Draft Economic Growth (Regulatory Functions) (Amendment) Order 2024 Draft Growth Duty: Statutory Guidance Refresh

Kevin Hollinrake Excerpts

Tuesday 23rd April 2024 General Committees

[The Minister of State, Department for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft Economic Growth (Regulatory Functions) (Amendment) Order 2024.

[The Chair]

With this it will be convenient to consider the draft Growth Duty: Statutory Guidance Refresh.

[Kevin Hollinrake]

It is a pleasure to speak with you in the Chair, Mr Paisley. The draft order and the draft guidance issued under section 110(1) of the Deregulation Act 2015 were laid before the House on 6 March 2024.

I am pleased to initiate this debate, and I emphasise the Government’s commitment to upholding rigorous parliamentary scrutiny for statutory instruments that impact the UK’s independent regulators. The draft statutory instrument and guidance we are debating relate to the growth duty, a duty that requires specified regulators to have regard to the desirability of promoting economic growth when exercising certain regulatory functions. Regulators within the scope of this duty need to consider the potential impact of their activities and their decisions on economic growth, and ensure that any regulatory action they take is necessary and proportionate.

The growth duty applies to more than 50 regulators and came into statutory effect on 29 March 2017 under the Deregulation Act 2015. The regulators already covered include the Environment Agency, the Care and Quality Commission and the Gambling Commission. At present, the growth duty does not apply to the utilities regulators, which are the Office of Communications, also known as Ofcom, the Office of Gas and Electricity Markets or Ofgem, and the Water Services Regulation Authority or Ofwat. The draft instrument will extend the growth duty to those regulators, which oversee industry sectors accounting for 13% of annual private UK investment and about 4% of UK GDP. By extending the growth duty, we will ensure that those critical regulators have regard to the need to promote economic growth.

The Department for Business and Trade has also prepared refreshed related statutory guidance to provide greater clarity to support regulators in their application of, and reporting against, the growth duty. The draft refreshed guidance identifies drivers of growth and behaviours of smarter regulation to assist regulators better to ensure proportional regulation and support sustainable economic growth.

Regulators play a vital role in shaping the UK economy through the way in which they regulate. It is therefore critical that regulation is cognisant of the requirements of growth. A good regulatory environment emerging from the attentive and responsive stewardship of an effective regulator can create the conditions for business confidence and investment, sensible risk taking, and innovation. Together, the extension of the growth duty and the revised guidance will support a positive shift in how regulation is delivered, driving growth and paving the way for businesses to start and grow.

[Peter Grant (Glenrothes) (SNP)]

We have discussed the actions of other regulators under the Minister’s remit on a number of occasion. Can he give us some examples of when actions of the water or energy regulators under the existing system have been detrimental to economic growth? The views I get from the public are that that is not where the biggest failing in the regulatory system is.

[Kevin Hollinrake]

I think it is about ensuring that regulators are proportionate in their decision making and take into account the needs for economic growth. For example, speed of decision making is pretty important to someone who is investing in our economy—they want to ensure that there is a consistent framework and that, where changes are made, they are done quickly and with the input of businesses. The feedback we are hearing is that that is not always the case. As I said, from 2017 this regime was implemented for 50 other regulators, and the sky has not fallen in yet on those sectors when any changes have been made to the system.

I understand there is a perception that the growth duty may conflict with environmental duties or enforcement of protections. That is absolutely not the case. The draft refreshed growth duty statutory guidance sets out in the opening paragraph the importance of ensuring

“adequate protections for consumers and the environment.”

The growth duty does not and will not legitimise non-compliance with other duties or objectives, and its purpose is not to achieve or pursue economic growth at the expense of necessary protections. The guidance also identifies environmental sustainability as one of the seven drivers of economic growth. We set out in the guidance that natural capital and the ecosystems in which we live are fundamental to economic growth and therefore need to be safeguarded for economic growth to be sustained.

