Strikes (Minimum Service Levels) Bill

Kevin Hollinrake Excerpts

2nd reading
Monday 16th January 2023 Commons Chamber

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

I am grateful to the hon. Member for giving way. Will she point out where there are any criminal sanctions attached to the proposed legislation? As far as I can see, there are absolutely none. It is important that we do not scaremonger in that way.

[Kate Osborne]

If we attack the trade unions, which are made up of members who are workers, then we are attacking the workers.

The Government’s proposed legislation and the response I just got show the contempt in which they hold working people. The Government do not care about working people. They do not care about our communities who are struggling to survive in the face of unaffordable food and energy bills, and struggling to deal with the cost of living crisis and 13 years of cuts by the Conservative party. We already have the most restrictive workers’ rights in western Europe, and it is an affront to democracy that this Government are trying to restrict them further.

Of course, the Government know that the Bill is not workable. It will be held up in the other place, if it gets that far, and in the courts. They only care about attention-grabbing headlines—about moving the Overton window so the people of this country will accept more and more restrictions on their rights.

Minimum service levels already exist: our NHS teams ensure that priority calls are dealt with, and teachers ensure that special educational needs children are catered for. What we need is for the Government to provide a minimum service level every day. We hear daily of workers struggling to cope with current staffing levels. The Government should be looking at ways to address the NHS staffing crisis, not making it worse.

The Government need to accept that the reason so many sectors are saying “enough is enough” and taking industrial action—we heard the announcement today that the teaching unions will take action, and I send my solidarity to them—is the Government’s failures. The firefighters, NHS staff, transport staff and education staff that the Bill targets are the very people who saw us through the pandemic. If the Bill passes, no doubt the Government will eventually seek to apply the legislation to workers in more sectors. Instead of inflaming the situation, they should start dealing with the causes of increased strike action: low wages, fuel and food poverty, and cuts to public services.

The Bill is part of the Government’s plan to restrict all our rights and to demonise and criminalise those who are just trying to survive. As I said at the start, it is an act of political violence. The Government should do the right thing for the country and withdraw it.

--- Later in debate ---

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

I thank the Members on both sides of the House who have contributed to the debate.

The clear objective of the Bill is to protect the lives and livelihoods of the public by enabling minimum service levels to be applied to our vital public services during strikes. It does not ban the right to strike. It finds the right balance, which was highlighted by my hon. Friend the Member for Gloucester (Richard Graham), my hon. Friend the Member for South West Hertfordshire (Mr Mohindra)—who made some important points about the needs of business—and my hon. Friends the Members for Rushcliffe (Ruth Edwards), for Guildford (Angela Richardson), for Southend West (Anna Firth) and for Meriden (Saqib Bhatti).

Let me turn to some of the other points raised today. Like others on both sides of the House, I pay tribute and express our gratitude to our public sector key workers. That point was raised by my hon. Friends the Members for Sleaford and North Hykeham (Dr Johnson) and for Runnymede and Weybridge (Dr Spencer), who have vast experience of working in the public sector. I have my own personal experience, as my mother worked in the public sector all her life—a life worked to rehabilitate offenders. I am aware of the contribution that public sector workers make to our society.

The deputy leader of the Opposition seeks to blame this Government alone for the challenging times we face, but she seems conveniently to forget that we are still not free from the after-effects of the covid-19 pandemic and Russia’s illegal invasion of Ukraine. I was very interested in a point she raised in her speech, when she said, “We would have resolved this dispute long ago.” At what figure? Would it have been 11% across the public sector? That would have cost the taxpayers of this country £28 billion. That is £1,000 per household per annum. Maybe the leader of the Opposition will reflect on that now that he is here, obviously having had a call from his union paymasters.

Members ask why the Government are focusing on legislating and not resolving the disputes. The Government recognise the pressure of the cost of living on people. That is why we have committed to halving inflation and growing the economy, and why we have provided £26 billion to support individuals and businesses. We are investing billions more in schools, the NHS and social care. All that supports workers.

My right hon. Friend the Member for Witham (Priti Patel) is right to highlight the devastating impact of strikes on the economy—£6 billion, including £2.5 billion of lost income to the hospitality sector alone. That is why Ministers across Government have been meeting unions to resolve the disputes where it is possible to do so.

[Sarah Owen]

The Minister talks about the cost of strike action, but will he agree about the cost of the damage that the previous Prime Minister and the previous Chancellor did to our country and all the taxpayers and workers who we on the Opposition Benches are supporting today?

[Kevin Hollinrake]

I would highlight the downward pressure already placed on inflation, the changes to the money markets following the action taken by our Chancellor and Prime Minister and the stability being delivered through their future plan.

[Barry Gardiner]

Will the Minister give way?

[Kevin Hollinrake]

I will shortly. Ministers across Government have been meeting unions to resolve the disputes where it is possible to do so. It is obviously apparent that unions exist to represent union members. Apparently, from today’s debate, so does the Labour party. The shadow Cabinet alone has received £350,000 since 2019. It is important to reflect on those figures. We need to have the confidence that when workers strike, people’s lives and livelihoods are not put at risk, so we need the power to act. That is why this legislation is needed. The public expect us to act. It is no wonder that YouGov polling for The Times published last week found that 56% of voters support this legislation and only 31% are against it.

[Barry Gardiner]

The Minister will know that under this Bill it is possible for the Government to designate workers to perform under a contract when they have voted to go on strike. Will he at least give an assurance that there will be no attempt by any Secretary of State to designate a union official to break a strike that they have encouraged their union members to be involved in?

[Kevin Hollinrake]

I will deal with work notices later in my speech, but it is clear that it is up to employers to decide what workers are needed on certain days, and there is no discrimination between people who are union members and people who are not. That is very clear in the legislation. Hon. Members have questioned the sectors within the Bill. The sectors in scope of the Bill are justified as these sectors are where strike action causes disproportionate disruption to the general public.

[Mr Gagan Mohindra]

The Minister is making an excellent summing up, as always. Could he reaffirm that public opinion is with this side of the House rather than with the Opposition?

[Kevin Hollinrake]

I think that the polling is very clear. We have heard precious little about what the public think of this. We heard a lot about the impact on public sector workers, but the public themselves are with us on this legislation.

The Government have already announced their intention to consult on the application of minimum service levels for rail, ambulance and fire services. I welcome Members’ questions and suggestions on how minimum service levels will operate in specific services, and I note in particular the helpful contributions from my hon. Friends the Members for Milton Keynes South (Iain Stewart) and for West Dorset (Chris Loder). I look forward to the contribution of key stakeholders and experts during the consultation process. The Government will also engage with the devolved Administrations during the consultation process. The Government have been clear, however, that we may choose not to use the regulation-making powers in the Bill if adequate voluntary arrangements, where necessary, are already in place between employers in a relevant sector.

This legislation also equips employers to manage instances where a worker takes strike action despite being named to work on a strike day. It is at the discretion of employers as to what action, if any, is taken, and we hope that employers are fair and reasonable. The claim that it is a policy of this Government to sack workers is an unfair exaggeration.

I want to touch on the international examples, mentioned in the excellent speech by my hon. Friend the Member for Newbury (Laura Farris). The concept of minimum service levels is not new. They are used all over the world, including in the USA, Canada and a number of European countries including Spain and Italy. We all want to see an end to these strikes.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

claimed to move the closure (Standing Order No. 36).

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

No, we still have another two and a bit minutes to run, so I am using my discretion not to accept that.

[Kevin Hollinrake]

In response to questions regarding the consistency of this legislation with the UK’s—

[David Linden]

I beg to move, That the House sit in private.

Question put forthwith (Standing Order No. 163).

The House proceeded to a Division.

Royal Mail and the Universal Service Obligation

Kevin Hollinrake Excerpts

Thursday 12th January 2023 Westminster Hall

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

It is a pleasure to speak with you in the Chair, Ms Ali. I congratulate the hon. Member for Jarrow (Kate Osborne) on securing this really important debate about Royal Mail and the future of the universal postal service, and I very much appreciate her experience and expertise, and what she is able to add to this very important debate. She talked about the changes at the top of Royal Mail, as well as the changes in personnel in my role. I pay tribute to my predecessors, not least for their unwavering commitment to Royal Mail workers, who do such a fine job, and to a universal postal service, which I will come to in a second. Today’s debate is the second I have had on this matter in this Chamber this week, which shows how important the subject is to our constituents and to fellow Members of Parliament. I agree with the way the hon. Lady described the service; it is a lifeline for many throughout our communities.

I thank all right hon. and hon. Members for their important contributions. As they know, postal services are an integral part of the modern economy, allowing the smallest of businesses to connect with customers across the world and providing consumers with access to a vast range of products. Most people rely on at least some important information to be delivered by post. Cards and letters remain a special way to keep in touch with loved ones, and, as the hon. Member for Luton South (Rachel Hopkins) said, it was hugely important that covid tests were distributed properly during the pandemic.

In the last financial year, all postal operators delivered around 3.8 billion parcels across the UK and Royal Mail delivered around 8 billion addressed letters. My hon. Friend the Member for Wantage (David Johnston) is right that the volume of letters delivered has dropped to 8 billion; it was around double that in 2013, at the time of privatisation. Nevertheless, the importance of the postal service in keeping people connected was never more apparent than during the covid pandemic. We are hugely grateful to the delivery workers, who worked exceptionally hard to deliver letters and parcels in those difficult circumstances.

My right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) and the hon. Member for Glasgow South West (Chris Stephens) talked about the pride that postal workers feel in their jobs. I absolutely concur with that. My father was a milkman in our local community. The hon. Member for Glasgow South West talked about how vulnerable members of the community are looked after by postal workers, and that was the experience of my father in our little local community as well, so I fully recognise the importance of the service.

Post offices also play a unique and vital role in the UK’s postal system. We are committed to ensuring that we keep a minimum of 11,500 branches throughout the UK, with 99% of the population being within three miles of a post office. That is why we have invested £2.5 billion in the post office network over the last 10 years.

The hon. Member for Eltham (Clive Efford) seemed to think that Government Members view public service workers as enemies. I gently say to him that I take exception to that. We all have friends and relatives who proudly work in the public service. My mum was a social worker who worked in the public sector all her life, and she did a fantastic job, so I do not recognise the hon. Gentleman’s characterisation, and I do not recognise in my colleagues, either.

[Clive Efford]

My simple question is: how will the Minister vote on the Bill on Monday?

[Kevin Hollinrake]

We will have a good opportunity to debate the Bill on Monday, so I do not want to get dragged into that right now.

[Ian Lavery]

Yes or no?

[Kevin Hollinrake]

As the Minister concerned, clearly I will vote in favour, as the hon. Gentleman would imagine, but let us have a good debate about that on Monday. I spoke to one of the hon. Gentleman’s colleagues, the Chair of the Business, Energy and Industrial Strategy Committee, the hon. Member for Bristol North West (Darren Jones), today, and he said he was very supportive of a minimum service level, so we should not draw battle lines on this issue simply on party political grounds. But perhaps we should have a go at debating that on Monday.

The importance of the universal postal service is a key element of today’s debate, as mentioned by many hon. Members, including my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale, my hon. Friend the Member for Wimbledon (Stephen Hammond), and the hon. Members for Reading East (Matt Rodda), for Luton South, for Wansbeck (Ian Lavery) and for Ilford South (Sam Tarry). Our objective continues to be the provision of a financially sustainable and efficient universal service that meets the needs of users, within an open and competitive postal market. That is why the six-day-a-week, one-price-goes-anywhere, universal service remains at the heart of the regulatory regime, and why Ofcom has a primary duty to secure its provision.

