Sub-postmasters and Sub-postmistresses: Remuneration

Kevin Hollinrake Excerpts

Tuesday 23rd May 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

It is a pleasure to speak with you in the Chair, Mr Twigg.

I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this very important debate. I agree with many of the sentiments that he expressed in his speech.

When I was growing up as a young boy in my local town of Easingwold, we had Mr Taylor, the bank manager —he managed the Barclays bank—and Mr Clark, the baker; Mr Thornton, our butcher; Mr Hollinrake, who was our milkman; and Mr Hodgson, our postmaster. The only equivalent personality who I would be able to identify now in our community of Easingwold would be Pritpal, who is our postmaster. Sadly, all those other pillars of the community have gone, so we absolutely know that our postmasters are the pillars and beating hearts of our communities. It is therefore paramount that we secure the right future for our post office network, which is one of the largest retail networks in the country, with 11,500 branches. We know from the recent report by London Economics that post offices bring a huge amount to our whole economy—£4.7 billion in 2021-22.

I spoke in glowing terms about the network being the pillars of our communities at the annual conference of the National Federation of SubPostmasters only last week. It is good to see Calum Greenhow, who represents that organisation, here in the Public Gallery today; indeed, he is on his annual holiday, but has still turned up to this debate. Quite simply, there is no Post Office without postmasters.

The subject of this debate is crucial, because if we are to run a sustainable network of post offices, we clearly need to ensure that those businesses are sustainable too. Post Office is a commercial business; it operates at arm’s length from the Government. Postmaster remuneration will ultimately be an operational matter for the Post Office, but I totally agree that we need to get the situation on a sustainable footing.

There were some improvements to remuneration in April, as I think has been acknowledged, including increasing payments for outreach services by 9.5% and payments for banking deposit transactions by 20%, although I know that their cash impact is very limited; that point was raised at the conference last week.

I understand the issue that the right hon. Member for Orkney and Shetland raised about deposits. The money is counted and, because of unknown deposit limits, that money sometimes has to be counted back, which is unfair. I am working closely with the Financial Conduct Authority and various banks on those deposit limits, which seem to be arbitrary and have damaging effects on the business community as a whole in our towns and villages, not just on the post offices themselves. I am determined to find a solution to that problem, alongside my colleague, the Economic Secretary to the Treasury.

The improvements made in April 2023 were made following previous improvements in August 2022, and postmasters benefiting from Royal Mail tariff increases was announced in March 2023. However, I appreciate that the measures have not gone as far as postmasters would have liked. We have the issue under review and we discuss it often at our meetings with the Post Office.

My hon. Friend the Member for North Norfolk (Duncan Baker) raised an important point about the amount of revenue that is passed on to sub-postmasters. Something that results from that, which I have discussed with the Post Office at our meetings, is the need to control and reduce central costs to ensure that there is more money to go around the network, rather than held in the centre. Postmasters are the most important part of the post office network, and I agree that they need to be able to make a decent living for that network to be sustainable for the future.

Clearly, we need the Post Office to look for opportunities to drive footfall into branches. A point was raised about the DVLA. I am aware of those negotiations. Again, those matters are between the Post Office and postmasters, but we are keen to see a resolution and we hope that one will be obtained. The hon. Member for Motherwell and Wishaw (Marion Fellows) does fine work as chair of the all-party parliamentary group on post offices. As she said, we see the Post Office very much as the front office of Government. Having said that, we cannot dictate to people how they decide to access services. We all benefit from access to the internet and the digital world, and applying for different things on our phones and computers.

[Marion Fellows]

Digital applications should not exclude cash for people who are digitally excluded, and there are many of those people in our communities. As the Minister said, post offices are at the heart of our communities. Everyone needs to be able to use them and access Government services.

--- Later in debate ---

[Kevin Hollinrake]

I agree. I hope the hon. Lady will forgive me if I gave her the wrong impression. I am not saying that it should be either/or, but we should leave it to customers to decide how they want to access services.

[Mr Carmichael]

The Minister is absolutely right. We cannot dictate to people how they do things. But surely with the example of the cash limits on bank deposits, that is exactly what we are doing. If we say, “You’ve had your limit; you can’t pay in any more money here,” then we have taken away the option for them to use the post office. Let us not forget that they are probably using that option as a sop to the Government here, because they were making all sorts of promises about it being the last bank in town.

[Kevin Hollinrake]

I understand that cash deposit limits are a crucial issue, and we are determined to find a resolution. It is not about something imposed by the Government or even the Post Office; it is about money laundering concerns. The FCA was concerned about the post network being used for money laundering purposes. The right hon. Gentleman and I have both spoken about the need to tackle economic crime, so that is the reason behind it. My concern is whether those measures are proportionate and appropriate. I think there should be ways round that. Some banks are interpreting the advice differently.

I will turn to some other issues that the post office network is facing. One is the disruption to business caused by the dispute between Royal Mail and the Communication Workers Union. Hopefully, that has nearly come to its end. Letter volumes are on a long-term decline, with a 50% reduction in the last 10 years. Foreign currency exchange is another important revenue stream, which was obviously challenged between 2020 and 2022. Again, that should be returning to normal.

There is no silver bullet to solve those problems, but, nevertheless, there are some opportunities for the future. We see that the Post Office needs to adapt to today’s economic environment. There are initiatives under way, such as post offices becoming parcel hubs—not only for Royal Mail; there are now new partnerships with Amazon, DPD UK, Evri and DHL, and that is a benefit to consumers and potentially postmasters.

Positive steps to diversify the business are critical. The right hon. Member for Orkney and Shetland highlighted what a tremendous job his post office is doing in terms of fresh produce and fish. Diversification is very important for any business; when a part of a business is struggling to make ends meet, it should add further businesses to that outlet. There has been significant investment in the replacement for the Horizon system. The new system should make transactions easier and more efficient, which should help sub-postmasters with the amount of time it takes to do their work.

The Government have stepped in for the short term, with things such as business rates support worth £13.6 billion, and the £23 billion over an 18-month period to help with energy costs. We are keen to help all businesses through a difficult time, not least the post office network, which has received £2.5 billion of central Government funding over the last 10 years, and will receive £335 million over the next three, including the £50 million a year subsidy to safeguard services in uncommercial parts of the network.

I take the right hon. Member for Orkney and Shetland’s point on the Post Office’s senior management bonus situation—a matter that we took very seriously. The Post Office itself is doing its own inquiry into the circumstances around that and we have committed to undertaking an independent review of the issue. It is important that we wait for the outcome of the review before we make a judgment on that situation, but it is something that we are taking seriously.

I thank Members for their contributions to the debate. It is encouraging that we are all on the same page on this issue; we all want to ensure we have a sustainable network, and we need to have a grown-up conversation about how we do that.

--- Later in debate ---

On resuming—

[Kevin Hollinrake]

To conclude, we will continue to work with the Post Office to deal with the challenges that the network faces and lay the foundations for a sustainable network in the future.

Question put and agreed to.

Strikes (Minimum Service Levels) Bill

Kevin Hollinrake Excerpts

Consideration of Lords amendments
Monday 22nd May 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move, That this House disagrees with Lords amendment 1.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Lords amendment 2, and Government motion to disagree.

Lords amendment 4, and Government motion to disagree.

Lords amendment 5, and Government motion to disagree.

Lords amendment 6, and Government motion to disagree.

Lords amendment 7, and Government motion to disagree.

Lords amendment 3.

[Kevin Hollinrake]

This Bill was introduced with the intention of balancing the ability to strike with the rights and freedoms of the public, by applying minimum service levels on strike days to protect the lives and livelihoods of the public. We should not ignore the fact that the economic costs of these strikes have been estimated at around £3 billion, and much of that impact falls on business sectors that are already facing difficulties, such as the hospitality sector.

The Bill brings the UK into line with many other countries: Spain and France have statutory minimum service levels in ambulance services and they also, along with Belgium, have statutory minimum service levels in fire services. In some countries, such as the United States of America, Australia and Canada, some services are prohibited from taking any strike action altogether. However, the Government are not suggesting we go that far.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

In the European countries the Minister mentioned where there is minimum service provision, is it not the case that that minimum service provision is agreed by negotiation, and that workers there do not get sacked for striking?

[Kevin Hollinrake]

All jurisdictions differ, and the way that minimum service levels are set differ. Some are set by the Government; we have done that, through consultation with stakeholders, and we will decide what the right level of minimum service will be. All jurisdictions differ somewhat, but the key point is that in many jurisdictions there are restrictions placed on the ability to strike.

[David Linden (Glasgow East) (SNP)]

On the issue of stakeholders and jurisdictions, may I turn the Minister’s attention to the devolved Administrations? The SNP Scottish Government have been crystal clear in their opposition to this tawdry piece of legislation. In the interests of the UK Government’s respect agenda when it comes to the devolved jurisdictions, why are they ploughing ahead with this Bill that drives a coach and horses through the fundamental human right to withdraw one’s labour?

[Kevin Hollinrake]

I will deal with that question in a second; it is covered by one of the Lords amendments that I will speak to, so I will address it when I come to the element of my speech relating to the devolved Administrations.

The Bill returns to us with a number of amendments made in the other place. I would like to be clear that, with the exception of our own Lords amendment 3, the Government consider the majority of the changes to be designed to make the Bill either less effective or entirely ineffective in achieving its aims. The Government will therefore be disagreeing with those amendments.

I will speak first to Lords amendment 3, which was tabled by my colleague Lord Callanan in the other place and provides clarity in respect of the matters to which an employer must not have regard in respect of trade union membership and activities when deciding whether to identify a person in a work notice. The amendment addresses a point raised by the Joint Committee on Human Rights in its report on the Bill.

[Joanna Cherry (Edinburgh South West) (SNP)]

The Minister and I have had some correspondence about the Bill in my capacity as Chair of the Joint Committee on Human Rights, but can he not see that many of the concerns we expressed in our report on the Bill are echoed by the amendments that the Lords have brought, and also by organisations such as the TUC and the Equality and Human Rights Commission? Why is he not giving them more weight?

[Kevin Hollinrake]

At times in life we have to agree to disagree, do we not? The Government feel that the Bill strikes a balance, but the hon. and learned Lady does not, and I respect her opinion. I studied carefully the letter she sent me and I responded to it.

[Joanna Cherry]

I am not talking about the report of the Joint Committee on Human Rights alone; I am saying that many of our concerns are widely supported by other groups such as the EHRC, the TUC and, now, the majority of their lordships. Will the Minister not reconsider the response he gave to my Committee’s report?

[Kevin Hollinrake]

Of course we have considered those concerns, and we considered the amendments in the other place. We feel that what we are proposing with this legislation strikes the right balance. I fully accept that the hon. and learned Lady disagrees with that position.

[Mike Amesbury (Weaver Vale) (Lab)]

Is it not the case that the Government’s own, belated, impact assessment suggests that the Bill is ineffective? It is just unworkable. In fact, I think both the Secretary of State for Education and the Transport Secretary have said the same. The Bill will just make matters considerably worse in terms of industrial relations.

[Kevin Hollinrake]

That is not what has been said, and I disagree with that perspective. The fact that other jurisdictions and other nations use this approach to making sure there are minimum service levels to protect the public, their lives and their livelihoods is indicative that it is the right thing to do. Indeed, as the hon. Gentleman knows, derogations exist in parts of our public services that do exactly what we are requiring services to do with minimum service levels; it is just that they do not work effectively all the time.

[Rachael Maskell (York Central) (Lab/Co-op)]

The Minister finds himself in an isolated position. At the Health and Social Care Committee on 9 May, NHS Providers, NHS Employers and NHS Confederation all said that the Bill was incredibly unhelpful and that additional legislation could make things more difficult, rather than improving the situation. Sir Julian Hartley, the chief executive officer of NHS Providers, said so. Why is the Minister going against the employers, not just the trade unions?

[Kevin Hollinrake]

We do not see that as being the case and we do not agree with that position. We think the Bill is effective and that it is the right thing to do to make sure that people can go about their daily lives unhindered, without fear or concerns about not being able to access vital public services.

I turn next to Lords amendment 1, which changes the application of the Bill from the whole of Great Britain to England only. The amendment would mean that strike action would continue to have disproportionate impacts on the public in Wales and Scotland. As the Government have always maintained, the purpose and substance of the Bill is to regulate employment rights and duties and industrial relations in specified services. Industrial relations is clearly a reserved matter and therefore we consider it right and appropriate to apply the legislation to the whole of Great Britain.