The draft SI will ensure that economic growth can form part of regulators’ decision making and purpose, thus supporting the change in behaviour being sought. By requiring the regulators to consider the growth duty, they will be empowered to consider areas that may not be reflected or may be only partly reflected in their duties, such as promoting innovation or trade growth.

The growth duty is not prescriptive and does not mandate particular actions, nor does it create a hierarchy over existing regulatory duties. The draft refreshed guidance is clear that regulators, as independent and experienced bodies, are best placed to balance their own decision making in that regard. The Government have also committed to review the impact of the extension of the SI within the related impact assessment, and will consider the impact and effectiveness of the growth duty on investment, growth, the environment and other factors in detail at the committed review point.

The draft refreshed guidance outlines drivers of sustainable economic growth supported by case studies, examples to provide clarity to regulators within scope of the duty and to help them promote growth. The guidance also identifies behaviours that contribute to good regulatory decision making and smarter regulation. The purpose of the guidance is to assist regulators to give appropriate consideration to the potential impact of their decisions on economic growth. The revised guidance encourages transparency and accountability for growth across regulators, with the aim of attracting investment and creating jobs.

The proposals are necessary to ensure that the energy, water and communications sectors strive for maximum efficiency over a sustained period. The draft refreshed guidance makes it clear that regulators should work with businesses on, among other things, the environment, trade, investment and skills to ensure sustainable medium to long-term economic growth. That will ensure that current-day economic growth can be achieved without undermining the ability of future growth. The refreshed growth duty guidance will support regulators in their application of, and reporting against, the growth duty. The Secretary of State’s overarching priority is to support businesses and grow the economy, which is what this draft instrument and supporting guidance seek to achieve today. I commend them to the Committee.

--- Later in debate ---

[Kevin Hollinrake]

I thank hon. Members for their contributions. The shadow Minister raised a number of important points about environmental protections. The new duty does not override the requirements of water companies or the regulator to ensure that environmental protections are put in place.

I would gently point out that there are two reasons why we are seeing such difficulties with our water suppliers now compared with the progressive change we have seen over recent years. First, we increased the monitoring of those dangerous parts of our system from 7% to 100% in 2010 so that we can see what is actually happening on the ground. We are also experiencing much higher rainfall, which is adding problems. To tackle this, the water companies have committed £96 billion for the period of 2025 to 2030. That is a 63% uplift on previous levels. Even before that, they were investing £6 billion annually, which is double the amount invested in capital infrastructure prior to privatisation. Work is being undertaken, but we accept that more needs to be done.

The hon. Member for Bethnal Green and Bow raised concerns about takeovers. Clearly we have a number of different vehicles we can use to mitigate those concerns, whatever sector they may relate to. We have the National Security and Investment Act 2021 and, for issues on public interest grounds, the Enterprise Act 2002. She also spoke about sluggish growth. I suggest that she checks the figures on GDP growth since 2010 or 2016 or pre-pandemic levels. We are third in the G7 and are growing faster than anywhere else except—[Interruption.] Well these are the facts. The hon. Lady can choose her own opinion, but she cannot choose her own facts. The only countries that have grown faster than us since then are the US and Canada. That is an absolute fact, so she should check the figures before saying that there has been sluggish growth.

On the question of “Why now?”, when we included the 50 regulators in 2017, we thought that the growth duty to be applied to Ofgem, Ofwat and Ofcom required further consideration, because they are economic regulators responsible for markets where operators are deemed to have monopoly or near-monopoly market power. More recently, we decided to include them within the various requirements of the growth duty.

My right hon. Friend the Member for Maldon asked about conflict. To reiterate, there is no hierarchy here. The requirements for the environment remain and are not replaced by this measure. In terms of prices, the regulator has an affordability duty as one of the requirements, so that should not override the price-setting role that is naturally played by a regulator in what is pretty much a monopoly sector.