My hon. Friend the Member for Wimbledon asked what I am doing to make sure that Ofcom meets its responsibilities. I met the head of Ofcom and other members and pointed out very clearly its role as a regulator, and in ensuring that this service continues.

To be completely clear, the Government currently have no plans to change the statutory minimum requirements of the universal postal service, which are set out in the Postal Services Act 2011.

[Chris Stephens]

I take what the Minister says in good faith, but could he maybe just respond to some of our concerns about the actions of Royal Mail and the proposed takeover from Vesa Equity? While the Government are saying that they want to keep the six-day service, Royal Mail management and some of its shareholders seem to be trying to do something completely different.

[Kevin Hollinrake]

The hon. Gentleman raises an important point. I will come on to the Vesa point later, but set out in the legislation, from back in 2011, there is a clear and transparent process for how any changes to the universal postal service should be considered. That was coalition legislation. Any such change would need to be made through secondary legislation and be agreed by Parliament. We would also expect Ofcom to consult with all stakeholders. Our position has been very clear in my meetings with Royal Mail and Ofcom: we think that the six-day service should continue.

Ofcom has a monitoring regime in place to identify any risks or threats to the universal postal service. Since 2012, it has published an annual report setting out key data and trends in the postal sector, the impact of the changing market dynamics on UK postal services, and Royal Mail’s performance. Royal Mail is clearly facing some challenges, particularly given the long-term decline in letter volumes and the currently challenging economic backdrop, but I have yet to receive any convincing case for a need to change to meet users’ needs and to ensure the financial sustainability of the universal postal service.

A number of hon. Members, including my hon. Friend the Member for Wimbledon and the hon. Member for Jarrow, raised a point about large business owners and the impact on large businesses, such as those that produce magazines and the like, and how they would be impacted. We would fully expect their needs to be taken into account, in terms of user needs’ surveys. The hon. Member for Reading East talked about the impact on small and medium-sized enterprises—something that is very important to me personally—and making sure that they can get marketing messages out to communities across their target areas.

I have made it clear to Royal Mail that it needs to make any case for change to Ofcom and that I will fully consider any advice the regulator gives me on the future scope of the universal postal service.

Hon. Members have understandably raised concerns about Royal Mail’s service delivery performance. The hon. Member for Liverpool, West Derby (Ian Byrne) and my hon. Friend the Member for Wimbledon both raised that point. It is true that the business has faced increasing pressures over the last few years, not least the coronavirus pandemic and the industrial relations dispute with the Communication Workers Union. There have been impacts on the business and the users of postal services. It is regrettable to see postal services disrupted due to strike action and to see the impact that that is having on consumers, businesses and other users.

We are not involved in the negotiations, given that Royal Mail is a private company. However, we are monitoring the dispute closely and have urged Royal Mail and the CWU to reach a resolution as soon as possible. I know there are ACAS talks right now and there will be no further strikes until 20 January, until the talks have concluded. I very much hope that the talks will prove successful.

[Ian Lavery]

Before the Minister concludes, will he comment on the fact that Royal Mail is openly bragging that it has £1.7 billion in a war chest for union-busting and investing in the company?

[Kevin Hollinrake]

I will come on to that important point.

Among other things, Royal Mail is required by Ofcom regulation to achieve certain performance targets in the delivery of its universal service products to ensure that consumers receive an adequate level of service. The regulator has powers to investigate and to take enforcement action, as it did when it fined Royal Mail £1.5 million in 2020 for missing its 2018-19 first class national delivery target.

Ofcom does accept that covid-19 has had a continued impact on Royal Mail’s service delivery, which is why Ofcom did not fine it for its regulatory obligations breaches last year. However, in that decision, Ofcom also noted its concerns, which should concern us all, about Royal Mail’s performance in the early part of the year, which Ofcom felt fell well short of where it should be. Ofcom believes that Royal Mail has had plenty of time to learn lessons from the pandemic, which will mean that it is unlikely to consider the factors considered for 2021-22 as exceptional and beyond its control in the future. Royal Mail has committed to restoring quality of service as soon as possible, and I expect Ofcom to keep a close eye on its performance over the remainder of this year.

Points about renationalisation were raised by the hon. Members for Glasgow East (David Linden), Coventry South (Zarah Sultana) and Glasgow South West and others. While Royal Mail undoubtedly faces challenges, the Government are clear that renationalising the business is not the answer. One of the primary reasons for the sale was to enable Royal Mail to access the capital it needs to invest. When Royal Mail was independently reviewed in 2008 for the last Labour Government, we were told that it was underfunded and had not kept pace; it was 40% less efficient than equivalents around the world.

Financial performance was raised by the hon. Member for Wansbeck and the hon. Member for Cynon Valley (Beth Winter). I think the hon. Member for Cynon Valley said that she had not had a response to her letter. I have asked my officials to look into that urgently, along with the letter from the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), to ensure that they get responses quickly; I apologise for that.

In terms of profitability, it is important to look at Royal Mail in isolation, rather than at IDS itself. Different figures have been bandied about. Look at profitability this year: as Members have mentioned, in the same period in the previous year it made a profit of £235 million —this year, it made a loss of £220 million. To answer hon. Members’ questions, in its regulatory notice in the Regulatory News Service—in which the information must be accurate—it blames that on the strikes, the lack of productivity improvements that were set out in the “Pathway to Change” document and the macro-economic climate.

The hon. Member for Wansbeck described the £1.7 billion invested as a war chest to fight unions; I do not think that that is an accurate statement. I saw it reported in one of the papers—I think it stated that it was £1.7 billion to invest across the businesses. That does not mean that it uses that war chest to simply fight industrial action, and I would not expect that to happen. We are keen to ensure that the dispute is resolved, and amicably.

Royal Mail has invested more than £2 billion in the UK business since privatisation, including £900 million over the last three years and £441 million in the last financial year, in areas such as electric vans, two new parcel hubs, automation and improving its poorest performing delivery offices. Importantly, that investment is transforming how Royal Mail operates, with parcel automation up from 12% in 2019 to 65% now. There is certainly room for improvement in Royal Mail’s service delivery. Ofcom’s analysis tells us that most consumers continue to be satisfied with postal services, but we should continue to challenge Royal Mail on its performance.

As I have set out, the Government remain committed to securing a financially sustainable and efficient universal postal service for users throughout the UK that is accessible and affordable. There are currently no plans to change the minimum requirements of the service.

Skills and Labour Shortages

Kevin Hollinrake Excerpts

Thursday 12th January 2023 Westminster Hall

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

It is a pleasure to speak with you in the Chair, Sir Graham. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this vital debate.

Despite the shocks of the pandemic, the labour market has recovered well, as the hon. Lady pointed out. The employment rate is at a historic high, and unemployment and inactivity are low by historical and global standards. She is right that employment shortages are a drag on the economy. In many ways, the shortages are counter- intuitive: as my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) said, there was net migration of over 500,000 people last year—a huge amount of immigration. Of course, we need to ensure that the immigration that we get meets the needs of employers.

The shadow Minister, the hon. Member for Chesterfield (Mr Perkins), made an interesting point. It is wrong to look at the issue in the context of the UK alone; the issues affect all developed nations. In fact, the World Economic Forum recently said that labour shortages are apparent across all OECD countries. In the UK, there are 1.187 million vacancies and 1.247 million unemployed people. In the US, incredibly, there are 10.5 million vacancies: 1.74 job opportunities for every person who is looking for a job. On that basis, the US has an even greater problem than the UK. Nevertheless, we have to take the issue seriously, and do what we can, competitively and in an international context, to try to resolve the problem and grow the economy for the benefit of all. Ensuring that the right people, with the right skills, are in the right jobs is essential to achieving that.

The hon. Member for Chesterfield may be aware that both skills and labour shortages have been at the centre of much ongoing work and many discussions across Government. The causes of labour shortages are complex; they are not attributable to any single factor. Broadly, some of the major causes of reduced labour supply include long-term sickness, which has been mentioned, and early retirement—two areas that the Government are making a significant effort to address. Indeed, I will meet next week with colleagues in the Treasury, the Exchequer Secretary to the Treasury, the Minister for Employment and key stakeholders—largely employer organisations—to see how we can address the issues.

Late last year, the autumn statement set out the scope of a review that will thoroughly assess workforce participation early in 2023. Numerous Select Committees have also taken an acute interest in labour shortages. Most recently, the Lords Economic Affairs Committee published its findings on labour supply. I appeared before the Committee and hold the members in very high regard, and I welcome its conclusions and the continued attention paid to labour market policy. A resilient labour market is vital if the UK is to retain its position as a world-leading economy. We must ensure that people of all ages are able to climb the ladder of opportunity and develop the skills that they, the country and business need.

I recognise that, as Members have said, businesses are struggling to recruit the right people and face other issues. The Government are committed to helping businesses that are struggling to get through those issues. The hon. Member for Strangford (Jim Shannon) raised an important point about hospitality, which clearly features in most of our constituencies. I am fully aware of the some of the difficulties that hospitality faces. There is no doubt that Brexit has been an issue, and we should not try to ignore the issues of Brexit. The net migration figure has increased, but the profile of the workers is different, as the hon. Member for North Ayrshire and Arran said. We need to ensure that the supply meets the demand—not least for hospitality. I chair the Hospitality Sector Council, which has a sub-group looking at the issue right now. It includes leading people from the world of hospitality and business representative groups. We are keen to resolve these issues.

I will touch on Brexit. Even though I voted to remain in the European Union, it is wrong to look at it as simply a difficulty for the United Kingdom; there are clearly opportunities as well. One particular opportunity in the UK is the opportunity to mine lithium. We have been able to do that more effectively and quickly than some of our international counterparts, as we have managed to change our health and safety rules to cut some of the red tape and make it more viable.

As many Members have concluded, it is clear that the country has a number of skills gaps and, in certain sectors, those gaps are causing labour shortages. The hon. Member for North Ayrshire and Arran raised the issue of nurses. She is right that we have nurse shortages that we need to fill, despite having 40,000 more nurses than were working in the service in 2010.

I will focus on three core things: what the Government are doing to identify skills gaps; where we see skills gaps and how we need to tackle them; and wider action that we are taking to address labour supply shortages. The Department for Education is leading on improving the collection, analysis and dissemination of labour market information to support decision making by actors across the skills system. That important point was raised by the hon. Member for Wirral West. That will ensure that we can improve the skills system. That work includes a regular cycle of employer skills surveys to gather insights on employer needs and engagement with the skills system.

We have established the Unit for Future Skills, a new analytical and research unit working across Government to improve the quality of jobs and skills data, which will be made more available and accessible to policymakers, stakeholders and the general public, and will support a better understanding of skills mismatches and future demand. The hon. Member for North Ayrshire and Arran may be aware that Skills Development Scotland does similar work to the Unit for Future Skills. Officials from DfE and the devolved Administrations have met to discuss how that work can be shared, and will continue to engage on it.

For England, the Government are also establishing local skills improvement plans; that goes to some of the issues raised by the hon. Member for North Ayrshire and Arran about rural areas and depopulation. The plans will help to forge stronger and more dynamic partnerships between employers and providers, and help to make training more responsive to employer and local market needs.

The hon. Member for Strangford raised the issue of skills in the food production sector. I think he has a Karro facility in his constituency—a pork production facility. That production is key to his constituency and mine. I have visited that organisation and that facility, and I was struck by what it was doing to ensure that it was equipping young people in the local area with the skills that they needed for butchering and the like. Normally, those people would be coming in from eastern Europe, so these things are having specific beneficial effects for young people in our areas. It is key that businesses invest in the skills of their domestic workforce.