I also point out that the employer has statutory discretion on whether to issue a work notice ahead of the strike, specifying the workforce required to achieve the minimum service level. We hope that all employers will issue work notices to ensure that minimum service levels are achieved where it is necessary to do so. Employers must consider any contractual, public law or other legal duties that they have.

[John McDonnell (Hayes and Harlington) (Lab)]

The Lords passed an extremely sensible amendment asking the Government simply to consult before they go further with this legislation. To give an example of why consultation is needed in my constituency, there is no such thing as a minimum service for air traffic controllers. In effect, that means that the Government are barring air traffic controllers from ever taking industrial action. Those sorts of consultations need to take place before the Government, as others have said, inflame the industrial relations climate in this country.

[Kevin Hollinrake]

As the right hon. Gentleman knows, we have already consulted. Those consultations closed around the middle of May. We will obviously look carefully at all the submissions made; it is important that we do. Ministers—I have one sat next to me: the Minister of State, Department for Transport, my hon. Friend the Member for Bexhill and Battle (Huw Merriman)—will make sure that stakeholder submissions are properly taken into account.

[Several hon. Members rose—]

--- Later in debate ---

[Kevin Hollinrake]

I will make some progress. Lords amendment 2 would require a consultation be carried out and reviewed before use was made of the power to make regulations setting minimum service levels. The primary stated motivation for tabling the amendment was to increase parliamentary scrutiny of the regulations implementing minimum service levels. Although there may be some merit to the intentions behind the amendment, it is, in the Government’s view, duplicative, and would ultimately delay the implementation of the policy. For those reasons, we disagree with it.

I turn to Lords amendments 4 and 5, and the associated tidying amendments, Lords amendments 6 and 7. In the Government’s view, the amendments were tabled to make the Bill inoperable.

[Janet Daby (Lewisham East) (Lab)]

Will the Minister explain how the legislation complies with all International Labour Organisation conventions?

[Kevin Hollinrake]

We believe that it does. The ILO endorses the use of minimum service levels to make sure that the provision of public services is maintained during periods of industrial action. We are happy with our position on that.

We resist Lords amendments 4 to 7 on the principle that the Government have a duty to pass effective legislation. It is regrettable that Opposition Lords have sought to undermine that principle. Lords amendment 4 would mean that there were no consequences for a worker who did not comply with a work notice. The Government disagree with the amendment, as without those consequences, employers would be powerless to manage instances of non-compliance, and strikes would continue to have a disproportionate impact on the public. That would severely undermine the effectiveness of the legislation. Given that the amendment would make the Bill ineffective, as I suspect the Opposition intended, the Government cannot support it.

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

It looks as though the unelected House has a better understanding of what happens in the workplace than the Government do; that should worry the Minister. Can he name other countries where a worker could be dismissed in such circumstances?

[Kevin Hollinrake]

In some countries, such as those I referred to earlier, strikes are banned completely for those working for some blue light services. We already have that situation in the UK for the armed forces, prison officers and the police. There would be a breach of contract if people in those positions were to strike.

[Joanna Cherry]

rose—

[Kevin Hollinrake]

I will make progress, if I may. Lords amendment 5 also seeks to make the Bill inoperable. It would mean that there were no legal consequences for a union that induced people to go on strike when they had been identified, through a work notice, as needing to work, or for a union that failed to take reasonable steps to ensure that their members complied with work notices. The amendment would mean that unions had no responsibility for ensuring that their members did not participate in strike action and attended work if named in a work notice.

[Bob Seely (Isle of Wight) (Con)]

Minimum service levels are entirely sensible; it is an idea whose time has come, and it shows that we support the working people in this country, unlike the Opposition parties. On the awfulness of Lords amendment 5, given that we have here the Minister of State, Department for Transport, my hon. Friend the Member for Bexhill and Battle (Huw Merriman), I wanted to ask this. Secondary legislation will be used to decide which industries are to be covered by the measures. The Bill is particularly targeted at rail, but I would like at some point to have a conversation with the Minister about including the Solent ferries. They are truly a lifeline service, because unless my constituents fancy swimming the Solent, they do not have an alternative to ferries, whereas people have an alternative to rail and other services.

[Kevin Hollinrake]

I am grateful to my hon. Friend for that point. He has raised it with me offline. I am of course very happy to have a proper discussion with him about that, and I know that Transport Ministers would also be happy to.

[Alan Brown]

On making unions responsible for forcing workers to comply with work notices, does the Minister not understand that unions work for and on behalf of their members, and reflect their wishes? If their members wish to go on strike, how is it just or moral to force unions to make their workers break that strike?

[Kevin Hollinrake]

There is a balance to be struck, and what I think is just and moral is ensuring that public services are maintained. That is the balance that we are trying to ensure. We are not at all saying that people cannot strike; we are saying that a minimum service level should be maintained during the strike.

Lords amendment 5 would mean that there were no consequences for trade unions that failed to meet their responsibilities. If we remove the consequences for trade unions that fail to take reasonable steps, we will be far less likely to achieve minimum service levels, as trade unions might attempt to persuade workers not to comply with work notices, and to take strike action instead.

--- Later in debate ---

[Sam Tarry (Ilford South) (Lab)]

In its original form, this Bill represented what many call a sackers charter, because it was a mishmash of unworkable draconian assault on workers’ rights. I would say it is one of the biggest setbacks for workers’ rights in generations. If it passes, it will shackle trade unions, ordinary workers and a whole list of people struggling for fair wages in so many sectors of our economy. It will place unacceptable restrictions on the fundamental right for workers to withdraw their labour, and to defend their and their colleagues’ pay, which at the moment mostly seems to mean defending themselves from the Government’s inability to offer fair pay rises in so much of our public sector.

Worst of all, particularly in a sector such as the railways, the Bill will worsen industrial relations, create more delays on rail and create a worse situation for passengers. It will worsen industrial relations overall. I note that one union did successfully get a decent pay rise, because the Government clearly could not stomach the fight with it. It was our beloved firefighters who did actually get a decent raise out of this Government.

This Bill is anti-democratic because it gives the Secretary of State enormous power to define and introduce minimum service requirements. It is draconian because, in its original form, workers could be sacked for participating in industrial action supported through their own democratic processes. By the way, with trade unions facing enormous damages, we should bear in mind that they are the biggest voluntary organisation movement in this country, with more than 6 million people, and the majority of the reps do not get a single penny for the trade union work they do.

The Bill is also counterproductive, because the Government’s own analysis says that minimum service levels could lead to more strikes and more non-strike industrial action—in other words, action short of strike—so what on earth is the point of going ahead with it? It is unnecessary to its very core, because it is already custom and practice, especially in the NHS and the blue light services, for cover to be agreed by unions during industrial disputes.

[Kevin Hollinrake]

indicated dissent.

[Sam Tarry]

The Minister shakes his head, but that is a fact. If he does not believe me, I will take him to my local hospital to see that and to have discussions with the union reps, who regard the safety of their patients as their outright priority.

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[Ian Lavery]

My hon. Friend makes a good and valid point that the trade unions are the workers themselves. It is as simple as that.

In conclusion, will Government Members tell us why we are not having a minimum service Bill for non-strike days? In the past year or so, in particular when the paramedics and ambulance workers have gone on strike, efficiency has increased and has been first class on strike days. On non-strike days, like the 360-odd days other than those strike days, unfortunately what we see is people lying on pavements or having heart attacks who cannot get an ambulance. Let us look at a Bill for non-striking days so we can enhance the efficiency of all of the services outlined tonight. If the Minister did that, he would get our support.

[Kevin Hollinrake]

I thank all Members, on both sides of the House, for the robust debate we have had as the legislation has passed through both Houses. It is fair to say that the discussion and debate about the legislation has pretty much divided along party political lines. Our position is that this legislation strikes a balance between the right to strike and the right of the public to go about their daily business and daily lives.

It is also fair to say that we could have chosen an option that went much further. As I said earlier, the USA, Australia and Canada have completely banned strikes in certain sectors, prohibiting them completely. Spain and Belgium have similar legislation on minimum service levels. Indeed, in France there are penalties of up to six months in jail for anyone who is under a requisition notice to return to work.

It is interesting that many Opposition Members have talked about restricting the right to strike. Well, we already restrict the right to strike for the armed forces, the police and prison officers. Will Opposition Members repeal that legislation to allow people who work in those parts of our society to strike? There are already some restrictions; we are putting in place sensible restrictions that are already in place in many other countries.

The guidance from the International Labour Organisation says:

“A minimum service may be set up in the event of a strike, the extent and duration of which might be such as to result in an acute national crisis endangering the normal living conditions of the population.”

It is clear the ILO supports the kinds of measures we are putting in place. I have heard Opposition Members say that no one wants this legislation but interestingly, when surveyed, 56% of the public say that they do, against 31% who do not.

Earlier today, the deputy Leader of the Opposition tweeted her support for the 121 politicians who have condemned the Bill. May I gently urge her to look at some of the people who signed that letter? Some of those signatories are anti-Zelensky, anti-Ukraine, anti-Israel and pro-Russia. I urge her to look at that again and withdraw her tweet.

We believe the legislation strikes the right balance between the right to strike and the rights of the public to go about their daily business and protect their livelihoods. There have been over £3 billion of costs to our economy because of these strikes, which is putting many businesses and many jobs in danger. The Bill presents a fair balance between the rights of workers and the rights of the public.

[Chris Stephens]

The Minister is generous in giving way. He mentions balance. Can he tell me what is balanced about a piece of legislation, which he supports, whereby an employee who does not get a work notice can be dismissed?

[Kevin Hollinrake]

There have to be measures that employers can use to make sure people comply with the work notice—that is how it works in many other countries. The reality is that nobody will be sacked as a result of the legislation. There are other disciplinary measures that can take place. We already have derogations in place on a voluntary basis that do not always prove ineffective. We are formalising the process to allow these measures to take place in other vital public services.

The amendments would make the legislation ineffective, which is why I urge all Members on both sides of the House to vote with us and disagree with the amendments.

Question put, That this House disagrees with Lords amendment 1.

Draft Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023

Kevin Hollinrake Excerpts

Monday 22nd May 2023 General Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023.

It is a pleasure to speak with you in the Chair, Dame Angela.

The regulations, which were laid before the House on 26 April, form part of a series of secondary legislation needed to effectively implement the register of overseas entities. The register was created under part 1 of the Economic Crime (Transparency and Enforcement) Act 2022, which I will refer to as “the Act”.

The register will help crack down on dirty Russian money in the UK and corrupt foreign elites abusing the openness of our economy. Overseas entities owning or buying property or land in the UK must give information about their beneficial owners or managing officers to Companies House. Law enforcement agencies now have a wealth of new information to help them track down those using UK property or land as a vehicle for money laundering.

The register went live on 1 August last year, with the deadline for registering set for 31 January this year. There has been a high level of compliance, with more than 27,900 overseas entities registering to date. Entities that have disposed of their land are required to provide statements with information about their beneficial owners and details such as title numbers. More than 750 have provided details to Companies House, having disposed of all their interests in land before the end of the transition period. That means that just under 29,000 entities have complied with the requirements.

Although that likely leaves a few thousand entities still to register, some of them are believed to have been dissolved or struck off, and others have not kept their address details up to date with the land registries. That means they might not have received the letters that have been sent to them so far by Companies House. I know that Members want to be reassured that compliance and enforcement action is being taken. I want to reassure them that case preparation takes time, but is happening.

Companies House continues to work to increase compliance even further and is actively preparing cases for enforcement action. Any overseas entity that has failed to register is already restricted from selling, leasing or raising charges on the land it owns until it registers. Overseas entities are also unable to purchase any new UK land without registering. These are novel and severe sanctions—indeed, the most severe in the world.

It is worth reminding hon. Members that when the draft Registration of Overseas Entities Bill was scrutinised by Parliament, the Joint Committee on Human Rights warned of the severity of the restriction, in particular the “chilling effect” that it would have. The Government of course took seriously the concerns raised, but felt the sanction was proportionate given the policy objectives of the register. This shows the seriousness of the sanction and the need for the Government to get the balance right with the approach to enforcement so as not to deter legitimate investment in the UK.

Once the Economic Crime and Corporate Transparency Bill receives Royal Assent, a further enforcement tool will be added to the arsenal: a person who receives a financial penalty from the registrar or is convicted of an offence may be disqualified from acting as a UK director. Once the Bill receives Royal Assent, I will bring forward further regulations under new and amended powers that will further strengthen the requirements of the register.

The statutory instrument deals with two main elements: financial penalties arising from misconduct in relation to the register, and the treatment of land disposed of in Northern Ireland by overseas entities and rights of those acting in good faith.