The hon. Member for Glenrothes talked about the requirements and why we are introducing this measure. I point him to some very important stakeholders, including the Federation of Small Businesses, that have welcomed this new duty. He asks about a sovereign wealth fund, which is one of the Government’s plans—we have already announced a plan to introduce one. I would say to him that this is about growth, and point to the facts about growth in the UK, particularly in Scotland. Over the 10 years from 2011 to 2021, England’s GDP growth was 14.9%. The UK’s as a whole was 12.9% and Scotland’s was 7.2%. Growth is important. We cannot deliver the revenue that allows us to set up something like a sovereign wealth fund without economic growth. That is what this is about, so he should welcome it.

[Peter Grant]

The Minister’s statistics are very interesting. Can he give us the equivalent figure for England without the City of London?

[Kevin Hollinrake]

The hon. Gentleman can easily find the figures through the House of Commons Library, as I did. Is he envious of the City of London? We should be proud of this great city. Scotland has great cities too. I am a big fan of Edinburgh, Glasgow and other cities. What I am saying is that growth is important. The hon. Gentleman seems to think that it is not. I would ask him to think again about that perspective.

I thank hon. Members for their contributions. To conclude, by extending the growth duty to Ofgem, Ofcom and Ofwat, we will ensure that the regulators have regard to the need to promote economic growth. An economy that promotes growth is an economy that is better able to attract businesses to our shores, innovate, serve households and deliver prosperity across our nations.

[Rushanara Ali]

I asked the Minister about the primary and secondary objectives, and whether he sees any parallels in how these changes are thought of—I know this is about having due

“regard to the desirability of promoting economic growth”.

Does he think there is a parallel with the way that the competitive duty has been applied?

There is a potential tension to be managed in how regulators think about the importance of sector regulation and the Government imperative to promote growth. When regulatory officials think about our priorities, they might err on one side or the other, and that tension could be a problem. Does he feel that more work is needed to emphasise how the measures are applied, so that consumers do not suffer while we try to promote growth?

We need to do these things in tandem, so that we do not end up with a false economy, where damage is done to the economy through protections and standards that then cost the taxpayer a significant amount. That would leave us in the worst of all worlds, and is surely something that all different parties want to avoid.

[Kevin Hollinrake]

I do not disagree with anything the hon. Lady says. This is a parallel objective, not one that should replace the current objectives. It is a consideration for regulators. It is about not just obviating the risk, but looking at other factors. Investment is hugely important for our consumers and our citizens. This draft order is not about one thing or the other—for example, it will not replace the environmental duties of Ofwat. Indeed, the Environment Agency, which has had this duty since 2017, has issued about £150 million in fines to 60 different companies, so this is not about backing off on environmental protections. The hon. Lady raises an important point, however, and we have committed to reviewing how these measures will affect the general regulatory regime to ensure that there are no unintended consequences, although we do not feel that there will be, as long as the right balance is struck.

Of course, regulation must be used only where absolutely necessary, and must be implemented in a way that provides the right foundations for our economy to thrive. The purpose of the duty is to ensure that the specified regulators give appropriate consideration to the potential impact of their activities and decisions on economic growth, alongside their consideration of other statutory duties. It does not create a hierarchy over existing protections.

With that, I believe I have addressed all the questions posed by right hon. and hon. Members, and look forward to the Committee’s support and commendation of the order.

Smart Data Road Map

Kevin Hollinrake Excerpts

Thursday 18th April 2024 Written Statements

[The Minister of State, Department for Business and Trade (Kevin Hollinrake)]

The Government have today published a road map which sets out what action they will take over the coming year to progress a smart data economy as a result of the new powers in the Data Protection and Digital Information Bill.

The data economy is a large and growing part of the economy. Smart data unlocks data for individuals and businesses that is currently held and underutilised in a small number of existing companies. It allows businesses to easily access this data, with consumers’ consent, to provide new services that drive investment, productivity, competitive outcomes and, ultimately, economic growth.