Local skills improvement plans in England are already working and making a difference. In the west of England, the local skills improvement plans identified health and social care, aerospace and advanced engineering as the sectors with the greatest skills challenges. We have awarded £2.75 million to colleges in the area to develop new courses and facilities for both sectors, including new apprenticeship routes for allied health professionals.

[Margaret Greenwood]

The Minister is talking about LSIPs and the areas of skills shortages that they have identified; he has given examples. Will he describe how we will get the investment that we need in adult basic skills? Local employers will not naturally think about people who cannot really read and write very well. My concern is that if they are describing what the offer is, that whole cohort of people who desperately need help to improve themselves may never get any help at all.

[Kevin Hollinrake]

I think the adult education budget has something to do with that, but the hon. Lady is right to point to the improvements that we need to make in numeracy and literacy. Clearly, that is not directly the responsibility of my Department, but I am very keen to go back to DFE and make sure that it is aware of her views.

On identifying skills gaps, evidence from the Chartered Institute of Personnel and Development shows that 46% of employers reported having hard-to-fill vacancies. The top response from employers with hard-to-fill vacancies has been to upskill staff, which is clearly key. We know which regions have the highest skill-shortage density, and we know about the impact on employers when they lose business. The key areas where we feel that the skills gaps are most acute are workforce sectors with high volumes of vacancies, green jobs, which have been mentioned by many Members, growth sectors, and science and tech. We are committed to tackling these skills gaps through major investment and reforms to skill and further education provision.

I turn to some of the excellent work done by my colleagues in the Department for Education on apprenticeships, which were mentioned by my right hon. Friend the Member for Chipping Barnet and the hon. Member for Chesterfield. There have been over 5.1 million apprenticeship starts since May 2010. In recent years we have transformed apprenticeships, driving up the quality so that they better meet the skills needs of employers. I fully recognise and support businesses’ calls for us to make the levy funds more flexible, but we have to see the issue in context.

Some of the earlier apprenticeship schemes were criticised for not being sufficiently robust and challenging, or of the right quality. It is about striking a balance, but I am very impressed by some of the skills bootcamp-type schemes that perhaps we should focus on in order to give more flexibility. I went to see a new initiative called Trade Up, which seeks to double the number of construction workers. It is a private sector initiative with very short, 10 to 16-week courses, and it involves getting gas fitters and joiners back into the sector.

There are lots of different solutions that we need to look at. The Government have launched T-levels for young people, which will boost access to high-quality technical education. The Government are also committed to ensuring that, at any stage, adults can upskill to reach their potential through skills bootcamps and level 3 free courses for jobs in priority areas. The adult education budget, and giving adults a funding entitlement to get English, maths and digital qualifications, is hugely important, as the hon. Member for North Ayrshire and Arran said.

The Government’s research and development people and culture strategy puts people at the heart of research and development, and sets out our plans to attract enough people with the rights skills across all roles. We are aiming for a full pipeline of research and innovation workers for the future. A huge part of understanding the role that skills play is making sure that we can respond to labour market shortages. The Government are working closely with businesses, and encouraging them to take a stronger role in providing their workforce with skills and training.

Do you want me to conclude, Sir Graham?

[Sir Graham Brady (in the Chair)]

That would be a good idea.

[Kevin Hollinrake]

Okay. I will touch on immigration, because it is hugely important. Clearly, this is a key part of the system. We have the new points-based immigration system, and it is critical to people who voted to leave the European Union that we control migration. Clearly, it is important that we take a pragmatic view. We are monitoring the situation—for instance, we added care staff to the shortage occupation list only this year. I have great sympathy with asylum seekers, and as a Back Bencher I said that we should be more flexible. The issue is one that Members might want to discuss with the Home Office, which has direct responsibility for it.

I thank the hon. Member for North Ayrshire and Arran for securing this very important debate. It has been fascinating and stimulating, and we have had a great discussion on a topic that everyone across these Benches believes is vital.

Draft Climate Change (Targeted Greenhouse Gases) Order 2022

Kevin Hollinrake Excerpts

Wednesday 11th January 2023 General Committees

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

I beg to move,

That the Committee has considered the draft Climate Change (Targeted Greenhouse Gases) Order 2022.

It is a pleasure to serve with you in the Chair, Mr Davies.

The draft order was laid before the House on 19 October 2022. It updates the Climate Change Act 2008 by introducing nitrogen trifluoride, which I will refer to as NF₃, as the seventh targeted greenhouse gas, and thereby brings it into scope for the UK’s carbon budgets. NF₃ is a synthetic gas that occurs naturally but not in the volumes we need. It is primarily used in the production of electronics such as solar panels and flat-screen TVs, but is considered a potent contributor to climate change and is estimated to be 16,000 times more potent than carbon dioxide. The order will rightly introduce new duties on the Secretary of State to report on these harmful emissions.

I assure the Committee that NF₃ emissions have been captured in the UK’s national greenhouse gas emissions statistics and international reporting to the United Nations framework convention on climate change since 2015. NF₃ is also within the scope of the UK’s nationally determined contributions under the Paris agreement. The order will ensure that the Climate Change Act and statutory reporting pursuant to the Act are aligned with our greenhouse gas inventories and international reporting practice, and that our domestic targets continue to align with the latest science.

The inclusion of NF₃ does not put our domestic targets at risk, as NF₃ emissions represented less than 0.0001%—I think that is a ten-thousandth of a per cent.—of total UK territorial emissions in 2020. Its inclusion in the carbon budgets does not make a material difference to the challenge of meeting them, and it can therefore be included without reviewing the levels of those legislative targets. That view is supported by the Climate Change Committee, for whose support and advice I am grateful.

Let me turn to the wider impacts of the order. The inclusion of NF₃ in the Act will require businesses to report on NF₃ emissions under the streamlined energy and carbon reporting framework. That is a reporting requirement for all quoted companies and large businesses. Due to the very low use of NF₃ in UK production, and because existing reporting methodologies such as the widely used greenhouse gas protocol only require NF₃ to be included in companies’ inventories, I can assure the Committee that the impact on business from the instrument coming into force will be minimal.

I thank all the devolved Governments for their support during the consultation on the order. I thank the Welsh Minister for Climate Change for bringing before the Senedd a statutory instrument consent memorandum stating that this order is the most practical legislative vehicle for the provision in question to apply to Wales.

The Government want to ensure that as we transition the economy to net zero, the Climate Change Act 2008 evolves with the necessary developments in science and our international commitments. It is therefore right that this harmful and extremely potent gas becomes part of our domestic targets and is reflected in our efforts to track progress against them. I commend the order to the Committee.

--- Later in debate ---

[Kevin Hollinrake]

It is a pleasure to respond to the shadow Minister, whom I thank for his support. He is right that nitrogen trifluoride is a very potent gas, but it occurs in minuscule quantities. As I said in my opening remarks, we have been recording emissions internationally and it is right that we now do that domestically. We are learning more and more as we go.

On the shadow Minister’s point about how we eradicate the gas completely from processes, he will be familiar with the review of the F-gas regulation that was published last month. We intend to consult next year on proposals for change. That process will be used to assess how we can go even further, with a focus on what additional reductions can be made to help us to meet our obligations to meet net zero by 2050. The shadow Minister can be assured that that is the direction we are going in.

The Climate Change Act requires the Government to ensure that our emissions reporting meets the standards that are set internationally. I am proud that this Government are doing exactly that in bringing forward this legislation. I point out to the shadow Minister and others in the Committee that an international comparison of the efforts of different countries around the world to mitigate climate change is compiled by an organisation called Germanwatch; I am sure the shadow Minister is very familiar with it. It lists every single country in the world, and we are eighth in that list. According to that independent report, the only countries ahead of us are Denmark, Sweden, Chile, Morocco, India, Estonia and Norway. Every other country that the shadow Minister or anyone else in the Committee can name is following our lead in terms of our efforts to mitigate climate change. With that, I commend the draft order to the Committee.

Question put and agreed to.

Future of Postal Services

Kevin Hollinrake Excerpts

Tuesday 10th January 2023 Westminster Hall

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

Sir Gary, could you clarify exactly what time I can speak until, if I am to give the hon. Member for Birmingham, Hall Green (Tahir Ali), two minutes in which to wind up?

[Sir Gary Streeter (in the Chair)]

Two minutes to six.

[Kevin Hollinrake]

Thank you. It is a pleasure to serve under your chairmanship, Sir Gary, and I congratulate the hon. Member for Birmingham, Hall Green, on securing today’s debate about the future of postal services, particularly given his experience and expertise. When somebody with that kind of experience and expertise speaks, we should all listen very carefully.

I agree with the hon. Gentleman that postal services are an integral part of the modern economy, allowing the smallest of businesses to connect with customers across the world and providing consumers with access to a vast range of products. The importance of the postal service to keeping people connected was never more apparent than during the coronavirus pandemic, and I am hugely grateful to the delivery workers who worked exceptionally hard to deliver letters and parcels in those very difficult circumstances. The post office network also plays a unique and vital role as part of the UK postal system, and I will address the points that were raised regarding that network shortly.

To deal first and foremost with the future of the universal postal service, which was raised by the hon. Member for Birmingham, Hall Green, the right hon. Members for Orkney and Shetland (Mr Carmichael) and for Islington North (Jeremy Corbyn), and others, the Government’s postal policy objective continues to be a financially sustainable and efficient universal service that meets the needs of users within an open and competitive postal market. That is why the six-day week, “one price goes anywhere” and the universal service remain at the heart of the regulatory regime, and why Ofcom has a primary duty to secure that provision.

To be completely clear, the Government currently have no plans to change the statutory minimum requirements of a universal postal service, which are set out in the Postal Services Act 2011. However, we accept that the universal postal service is facing challenges, particularly given the decline in letter volumes, which have halved since privatisation in 2013. That answers the question raised by the shadow Minister, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), about why people are paying more for less. Part of the difficulty is that the volumes have fallen so much, which affects revenue.

[Chi Onwurah]

Will the Minister give way?

[Kevin Hollinrake]

Very briefly, as I have very little time.

[Chi Onwurah]

I thank him for giving way, but he has not answered my question at all. There is a decline in one part of the market, but another part is growing. My question was: what is the vision?

[Kevin Hollinrake]

That is a separate point that I will come to, if I may. I have yet to hear a convincing case for the need for change to meet users’ needs and ensure the financial sustainability of a universal postal service. I have met with both Ofcom and Royal Mail management to discuss that issue. I have made it clear to Royal Mail that it needs to make any case for change to Ofcom, and that I will fully consider any advice the regulator gives me on the future scope of the universal postal service.

The hon. Members for Chesham and Amersham (Sarah Green) and for Motherwell and Wishaw (Marion Fellows), who I have worked with closely on other matters regarding the Post Office, raised concerns about quality of service. I am aware that over the last few years the business has faced increased pressures on its operations for a variety of reasons. First, there was the covid pandemic and its lingering effects; secondly, operational revisions were required to modernise and transform the business; and, most recently, there was the industrial dispute with the Communication Workers Union. I do not accept the point made by the hon. Member for Leeds East (Richard Burgon) that this is union busting. The management has been clear that there will be no compulsory redundancies, but these issues impact both the business and users of postal services, particularly when important mail items are delayed.