The Economic Crime (Transparency and Enforcement) Act sets out that the registrar may impose a financial penalty as an alternative to criminal prosecution. The draft regulations set out the procedure for the imposition and enforcement of financial penalties. A financial penalty could be imposed on a variety of persons, depending on the offence—for example, where an overseas entity has failed to register, on a verifier who has knowingly submitted a false filing, or a person who has failed to respond to an information notice sent by an overseas entity.

If the registrar suspects that a person is engaged in conduct amounting to an offence, she may issue a warning notice in writing to that person giving 28 days to make representations about their conduct. If the registrar is satisfied beyond reasonable doubt that the person has engaged in conduct amounting to an offence, she may issue a penalty notice in writing to that person giving 28 days to pay the penalty. If a person fails to pay, interest will accrue at 8%, the statutory interest rate.

The instrument sets out that a financial penalty imposed by the registrar may be a fixed penalty, a daily rate penalty, or a combination of both. Where the criminal fine set out in the Act is a fixed penalty, the registrar may impose more than one penalty in relation to the same conduct if there is continued contravention. That means that a further penalty can be imposed if a person remains non-compliant despite having a penalty imposed. Subsequent penalties could increase to encourage compliance.

The instrument does not prescribe the specific amounts of financial penalties that may be imposed in relation to each offence. Instead, it states that a financial penalty

“must not exceed the maximum fine that could be imposed by a court…under criminal proceedings in the jurisdiction in which the offence was committed.”

That flexibility allows proportionate and effective targeting of non-compliant persons and penalties that can be adjusted according to the seriousness of the misconduct and the specifics of the case.

Given that penalties are an alternative to criminal prosecution, the registrar should bear in mind the process a court would follow. The goal of the financial penalty regime is to encourage ongoing compliance with the requirements. When deciding whether to prosecute and what sentence to give, courts follow sentencing guidelines to ensure that it is in the public interest to prosecute and that the sentence is proportionate to the seriousness of the offence. The registrar should also consider the public interest and be proportionate when imposing financial penalties.

For the failure to register offence, the Act sets out that the criminal fine that courts in England, Wales and Scotland can impose can be unlimited. That means that, in theory, the registrar may impose an unlimited financial penalty when an overseas entity has failed to register.

As an indication of the seriousness of the failure to register offence, the registrar will review the portfolio owned by an overseas entity that has failed to register. The registrar will use a range of sources to estimate the value of the portfolio owned, including the UK house price index and data on business rate bands. The registrar will apply different starting points for the financial penalty depending on whether the estimated value of each property or piece of land falls into one of three bands. If the value of the property or land is estimated to be in the lower band, the starting point for the penalty will be £10,000. If the value is estimated to be in the middle band, the starting point will be £20,000. In the higher band, the starting point will be £50,000.

[Hilary Benn (Leeds Central) (Lab)]

If an entity has broken the law and has been fined, does the UK have any powers to say that that entity cannot in future buy any properties in the UK, even if they then choose to declare the beneficial owner in that case? Is that fine followed up by any further sanction?

[Kevin Hollinrake]

If they have not registered properly, they cannot buy UK property.

If an overseas entity owns more than one property or piece of land, the penalty values will be added up to provide a starting point. Given that interest will accrue at the statutory interest rate of 8%, the penalty will rack up quickly if an overseas entity fails to pay. The registrar may also consider other aggravating factors, such as whether the person has committed the offence previously. When any financial penalty remains unpaid, it can be enforced as if it were a judgment debt, including by a charge being registered against property or land owned by an overseas entity.

The registrar will keep the model under review ahead of imposing financial penalties for failure to file the annual update on time. If the registrar finds that the level of penalties needs to be reviewed because they are insufficient to provide a deterrent, the instrument gives her the flexibility to do so. The instrument also gives the registrar the power to vary or revoke a financial penalty on a case-by-case basis—for example, if new information comes to light that may aggravate or mitigate the misconduct. The instrument also sets out the grounds for appeal and the court’s powers in relation to an appeal.

Companies House has been preparing to operationalise the regulations and will be ready to issue notices as soon as the regulations come into force. Companies House already includes in its annual report the details of financial penalties imposed in relation to UK companies, and the Insolvency Service publishes enforcement outcomes annually. The Government consider that those are appropriate places for these details to be published in relation to the register.

The second part of the instrument sets out the grounds for registering dispositions in Northern Ireland that would otherwise be prohibited. Schedule 8A to the Land Registration Act (Northern Ireland) 1970 is amended to provide a mechanism to allow the Secretary of State to consent to the registration of a land transaction that would otherwise be prohibited.

If a third party transacts with an overseas entity at a time when the overseas entity is non-compliant with the requirements of the register, the third party will be prohibited from registering the transaction; for instance, if it has bought land from an overseas entity that is non-compliant, it will be unable to register itself as the new proprietor. The intention of that sanction is to disincentivise anyone from transacting with a non-compliant overseas entity, which I think was the point that the right hon. Member for Leeds Central was making.

However, in certain circumstances, it is possible that a third party may transact in good faith, without knowing that the overseas entity was non-compliant, resulting in its acquisition of a land title that cannot be registered with the Land Registry. The Act is not intended to penalise innocent third parties and so this mechanism is necessary to allow for the effective functioning of land transactions. A similar mechanism is already available in England and Wales, and Scotland.

In conclusion, I emphasise that the measures in the draft regulations are crucial for the effective operation of the register. I hope that the Committee will support the measures and their objectives. I commend the draft regulations to the Committee.

--- Later in debate ---

[Kevin Hollinrake]

It is a pleasure to respond to the important points raised in the debate. The shadow Minister, the hon. Member for Feltham and Heston, asked when the draft regulations come into force. The date they come into force is 21 June. Companies House will be able to impose financial penalties from that date forward. On warning letters, on different occasions Companies House has written to entities that have not registered—to the property of the address they own or to the service address provided to the registry.

The right hon. Member for Birmingham, Hodge Hill asked about the number of overseas entities that are not registered. We estimate that there are 32,000 entities and that 29,000 are now compliant, so it is 3,000. We think that a significant number of those might not have received the communications and might not be deliberately not co-operating. It is important that any enforcement action taken is proportionate. That is what Companies House is there for.

The right hon. Gentleman also made an important point about resources. As he knows, I am totally aligned with him on ensuring that Companies House has the right resources. We are undertaking a body of work with Companies House to determine what resources it needs and how we apply the right registration or incorporation fee—it will be a higher fee than the current £12. There are also annual fees—recurrent fees—for filing, which can also be used to ensure that Companies House has the right level of resources. We think that that is the horse before cart approach; we are seeing what resources it needs for this and its other work to ensure that the register is accurate.

The shadow Minister mentioned the £2,500—the daily fine for the failure to update offence. The other fines for failing to register are much more significant. The bands I set out earlier are based roughly on council tax bands: A to C will be the £10,000 fee, D to F £20,000 and G to H £50,000. That fine would apply to each property in the portfolio. If we imagine a portfolio of three properties in the mid-range, that would be an initial fine of £60,000, which could be doubled subsequently for non-compliance. The fines are not insignificant and we think that they are at the right level to encourage compliance.

The shadow Minister also made a point about the 750 who have provided the details as required by Companies House, in which they basically say that they no longer hold the properties—the properties have been disposed of—and we therefore feel they are compliant. The 28 days is the time to respond; that was the response time required after the request by the registrar.

On the proxy directors, I understand the point made by the right hon. Member for Birmingham, Hodge Hill, but that does not obviate the requirement for the beneficial owner to be named. Whatever proxy directors there might be, the requirement is for the beneficial owner to be named in any circumstance. That is in existing ownership or future ownership. Someone cannot technically hide behind the proxy director without being guilty of a false filing offence.

[Liam Byrne]

I am grateful for the clarification. Will the Minister also clarify whether, if the penalty regime stops people trading with an unregistered overseas entity, they could still trade with a beneficial owner who was standing behind an entity based overseas that had not fulfilled its obligations?

[Kevin Hollinrake]

Either way, if it were an entity established now or in future, it would be in breach of the legislation—it would be breaking the law by doing that, by not declaring who the beneficial owner was, in any circumstance. Whether that is through shareholders or directors, it is about the person with significant control. That person does not even have to have a shareholding to be a beneficial owner or a person with significant control, if they exert influence by other means. The legislation is in the right place, though enforcement is a different matter, of course, and we must ensure that the relevant enforcement agencies have the resources they need.

The final point was on concerns about trusts. The Economic Crime and Corporate Transparency Bill, which is going through the Lords, includes some additional mechanisms to ensure that we get behind trusts so that they are not used as a vehicle for non-compliance or to avoid the rules. His Majesty’s Revenue and Customs has a great deal of information that is not publicly available for good reason—some people have trusts to protect individuals, such as minors.

To conclude, the draft regulations will complement the measures in the Economic Crime (Transparency and Enforcement) Act 2022 to ensure that the register is as effective as possible. I commend them to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Thursday 18th May 2023 Commons Chamber

[Simon Fell (Barrow and Furness) (Con)]

17. What steps she is taking to help support the growth of small and medium-sized businesses.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The Government are providing better support in a number of ways, including through our network of 38 growth hubs across England, our Help To Grow management scheme and mentorships. We are improving access to finance, not least through our start-up loans and recovery loan scheme. We are removing barriers to trade for our SMEs. Those that are seeking to grow through exports can now access support through our UK Export Academy and UK Export Finance.

[Samantha Dixon]

Small and medium-sized businesses are the beating heart of Chester and our country’s economy, yet their costs have become crippling, with extortionate energy bills, staff shortages and businesses forced to shut their doors for good. Reports show that a record number of people are off work due to health reasons, notably an increase in mental health issues. What is the Government’s plan to put that right and help businesses in Chester and up and down the country?

[Kevin Hollinrake]

The hon. Lady raises an important point. The first thing we will do for any business is to ensure that the economy is growing, as it is. We are seeing much higher rates of growth than anticipated by many, and we are cutting the costs of doing business by halving inflation, which again is incredibly important for business. In the short term, we are providing support with £13.6 billion of business rate discounts. We put £23 billion into energy discount schemes, too. We also have a big programme, across government, to try to get 9 million people who are economically inactive back to work.

[Stephen Morgan]

Portsmouth’s fantastic small and family-run businesses tell me that after the Tories crashed the economy, they are struggling with rising business rates, supply chain issues and soaring energy costs. Why does the Minister not just adopt Labour’s plan to scrap business rates and replace them with a system fit for the 21st century?

[Kevin Hollinrake]

We would all like to reform business rates. When people in my constituency hear about Labour’s plans to scrap business rates, the question I always get is, “Where is the money coming from?” Business rates raise £22 billion in England alone. I have heard Labour’s plans to scrap business rates. Which taxes will be increased to make up that shortfall? That is the question. We are reforming business rates to ensure that small businesses pay less, and providing short-term discounts. Labour cannot simply wipe away £22 billion without telling us where the money is coming from.

[Robbie Moore]

I recently had the pleasure of hosting a business roundtable in my constituency for small and medium-sized businesses, many of whom are proud of the products and services they want to export. Will my hon. Friend outline what additional steps the Government are taking to support small and medium-sized businesses in my constituency and across the UK that are looking to export their world-leading products to the global market?

[Kevin Hollinrake]

My hon. Friend is a great champion for his businesses across Keighley, and I thank him for the work he does. He will know that through our export strategy, “Made in the UK, Sold to the World”, we provide extensive support and advice to SMEs, whether they are considering exporting, learning about how to go about it, or expanding into new markets. UK Export Finance focuses on supporting SMEs so that they can secure export opportunities.

[Simon Fell]

Barrow-in-Furness is, I hope, about to enter a 25-to-30 year jobs boom thanks to the Government’s steadfast support for Dreadnought, AUKUS and the renewable energy projects up and down our coast. However, that causes issues for our local SMEs, which are struggling to retain and recruit, not least because of the geographical isolation of Barrow-in-Furness. May I invite my hon. Friend the Minister to cross the Pennines to speak to the SME cluster that I chair over there and hear some of their concerns? Does the Department have some specialist support to help those businesses leaning into this new economic challenge?

[Kevin Hollinrake]

I would be happy to cross the Pennines; I have been known to. It would be my pleasure to do that. What businesses want more than anything is to make sure that we have a growing economy, which we have, and that we are controlling costs by halving inflation. The next thing that businesses want is access to labour and skills. I attended the British Chambers of Commerce’s global event yesterday at the QEII Centre, and it was one of the key asks. We are doing many things on making the workplace more attractive: flexible working and, for example, carer’s leave. We have a programme across government to try to get those 9 million people who are currently economically inactive back to work. That can solve many of the problems, along with reform of childcare and other things. I am happy to come and listen to my hon. Friend’s businesses and find out the particular challenges they are facing.