The Data Protection and Digital Information Bill was introduced to the House of Commons in March 2023 and passed Second Reading in the House of Lords on 19 December 2023. The Bill will provide the Government with the powers we need to deliver the benefits and safeguards required for a smart data economy, including the ability to mandate industry involvement in smart data schemes.

The road map sets out how the Government will use these powers over the coming year by identifying the opportunities and challenges in implementing smart data schemes in seven sectors: energy, banking, finance, retail, homebuying, transport and telecoms. This will help business and interested groups plan for and benefit from action in this area.

This delivers on the commitment made at autumn statement 2023 to kickstart the smart data big bang.

A copy of the road map will be deposited in the Library of the House.

[HCWS416]

Draft Post Office Network Subsidy Scheme (Amendment) Order 2024

Kevin Hollinrake Excerpts

Wednesday 17th April 2024 General Committees

[The Minister of State, Department for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft Post Office Network Subsidy Scheme (Amendment) Order 2024.

It is a pleasure to speak with you in the Chair, Ms Vaz. The draft order was laid before this House on 11 December. Under section 103 of the Postal Services Act 2000 the Secretary of State for Business and Trade has the power make payments to support the provision of the post office network. The power is subject to conditions, one of which includes the cap on the total amount of funding that can be given to the Post Office in any given financial year. The current cap, set in 2011, is £500 million and we propose to increase that to £750 million. Raising the cap on funding that can be provided to the Post Office does not reflect a funding commitment. It is simply an enabling power to allow the Government to provide appropriate funding to the Post Office when needed.

The rationale for the increased cap is simple: we must avoid a situation where the Government cannot legally provide the funding that the Post Office needs for its essential activities. As all Members will be aware, there are important areas where the Government currently provide funding to the Post Office to enable it to maintain its delivery of key services across the UK.

First, there is funding for providing redress for the victims of the Horizon scandal, one of the biggest miscarriages of justice in living history. The victims must get the justice and redress they deserve. There are a number of redress schemes to which the Government are contributing funding, as well as funding associated with delivering redress schemes. It is essential that the process is not held up at any stage.

Secondly, the Government provide significant and vital funding to support the post office network. Post offices are, of course, the beating heart of our communities. Through the network of over 11,500 branches, post offices deliver essential services across the United Kingdom. There are currently over 6,000 rural branches—54% of the total network. Over 3,000 of those are described as the last shop in the village, providing vital retail, mail, parcel and banking services in one place, helping to sustain thousands of rural communities.

Such services are hugely valuable to individuals and small and medium-sized businesses in urban and rural areas across the United Kingdom. It came as no surprise to see that in the most recent Local Shop Report from the Association of Convenience Stores, post offices are identified as a type of service considered by the public to have the “most positive impact” on a local area. The Government have provided significant financial support to sustain a nationwide network—more than £2.5 billion in funding to support the network in the past decade alone. The Government remain steadfast in their support of the network and have committed to maintain the annual £50 million subsidy to safeguard services in the uncommercial parts of the network until 2025. Without that funding, many post office branches would be unsustainable.

[Shailesh Vara (North West Cambridgeshire) (Con)]

The Minister is making a powerful case for increasing the cap to make sure that Post Office Ltd continues with the very valuable service it provides for the community. He mentioned the Horizon scandal at the start of his speech. Is it the case that the cap we are debating today is for additional services for the Post Office to maintain the standards it has at the moment, or will some of that money go to victims caught up in the Horizon scandal? Is it a bit of both or will there be separate funding exclusively for the Horizon scandal? If all the money in compensation were taken up by the increased cap amount, there will not be enough money left over to maintain the standards of Post Office Ltd.

[Kevin Hollinrake]

It is, in my right hon. Friend’s words, a bit of both. It is about maintaining services, including rural services. On improving the technology, of course we need to replace the current system. It is also about compensation, and the means of delivery—the administration—of the compensation. It is important to note that not all the compensation provided—we have set a maximum budget of £1 billion for compensation—is provided through these means. There are separate means, through the group litigation order process and the new compensation process for the newly overturned convictions, which we anticipate overturning by July. They can be funded through separate means, so it is not all through this particular process, but some of it certainly is.