[Richard Burgon]

The Minister rejects my allegation that the bosses of Royal Mail are engaged in union busting, but does he not think it is rather strange that over 100 trade union representatives have suddenly been suspended by Royal Mail bosses in the course of the dispute? Is that not rather odd? What conclusion does he draw from that?

[Kevin Hollinrake]

We do not get involved in negotiations, as Royal Mail is clearly a private company. I welcome the fact that the CWU and Royal Mail are now sitting down with ACAS and trying to resolve the dispute. We should give that process time to reach a resolution. I understand that any strikes have been suspended until the outcome of those negotiations. As I say, the Government are not involved in negotiations because Royal Mail is a private company, but we will monitor the dispute closely, and urge Royal Mail and the Communications Workers Union to reach a resolution as soon as possible.

To ensure that consumers receive an adequate service, Royal Mail is required by Ofcom regulation to, among other things, meet certain performance targets relating to the delivery of universal service products. The regulator has the power to investigate and take enforcement action. Indeed, in 2020 it fined Royal Mail £1.5 million for missing its 2018-19 first-class national delivery targets. Ofcom investigated Royal Mail’s service quality performance in 2021-22, and in doing so considered evidence submitted by Royal Mail of

“exceptional events, beyond the company’s control”

that may explain why targets were missed. In that instance, Ofcom accepted that there had been a continued impact of covid-19 on Royal Mail service delivery, and concluded that

“it was not appropriate to find Royal Mail in breach of its regulatory obligations”.

However, Ofcom was clear that it does not expect covid-19 to have a continuing significant impact on service going forwards. It stated:

“We are concerned by the fact that Royal Mail’s performance in the early part of 2022-23 fell well short of where it should be. We believe the company has had plenty of time to learn lessons from the pandemic, and we are unlikely to consider the factors outlined above as exceptional and beyond its control in future.”

When it comes to renationalisation, we probably part company with many of those on the Opposition Benches who expressed views on the subject, including the hon. Member for York Central (Rachael Maskell), the right hon. Member for Islington North, the hon. Member for Birmingham, Hall Green, who sponsored the debate, the hon. Member for Llanelli (Dame Nia Griffith), and the hon. Member for Motherwell and Wishaw. I do not believe that renationalisation is the answer. Although there are undoubtably challenges facing Royal Mail, the Government are clear that renationalising the business is not the answer.

One of primary reasons for the sale was to enable Royal Mail to access the capital it needed to invest in and grow the business. When Royal Mail was independently reviewed in 2008 under the last Labour Government, we were told that it was underfunded and had not kept pace with equivalents around the world, which were 40% more efficient. Compare this to the present day: Royal Mail has invested over £2 billion in the UK business since privatisation, including £900 million over the last three years and £441 million in the last financial year in areas such as electric vans, two new parcel hubs, automation and improving its poorest performing delivery offices.

The hon. Member for Birmingham, Hall Green, mentioned the £576 million pounds distributed to shareholders. I point out that there are good years and poor years in terms of financial performance. In the first half of this financial year, I think Royal Mail declared a £219 million loss. That is in the marketplace, so it is not breaching any confidentiality.

[Ian Lavery]

Royal Mail made a £758 million profit, gave £567 million to shareholders and then, shortly afterwards—weeks afterwards—it said that it was making a loss of £1 million a day. The hon. Gentleman is a successful businessman. Would he not be asking questions?

--- Later in debate ---

[Kevin Hollinrake]

We should always ask questions. I have asked questions of Royal Mail in the various discussions we have had. It is fair to say, though, that when shareholders invest, their money is locked up in that capital. Those shareholders rightly expect a return on that capital, as any Government should. I do not think it is wrong to distribute investment returns where they are fair and proportionate. The hon. Gentleman cannot simply say that money should not have been distributed to shareholders, but it should be fair. There also has to be a consideration of the context: it was probably an exceptional year. This year is clearly far more difficult.

The performance of other parcel carriers, including Evri, was raised. I have had correspondence with various Members present about Evri. It is frustrating when deliveries do not arrive on time or are damaged. Consumers should raise complaints about the delivery of items with the retailer. They can do so through Delivery Law UK or the Citizens Advice consumer service, but the key thing is to get back to the retailer. No retailer would want to carry on with a parcel carrier that was not meeting its obligations.

The post office network is hugely important to us, and we need to maintain 11,500 branches. Ninety-nine per cent. of people in the country expect to live within three miles of a post office. That will continue, and we continue to invest; there was £2.5 billion in funding over the past 10 years, and will be £335 million over the next three years.

To conclude, I have set out that the Government remain committed to securing a sustainable universal service for users throughout the UK. There are currently no plans to change the minimum requirements of the service.

Family Businesses: Contribution to Local Communities

Kevin Hollinrake Excerpts

Tuesday 20th December 2022 Westminster Hall

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

It is a pleasure to see you in the Chair, Mr Robertson. I thank my hon. Friend the Member for Carlisle (John Stevenson) for bringing forward this important and beautifully timed debate. If Christmas is about anything, it is family. Moreover, business is important in this place; it is absolutely right to have a debate on family businesses on our last day of term. I thank hon. Members for sharing their fine examples of businesses in their constituencies; we are all very proud of those businesses. It is hugely important that we support them.

There were many fantastic points made in this debate. Most of all, hon. Members stressed the importance of family businesses to their communities. Their contribution is fundamental. It is not just about employing local people; they can contribute to local charities, sponsor local football teams, or indeed sit on councils. My hon. Friend the Member for Carlisle made that important point. Easingwold is still part of my constituency, though it will not be after the boundary changes, which is quite annoying. There used to be the old Easingwold Rural District Council. Around the walls of the council chamber were black-and-white photographs of all the former council leaders. They were all local business people that I knew really well. They were important, and so proud of the town and their contribution to it. Now that our model for local authorities has changed, maybe that connection between businesses and their communities is not as strong as it was; that was a point made by my hon. Friend.

My right hon. Friend the Member for Aldridge-Brownhills (Wendy Morton) said that local businesses’ contribution to their communities cannot be overestimated. I am very proud to be somebody who might be described as having a family business. We started our business back in 1992; I was in partnership not with a family member, but with a very good friend, John Waterhouse, but over the years, we gathered family into our business. It did not start off as a family business, but it became one. The point about the proportion of women contributing to family businesses being greater than the proportion of women in business in general is interesting; my sister took over as chief executive of our business in 2015, just before we listed it, and I have to say that she did a far better job of running it than I did. It very much became a family business.

I am very proud to have this role. I am from business and for business, and am proud to have an opportunity to play an important part shaping how we look after all businesses in future, not least family businesses. My hon. Friend the Member for Torbay (Kevin Foster) made a point about support for staff. In the pandemic crisis, lots of business people cut their wages to make sure that they did not have to cut staff from their businesses. We did the same. I always used to say to people when they were starting a business, “You work twice the hours for half the money, if you run a business. That is what you have to be prepared for. You do that for a lot of years.” The commitment cannot be overestimated.

The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) made another point that really resonated with me, about local reputation, which is fundamental. A family business operates and does the right thing because its reputation is on the line every single day, whether that is through the service provided to the customers or the way employees are treated. Those elements are vital to local reputation and are hugely important.

Of course, the family business community is very disparate, and its representation here is really important. I also commend the Institute for Family Business—I think we have some representation in the Public Gallery today—for its work. It is so important to highlight the benefits of family businesses and their contribution. I was proud to speak at the Family Business Week event, as did the shadow Minister. It was a fantastic event. There were so many people there, and a huge range of businesses, from construction to hospitality. It highlighted that 88% of UK businesses are family businesses, which employ 14 million people; and that 50% of mid-size businesses are family businesses, which shows both their contribution and the opportunity ahead.

I want to touch on what we are doing to support all businesses through a difficult period—there is no doubt that we will go through a difficult period—and I will come to some things we can do better in the future, to improve the prospects for family businesses. Clearly, it has been a difficult time for business generally, with the EU transition, the covid pandemic and now a supply-chain crisis and an energy crisis. It is important to recognise that these are global issues that we are trying to mitigate—they are not principally domestic—but they are clearly leading to recession, due to the need to put up interest rates to try to control inflation. It is therefore absolutely right that the Government should step in to try to mitigate some of the pressures, with measures such as the energy bill relief scheme, which is hugely important for businesses and is saving them a significant amount of money. That is a very expensive package; about £25 billion of taxpayers’ money is going into the scheme to try to mitigate the effects of the extra cost of energy for businesses.

The EBRS 2—the extension to that scheme—will be announced shortly. We are keen to make sure that we get all these good, viable businesses through this tricky time, until energy prices become more moderate. The one positive thing I can say about the difficult time ahead is that our business went through three recessions, and we came out stronger on the other side each time. Good businesses get through it and come out stronger, and the best years come after difficult years. Hopefully there is some optimism for the future, as well as a recognition of the challenges we face.

The Government announced a cut to fuel duty, and employment allowance has increased, reducing national insurance by up to £5,000 for small and medium-sized enterprises. There is also the £13.6 billion of business rate relief for businesses. I do not want to argue with the shadow Minister, as it is nearly Christmas, but I keep hearing that the Opposition are going to scrap or reform business rates—I am not sure which it is. To talk about getting rid of £22 billion without talking about what they will replace it with is not right and will create more uncertainty for businesses. It would be better to set out exactly how that money will be replaced. Perhaps we can deal with that issue in the new term next year.

The Government obviously reversed the decision to increase national insurance, which was helpful for most businesses and saved them about £4,200 a year. Importantly, at the Budget we announced the incentives to invest—the annual investment allowance. That is £1 million annually of full expensing against a business’s profitability. That is an important investment concession, and the Government are absolutely right to give that long-term certainty to businesses. That is an important new step, and that £1 million is permanent. That gives businesses the confidence that they can invest, knowing that it will be tax efficient.

My hon. Friend the Member for Carlisle and the shadow Minister talked about succession—passing on businesses to the next generation. Business property relief is a really important part of that. Not everybody understands exactly what it does, but it is an important tax concession that means that families can pass on their business to the next generation without paying inheritance tax. That hugely important tax incentive keeps family businesses together, and it is being done for exactly the right reasons.

The Government have exempted more businesses from regulations. Various business regulations have increased from a threshold of 50 or 250 employees to 500, which should lower regulations on many family businesses. We are trying to help family businesses, as well as many other businesses, transition to net zero. We have zero-rated energy on energy-saving products, which is really important. The Help to Grow: Management scheme improves management skills for SMEs. The Government are subsidising 90% of the cost of that scheme, which is hugely important in improving our management skills. Of course, the £4.8 billion levelling up fund and the £2.6 billion shared prosperity fund try to improve the communities that family businesses make such a huge contribution towards.

To improve the prospects of family businesses, and all small and medium-sized businesses, the most import thing that we can do is support them by spending our hard-earned money there and use them rather than their larger competitors. Like others, I was delighted to attend small business Saturday. From early morning to late evening, I visited fantastic small businesses across my constituency. I just want to name-check Taylor’s of Pickering. Pickering is a small town in a beautiful part of North Yorkshire, and Les and Joan Taylor started the business in 1969. It is a greengrocer and fishmonger, and it is in its third generation now. Peter Taylor, who now runs it, gets up at 2 o’clock every morning to deliver his groceries—he is a wholesaler too—and smoke his fish. It is a fantastic business. Those kinds of business are the backbone of our communities. As the hon. Member for Strangford (Jim Shannon) said, we are a nation of shopkeepers, and it is important that we go and shop in those businesses. I know that he does that on his high streets in Strangford.