[Mr Speaker]

I call the shadow Minister.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Twenty billion pounds! That is the amount of money currently held up in late payments—more than the entire science budget. It should be flowing to small businesses, allowing them to innovate, develop new products, create new jobs, drive our local economies or simply stay afloat. Instead, every day thousands of our great British small and medium-sized enterprises are wasting precious time and money chasing late payments, at an estimated cost of £684 million a year. For the sake of British business, will this Government take a leaf out of Labour’s policy book and properly legislate to tackle late payments to small businesses?

[Kevin Hollinrake]

Well, £90 billion is the amount of Labour’s uncosted spending plans, but let us talk about the £20 billion for now. The hon. Member is absolutely right to raise the issue of late payments. I attended a roundtable yesterday as part of our payment and cash flow review consultation, which is hugely important. We have significant engagement with businesses across the piece. We are determined and ambitious to reform the rules on late payments to ensure that businesses get paid on time. We have made significant progress in recent years in our international performance, so we are not an outlier. Nevertheless, we can and shall do more. The results of the consultation will be made available shortly.

[Layla Moran (Oxford West and Abingdon) (LD)]

2. If she will make an assessment of the implications for her policies of trends in the level of use of non-disclosure agreements by businesses in cases relating to sexual assault, harassment and misconduct.

--- Later in debate ---

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

3. What assessment her Department has made of the potential impact of the Digital Markets, Competition and Consumers Bill on levels of competition between businesses in digital markets.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The Digital Markets, Competition and Consumers Bill will establish a new pro-competition regime for digital markets. This will boost competition between businesses in digital markets, driving productivity, growth and innovation.

[Nadhim Zahawi]

The Competition and Markets Authority’s recent ruling blocking the acquisition of Activision Blizzard has made us an outlier. Its intervention in the nascent, innovative cloud gaming market was based on potential rather than real market power. You will know, Mr Speaker, that regulators have as much of a lever on growth in the economy as the Government. As we are doing in financial services, all regulators should have a remit for growth, and maybe—just maybe—we can call them “regulators for growth”.

[Kevin Hollinrake]

I am grateful to my right hon. Friend for his question. He may have noticed that we recently launched a paper, “Smarter Regulation to Grow the Economy”, so we absolutely agree with that point. Some of the measures it proposes are about ensuring that Ministers, officials and others look at alternatives to regulation, rather than jumping straight to regulation, and have an earlier impact assessment of what regulation would mean for businesses’ costs, rather than just looking at other factors. I absolutely agree with him that the best regulator is competition—the No. 1 thing we want to drive forward—which is also the best thing for growth. I am keen to talk to him about this matter in further detail after these questions.

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

A huge element of growth in the digital market is the crypto industry. The European Parliament has just signed off the Markets in Cryptoassets Regulation. That ambitious and forward-thinking law gives the European Union the first rules to govern the crypto industry. When will this Government do the same?

[Kevin Hollinrake]

We are looking at the crypto sector carefully, and there was a report yesterday from the Treasury Committee on that matter. The crypto sector is moving at pace, and it is important that regulation keeps up with that. We have regulated already on some of the promotions around cryptocurrency, and it is something we will keep under scrutiny. I am sure my Treasury colleagues will be doing that even more than I shall.

[Jessica Morden (Newport East) (Lab)]

4. What steps she is taking to support the steel sector.

--- Later in debate ---

[James Wild (North West Norfolk) (Con)]

9. What steps her Department is taking to improve the accountability of business regulators.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I am grateful to my hon. Friend for his fine work as part of the Regulatory Reform Group, which has just published a report. Last week the Government published “Smarter Regulation to Grow the Economy”, setting out our vision for the UK’s regulation and how we can harness the opportunities that Brexit presents to re-think how and when we regulate. As part of that, we set out our agenda to ensure that regulators help drive economic growth.

[James Wild]

I thank the Minister for his answer and for the reforms published last week. He kindly mentioned the Regulatory Reform Group and our report last week. Will he carefully consider our recommendations in the report on the Government better holding regulators to account, and look at the proposal for an accountability framework that looks at key metrics, including competition, to judge their performance?

[Kevin Hollinrake]

I read that with interest, and I spoke to my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) yesterday about the matter. It is important that all regulators with responsibility for regulating and promoting growth continue to be held to account for delivering on those objectives. His proposed joint committee of Members of both Houses is for the House authorities to consider, but I note that in a regulatory system that already has a number of accountability mechanisms, adding another layer could risk more uncertainty rather than clarity.

[Alison Thewliss (Glasgow Central) (SNP)]

Leaving the cost of formula up to the market has resulted in soaring prices, as Sky News has revealed this week. Parents are stealing formula from shops, relying on baby banks and formula foraging on Facebook, while profits and marketing spends of the companies have soared. Will the Minister instruct the Competition and Markets Authority to investigate the sector to protect our younger citizens?

[Kevin Hollinrake]

The CMA is an independent body that decides where it should intervene. We keep these matters under very close scrutiny. Competition is the best regulator. We have a very competitive market for the supermarkets. There are 14 supermarkets, all regulated by the Groceries Code Adjudicator. It is important that competition is allowed to play its role in driving down prices, but we will keep an eye on that.

[Geraint Davies (Swansea West) (Lab/Co-op)]

10. If she will make an assessment of the implications for her policies of the report by the Committee on Social Affairs, Health and Sustainable Development of the Council of Europe entitled “Safeguarding democracy, rights and the environment in international trade”.

--- Later in debate ---

[Rachael Maskell (York Central) (Lab/Co-op)]

16. Whether it remains her Department’s policy to bring forward an employment Bill.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The best thing we can do to help people with employment is to have a strong economy with low unemployment, and I am pleased to say that we have both. Although there is no employment Bill, the Government are supporting six private Members’ Bills to deliver on our manifesto commitments: helping new parents and unpaid carers, giving employees easier access to flexible working and giving workers the right to request a more predictable working pattern. The Employment (Allocation of Tips) Act 2023 has also now completed its journey.

[Rachael Maskell]

According to Stop Hurt at Work, 27% of employees experience bullying or harassment at work. There is no legal definition of workplace bullying and no simple path to restitution. Although we have been promised employment legislation by this Government since 2017, and in the light of Matthew Taylor’s “Good work” report, we have not seen an employment Bill in this Parliament to protect workers at work. Can we expand employment rights in legislation to ensure that there is a clear path to restitution for people experiencing bullying at work?

[Kevin Hollinrake]

I point out that the unemployment rate in York is at a record low of 1.4%, which is below the national average, as I am sure the hon. Lady would welcome.

Since the good work plan was published, the Government have taken forward a wide range of commitments, including giving all workers the right to receive a statement of their rights on day one and the right to request a more predictable working pattern. I am very happy to meet the hon. Lady following these questions to discuss the points she raises.

[Mr Speaker]

I call the shadow Minister.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

Ministers have promised an employment Bill more than 20 times, but they have consistently failed to deliver. It seems that not a week goes by without a company in the gig economy announcing that it is stripping back workers’ rights and protections, presumably because they are confident that this Government will not legislate to introduce protections in the gig economy. Will the Minister come clean on the Government’s plans? If they are not going to bring in any protections for gig economy workers, will he now apologise to them for another failed promise?

[Kevin Hollinrake]

Paying the national living wage is the law, and failing to pay workers the correct wage can result in significant fines, public naming and, for the most serious offences, criminal prosecution. The national living wage applies to all those who are classified as employees or limb (b) workers. If an individual feels that their employment status has been misclassified, they have the right to go to an employment tribunal.

[Peter Aldous (Waveney) (Con)]

T1. If she will make a statement on her departmental responsibilities.

--- Later in debate ---

[Mr Philip Hollobone (Kettering) (Con)]

What would have been the answer to Question 19? How many businesses were supported by grant funding in North Northamptonshire during the pandemic?

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

Off the top of my head, I can say that during the pandemic the Government delivered an unprecedented package of support for businesses. In total, more than £22.6 billion was provided to businesses via local authorities. In Kettering, more than 5,000 covid-19 business grants were issued, amounting to £24 million. North Northamptonshire Council delivered £29.9 million to local businesses through the covid-19 business grant scheme.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

T2. Dr Nikhil Datta from Warwick Economics noted that the £5.84 billion that UK consumers had paid in increased food prices by 2021 as a result of Brexit hit the poorest households hardest, as they spend a larger proportion of their income on food. Does the Secretary of State, the Minister or the UK Government accept that the most vulnerable households are paying the highest price for Brexit, especially in this ongoing food price inflation crisis?

[Kevin Hollinrake]

The hon. Lady raises an important point. As she knows, one of the Government’s commitments is to halve inflation, which will also have an impact on food prices. We absolutely need to do that, particularly for those low-income households. That is why we directed support mostly at low-income households, with more than £2,000 a household this year and £900 in additional support for low-income households this year. This is a twin-track approach, tackling inflation and lowering food prices, and also providing direct support.

[Eddie Hughes (Walsall North) (Con)]

Some 70% of our economy is services, so what is the Department doing to reduce barriers in that area and supercharge our global trade in services?

[Jessica Morden (Newport East) (Lab)]

May I draw the Minister’s attention to a Which? investigation into the lack of consistency in unit pricing by supermarkets? That makes it difficult for consumers to work out the real price of goods and, crucially, to choose between them. The Competition and Markets Authority is looking at this issue, but will the Government talk to the supermarkets too?

[Kevin Hollinrake]

The hon. Lady raises an important point. Which? does fantastic work. The CMA acts independently, without ministerial influence, and it is right that it does. However, I am sure it is keeping a close eye on that matter. As I said in a previous answer, the best way we can regulate prices in the UK is through strong competition. We have a very strong, competitive market in the supermarkets, with 14 chains in this country, and that is the best way to hold down prices. However, she raises an important point and I am sure the CMA will have listened to it.

[James Wild (North West Norfolk) (Con)]

UK Export Finance plays a vital role in supporting export opportunities, but a company in my constituency is having difficulties landing support to secure a contract based in one of our Trans-Pacific Partnership area countries. Will my right hon. Friend meet me to discuss this and how we can support that business?

--- Later in debate ---

[Richard Foord (Tiverton and Honiton) (LD)]

T7. According to the website for the Department for Business and Trade, the Department is supposed to“shape our rules to ensure businesses thrive”. Edenvale Turf is a successful small and medium-sized enterprise in my part of Devon and it employs more than 20 people. Older Edenvale workers have grandfather rights as supervisors, but they have been told that they will no longer be eligible to act as turf-cutting supervisors without taking a National Vocational Qualification. Will the Minister meet me to discuss how the Government might prevent scores of older, experienced people from leaving the workforce by getting out of the way and ensuring that businesses thrive?

[Kevin Hollinrake]

The hon. Gentleman raises a very important point. Clearly, our regulation must work in favour of employment and helping people to get work and stay in work. I am very happy to meet him, possibly with one of my colleagues from the Department for Work and Pensions, to look at this matter.

[Stephen Kinnock (Aberavon) (Lab)]

I am honoured to chair the all-party group on steel, and, as such, I have invited the Secretary of State to meet us, as all four of her predecessors have agreed to do. I am very disappointed that she has declined to do so. I urge her to reconsider that position.

The US is investing $282 billion in green manufacturing. The Spanish and German Governments are each investing £1 billion in the decarbonisation of their steel industries. Labour would match that opportunity with a £3 billion clean steel fund, but the Government’s response to date has been woefully inadequate. When will the Secretary of State bring forward a steel transition strategy that matches up with what our competitors are doing and that matches the ambition of our professional and dedicated steelworkers?

[Judith Cummins (Bradford South) (Lab)]

Marshalls Bakery, a small business in my constituency, has just closed its doors after 43 years of trading. The owners told me that they were unable to withstand the combined pressures of covid, rising wheat and container charges and high energy costs. They feel let down and are angry at the lack of Government support for businesses such as theirs. Can the Minister tell me what further steps he is taking to ensure that other small businesses can survive in this challenging climate to provide the certainty from Government that they so desperately need?

[Kevin Hollinrake]

I am sorry to hear about the demise of that business in the hon. Lady’s constituency. Clearly, it has been a very tough time for businesses in recent years, with the covid crisis followed by the cost of living crisis. I am very happy to meet her to discuss what support we provide, which is to the tune of hundreds of billions of pounds. I am informed that there has been £1 billion of support to businesses over recent years. The schemes running at the moment include: the rates discount at £13.6 billion; and £23 billion has been put into helping businesses with energy costs. I am very happy to meet her to discuss that further.

