million for textiles stores and £40 billion for clothing stores, as I have already mentioned.
Let me respond to some of the questions raised by the hon. Member for Sheffield, Brightside and Hillsborough. As I mentioned in response to interventions, the Government are committed to the consistency and continuation of the protection of consumers. In the consumer Green Paper, we are looking at ways to strengthen that and to make sure that we operate in the best way possible for the safety and rights of UK consumers. I am sure that in the future I will bring forward further measures that make sure that we protect and benefit consumers in this country.
On the mechanisms in the draft regulations to change the retained EU regulation, any changes would be made by the Secretary of State and would need to be made through a statutory instrument. The hon. Lady talked about enforcement. I have tried to outline for the Committee the fact that the Government are extremely committed to the protection of consumers. I am committed to it, as the Minister responsible.
Trading standards has an important role in enforcement and in giving consumers the comfort they need in relation to accepting that products placed on the market meet the regulations. One of my priorities and one of the Government’s priorities is to make sure that we work strongly as we can to enforce the rules. I am sure that as we leave Europe we shall look at other ways to make improvements for consumers and offer business the comfort of being able to get advice on regulations, and of the fact that the regulations can be enforced.
The hon. Lady also mentioned testing. Today we are agreeing on the regulations going into UK law for exit day. Under the new regulations the testing regime will come under the Secretary of State and we will need to issue further guidance on the UK testing formula. She is right about the highly technical issues relating to textile testing. We would have to make our approach to that extremely clear.
I hope that I have been able to answer some of the hon. Lady’s questions. I think that what has been said highlights the importance of the statutory instrument in continuing to set out clearly the requirements for textile labelling for the UK market, and in ensuring the smooth functioning of the sector.
Question put and agreed to.