We are doing a lot on finance, which a number of Members talked about. The hon. Member for Caithness, Sutherland and Easter Ross and my right hon. Friend the Member for Aldridge-Brownhills talked about the demise of the local bank manager. In my community, Ron Taylor was our local bank manager and a very well-known figure. I think that has disappeared.

We are doing things to improve access to finance for SMEs and family businesses. The British Business Bank has given £12.2 billion through various different mechanisms to 96,000 businesses, and when it comes to new family businesses, over £1 billion is now being lent in start-up loans to about 100,000 businesses. However, there is an argument that we need to once again put in place patient capital for intergenerational businesses—some other countries do that better than we do. Certainly, in lots of the G7 nations, particularly Germany, regional mutual banks provide long-term finance for family businesses; that, I think, is why we see many more big intergenerational businesses in places such as Germany. That is something we need to look at and learn from, and in my role I am keen to explore the potential of that.

The UK has a very good story to tell in terms of business. We are first in the OECD for the numbers of start-ups per capita, but we are 13th in terms of scale-up, so we do not get as many businesses growing quickly in those early years. Again, that is something I very much want to focus on in my role. It is a huge opportunity, because we know that if we can solve that particular equation—that first and 13th equation—we can solve the productivity puzzle.

We are looking at many other things, including through our review of payment and cash flow, which is another source of finance. We are very keen to scrutinise current practices and develop best practice in that area, to make sure we have good advice and mentoring services. There are 38 growth hubs around the country. We are keen to improve people’s growth hubs, and to hear stories from hon. Members across the House about the quality of their local growth hubs, to make sure that they are as good as they can be. We invest heavily in them. They are there to provide advice on access to finance and mentoring, and we want to make sure that they are delivering good outcomes for our local SMEs. We also want to improve procurement by bringing more SMEs and family businesses into public sector procurement. The Procurement Bill is going through Parliament at the moment, but there are lots of other lessons we can learn.

I will conclude now, to give my hon. Friend the Member for Carlisle a couple of minutes in which to sum up. As I say, it is a great privilege for me to be able to speak in this debate. All hon. Members across the House come to this place to make a difference, and this debate has been a great opportunity for me to be able to give something back to my community—the business community that has been transformational for my life. Thank you for that opportunity, Mr Robertson, and I conclude by wishing all hon. Members a very merry Christmas and a happy new year.

Prepayment Meters: Self-Disconnection

Kevin Hollinrake Excerpts

Thursday 15th December 2022 Commons Chamber

[Anne McLaughlin (Glasgow North East) (SNP)]

I beg to move,

That this House recognises that prepayment meter customers, who pay for their usage in advance, are not afforded the same rights when in energy debt as customers who pay in arrears, such as those who pay in direct debit; understands that a prepayment meter customer is automatically disconnected when they exceed just £10 of debt; acknowledges that, in contrast, those who pay in arrears are afforded time and support to resolve their debts before action is taken to disconnect; is deeply concerned that so called self-disconnection of prepayment meter customers will see the most vulnerable in our society left without heat, light and facilities to cook and wash over the coming winter; and strongly urges the Government to outlaw self-disconnection to ensure that the poorest and most vulnerable customers are not left without basic energy provision.

First, let me thank the Backbench Business Committee for agreeing to this debate, and for understanding the urgent nature of it and, thus, offering me a pre-Christmas date. It is urgent, because something needs to be done now, even if only on a temporary basis. It is urgent enough for me to say at the outset that I am not just trying to raise awareness today; I am asking the Minister to do something about this, preferably today. Perhaps he will be unable to do so because of procedure, but I hope he will at least resolve to listen closely and act urgently.

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

indicated assent.

[Anne McLaughlin]

I see that the Minister is nodding and I thank him for that. I hope he is able to come back next week before Parliament goes into recess, before we are plunged into even colder temperatures than we are experiencing at the moment and before people start dying because they did not enjoy the same rights as the majority of people. I urge him to come back next week and tell us that he has decided to give everyone those rights and that he will do so by outlawing so-called “self-disconnection” for those on prepayment meters.

I am also calling on the energy suppliers to do the same. One of them surely will have the moral compass and backbone to lead the way and be the first to promise that nobody—none of its customers—will be subjected to self-disconnection simply because they are on a prepayment meter. I am calling on the big six, as those guys have the money—they have the billions—and they can do this. Those companies have to take responsibility, but we probably cannot wait for that and the Government need to compel them to do so.

The other thing I would like the Government to get on top of this side of Christmas is ensuring that everybody is accessing the energy bill discount of £66 a month. The consumer rights group Which? told me this morning that a reported £84 million of that money is not reaching half a million households—the ones who need it the most. That is happening for a variety of reasons. Every company has a different way to access this help, with some requiring people to go to the post office. With others, the help arrives by post and often the recipient thinks that this is junk mail or they are afraid to open the letter. That is what happens when someone is on a low income: they get scared of the letters coming through the door, so they bury their head in the sand. I know that the Secretary of State has written to these companies about this issue, but anything more that can be done must be done urgently.

Before I come on to the substance of the debate, may I also thank the many MPs, from all parties, who signed my debate application, both those who are here today and those who sent messages of support, as I very much appreciate it? More importantly, our constituents will appreciate seeing their MPs stand up and fight for them —I hate to say it, but in some cases they are fighting for these people’s lives.

I pay my gas and electricity bills by standing order. In common with those who pay by direct debit or pay when the bill comes in, I pay in arrears. Also in common with those who pay in arrears, if I stop paying my bills I can be disconnected by my energy provider but it is very much a final step—a last resort. That is not the case for those who pay by prepayment meter. Should they be unable to pay for gas or electricity, the first thing that happens is that they are disconnected from their supply. The minute they go over the £10 or, in some cases, £5 of emergency credit that is applied to each prepayment meter, their supply just stops and they are considered to have self-disconnected.

--- Later in debate ---

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

Let me begin by thanking the hon. Member for Glasgow North East (Anne McLaughlin) for the positive way in which she introduced this important and sensitive debate. Like her, I have always adopted the principle that we get more with sugar than we do with salt, so I do whatever I can to protect the customers about whom she is concerned, particularly those with prepayment meters. As she said, the problems among that cohort will become worse during the winter, notably the cost of living crisis and the cold weather—nowhere more than in Scotland, she said, although north Yorkshire also gets fairly cold at this time of year, as, indeed, do other parts of the country: my hon. Friend the Member for Gloucester (Richard Graham) mentioned parts of his own constituency where people are being affected.

The Government entirely share the hon. Lady’s concerns. It is of course important to bear in mind suggestions, such as those made in today’s debate, of ways in which to keep our rules and regulations and processes under review to ensure that these vulnerable people are protected. However, we are able to provide robust protections and financial support for people in those circumstances, and I shall say more about that shortly.

The problems of debt create great anxiety, and that is another element that requires consideration. At times in the past I have been in debt, both personally and in my business life, and I know how anxious it can make people and their families. For some years I co-chaired the all-party parliamentary group on poverty, whose aim was to reduce the impacts of poverty and which considered matters such as the poverty premium, which is relevant to the issue of prepayment meters.

Ours is not the only country that has these meters; they are used around the world, with the purpose of managing debt. The one thing that people in circumstances such as this need to be able to do is budget properly. I think it was acknowledged by the hon. Member for Glasgow North (Patrick Grady) that prepayment meters have a role in helping people to budget, and can reduce the chances of their getting into debt or their debt increasing, making their position even worse.

[Catherine West]

I think the whole House would accept that advice on debt and debt management is crucial, but when a student household is spending £12 for 20 minutes of hot water, which, extrapolated over 12 months, is £4,300—and that is not even a dual fuel bill; it is a single bill—there is a problem, and it has nothing to do with debt management.

[Kevin Hollinrake]

That is definitely an issue. We need to ensure that people have access to fair deals, and I shall say more about that in a moment.

As was acknowledged by the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), one of the difficulties involved in not using a prepayment meter is the fact that the only alternative would be court action, which could potentially increase the debt and affect someone’s credit rating, which is the least desirable outcome.

[Anne McLaughlin]

The Minister seems to be arguing that if the energy companies have to take people to court, it will cost those people more than having their prepayment meters cut off. The point is that they will not be taken to court immediately. Someone like me can wait for a year while the energy company is trying to work out some plan. Energy companies are more likely to work with the person concerned to find a way for them to pay their bills than to take them to court straight away.

[Kevin Hollinrake]

The hon. Lady has raised an important point about people being treated equally. In these circumstances, people will often have been through the processes that she has described. They will have been on normal payment terms, and there will have been a debt recognition and reconciliation process that may have ended up with people either adopting a prepayment meter voluntarily or, as a last resort, having one forced upon them. There are mechanisms, which I will explain in a minute, whereby people are granted abeyance and forbearance.

In the case of many households, if debt were allowed to spiral out of control—and that is not generally voluntary; it is more often due to matters beyond the control of those households, and it is important that we provide support for them—the suppliers themselves could find themselves in a perilous position. These are commercial suppliers of electricity and gas. In fact, this could force out of the market suppliers who specialise in cases such as this. The last thing we want is a lack of provision for people in these circumstances.

These prepayment meters have moved on from the ones that we used to have. The modern smart meters are far easier to top up remotely, and make it easier to check balances.

[Stephen Kinnock (Aberavon) (Lab)]

I thank the Minister for giving way; he is being very generous.

My constituency office is being contacted by a great many people who have still not received their prepayment vouchers from the energy suppliers, but are receiving letters from the suppliers telling them that if they do not use the vouchers by January they will be cancelled, which would of course push those people further into debt. What are the Government doing to ensure that they receive the vouchers and do not lose the money to which they are entitled?

[Kevin Hollinrake]

Other Members have made that important point, and I will come to it, but I had better make some progress, because you asked me to finish in about four minutes, Madam Deputy Speaker, which I shall endeavour to do.

We believe that there is a role for prepayment meters. Ofgem rules already require energy suppliers to offer a prepayment service only when it is safe and reasonably practicable to do so, and that applies whether a meter is smart or traditional. There are clear obligations on energy suppliers regarding customers in payment difficulty, and a prescribed process for occasions on which a warrant is required. That point was raised by the hon. Member for Kilmarnock and Loudoun (Alan Brown) and, indeed, by the hon. Member for Glasgow North East.

There are clear expectations for suppliers in respect of the steps to be taken before they instal a prepayment meter owing to debt, or switching a smart meter from credit to prepayment mode. Those steps include conversations to discuss debt repayment, budget management and energy efficiency measures, and referrals to debt advisers and charities. Before a prepayment meter is chosen as the debt repayment pathway, its safety must be assessed, as well as the customer’s ability to pay. Suppliers must give their customers seven days’ notice before installing a prepayment meter or switching a smart meter to prepayment mode. Ofgem recently published a regulatory expectations letter, in which it set out its expectation that suppliers will ensure that prepayment meters are safe and reasonably practicable in every case.

I would like to highlight some of the circumstances in which it is not deemed safe to have a prepayment meter, which include having specific disabilities or illnesses, or having children under five, as has been set out. Indeed, the hon. Member for East Lothian (Kenny MacAskill) raised that point. It is absolutely right that we provide support for those who are most in need.

The hon. Member also raised the issue of social tariffs, which were introduced in 2008 as part of a voluntary agreement between the Government and energy suppliers. They were replaced by the current mandated warm home discount scheme in 2011. This has improved outcomes by providing consistent and transparent benefits, and by utilising data matching to improve targeting. Clearly, it is important that we continue to review our current provisions and see what else might be done to help people in those circumstances.