[Carol Monaghan (Glasgow North West) (SNP)]

UK semiconductor businesses have been crying out for the semiconductor strategy. I have asked a number of questions about this, and two weeks ago the Minister for Science, Research and Innovation told me it would be published in “a matter of days”. The Secretary of State loves a doughty champion; can she be a doughty champion for the semiconductor industry and speak to colleagues in the Department for Science, Innovation and Technology to get the strategy published?

--- Later in debate ---

[Alison Thewliss (Glasgow Central) (SNP)]

Businesses and organisations in my constituency, and no doubt beyond, have ended up marooned on exceptionally high energy tariffs because they were forced to sign contracts at the height of the crisis. What conversations have Ministers had with Ofgem and with the energy companies to see what can be done to support those businesses, as those tariffs will be a drag on their future growth and development, and in some cases threaten their very survival?

[Kevin Hollinrake]

The hon. Lady makes an important point. Alongside the Minister for Energy Security and Net Zero, I met energy suppliers and Ofgem recently to discuss the matter. The problem is principally that energy prices have fallen, so businesses entering into new contracts today are getting more competitive rates, but the ones who entered contracts between July and December last year are facing difficulties. The energy suppliers have promised to help, but if the hon. Lady wants to talk to me about any particular instances, I am happy to help.

[Stephen Kinnock]

On a point of order, Mr Speaker. Following the exchange I just had with the Secretary of State, I want to underline the point that her office has declined and said that she would not be interested in meeting the all-party parliamentary group for steel and metal related industries. While she did come to visit the Port Talbot steelworks in my constituency, which of course I welcome, I was not invited to join her on that visit, whereas I understand the hon. Member for Scunthorpe (Holly Mumby-Croft) was invited to join her on the visit to the Scunthorpe steelworks. I just want to set the record straight on those points.

Digital Markets, Competition and Consumers Bill

Kevin Hollinrake Excerpts

2nd reading
Wednesday 17th May 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move, That the Bill be now read a Second time.

Digital technologies are a 21st-century miracle. They bring us closer together and connect us to the world. Today it is difficult to remember a time without answers at our fingertips, or the ability to buy goods and services from across the globe in just a few clicks. Technology has hugely increased our choices of goods and services and how they are delivered to us. It allows us to work in entirely new ways when we are on the move or in far-flung places abroad.

Just as digital technologies have profoundly altered our lives, they have also transformed the UK economy. We now have more tech unicorns than any other country in Europe: indeed, we have more than France and Germany combined. Eight cities in the UK are home to at least one unicorn, and this success continues. Last year, our tech start-ups and scale-ups also attracted more investment than those of France and Germany combined, creating jobs and opportunities throughout the United Kingdom. It is clear that tech will be key to achieving the Prime Minister’s priority of driving economic growth across the UK. Our figures forecast that the digital sector could expand by an additional £41 billion by 2025. However, the UK’s continued tech success depends on markets that are fiercely competitive, where the best companies can thrive and create innovations that spur growth.

Over the last decade, the UK’s digital markets have developed at an exponential rate, but our competition framework has failed to keep up. Its last legislative overhaul took place nearly a quarter of a century ago, when the internet was in its infancy and smartphones had not yet been invented. Since then competition across the broader economy has declined, and in the tech sector a small number of firms exert immense control across strategically critical services with practices such as self-preferencing, restricting operability, and exclusivity requirements.

Competitive markets are, of course, the best way to provide the best outcomes for consumers, and Governments and regulators should step in only when we see market failure or excessive market power. The International Monetary Fund has found that market power in the tech industry increased significantly between 1995 and 2016, which included increases of more than 30% in mark-ups and more than 10% in concentration globally. The Competition and Markets Authority estimates that in 2021 alone, Google and Apple made excess profits of more than £4 billion in the UK. Apple and Google determine which apps are in the App Store, how they are ranked and how they are discovered. They often charge significant levels of commission, up to 30% of revenue, and require all transactions to be made through in-app systems—which, as we all know, means that at the end of the day, all charges, commissions and taxes are paid for by consumers.

Dominance of display ads for Facebook and Google cost UK consumers about £2.4 billion a year. Between 2009 and 2019, GAFAM—Google, Apple, Facebook, Amazon and Microsoft—made more than 400 acquisitions without any regulatory intervention or referral through the voluntary mechanisms. This is why in recent years there has been an increasing acceptance of the need for new legislation that is fit for these dynamic and rapidly evolving markets. The Digital Competition Expert Panel, led by Harvard’s Professor Jason Furman, and the Digital Markets Taskforce have conducted independent assessments of how digital markets operate, noting that they have specific features which can allow them to tip in favour of one particular firm.

Colleagues on both sides of the House, including my hon. Friend the Member for Weston-super-Mare (John Penrose) and the hon. Member for Bristol North West (Darren Jones), have called for more to be done to allow consumers to benefit from greater competition in these markets. However, there is also a growing consensus that in a market which functions well, competition must work hand in hand with consumer protections. People must know that they can spend their money with confidence, safe in the knowledge that they have the right information and support if something goes wrong. That is critical, because when consumers feel that they risk losing their hard-earned cash, they also risk losing trust in markets as a whole. The Bill seeks to achieve all these goals and unleash the full opportunities of digital markets for the UK, so that every part of the country can reap the rewards. All told, under these measures we expect consumers to benefit to the tune of almost £10 billion over the next 10 years.

My right hon. Friend the Chancellor of the Exchequer recognises this legislation’s significance to the UK economy and its importance to consumers, particularly during a cost of living crisis, which is why he announced the earlier introduction of the Bill in his autumn statement. I should remind the House, however, that the majority of the Bill’s measures have been thoroughly scrutinised and analysed by experts and businesses over a number of years. This included a consultation in 2021 and a careful consideration of the responses.

I will now speak to the Bill’s measures in greater depth. Part 1 sets up a new pro-competition regime for digital markets, which will be overseen and enforced by the Competition and Markets Authority’s Digital Markets Unit. This legislation gives the DMU the ability to tackle the causes and consequences of market power, ensuring that people and businesses large and small are treated fairly by the most powerful tech firms. By encouraging greater competition, this work will lead to lower prices for everyday online goods and services and give consumers more choice and control.

The measures in part 2 will refine the CMA’s competition enforcement work so that it is better targeted, faster and more effective, allowing the free market to operate more efficiently.

[Damian Collins (Folkestone and Hythe) (Con)]

My hon. Friend got through part 1 a bit quicker than I thought he would—I have a question relating to part 1. Clause 38 creates a final offer mechanism for dispute resolution. The news media industry has been waiting for this legislation for a long time but it is not expressly referenced in the Bill. Can he confirm that the news industry and other industries could benefit from this final offer mechanism?

[Kevin Hollinrake]

My hon. Friend makes a good point. I wish him the best of luck in the election this afternoon. It is for a very important Committee that will scrutinise this legislation. The final offer mechanism is innovative and represents a positive way forward, in that it will bring parties to the table and they will both have to make sensible offers relating to how they see a fair resolution. This will avoid them putting unrealistic claims on the table, and it could well help the news industry and many other sectors.

[John Penrose (Weston-super-Mare) (Con)]

Like my hon. Friend the Member for Folkestone and Hythe (Damian Collins), I was concerned that the Minister might be moving on from part 1 a fraction early. This is a welcome Bill that will do an enormous amount of good, and it has allowed me to tick off a large number of the recommendations that I made in my report, which he referenced earlier. The concern about the Digital Markets Unit’s powers is not that they are not good enough; it is that they might over time add more and more of a regulatory burden as ex ante powers build up over the years. Does he have thoughts on how he can ensure that, after those ex ante powers have been in place for a couple of years as regulations, the CMA can analyse whether they could perhaps be replaced by pro-market reforms?

[Kevin Hollinrake]

I am grateful to my hon. Friend for his engagement on this. We have discussed this at length many times, both in my role as a Minister and in my previous role as a Back Bencher, when we looked at the best form of regulation. I think we both agree that ex post regulation is preferable to ex ante regulation, as is a pro-competitive environment, as I said earlier. We should step in only when there is market failure. Of course we should look at the powers and ensure that they are being used wisely, and I have confidence that the CMA will do that. There are a number of checks and balances on the CMA and the DMU, not least through the competition appeal tribunal and the courts, which ensure that decisions are valid and worthwhile, but we should also have a good debate on how we scrutinise the DMU and CMA generally. Obviously they report to Parliament every year, and the Select Committee work is also important. I think that my hon. Friend and I would agree that the best way to regulate markets is through competitive environments, and that is what we should always favour in this discussion.

[Andy Carter (Warrington South) (Con)]

I echo the comments of my colleagues who have welcomed the Bill. The Minister will know that the DMU will be regulating a highly specialised area and that detailed knowledge of the sector will be critically important. Can he assure me that the DMU will have sufficient powers to recruit people who really understand the sector? Will it be able to pay accordingly in order to recruit those people, and not be bound by civil service contracts and pay bands that might limit its ability to recruit very experienced people?

[Kevin Hollinrake]

My hon. Friend makes an important point. The tech industry is clearly very powerful in terms of its resources and its ability to recruit the best people. My experience of the CMA is that there are good people within it, and I expect that to be reflected in the DMU as well. People who have been connected to the CMA, including former chairs, have spoken highly of its abilities, but my hon. Friend makes the important point that we need to have the best people so that we can hold those powerful entities to account.

The legislation will be delivered through making market inquiries more efficient, focused and proportionate, updating the merger regime and amending existing legislation concerning anti-competitive conduct and abuse of a dominant position. The measures in parts 3 and 4 make important updates and improvements to consumer law. The UK is currently the only G7 country without civil penalties for common breaches of consumer protection such as unfair trading. Part 3 creates a new model that will allow the CMA to act faster, tackle more cases and protect consumers’ interests while creating a level playing field for businesses.

Part 4 tackles the subscription traps that cost consumers £1.6 billion a year. We expect there to be a £400 million saving for consumers as a result of the measures we have proposed. I am sure that many Members know constituents—

[Craig Whittaker (Calder Valley) (Con)]

rose—

[Kevin Hollinrake]

I think I am going to hear about one in a moment. Many Members will know constituents who have received shock charges for a subscription or faced difficulties when trying to cancel one. The Bill contains new rights to subscription reminders and easier cancellations, so that those who want out can get out.

[Craig Whittaker]

The Minister is not going to hear about a constituent, but I would like to point out that charities’ lotteries, which are great fundraisers for great causes that put so much back into all our communities, are already heavily regulated by the Gambling Commission. Will my hon. Friend look at schedule 19 to see whether subscription-based charity lotteries can be excluded?

[Kevin Hollinrake]

That is an interesting point and I would be happy to look at the matter in detail. It is not something that I have considered thus far but perhaps we can have a discussion about it at a later stage. We will certainly pick it up if we can and make sure that it does not cut us across anything that my hon. Friend is concerned about.

This legislation includes other measures to help consumers to keep more of their hard-earned cash, including a power to add to the list of banned practices. We intend to use this power first to tackle the wild west of fake reviews, which can dupe customers into buying shoddy goods and services. There are also new protections for consumer prepayments to consumer saving schemes, so that devastating cases such as the collapse of the Farepak Christmas savings club, which left vulnerable consumers out of pocket, can never be repeated. Together, these measures deliver on our manifesto commitment to tackle consumer rip-offs and bad business practices, demonstrating that this is a Government who back consumers.

[Alun Cairns (Vale of Glamorgan) (Con)]

I recognise that the Bill would introduce enhanced competition and protect significant areas of consumer policy, but it would also extend the powers of the CMA significantly. May I draw my hon. Friend’s attention to the regulatory reform group that my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) and other hon. and right hon. Members have sat on, which is seeking a cultural change among regulators to ensure that they have an interest in the wider industry as well as in consumers? For business and industry to be sustainable, the CMA must be able to respond in a proactive, business-friendly way.

[Kevin Hollinrake]

My right hon. Friend makes a strong point, and it is one reason why we are reviewing the economic regulators. The work has been ongoing for 18 months, and we are due to produce our thoughts this spring. It is important that regulators focus on consumer outcomes and, as others have said, a more competitive environment produces the best outcomes, so he is right to draw attention to that issue.

[John Redwood (Wokingham) (Con)]

Briefly, what will be the direct impact of the Bill on the cost to the state and to business?

[Kevin Hollinrake]

The annual cost to business is £178 million, which we must consider carefully when we bring forward new regulatory burdens, but most people will think that the measures are needed because there is a huge consumer benefit of roughly £1 billion a year over 10 years, so it is important that we strike that balance. I am not aware that the cost to the state has been calculated, but my right hon. Friend and I are probably most concerned about the cost to business.

[John Penrose]

I thank the Minister for his generosity in giving way again.

The Minister’s response to the question about regulatory burden mentioned the welcome, necessary and important review of economic regulators. However, he will understand that enormous regulatory burden is created by other regulators. There are only eight economic regulators, but there are dozens of other regulators, many of which create vastly more regulatory burden than the economic regulators, although the economic regulators are not exempt. What plans does he have to address those regulatory burdens, which are much broader and cover much more of the economy?

[Kevin Hollinrake]

My hon. Friend makes a very good point, and it is why only a few days ago we published a framework for better regulation to look at these things in the round and to make sure we have regulators that serve the public, rather than the interests of the regulator. We do not want to see regulatory creep for any purpose other than consumer benefit, and he and I will continue to have significant dialogue on those issues.

Some Members will argue that we should legislate more like the EU’s Digital Markets Act, by using this Bill to create sweeping, one-size-fits-all measures. However, our Brexit freedoms mean we can draft legislation that drives innovation without placing blanket obligations on firms or creating unnecessary regulatory burdens. Some will respond to the Bill by saying that we should go harder against big tech, but I remind them that the Bill’s primary purpose is to reduce economic harms, to boost competition, to create a fair and level playing field, and to give consumers greater choice and better prices.

We need to act, but we must act proportionally because tech firms make a valuable contribution to the economy and our lives. Big does not equal bad. A war on tech will not create growth. It has already been argued in this debate that the CMA has enough power, and my response is that technology is changing rapidly and our watchdogs need to be equipped to fully support businesses and consumers in this competitive world.

I look forward to engaging with colleagues as the Bill makes its way through the House, and I hope Members will give it their backing so that the Government can continue our work of protecting consumers, increasing competition in all markets and growing the UK economy.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

--- Later in debate ---

[Richard Thomson]

The right hon. Member is absolutely right that it is not easy, but that does not mean it is something that we should avoid trying to tackle, or that we should not try to come up with a way of improving the competitive environment. I am certainly more than happy to engage on an open and constructive basis with anyone about how we might do so.

[Kevin Hollinrake]

Will the hon. Gentleman therefore support our approach, which is to consult in parallel with the passage of the Bill through both Houses about things like drip pricing and fake reviews, so that we can have that open dialogue and make sure that we get the answers right, including to the questions posed by my right hon. Friend the Member for Wokingham (John Redwood)?

[Richard Thomson]

I thank the Minister for his intervention. Indeed, I would be quite happy to see what comes back from that consultation, because there are areas of real concern. If we can find consensus on how those matters can best be tackled—we might not be able to please everybody, but we can address them as best we can—that would be a welcome step forward.

In closing, the Bill is important for growth and competition, but also for consumer protection. The exchange that we collectively had just now on those matters was encouraging, and I would certainly like that spirit to continue in Committee. I do not think I have ever managed to successfully get something passed in Committee; I look forward to that changing.

--- Later in debate ---

[Matt Warman (Boston and Skegness) (Con)]

I enjoyed the Minister’s opening gambit about how much the internet has changed our lives over many years. He is right, but the House has now been regulating the internet and its effects for many years as well, and this is in some ways a long-overdue Bill. When I was the Minister, my great fear was that Back Benchers would treat it like a Christmas tree and try to add many great ideas of their own. Now that I am on the Back Benches, that is precisely the approach that I intend to take.

I hope that the Minister—and you, Mr Deputy Speaker—will indulge me on a few issues that are somewhat in the weeds of the Bill as well as on two broader points. This is fundamentally a welcome Bill. It is hugely consequential in the effects that it will have on the digital landscape and Britain’s ability to regulate in a new and different, fundamentally pro-competition way in an age that will be affected by markets that operate very differently online from those that we have been used to regulating.

There are a couple of relatively small issues. First, on subscription traps, we have heard a little from other hon. Members about auto-renewal. I think that it should simply not be the default. That is worth looking at. The Minister may take the view that it is for the CMA or the DMU to look at that rather than for the Government to take a view, but that fundamentally could protect consumers.

Secondly, the Minister has made really welcome moves on protecting consumers from online scams. Such scams operate fundamentally differently from the scams of the past, so his new approach is welcome. There is, however, a key interaction in scams and unsafe goods. People who knowingly sell unsafe goods online are surely, by some definition, scammers, yet the Bill does not appear to do quite the whole job. He may be able to offer reassurance on that.

[Kevin Hollinrake]

My hon. Friend raised a fair point. A fair and level playing field is important for our wider economy and opportunity. Alongside the Bill, we are keen to bring forward the product safety review, which looks at online marketplaces and how they sell and distribute products compared with our normal high-street locations, which have far more stringent product safety requirements. So a body of work is going on alongside this one.

[Matt Warman]

I welcome that. The Minister will know that that body of work has been going on in parallel with this one for some time. It is welcome, and I hope that its results will be presented relatively quickly.

The new judicial review standards for CMA and DMU decisions have been welcomed by the Coalition for App Fairness, which is a good and credible group. But, simultaneously, this is a big shift and we need to be confident that it will genuinely protect both larger operators in the right way and smaller operators. I think we will hear more about that from hon. Members in this place as well as in the House of Lords.

I have two larger points. First, it is DMU mission creep, which we heard about briefly from my hon. Friend the Member for Weston-super-Mare (John Penrose), that we should fundamentally be most nervous about. It was certainly my concern a little while ago that the Bill gives the regulator the flexibility it needs to deal with the modern world in the right way. That is absolutely the right approach and I am pleased that it has persisted, but it is important that it is appropriately regulated—if I can use that word about a regulator—so that it does not end up potentially going further than any Minister or Government might wish. It is important that the CMA and the DMU operate in the way that this House intends, with all the independence that this House also intends.

My final broader point is that the Bill does some excellent work on interoperability of software. What it does not do, at least on the face of the Bill, is consider that interoperable software is fundamentally linked to interoperable harm. If I can try to turn that into real terms, it is obviously great that operators such as Apple are able to build their own superb and unique ecosystems. The same goes for Android and so on—there are other equivalent versions. What would be useful to try to guard against, probably via the DMU rather than directly via Government, is the current situation whereby, to take one example, the way we use iMessage or video calls is fundamentally limited if we seek to do it on a different platform. We have all seen the different blue and green bubbles on Apple iMessage. That is partly because of the interoperability of hardware and software. I am somewhat conflicted about whether that should be a point of differentiation for Apple, Android, WhatsApp or other operators, or whether we see it as part of a problem within emerging monopolies. I therefore suggest it is exactly the sort of thing that an independent regulator might wish to take a view on.

We heard, furthermore, about the metaverse. What we do not want, surely, is a series of emerging and conflicting metaverses—if that were to be the case—that fundamentally embed monopolistic behaviour, because they will be some of the largest economies of the future. Again, it is potentially hugely beneficial to have a unique and brilliant metaverse under the personal command of Mark Zuckerberg and one under the personal command of Tim Cook, as a competitor. However, a regulator may take a different view and it is important that we think through these emerging opportunities. The Bill is a place where we may start some of that work. It is right that it seeks to be future-proofed against some of those interesting challenges, but at the moment there are a small number of potential opportunities that the Minister may yet seek to seize—shall we put it like that?—rather than allow them to pass by and have to address them later on.

Fundamentally, I welcome the Bill. It already embodies some huge opportunities to make real progress and there are some more that we may be able to take forward. I look forward to supporting its passage through the House.

--- Later in debate ---

[Kevin Hollinrake]

I certainly do not ask for any bragging rights. May I thank the hon. Lady for the work she does on the all-party parliamentary group on ticket abuse? On the case she refers to, she is right to say that it is three years since the conviction took place, but the confiscation order, which was for £6.1 million, took place only in December last year. Does she think that sends a strong message to the cohort of people she refers to that there are strict and strong penalties for people who engage in that kind of activity?

[Mrs Hodgson]

We would all like to think that it would with right-minded people, but I do not think professional touts think like the Minister or any of us in this House, so they probably have not seen it as a deterrent. From what I am hearing from the experts I work with, it is still going on—it is business as usual for the touts. We really need more enforcement in this area. More laws are good, but laws without enforcement just do not work.

The UK is rightly proud of its live event industry, but do the Government really know what the consumer experience often is? I would be interested to learn which experts, campaigners or live music representatives the Government worked with or consulted when they rejected the CMA’s advice so firmly. I have written to the Minister to ask him that, so he can respond in writing if he does not have that information to hand or in his memory from those meetings.

The Minister rejected the advice on this area, saying that resale sites like Viagogo may

“still provide a service of value to some consumers”.

The many tens of thousands of victims of Viagogo may disagree. That misses the point entirely. Resale sites allow touts to commit fraud every single day and permit them to charge inexplicably high prices for such tickets. Illegal activity is happening on those sites right now, as we sit here discussing the issue. Such sites are profiting from that, and the CMA has no power to do anything about it, which is why the Bill needs additional measures. I hope the Department for Science, Innovation and Technology will take a different approach to its forerunner Department, because the Bill is a perfect and timely opportunity to rectify the situation.

If, as the Minister has said, broader changes to consumer law are the priority, I look forward to learning what changes to the proposed legislation his Government will allow. At present, despite the enhanced consumer protection in the Bill, which he spoke of in his opening remarks, it will not be able to tackle all the problems in the online secondary ticketing market, as the enforcement is just not there. Speak to any National Trading Standards officer: they want to go after the touts, but their budget of circa £16 million is for everything they need to do and is not sufficient. I am sure they could spend that on enforcement against illegal ticket touting alone.

The Bill looks to provide the CMA with stronger tools to investigate competition problems and take faster, more effective action, including where companies collude to bump up prices at the expense of UK consumers. Is that not exactly the case in the secondary ticketing market, where sites like Viagogo allow individuals, as well as themselves, to profiteer from a manner of resale that contradicts legislation? As part of the Bill, will the Government take the necessary steps to make sure that laws, including those in the Bill, are upheld and enforced properly?

I look forward to hearing the Minister’s response on this matter. Our cross-party group, the all-party parliamentary group on ticket abuse, would be delighted to work with him and his Department to strengthen the legislation and to protect consumers from the abomination of ticket abuse.

--- Later in debate ---

[Paul Scully]

Many of the regulators will be under the remit of the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). Indeed, that is something that I did—

[Kevin Hollinrake]

indicated assent.

[Paul Scully]

I just heard the verbal nod from him to say that he continues to do that.

I will come to the CMA in a second. In answer to the hon. Member for Washington and Sunderland West, whom I congratulate for the APPG’s work, the CMA is continuing to monitor the online secondary ticketing market, including the issues that have been reported about refunds and cancellations as a result of the pandemic. The Government welcome the CMA’s report, but we believe that we have the measures in place to ensure that consumers have the information that they need to make informed decisions on ticket resales. The Bill will give the CMA significant new civil powers to tackle bad businesses ripping off consumers, so we do not see the need for additional regulatory powers. However, I agree with her that enforcing the existing regulations is key. I thank her for her work in this area.

I will briefly cover some of the other issues. On judicial review, which was raised by my hon. Friend the Member for Hitchin and Harpenden, we have heard that the entire purpose of the Bill is to ensure that we tackle an area where a small number of companies have dominance in many parts of our lives. That is not necessarily a bad thing, so this is not an attack on big tech. None the less, some of the challenger firms mentioned by the hon. Member for Pontypridd, although they may be household names, are rightly scared because of the relationship they have with big tech. We must get the balance right by ensuring that there can be an appeal on judicial review standards, but it must not be something that a company with deep pockets can extend and extend. Because the harms happen so quickly in a tech business, the remediation needs to take place as quickly as possible.

Contingencies Fund Advance: Companies House

Kevin Hollinrake Excerpts

Tuesday 16th May 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The Economic Crime and Corporate Transparency Bill will reform the operations of Companies House by setting out new objectives for the Registrar of Companies, including additional powers to query and amend the register where it is suspected that there is fraud or error, as well as scope to proactively share intelligence on criminal activity across Government to combat economic crime. These provisions will help Companies House do more to tackle criminals, terrorists, and corruption, strengthening the UK’s reputation as a place where legitimate business can thrive, while driving dirty money out of the country.

The legislation enables further investigation and enforcement activity to be undertaken against corporate entities. In readiness for this responsibility we propose to ensure Companies House has the right staff and systems in place to deliver the Registrar’s new powers.