[Alan Brown]

The Minister almost seems to be making an argument that the warm home discount scheme has been more successful than the social tariffs. Why then has the Department for Business, Energy and Industrial Strategy confirmed that it is considering revisiting social tariffs? I do support that, but he seems to be making a contrary argument.

[Kevin Hollinrake]

I do not think it is a contrary argument. We should always look to improve our rules. We believe it is an improvement on the past scheme, but there may be further improvements we can make. That is the right iterative process to take.

[Richard Graham]

Will the Minister give way?

[Kevin Hollinrake]

Yes—for the last time, if I can.

[Richard Graham]

On action, what does the Minister think can be done on social tariffs?

[Kevin Hollinrake]

That is a very good point. We are happy to listen to evidence from right across the House on different things that might be done, but clearly the most important thing is to ensure that support is targeted at those most in need. If there are better ways to do that, then we should certainly be listening. I would be very happy to talk to my hon. Friend at any point about any suggestions he might have. I know these issues are very important to him, so I am very keen to continue that conversation.

[Catherine West]

Will the Minister give way?

[Kevin Hollinrake]

I am sorry, but I am already past my time. I will have to conclude.

As Members will know, the Government have stepped in through various different mechanisms, including the energy price guarantee, energy bills support scheme and the energy bill relief scheme for businesses, with about £75 billion of taxpayer support for those areas.

The hon. Member for Hornsey and Wood Green talked about inherited debt, which is a very interesting point. We have not had evidence of that. If she has evidence of that and could write to me, I would be very interested in taking that up for her.

Before I conclude, I want to touch on standing charges, which is a very important point. We want to ensure that the market is as competitive as possible, so that people can access fair deals and we do not get the poverty premium that I mentioned earlier. Under Ofgem rules, charges must reflect the cost of delivering the service. It can be the case that there is a higher cost to suppliers for operating supplies for those on prepayment meters. It is important that we continue to look at that to see whether there might be better ways to ensure those customers are treated more fairly.

To conclude, the Government are listening to consumers and industry. We are providing a substantive support package via the energy bills support scheme and the energy price guarantee. Ofgem, the regulator, has set robust regulatory protections for consumers on prepayment meters. We are committed to providing the support and protections necessary to ensure that consumers and industry will thrive in the decades to come. [Interruption.]

I will conclude by talking about the vouchers. There is a problem in terms of vouchers. About 60% of people have managed to gain support through vouchers. We have written to suppliers on this particular matter. We need to improve the communication between suppliers and customers to ensure that take-up is higher. We believe that the take-up will improve over future weeks, but we are definitely keeping that under review and are keen to ensure all that support reaches households where it is intended to do so.

Draft Conformity Assessment (Mutual Recognition Agreements) (Amendment) Regulations 2022

Kevin Hollinrake Excerpts

Tuesday 13th December 2022 General Committees

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

I beg to move,

That the Committee has considered the draft Conformity Assessment (Mutual Recognition Agreements) (Amendment) Regulations 2022.

It is a pleasure to serve with you in the Chair, Mr Twigg. The regulations were laid before the House on 21 November 2022 and implement a trade agreement with Switzerland, a country with which the UK has strong economic and historical ties. Switzerland is the UK’s 10th largest trading partner and our bilateral trade in goods was worth £38 billion in 2021. Members will appreciate the importance of supporting such international trade relationships while protecting our product safety and legal metrology system, which is among the strongest in the world.

The UK signed the mutual recognition agreement with Switzerland on 17 November 2022 to reduce technical barriers to trade related to conformity assessment. The MRA promotes trade in goods between the UK and Switzerland by helping businesses to simplify their conformity assessment arrangements. Product safety legislation in the UK and Switzerland—indeed, in most countries—often requires products to be assessed against minimum essential requirements, sometimes by a conformity assessment body, or CAB, external to the business. MRAs can reduce barriers by allowing the conformity assessment to be undertaken by a body based in the UK prior to export to the relevant country, which in this case is Switzerland. Likewise, they enable procedures carried out by recognised overseas CABs and appointed bodies to be recognised in respect of our domestic regulations.

The products in scope of the MRA cover many areas, from rules on noise-emitting equipment for use outdoors to measuring instruments and much in between. For example, if a small UK business that manufactures potentially noisy outdoor equipment such as lawnmowers is considering exporting that equipment to Switzerland, it might find it can get all its advice and approvals from a single UK-based CAB. If that means the business reduces its costs, it can of course pass that saving on to its customers.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Will the Minister clarify whether the MRA will make any difference for the five sectors to which it applies or in effect continues the temporary arrangements we currently have for those sectors with the Swiss?

--- Later in debate ---

[Kevin Hollinrake]

It makes a difference in that it makes the arrangements permanent. We have a three-year deal; the MRA makes the temporary arrangements permanent and formalises the UK-Switzerland relationship in terms of conformity assessment bodies.

[Seema Malhotra]

I understand that the MRA may make temporary arrangements permanent but I am trying to understand whether anything is different under it for the five sectors to which it applies. Will anything affect businesses that are currently trading under the temporary arrangements for products that they export to Switzerland? Or does the MRA in effect continue the current temporary arrangements, even it makes them permanent?

[Kevin Hollinrake]

As I understand it, nothing is different, but I will check with my officials and come back to the hon. Lady before the end of the debate.

The outdoor equipment manufacturer I referred to will be able to continue to access international markets more easily when assessment is facilitated in the way I described, thereby increasing its exporting potential and customer choice. The MRA benefits that the UK experienced for years as an EU member are maintained through the provisions of the new MRA with Switzerland.

The statutory instrument we are considering implements the MRA by amending an earlier set of regulations made last year: the Conformity Assessment (Mutual Recognition Agreements) and Weights and Measures (Intoxicating Liquor) (Amendment) Regulations 2021.

[Andy McDonald (Middlesbrough) (Lab)]

The Minister is explaining to us that this is putting the UK and Switzerland in the same position as now, making a temporary arrangement permanent. On a point of clarification, is there any differential between the relationship with Switzerland on those matters, as compared with that with the rest of the EU? Is there any difference or are similar arrangements being made?

[Kevin Hollinrake]

The rest of the EU uses the CE mark. If we want to export products to the EU, we use the CE mark. That is a European certification process. These are relationships simply between the UK and Switzerland, not with the rest of the European Union. We have a separate arrangement for that.

The 2021 regulations are amended by the instrument we are considering so that they are also included in the Swiss MRA. I will return briefly to that point when discussing the territorial scope and the specifics of the regulations.

I will now consider each of the areas in greater detail. For goods coming into the UK that are in the scope of the MRA, we have committed to recognising the results of conformity assessment procedures carried out by recognised Swiss CABs and appointed bodies against our domestic regulations. The statutory instrument makes clear that assessments carried out by a recognised body based in Switzerland should be treated as equivalent to those carried out by a UK-approved or appointed body when products are placed on the market in Great Britain.

[Seema Malhotra]

It is important to be clear about where there is simply continuity rather than giving the impression of something new happening. To clarify, the SI means continuity of importing into the UK, without further checks, for goods made in Switzerland and tested for conformity against UK standards by a conformity assessment body in Switzerland. It is simply a continuity of arrangements under the Swiss temporary measures for the five sectors to which it applies.

[Kevin Hollinrake]

As I understand it—she may want to clarify—that is a continuation of the hon. Lady’s earlier question. Everything will be the same and the only difference is that UK manufacturers should affix a new Swiss mark to their products.

The Secretary of State will add Swiss bodies recognised under the agreement to the UK’s register of CABs, known as the UK market CAB database, which is a publicly available resource used by the UK’s market surveillance bodies and regulators to verify the status of CABs that approve products sold in the UK. Having all the CABs competent to assess for the domestic market in one place creates a one-stop shop for our UK enforcement authorities and businesses, helping them quickly to find and verify the credentials of CABs. The draft regulations do not change the substance of the requirements for third-party assessment, nor do they amend any requirement related to a product’s specifications or product safety credentials.

Turning to goods in scope of the UK-Swiss MRA that are assessed by UK CABs, the SI provides for the Secretary of State to designate CABs as competent to assess that goods comply with certain regulatory requirements of Switzerland under the MRA, as set out in a schedule to the SI. To give an example, that means that where a UK-based CAB wishes to be recognised by the Swiss authorities as competent to test and assess, for example, for Switzerland’s radio equipment requirements, the body can apply to the UK Accreditation Service to be accredited as competent to test against those Swiss requirements. The Secretary of State may then designate the body under the UK’s MRA with Switzerland to assess radio equipment for export to Switzerland. Once the CAB is designated, a UK manufacturer that uses the CAB’s services to assess its products for the domestic market has the option to use that same body, rather than a Swiss one, to do its assessment. The manufacturer can continue to place products on the Swiss market efficiently and without extra costs, potentially passing savings on to consumers.

The Secretary of State, or a person authorised to act on their behalf, may also disclose information to other parties to an MRA, where required by an MRA. We may, for example, pass on information related to goods originating in Switzerland that have been suspended by UK enforcement authorities under commitments to co-operate in the MRA with Switzerland. Disclosure will be made in accordance with data protection legislation.

Let me turn to the territorial scope of the draft regulations. They extend to the whole of the UK, apart from regulation 5, on recognition of conformity assessment by Swiss CABs, which extends to Great Britain only. Northern Ireland will continue to recognise the results of conformity assessment procedures done under the MRA between the European Union and Switzerland. That is in accordance with the terms of the Northern Ireland protocol to the withdrawal agreement. Regulations 6 and 7 of the 2021 regulations, to which I referred earlier, deal respectively with the Secretary of State’s power to designate UK-based bodies under these agreements and to information sharing. The powers extend to the whole of the UK, which means that CABs across the UK can be designated under the MRA and the Secretary of State will be able to share relevant information as required under the MRA.

In conclusion, the SI will provide certainty about the UK’s approach to recognising and designating CABs for products in scope of the MRA. We introduced the draft regulations to give effect to provisions that keep barriers to trade low while preserving our robust safety rules. We do so as a Government who are committed to ensuring that consumers are protected from unsafe products as we look to deliver a product safety regime that is simple, flexible and fit for the opportunities ahead of us. I commend the draft regulations to the Committee.

--- Later in debate ---

[Kevin Hollinrake]

I appreciate the shadow Minister’s points, which were extensive and exhaustive. I want to clarify: these regulations relate to only UK companies or Swiss companies who are trading with each other. They do not relate to wider exports to the European Union or European Union exports to the UK. That is the point.

Using the hon. Lady’s example, if a company in Thirsk and Malton decided to move to Northern Ireland, and only wanted to export to Switzerland, then it could use a Swiss-based conformity assessment body to have its products verified. It could use the Swiss mark. If a Swiss company wanted to export its products to Northern Ireland, it could use the CE mark. That is how it would work, because of the different arrangements in Northern Ireland and the rest of the United Kingdom.

The hon. Lady asks if the process will be slower or more costly. That is the absolute opposite of what the regulations are about. They are about UK companies, or Swiss companies, who want to trade with each other, who want to use a different mark, because they are only trading with Switzerland or the United Kingdom.

[Seema Malhotra]

Will the Minister give way?

[Kevin Hollinrake]

I will not, because of the pressure of time. I have a lot to go through and she has asked a lot of questions, which I want to cover.

[Seema Malhotra]

It is just to clear up a misunderstanding.

[Kevin Hollinrake]

Okay.

[Seema Malhotra]

That question was about whether there will be a slower or more costly process in relation to the eight sectors that are not covered by the MRA.

[Kevin Hollinrake]

I think the hon. Lady asked both questions. Those sectors are still covered by the CE mark. It is not possible to distinguish a separate Swiss mark from the CE mark, so those eight sectors would still be covered by the CE mark. Nothing would change for companies that are trading in those sectors, so there will be no greater cost; there will be less cost for companies who are just trading bilaterally between the UK and Switzerland. The conformity assessment will be done once, not twice. If companies in that particular sector need to trade with Switzerland, that would have had to be done twice. These provisions are only for companies that are trading only between the UK and Switzerland. That is the key part of this statutory instrument.

On divergence in standards—another point raised by the hon. Lady—the regulations are made with the principle of divergence in mind. We can diverge, but if a company is exporting to Switzerland, it must have regard to Swiss regulations. It has to make sure that the product conforms with the Swiss safety regulations and other conformity regulations. That is the point. We can diverge, certainly, but if a company is exporting to Switzerland, it has to make sure that its products conform with Swiss rules. That is the point. Divergence is possible under these provisions.

The trade level in the five sectors is very hard to quantify. I cannot give the hon. Lady a number on that. She asked about the extent of trade covered by those five sectors and it is not possible to separate that out—[Interruption.] No, the figures relate to the three sectors—the 70%. If the hon. Lady wants to write to me to explore the details further, perhaps that will be swifter than arguing about it here.

As for the number of businesses we engage with, we engage with businesses all the time. I do not have those figures to hand.

Our trade with Switzerland is significant, and technical agreements on trade and goods such as the MRA that this SI will implement will serve an important function in facilitating and encouraging that trade. I have set out how the SI will preserve such measures to keep barriers to trade with Switzerland low while maintaining our robust product safety framework. In supporting the SI, we are ensuring that our manufacturers and consumers benefit from maintaining the arrangements to minimise the duplication of conformity assessment requirements between ourselves and Switzerland. I commend the SI to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Conformity Assessment (Mutual Recognition Agreements) (Amendment) Regulations 2022.

Draft Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022

Kevin Hollinrake Excerpts

Wednesday 7th December 2022 General Committees

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

I beg to move,

That the Committee has considered the draft Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022.

It is a pleasure to serve with you in the Chair, Mrs Latham. Since 1 January 2021, the UK conformity assessment mark, the UKCA, has been used alongside recognition of the EU’s CE and reversed epsilon markings. The UKCA marking applies primarily to manufactured goods that are placed on the market in Great Britain, from microwaves to laptops and from pint glasses to electrical equipment. Products requiring the UKCA marking are valued at approximately 25%, or £110 billion, of manufacturing imports.

For most product sectors, recognition of the CE and reversed epsilon markings in Great Britain is due to end at 11 pm on 31 December 2022, but we know that businesses face increasing burdens with cost of living increases and global supply chain challenges. The main objective of the statutory instrument is to provide businesses with additional time to transition to the UKCA regime and give them greater flexibility in how they can legally place products on the market in Great Britain. It is being made using the powers in section 8 of the European Union (Withdrawal) Act 2018 to address deficiencies arising from EU exit. Without the measures implemented by the instrument, industry will have to meet UKCA requirements from 1 January 2023, at a time of economic hardship for many businesses. Following the UK’s exit from the European Union, the UKCA marking was introduced in Great Britain to replace the EU’s CE marking. As a result of EU exit, we have the autonomy to set our own product regulations and ensure that they work for businesses and consumers throughout the country.

To place products on the market in Great Britain, manufacturers must ensure that products meet the essential safety requirements of relevant product legislation. Compliance is achieved by following a conformity assessment procedure. For lower risk products manufacturers can self-declare compliance, and for higher risk products manufacturers may need to go to a conformity assessment body for product testing.

We have engaged with businesses on the challenges that they have faced in transitioning to UKCA, and the feedback that we received led to the announcement in June 2022 of a range of measures to address key issues. Those transitional measures have been welcomed by businesses, and the SI will implement them. Officials have delivered an extensive programme of domestic and international engagement to support businesses transitioning to the UKCA regime. They have also engaged with UK conformity assessment bodies and worked closely with the UK Accreditation Service, UKAS, to ensure that the accreditation process is as smooth as possible.

Despite the work that we have undertaken since the introduction of the UKCA, industry engagement has indicated that the current economic circumstances are making it more difficult for businesses to meet UKCA requirements, hence the need for further Government action. Although we recognise that a further extension to recognition of the CE marking may raise questions about the future transition timescales for the mandatory UKCA regime, we believe that the benefits of reducing immediate burdens and costs for industry in the current economic climate outweigh the potential risk of business hesitancy to prepare. UKCA marking remains valid when placing goods on the market in Great Britain, and we will continue to engage closely with industry to provide support and understand how to take a pragmatic approach by improving regulation to the benefit of businesses and customers.

Let me explain what the key elements of the SI do in more detail. It extends the time for existing transitional provisions, allowing certain products meeting EU requirements and markings to be placed on the market or put into service in Great Britain. That will give businesses the option to choose to use the CE marking for a further two years until 31 December 2024.

Secondly, the SI provides that when a manufacturer has undertaken any steps under EU conformity assessment procedures in the period until 31 December 2024 but the goods have not been placed on the GB market, those steps will be taken to have been done under the equivalent UK conformity assessment procedures. That applies for as long as any certificate issued is valid or until 31 December 2027, whichever is sooner.

Thirdly, the SI extends the time for existing labelling easements. That will allow businesses to affix the UKCA marking and to include important information for products imported from European economic area countries and, in some cases, Switzerland on a label affixed to the product or accompanying document, rather than on the product itself. There are different rules for medical devices, construction products, cableways, transportable pressure equipment, unmanned aircraft systems, rail products and marine equipment.

To conclude, recognition of the CE marking in Great Britain is due to end at 11 pm on 31 December 2022 for the product sectors in this instrument. Its main objective is to provide businesses with the additional time to transition to the post-exit independent UK conformity assessment regime requirements to legally place products on the market in Great Britain. I am sure hon. Members will recognise that, at a time of cost of living increases and global supply chain challenges facing UK businesses, it is right that Government provide businesses with more flexibility, so I urge the Committee to approve this SI.

--- Later in debate ---

[Kevin Hollinrake]

I thank the hon. Lady for her contribution, and the hon. Member for Brighton, Kemptown for his intervention.

The fact that we are taking a pragmatic approach to the issue should be welcomed, not challenged. Of course, the hon. Lady is there to provide challenge, but it is important, given the current economic circumstances, that we listen to businesses, which is what she encouraged us to do. That is one of the reasons for the delay. We have engaged with and listened to the industry’s concerns and have responded accordingly.

The hon. Lady asks by what mechanisms we do that. We have regular face-to-face meetings; I have meetings and webinars, and correspond all the time with businesses, and it is quite right that we do that. This is a sensible delay, and shows that we can use our autonomy to support businesses and provide flexibility to use either marking for now—UKCA or CE markings.

The hon. Lady is probably underestimating the amount of work that was done by manufacturers in this area. It is our best estimate that 89% of UK manufacturers either had or were planning to introduce the UKCA mark by the end of this year, so it is not as if no progress has been made. It is just that we did not want to disadvantage some businesses that had not managed to make that progress. Significant progress has been made. We do not expect to have to extend the provisions further, but it is right to extend them now and take a pragmatic approach.

The hon. Lady was quite critical of the general UK approach to product standards. I have met representatives of the Office for Product Safety and Standards on a number of occasions, and I have the highest regard for them. They are hard-working, professional civil servants, who take their job seriously and do a fantastic job. She made a good point about products sold online that might not conform to standards, which is a point I raised with the OPSS when we first met: about whether there is a fair and level playing field for other UK businesses when an online marketplace selling into UK customers might not meet relevant standards, and the different responsibilities of those marketplaces. That can be challenged on the basis that they do not believe they are a distributor. We need to look into that and are doing so as part of the product safety review, and I am very interested in the outcome.

[Seema Malhotra]

Perhaps the Minister was about to say when the Government will be publishing their product safety review due in spring 2022. That commitment was made by Ministers, not civil servants, unless he wants to tell me otherwise. I think we all respect the civil servants, who are playing their part. This is a question about the Government’s priorities and why the measures have been delayed.

[Kevin Hollinrake]

It was not this Minister who made that promise, so I cannot speak to that particular commitment, but any review should be done properly and not rushed, and we need to get this right. Various things have happened over recent years that have delayed all kinds of things, as I think the hon. Lady would understand, with a pandemic followed by a cost of living crisis and, it is fair to say, some political instability, but we need to move on from that.

[Seema Malhotra]

Will the Minister give way again?

[Kevin Hollinrake]

I will, for the last time.

[Seema Malhotra]

I thank the Minister for giving way. Given that it has been at least six months since spring 2022, will he undertake to provide a new timeline for when he expects the review to be published? Now that he is the Minister, I am sure he can get a briefing on how far away from publication we are, and he could then share with the House whether there are any further issues.

[Kevin Hollinrake]

The hon. Lady will be used to the phrase “soon”, “very soon” or whichever she wants to use—

[Seema Malhotra]

Or “shortly”.

[Kevin Hollinrake]

Yes. We are working to bring the review forward as quickly as possible, but as I say, we want to make sure that we do a good job and not just accelerate it to an arbitrary date, which might mean the review is not as sound as it could be. There are some other things that I have asked the OPSS to look at in my first weeks as Minister for Enterprise, Markets and Small Business.

[Seema Malhotra]

Will the Minister give way?

[Kevin Hollinrake]

I will not give way any more. I want to challenge a few of the other points that the hon. Lady made that do not relate to this SI. She talked about low growth. We have had the third fastest growth in the G7 since 2010, so she needs to reflect on how she defines “low growth”. The only countries that have grown faster than the UK over the last 12 years are the US and Canada, so we have grown faster than Germany and France, for example, and she might want to reflect on that. She also mentioned high levels of tax. We have had to put taxes up to balance the books, because that is what we as a party believe in doing.

[The Chair]

Order. We need to stick to the regulations.

[Kevin Hollinrake]

I apologise, Mrs Latham—she started it.

I do not agree that we should stick to the CE marking and not have our own product standards system, because that would miss an opportunity and we would then be locked into the EU rules. Perhaps that is what the hon. Lady would prefer, but we on the Government Benches would not; we want to pursue our own regime that better suits UK businesses and consumers.

This legislation will provide industry with additional time to transition to the post-exit independent UKCA regime requirements for most product sectors. It will give businesses greater flexibility in how they can legally place products on the market in Great Britain by allowing them to use either the CE marking or the UKCA marking until 31 December 2024. Without this legislation, from 1 January next year, businesses that do not comply with UKCA requirements would not legally be able to place their products on the GB market. That would potentially cause short-term market and supply chain disruption, which would not be desirable at all for manufacturers and could cause reduced product availability and could translate into higher costs for commercial supply chains and consumers. We will, of course, continue to engage with industry closely to provide support to businesses and to understand how to take a pragmatic approach to improving regulation to the benefit of businesses and consumers, while maintaining our commitment to higher levels of protection for UK consumers.

Question put and agreed to.

Employment and the High Street

Kevin Hollinrake Excerpts

Wednesday 7th December 2022 Westminster Hall

[Catherine West]

I believe that the free parking that is on offer from the Welsh Government is not necessarily replicated in England, so there are swings and roundabouts with different regions. I am sure the Minister will know every detail about where free parking is available and where it is not, but that may well be something that my constituents now ask me for, because parking is quite a contentious issue in my local authority area.