Parliamentary approval for additional resource of £425,000 and capital of £37,000 for this new service will be sought in a main estimate for the Department for Business and Trade. Pending that approval, urgent expenditure estimated at £462,000 will be met by repayable cash advances from the Contingencies Fund.

[HCWS773]

Artificial Intelligence and the Labour Market

Kevin Hollinrake Excerpts

Wednesday 26th April 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I am grateful to be called, Dame Maria, and it is a pleasure to speak in the debate. I congratulate the hon. Member for Birkenhead (Mick Whitley) on bringing this timely subject forward. I thought it would be appropriate to type his question into ChatGPT. I put in, “What is the potential impact of AI on the labour market?” It said, “AI has the potential to transform many aspects of the economy and society for the better. It also raises concerns about job displacement and the future of work.” That is it in a nutshell. It did not say that it was time for a Labour Government.

[Justin Madders]

Did the AI tell the Minister that the Conservative Government have got everything right?

[Kevin Hollinrake]

I have not actually posed that question, but perhaps I could later.

This is an important debate, and it is important that we look at the issue strategically. The Government and the Labour party probably have different approaches: the Labour party’s natural position on this kind of stuff is to regulate everything as much as possible, whereas we believe that free markets have had a tremendous effect on people’s lives right across the planet. Whether we look at education, tackling poverty or child mortality, many of the benefits in our society over the last 100 years have been delivered through the free market.

Our natural inclination is to support innovation but to be careful about its introduction and to look to mitigate any of its damaging effects, and that is what is set out in the national AI strategy. As we have seen, it has AI potential to become one of the most significant innovations in history—a technology like the steam engine, electricity or the internet. Indeed, my hon. Friend the Member for Folkestone and Hythe (Damian Collins) said exactly that: this is like a new industrial revolution, and I think it is a very exciting opportunity for the future. However, we also have key concerns, which have been highlighted by hon. Members today. Although the Government believe in the growth potential of these technologies, we also want to be clear that growth cannot come at the expense of the rights and protections of working people.

Only now, as the technology rapidly improves, are most of us beginning to understand the transformative potential of AI. However, the technology is already delivering fantastic social and economic benefits for real people. The UK’s tech sector is home to a third of Europe’s AI companies, and the UK AI sector is worth more than £15.6 billion. The UK is third in the world for AI investment, behind the US and China, and attracts twice as much venture capital investment as France and Germany combined. As impressive as they are, those statistics should be put into the context of the sector’s growth potential. Recent research predicts that the use of AI by UK businesses will more than double in the next 20 years, with more than 1.3 million UK businesses using AI by 2040.

The Government have been supporting the ethical adoption of AI technologies, with more than £2.5 billion of investment since 2015. We recently announced £100 million for the Foundation Models Taskforce to help build and adopt the next generation of safe AI, £110 million for our AI tech missions fund and £900 million to establish new supercomputer capabilities. These exascale computers were mentioned in the Budget by my right hon. Friend the Chancellor. These developments have incredible potential to bring forward new forms of clean energy, and indeed new materials that can deliver that clean energy, and to accelerate things such as medical treatment. There are exciting opportunities ahead.

If we want to become an AI superpower, it is crucial that we do all we can to create the right environment to harness the benefits of AI and remain at the forefront of technological developments. Our approach, laid out in the AI White Paper, is designed to be flexible. We are ensuring that we have a proportionate, pro-innovation regulatory regime for AI in the UK, which will build on the existing expertise of our world-leading sectoral regulators.

Our regulatory regime will function by articulating five key principles, which are absolutely key to this debate and tackle many of the points that have been made by hon. Members across the Chamber. Regulators should follow these five principles when regulating AI in their sectors: safety, security and robustness; transparency and explainability; fairness; accountability and governance; and contestability and redress. That feeds into the important points made by my hon. Friend the Member for Watford (Dean Russell), who held this ministerial position immediately prior to myself, about deception, scams and fraud. We can all see the potential for that, of course.

Clearly, right across the piece, we have regulators with responsibility in those five areas. Those regulators are there to regulate bona fide companies, which should do the right thing, although we have to make sure that they do. For instance, if somebody held a database with inappropriate data on it, the Information Commissioner’s Office could easily look at that, and it has significant financial penalties at its disposal, such as 4% of global turnover or a £17 million fine. My hon. Friend the Member for Watford made a plea for a Turing clause, which I am, of course, very happy to look at. I think he was referring to organisations that might not be bona fide, and might actually be looking to undertake nefarious activities in this area. I do not think we can regulate those people very effectively, because they are not going to comply with anybody’s regulations. The only way to deal with those people is to find them, catch them, prosecute them and lock them up.

[Damian Collins]

The Minister talks about safety, but does he agree that that has to be safety by design, and not just having response mechanisms built into the system so that a victim can appeal? I know he has looked at fraud a lot in the past, and there is a presumption that all will be done to combat fraud at its known source, rather than just providing redress to victims.

[Kevin Hollinrake]

That is absolutely right. We will not deal with everything in the world of AI in this respect, but there needs to be overarching responsibility for preventing fraud. That is something we have committed to bringing forward in another legislative vehicle—the Economic Crime and Corporate Transparency Bill, which is passing through Parliament now—but I agree with my hon. Friend that there should be a responsibility on organisations to prevent fraud and not simply deal with the after-effects.

Our proposed framework is aligned with and supplemented by a variety of tools for trustworthy AI, such as assurance techniques, voluntary guidance and technical standards. The Centre for Data Ethics and Innovation published its AI assurance road map in December 2021, and the AI Standards Hub—a world-leading collaboration led by the Alan Turing Institute with the National Physical Laboratory and the British Standards Institution—launched last October. The hub is intended to provide a co-ordinated contribution to standards development on issues such as transparency, security and uncertainty, with a view to helping organisations to demonstrate that AI is used safely and responsibly.

We are taking action to ensure that households, public services and businesses can trust this technology. Unless we build public trust, we will miss out on many of the benefits on offer. The reality is that AI, as with other general-purpose technologies, has the potential to be a net creator of jobs. I fully understand the points raised by the hon. Member for Birkenhead—of course, we do not want to see swathes of people put out of work because of this technology. I hasten to add that that has never been the case with other technologies. There have been many concerns over the ages about how new technologies will affect jobs, but they tend to create other jobs in different sectors. The World Economic Forum estimates that robotics, automation and artificial intelligence will displace 85 million jobs globally by 2025, but create 97 million new jobs in different sectors, which I will discuss in a second. I think the hon. Member for Birkenhead asked in his speech whether I would be willing to meet him to discuss these points; I am always very happy to do that, if we can convene at another time.

The hon. Member also raised the point about how AI in the workplace has the potential to liberate the workforce from monotonous tasks such as inputting data or scanning through documents for a single piece of information. I will address the bigger concerns he has around that, but in the public sector it would leave teachers with more time to teach, clinicians with more time to spend with patients and police officers with more time on the beat, rather than being behind a desk.

As was raised in a salient point by my hon. Friend the Member for Folkestone and Hythe, AI also has tremendous potential in defence and national security. That is absolutely critical. It was interesting that leading people in the world of technology, led by Elon Musk, recently wrote a letter asking for a six-month pause while we look at how we can properly moderate the impacts of AI. I am not sure that that is a good idea, because I am not sure China and Russia would play that game. It is important that we stay ahead of the curve, for exactly the reasons pointed out by my hon. Friend.

[Damian Collins]

The Minister is exactly right. That initiative also suggests that AI is not yet here but, actually, the issues we have discussed today exist already. We can look at them already; we do not need a six-month pause to do that.

[Kevin Hollinrake]

That is absolutely right. There is an opportunity but also a potential threat. It is important that we continue to invest, and it is great that the UK is ahead of the game in its investment, behind only the US and China, which are obviously much bigger economies.

The key thing is that we take action on skills, skilling up our workforce in the UK to take advantage of the potential of AI. Clearly, a good computing education is at the heart of that. We have overhauled the outdated information and communications technology curriculum and replaced it with computing, and invested £84 million in the National Centre for Computing Education to inspire the next generation of computer scientists. Our national skills fund offers to do just that, with free level 3 qualifications for adults and skills bootcamps in digital courses, including coding, AI and cyber-security, available across England.

On that point, as well as the opportunities in AI, we need to look at the new opportunities in the new economy. Some jobs will be displaced, so we need to ensure that we are skilling up our workforce for other opportunities in our new economy, be it data science or green jobs with the green jobs taskforce. Recently, in Hull, there were 3,000 new jobs in the wind turbine sector with a starting salary of £32,000, which illustrates the potential for green jobs in our economy. So although jobs might be displaced, others, hopefully better-paid jobs will replace them. We want a higher-wage, higher-skilled economy.

The Government are also supporting 16 centres for doctoral training, backed by an initial £100 million, delivering 1,000 PhDs. We expanded that programme with a further £117 million at the recent launch of the Government’s science and technology framework. Last year, we invested an additional £17 million in AI and data science postgraduate conversion courses and scholarships to increase the diversity of the tech workforce, on top of the £13 million that has been invested in the programme since 2019-20. We also invested £46 million to support the Turing AI fellowships to attract the best and brightest AI talent to work in the UK.

The point about protections for workers’ rights was raised by many Members in the debate, not least the hon. Members for Gordon (Richard Thomson) and for Birkenhead; the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders); and my hon. Friends the Members for Folkestone and Hythe and for Watford. It is important to see the Government’s position on workers’ rights here. We are bolstering workers’ rights, raising the national living wage, with the highest increase on record—a near 10% increase—and six private Members’ Bills that increase workers’ rights, including on flexible working and other issues. There is also the Employment (Allocation of Tips) Bill, which is the favourite Bill of my hon. Friend the Member for Watford, who was its sponsor prior to becoming the Minister.

On the concerns many raised about workplace monitoring, we are committed to protecting workers. A number of laws are already in place that apply to the use of AI and data-driven technology in the workplace, including in decision making, which was raised by the hon. Member for Ellesmere Port and Neston. The Equality Act 2010 already requires employers and service providers not to discriminate against employees, job applicants and customers. That includes discrimination through actions taken as a result of an algorithm or a similar artificial intelligence mechanism. Tackling discrimination in AI is a major strand of the Equality and Human Rights Commission’s three-year strategy. Existing data protection legislation protects workers where personal data is involved, and that is one aspect of existing regulation on the development of AI systems and other technologies.

Reforms as part of the Data Protection and Digital Information Bill will cast article 22 of the UK GDPR as a right to specific safeguards, rather than as a general prohibition on solely automated decision making. These rights ensure that data subjects are informed about, and can seek human review of, significant decisions that are taken about them solely through automated means, which was a point raised by the shadow Minister. Employment law also offers protections. The Employment Rights Act 1996 provides that employees with two years of continuous service are protected from unfair dismissal, which would encompass circumstances where employees’ article 8 and UK GDPR rights have been breached in the algorithm decision-making process that led to the dismissal.

Of course, all good employers—by their very nature—should use human judgment. The best way we can help employers in any workplace is to have a strong jobs market where employers have to compete for employees. That is the kind of market we have delivered in this economy, despite some of the difficulties that surround it.

I once again thank the hon. Member for Birkenhead for tabling this timely and important debate. To be clear again, we have a strong ambition for the UK to become a science and technology superpower, and AI is a key part of that. However, the Government recognise the concerns around these technologies and appreciate that, as with all new technologies, trust has to be built. We will continue to build our understanding of how the employment rights framework operates in an era of increasing AI use. AI has the potential to make an incredibly positive contribution to creating a high-wage, high-skill and high-productivity economy. I very much look forward to seeing the further benefits as matters progress.

Post Office Horizon Compensation

Kevin Hollinrake Excerpts

Wednesday 26th April 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

On 23 March my Department launched its compensation scheme which aims to ensure that postmasters affected by the Post Office Horizon scandal who were part of the “GLO” High Court case get compensation on a similar basis to other postmasters.

To ensure that postmasters get fair, consistent and rapid compensation, the GLO Compensation Scheme Guidance and Principles document identifies the characteristics of moderate, serious and severe losses in some categories of compensation, including reputational damage and stigma, and gives figures indicating the likely range of awards. In the light of media comments on those figures I asked the Horizon Compensation Advisory Board to consider the matter. The group includes the right hon. Member for North Durham (Kevan Jones) and Lord Arbuthnot as well as two senior academics.

A report of the Board’s discussion is now available on the Department’s website. It recommends that the GLO Compensation Scheme’s guidance and principles should be amended to make it clear that:

The bands are not limits but indicative guidance to claimants, their lawyers and the Independent Panel.

Each case will be decided on its merits.