Going back to the essay question—that of high streets—2.8 million people are employed in retail across the UK, and in London, our high streets are home to 41% of all businesses in the city. Small businesses employ 16 million people in the UK and account for two thirds of UK private sector employment, yet so many high streets are on their knees after 12 years of staggeringly low growth, and independent and small businesses have been hit very hard. The BBC reported this week that there were 9,300 fewer retail outlets in March 2022 than in March 2020, and a recent London Business 1000 survey showed that three quarters of London businesses are feeling less confident about the UK economy over the next 12 months. That is why today’s debate is so important. We need to act now if we want to secure the future of our town centres and the 5.6 million small businesses across the country that are vital to our economy.

Developments in digital technology and the growth in online retail have completely transformed how people shop. Between 2006 and 2019, as we are all aware, online retail increased from around 7% to 19% of the market, while physical shops lost 13% of their market. The pandemic rapidly accelerated that trend and, sadly, many high streets have never recovered. In the week to 2 July 2022, overall retail footfall in the UK was 19% lower than the equivalent week in 2019. We saw how agile and innovative the retail sector can be when many shops moved online; however, that has not been enough to keep stores open, and businesses are begging for more support.

In 2014, the Centre for Retail Research predicted that the growth in online retailing and change in consumer demand would result in one in five UK stores closing within five years. Sadly, its predictions were correct, yet nearly a decade after they were made, the Government have failed to undertake any meaningful action to keep our high streets alive. One respondent, Trevor, described his local high street as follows:

“Depressing beyond belief. The life and vibrancy have completely disappeared”.

Shops are not the only businesses leaving the high street. Post offices, such as the branch inside WHSmith on Wood Green High Road, and bank branches have also been closing at an alarming rate over the past decade. We must consider the damaging effect of losing these other high street services on small businesses and the welfare of our senior citizens.

At least 50 bank branches have closed each month in the UK since 2015. I look forward to hearing what the Minister has to say about that; he used to mention it quite a lot when he was on the Back Benches, so I hope he will have some solutions now he is in that powerful position. As colleagues will be aware, HSBC announced another raft of closures this week. Some 8 million adults struggle to cope in a cashless society, with 1.9 million reliant on cash for nearly every transaction they make. Small businesses dependent on local bank branches to safely deposit cash will be forced to go cashless if more branches close, further isolating those who only use cash.

Banks are closing disproportionately in lower-income areas, taking their ATMs with them, shutting off free access to cash and quality financial services from those who need them most. At Prime Minister’s questions today, I was pleased to hear my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) ask eloquently what the Prime Minister would do about the closure of banks and the lack of access to cash. I hope the Minister will address that burning question.

Shop closures are also costing jobs. Some 1,001 shops closed between January and July this year, resulting in more than 13,000 job losses. Those closures will be among the 43% increase in insolvencies in the last 12 months alone. Retail employees are facing huge instability at a time when so many people are struggling to pay their bills and put food on the table.

As the Union of Shop, Distributive and Allied Workers —USDAW—has pointed out, retail is one of the few sectors that offers employees the flexibility to balance their work alongside caring commitments, yet many small businesses report that they cannot afford to pay their staff a wage that reflects the increasing cost of living. That is true for one small hair care business in my constituency, Afrocenchix, which told me that, although it would like to pay its staff more, that would mean increasing the cost of its products at a time when customers are tightening their belts. Many small business owners told me that although they struggle to pay themselves, they would go out of business if they put their prices up.

Another matter of acute concern for small businesses is the effect of soaring energy costs. The Government claim to have recognised that, but they have failed to offer a sustainable long-term solution to provide businesses with the assurance they need. For food-producing businesses, which use a lot of energy, skyrocketing energy bills are extremely worrying. The chair of the Crouch End traders group, who owns a bakery in my constituency, told me that increases in product prices are a likely outcome of soaring energy bills. At a time when customers are tightening their purse strings, he believes that this is a perfect storm threatening many traders. The owner of the oldest family-run artisan bakery in Manchester replied to the House of Commons survey to say that their biggest fear was the totally unsustainable increase in energy costs. I hope that the Minister will address this issue when he speaks.

Where is the sustainable support for businesses terrified about their energy bills? Where is the support for businesses to become more energy efficient, to reduce bills and help the planet? One trader told me that

“offering grants for solar panels would help a lot of businesses,”

adding that

“a lot of us want to be greener but can’t afford the initial capital outlay.”

Labour would keep energy bills down by establishing a publicly owned generator, GB Energy, to guarantee energy security and a stable supply of affordable power. We would make Britain a clean energy superpower by 2030, making sky-high energy bills under the Conservatives a thing of the past. There would be an exciting role for small businesses to play, with so many of them wanting to be part of the solution.

The most pressing issue threatening disaster for our high street shops, which was mentioned by every trader I spoke to, is the major burden of business rates. I am sure that the shadow Minister, my hon. Friend the Member for Feltham and Heston (Seema Malhotra), will outline Labour’s position on business rates, which I think is quite an exciting offer that would even out the disproportionate impact on small businesses compared with huge online retailers.

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

Will the hon. Lady set out what Labour’s policy is? So far, I have heard only that it will scrap business rates; I have not heard what it will put in their place to raise the £22.5 billion a year that we raise in England.

--- Later in debate ---

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

It is a pleasure to serve with you in the Chair, Mrs Cummins. I congratulate the hon. Member for Hornsey and Wood Green (Catherine West) on securing this important debate. As I knew she would, she spoke passionately on behalf of her constituents and our high streets.

We all agree about the importance of high streets. As the hon. Lady pointed out, this is not just about our local economy: high streets are crucial to our local communities. On a national scale, the retail sector alone contributes around 4% of UK gross value added and almost 3 million jobs. She referenced the impact of e-commerce, and I agree with the shadow Minister about the need for us to establish and maintain a fair and level playing field—something I have often spoken about in Parliament. I join the hon. Member for Stockport (Navendu Mishra), who called for more action on ensuring a fair and level playing field on taxation.

With 26% of retail sales taking place online, it is important to note that small high street businesses also trade online. That is about innovation but, as my hon. Friend the Member for Keighley (Robbie Moore) pointed out, it is consumers and consumer choice that are driving transactions online. We should not dictate to consumers where they shop, but that is nevertheless causing difficulties for our high street. I share the concerns of the hon. Member for Coventry North West (Taiwo Owatemi) about ensuring that we protect our high streets through this revolution—and it is a revolution—but we should not forget that it is consumers driving the revolution, rather than rates or any other issue. These are additional issues for retailers, but the primary issue is the customers in the first place and the footfall through different stores.

[Jim Shannon]

A shop in my high street moved from being just a shop front—an excellent and massive shop it is as well; probably four times the size of this room—to going online. It proved that by going online it could also maintain its presence on the high street. Can we do something to encourage businesses to do both—to have a shop on the high street and to be online?

[Kevin Hollinrake]

The hon. Member makes a good point. I was just going to come to his experiences shopping with his family in the physical high street. My family does that too. On Saturday, I was in Malton—one of the towns in my constituency—for Small Business Saturday. I too enjoy the experience of physically going shopping, and Malton is a wonderful example, as it created a new identity for itself as Yorkshire’s food capital. This is the future of high streets: a mixture of hospitality, leisure and retail. Malton has successfully done that, and there are lots of lessons to be learned from it.

The hon. Member for Strangford (Jim Shannon) rightly pointed out that there is an opportunity for businesses to be not just a physical or an online retainer, but both or either. It is about the creativity of businesses in meeting their customers’ needs, and that is what we have to facilitate. Of course, there is a multitude of opportunities for employment, from flexibility to the development of new and portable skills. We also need to recognise retail as a rewarding career—something that the Retail Sector Council, which I co-chair, is keen to do.

The high street has struggled with the pandemic, which has caused difficulties. We should pay tribute to the creativity and resilience of businesses and their ability to respond to those challenges; we have all seen examples on our high streets. It is right that part of our mission is to ensure that our high streets and the communities that depend on them receive the investment they need to properly plan and grow for the long term.

The hon. Member for Hornsey and Wood Green talked about the lack of meaningful action from the Government, which is one thing I do not accept. At a local level, we have to ensure that our local authorities have the right plans for infrastructure to drive footfall, and ensure that goods and services flow easily, and businesses and consumers benefit from decent roads, affordable parking and a clean and well-cared for mixed environment. At a national level, the Government are doing much, including through initiatives such as our £4.8 billion levelling-up fund and the future high streets fund. Last year, we published our build back better high streets strategy, which identified many changes we need, and we have already gone a long way towards delivering on that.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

My hon. Friend is right to highlight the potential benefits of wisely spending the levelling-up fund or the towns fund money that is available to local authorities. He may want to note that this has been done very successfully in Ipswich, where I helped to devise a scheme to support local shopping parades, which will see improved parking and many other enhancements. Might we be able to use that as an exemplar of what can be done to support the local high street and improve footfall?

[Kevin Hollinrake]

That is a great example. Through the different councils, we are determined to develop different best practice examples. My hon. Friend points to the leadership in his context, and I urge all colleagues to do the same and be leaders in their communities.

The Government have created a new commercial business and service use class, giving businesses the freedom and flexibility, through class E, to change use without needing planning permission. We are working to make permanent many of the regulatory easements we introduced during the pandemic that not only allowed cafes and restaurants to move the indoors to the outdoors but helped to create vibrant, bustling outdoor spaces. In the Levelling-up and Regeneration Bill, we are committed to going further to support places to tackle blight and revive our high streets, by giving new powers to local authorities to require landlords to rent out long-term vacant commercial premises to prospective tenants.

The hon. Member for York Central (Rachael Maskell) raised the important redevelopment of the Guildhall, which is a fantastic facility. I am sure she knows that the £22 million for that came from His Majesty’s Government’s growth deal and the getting building fund. The Government are doing much in these areas, including in the hospitality strategy and much more.

I will touch on one or two of the points made. The hon. Member for Ellesmere Port and Neston (Justin Madders) was understandably concerned about the closure of bank branches, which we have all experienced in our areas. Banking hubs are part of the solution, which we are supporting, as are post offices. There is a banking agreement that helps our post offices to maintain their profitability.

The hon. Member for Stockport talked about his local post office. Post offices are vital to local communities. The Government provide around £50 million a year in subsidies to ensure post offices are still with us. He also raised the matter of access to cash. Clause 47 of the Financial Services and Markets Bill deals with that, and gives the Financial Conduct Authority new powers to require provision of access to cash where it is disappearing from our high streets.

I will touch on business support thus far. The autumn statement’s £13.6 billion of business rates support has been welcomed right across the sector. It would be irresponsible and undeliverable to commit to simply scrap a tax completely, when it raises £22 billion in England alone, and not to say what it will be replaced with. That tax money has to be replaced by something, and we need to understand exactly what the replacement will be. Our approach is more realistic, reasonable and deliverable, as is the energy bill relief scheme, which is hugely important, as it provides vital support for businesses through to the end of March. We have been clear that there will be further support for some vulnerable sectors. The details of that support will be announced by the end of the year. For retail, I am sure there is a very good case for many of our smaller businesses on our high streets to get extended support.

I want to give the hon. Member for Hornsey and Wood Green time to respond. I thank all Members for their contributions. It is encouraging to see that all sides of the House share a common cause to look after our high streets, and make sure they are still focal points for our local communities.