The GLO Compensation Scheme expects to find some cases where the facts of the case demand awards significantly higher than the upper figure for the top band.

If a claimant’s compensation cannot be agreed through the Alternative Dispute Resolution process, they have the right to have it considered by the Independent Panel including a KC and other experts.

As for other aspects of compensation, where the guidance and principles set out bands, decisions will be taken by DBT and the Independent Panel based on the facts of each case looked at “in the round” and guided by considerations of fairness.

I am happy to accept these recommendations. My Department will publish a revised version of the guidance and principles in due course.

[HCWS742]

Digital Markets, Competition and Consumers Bill

Kevin Hollinrake Excerpts

Tuesday 25th April 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

Today, the Government are introducing the Digital Markets, Competition and Consumers Bill. The Bill will drive growth, innovation and productivity, ensuring that businesses and consumers in the UK reap the benefits of competitive markets. The Bill will:

boost innovation by increasing competition in digital markets, taking action against a small number of the most powerful tech companies that force businesses and consumers to sign up to unfair terms and pay inflated prices;

grow the economy by enhancing our wider competition regime to focus it on the areas of greatest harm, delivering a level playing field for businesses; and

protect consumers by strengthening the enforcement of consumer protection law and introducing new consumer rights, for example tackling subscription traps that currently set consumers back £1.6 billion a year.

Digital technologies have transformed the way we buy products and services, increasing accessibility, flexibility and choice, but we need to act now to address their potential for consumer harm. For instance, companies can make it unreasonably difficult for consumers to cancel a subscription, or inhibit choice by artificially ranking their own products higher in search results.

The Bill will give consumers greater choice and drive innovation, leading to new products that transform lives. It will also establish new, faster tools to address the unique barriers to competition in digital markets, allowing the Competition and Markets Authority to proactively drive more dynamic markets and prevent harmful practices such as making it difficult to switch between operating systems.

We are using the freedoms we have gained by leaving the EU to address these issues in a way that best works for the UK. We can now make our own decisions on how we maintain a proportionate system of regulation that drives innovation and protects consumers. Our new pro-competition regime, focused on the most powerful tech companies, is flexible and principles-based rather than following the EU Digital Markets Act’s blanket set of obligations on all “gatekeepers”, which risks creating unnecessary regulatory burdens for firms. Our more targeted and pro-innovation approach involves investigating specific harms, developing tailored obligations and taking more evidence-based regulatory decisions—informed by significant engagement with the firms themselves. We are also taking a power to ban unfair commercial practices, such as fake reviews, and are strengthening oversight of alternative dispute resolution services that would have been more constrained while in the EU.

The Bill will also support consumers through new and improved rights to deal with bad business practices such as subscription traps. This includes better information up front as well as easier exiting and earlier cancellation rights. These and other new measures will save consumers’ hard-earned cash and protect them from scams and rip-offs. We expect the Bill’s enforcement reforms to increase consumer benefits by tens of millions of pounds above the CMA’s current estimate of £146.5 million a year.

The Bill will grow the economy by boosting competition, better placing UK businesses to succeed in export markets. It will allow the CMA to more effectively deter, prevent and, where necessary, enforce against monopolistic behaviours, to ensure that the free market can operate effectively.

[HCWS737]

Draft Register of Overseas Entities (Definition of Foreign Limited Partner, Protection and Rectification) Regulations 2023

Kevin Hollinrake Excerpts

Monday 24th April 2023 General Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft Register of Overseas Entities (Definition of Foreign Limited Partner, Protection and Rectification) Regulations 2023.

It is a pleasure to speak with you in the Chair, Ms Fovargue.

The regulations were laid before the House on 15 March 2023. They form part of a series of secondary legislation that is needed to implement effectively the register of overseas entities. The register was created under part 1 of the Economic Crime (Transparency and Enforcement) Act 2022, which gained Royal Assent last year.

The register will crack down on dirty Russian money in the UK and other foreign corporate elites abusing our open economy. The register requires overseas entities owning or buying property in the UK to give information about their beneficial owners and/or managing officers to Companies House. The register provides more information for law enforcement to help it to track down those using UK property as a money laundering vehicle.

The register went live on 1 August 2022, and the deadline for registration was set for 31 January this year. There has been a relatively high rate of compliance, with more than 27,500 overseas entities registered so far. Over 700 have provided details to Companies House as they had disposed all their interests in land before the end of the transitional period. That means that over 28,000 entities have complied with the requirements. While that leaves probably a few thousand entities still to register, some of the unregistered entities are believed to have been dissolved or struck off, and others have not kept their address details up to date with the Land Registry. Companies House continues to work to increase compliance even further and is now also assessing cases for compliance action.

The first tranche of regulations was laid last year. Today we are considering the first regulations in the latest tranche that are subject to the affirmative procedure. Other instruments are in preparation, and they will ensure that the register can function even more effectively. The regulations we are considering have three main elements: they prescribe the characteristics of a foreign limited partner for the purposes of the 2022 Act; they allow for information held on the register to be removed on application under certain circumstances; and they amend the protection element of the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022.

The first part of the instrument sets out the characteristics of a foreign limited partner for the purposes of the register. The regulations require that such individuals must participate in a foreign limited partnership, or hold shares or an interest, either directly or indirectly, in a legal entity that participates in a foreign limited partnership. The regulations also define exactly what is meant by a foreign limited partnership and how an individual would qualify as a participant in a limited liability partnership. These provisions will assist overseas entities to decide who are registrable and beneficial owners under the legislation for the register of overseas entities.

Regulation 4 of the instrument sets out the grounds for rectification of the register. There may be occasions when information submitted to the registrar and visible on the register is factually incorrect, forged, or submitted without the consent of the overseas entities. It therefore allows for rectification of the register through the removal of such information.

Regulation 5 establishes the criteria for those entitled to receive notice on an application for rectification. In addition, the regulation specifies the information that must be included in the notice. The regulation also covers particulars of recipients’ rights and obligations under the provision. Accordingly, regulation 6 lays down the grounds for interested parties objecting to such an application. It also confirms how an objection should be made and the time limit for making one. Without these regulations, it would be impossible to know how to make an application to remove inaccurate or false information from the register, which would affect the register’s utility and accuracy.

Regulation 7 sets out the details of an amendment to the existing protection regime, which covers protecting personal information from public inspection. However, as things stand, protection can be granted only on an application subject to strict criteria. Applicants must provide evidence that they or a person they live with are at risk of serious violence or intimidation if their details are publicly disclosed. Such a disclosure must result directly from their link with the overseas entity.

The amending provision will remove the requirement to demonstrate the risk of violence or intimidation arising directly from the individual’s association with the overseas entity. The measure will subsequently allow applications for protection that are necessary because an individual is at serious risk. They would still need to demonstrate the risk before protection is granted, but the risk would no longer need to be linked to the overseas entity.

The amendment will also allow for a relevant individual’s usual residential address to be protected. For example, if the individual provided their usual address as a service address, not realising that it would be displayed on the public register, the person would have to provide an alternative address to protect their usual residential address. Protected information must still be provided to Companies House and will be available to law enforcement. The changes are being made because it has become apparent that the current criteria are not flexible enough. Without these changes, there is a real risk that some people will be in danger of serious violence or intimidation following the public disclosure of their details, given the ease with which that link could potentially be made to their usual address.

I emphasise that the regulations are crucial for the effective operation of the register of overseas entities. I hope that Members will support the measures and their objectives. I commend the draft regulations to the Committee.

--- Later in debate ---

[Kevin Hollinrake]

I thank members of the Committee for their valuable contributions to the debate. As the Committee knows, the Government are committed to ensuring that the register of overseas entities is robust and effective at tackling the illicit use of UK property to launder money. The draft regulations provide the mechanics that ensure the effective operation of the register.

The hon. Member for Caerphilly made a very good point. Clearly, sometimes individuals are under threat from other people for a variety of reasons. For example, a celebrity or public figure may not want their identity to be public because of potential risks posed by individuals to them or their families. That might be the case for a host of reasons—stalkers, for example. Where there is serious risk of violence or intimidation of that nature, which has to be proven to the registrar, the person is allowed not to disclose their address, particularly when it is a residential address, although the information is still held by Companies House and is available to law enforcement agencies. The protection regime is not a way of circumventing the purpose of the legislation; it applies in situations where there is proven potential for harm to the individual.

I think the shadow Minister, the hon. Member for Feltham and Heston, was a little unfair in some of her comments. The Government have certainly never turned a blind eye to some of the corruption that goes on in society. She says the Government have not acted, but as someone who has often spoken out about the need for stronger measures to deal with economic crime, I would say that Governments of all persuasions have not dealt with this issue in the past. She points to the fact that David Cameron stood up in 2015 and talked about the need for these kinds of measures. I agree with both him and her, but this country has failed to introduce appropriate measures for decades, and now we are doing so.

The hon. Lady points to Russia’s invasion of Ukraine bringing this issue into public consciousness. We parliamentarians react to public concern and we have concerns in the House about the invasion, which brought these kinds of issues into stark relief and provided the impetus to deal with them. We should all welcome the fact that we are dealing with them now. This SI is one of a number of measures we are taking forward that will make it much more difficult to use either properties or companies to launder ill-gotten gains through our society.

[Seema Malhotra]

The Minister has a track record in Parliament on this, but I think it is important to say that over the last seven years things have not been moving as quickly as they should have done. It is important to put on the record that various Committees in Parliament have raised this issue. We welcome things moving forward more quickly, but we have to keep our foot on the accelerator. That is extremely important.

[Kevin Hollinrake]

We are in violent agreement on moving things forward more quickly. I absolutely agree that we should have moved more quickly, but we are where we find ourselves. We have the momentum to act now, so let us make the best use of that opportunity.

The hon. Lady asks what Companies House is doing. As far as I am aware, 7,000 entities have not complied with the legislation. Some of them will no longer be entities that we need to worry about—they may well have closed down, and an address may have changed because there is no more purpose to an entity—but we are clearly keen to find out such information. Companies House has written to tens of thousands of organisations to ask them to register and to point out that there are now restrictions on being able to rent or sell land. There are meaningful measures in place to restrict the use of land and property, which is important. Companies House is also preparing cases for enforcement, which is another important message that we send to people who have not complied with the legislation. I am keen to make sure that the measures are taken forward as quickly as possible, and I am prepared to take personal oversight of making sure they are properly implemented.

The hon. Lady asked about how the measures can be avoided, such as by sharing ownership between a family of six. A beneficial owner is a beneficial owner regardless of how the ownership is distributed, and even if there are proxies. We had this discussion on the economic crime legislation, too. I think it is fair to say that if somebody is determined to avoid the rules by giving false evidence, they will do so, but there are significant penalties for doing that, which are a key part of the legislation.

The register of overseas entities provides a novel approach, and it is important to recognise that we are setting a new global standard. By setting up a register and introducing transparency, we are at the front of the pack with the legislation, so although the Opposition constantly put forward a fair challenge by saying that we are not going far enough, we are going further than any other jurisdiction I am aware of.

[Seema Malhotra]

It is not just the Opposition who are raising this issue. The Minister will know that many of the organisations with which he has worked in the past have also raised concerns about the threshold. I want to probe him on the threshold being 25%. It was not clear from his answer whether he was saying that any threshold, even a low one, would have people working around it. It feels fairly high for this purpose.

[Kevin Hollinrake]

We think it is at the appropriate level. We can perhaps have a discussion about it at length on another occasion, but as I say, the idea behind this is that the beneficial owner is disclosed. I will probably write to the hon. Lady to clarify this, but as I understand it, even if somebody put a proxy or nominee in place for the ownership of a property, it would still not get them off the hook in terms of whether they are actually the beneficial owner of the property. Perhaps I can write to her to confirm that.

The register is a crucial part of the Government’s fight against illicit finance. The Economic Crime and Corporate Transparency Bill, which is before Parliament, features substantial changes to UK company and partnership law, and complements the Economic Crime (Transparency and Enforcement) Act 2022. The Bill will introduce amendments to the Act that provide further operational detail to the register of overseas entities. For example, new measures in the Bill will require more information about overseas entities, including the title numbers of the properties held by overseas entities, and put in place minimum age limits for managing officers, to ensure that details of a person over 16 years of age must always be provided. The Bill will also make further provisions for registrable beneficial owners in cases involving trusts, and it includes an anti-avoidance mechanism to ensure that those in scope of the register at the time that the Act was first published as a Bill to Parliament cannot circumvent the requirements. The laying of the draft regulations complements the measures in the Bill to ensure that the register is as effective as possible, and I commend them to the Committee.

Question put and agreed to.