The Government will provide targeted investment funding to the Post Office, as the retail sector faces challenging conditions. It is still feeling the effects of changing consumer behaviour arising from covid-19, and the impact of cost of living pressures on consumer confidence arising from a range of factors, including inflation and high energy and supply chain costs, in a fiercely competitive market. As such, the Post Office is experiencing pressures as the business attempts to operate in this challenging commercial environment while meeting the cost to right the wrongs of the past.

Further pressures have also arisen through work to replace the outdated Horizon IT system. While this is a Post Office-led programme, it is essential for the future of the company and the network, and the Government have already committed to providing £103 million to support the development of the replacement system and to ensure the Horizon system is maintained before the replacement is rolled out. We provided funding to meet the company’s immediate needs for the programme and we are working closely with the Post Office to understand what funding may be required beyond this. These three areas are critical to the Post Office’s future and the current cap risks Government not being able to provide the Post Office with the funding it needs for essential activities. Having taken into account the Post Office’s current forecasts and the inflationary context since the previous cap was set in 2011, the Government considers a new cap of £750 million to be reasonable, sensible and proportionate.

--- Later in debate ---

[Kevin Hollinrake]

I thank Members for their important contributions, all of which I shall cover, if I think I can.

The hon. Member for Bethnal Green and Bow asked how the money is being allocated. As I said, this is a cautionary raising of the cap, rather than money specifically going out today. She also asked how the 2025 funding package is being spent. There is the £50 million annual subsidy for uncommercial parts of the network and £190 million to meet the costs of participating in the Post Office Horizon IT inquiry and delivering redress to postmasters. Some £103 million helps the development of a replacement for the Horizon IT system, but she might be reassured to hear that there are zero pounds for bonuses.

On our engagement with the Post Office, I meet monthly with the chief exec and other members of the board. I met today with the National Federation of SubPostmasters in one of its meetings to constructively challenge the Post Office management, which I attend on a monthly basis. I also meet the board itself—I did so recently—including the non-executive postmasters on it. I meet postmaster victims, as I did today. I was delighted to host Lee Castleton and others in Parliament today, where they met the Prime Minister and the Leader of the Opposition. It is important that those meetings are held, such as the one I did last week at Fenny Compton for a BBC programme.

The engagement is about not only righting the wrongs of the past, but the future. The post office network has a bright future, with revenue opportunities that are very much around access to cash and how the banking framework can bring more revenue into post offices. It is crucial not only to increase revenue, but to reduce costs at the centre. It is important that the Post Office itself reduces central costs so that more of the money that flows into the organisation as a whole goes to the postmasters themselves to create more profitable businesses.

The shadow Minister referred to governance. We decided to part company with Henry Staunton and the Secretary of State was absolutely right to do what she did. We hope to see improved governance with a new chair, whom we hope to appoint shortly.

We have been clear, certainly for the past 14 or 15 months in which I have been in this post, that Fujitsu has not only a moral responsibility—it accepts that, as it said before the Select Committee—to own up to how it contributed to what happened, but a financial responsibility. It will contribute significantly to the compensation bill, and we have already had conversations about when that will happen. The right approach is for the inquiry to hear all the evidence, after which we can decide how blame is apportioned and who is culpable.

The inquiry’s evidence sessions are due to be concluded by the end of this year, with the report published early next year. By that point, we will know the full extent of the compensation bill, and that is the right time for final conversations with Fujitsu about how much it should contribute. I appreciate the cross-party support for those conversations. We will have ample opportunities in debates such as this, as well as those on the Floor of the House as we debate the convictions legislation, to press the case publicly with Fujitsu that we expect a significant contribution to be made. I thank the hon. Member for Bethnal Green and Bow for her support and kind words.

The SNP spokesman, the hon. Member for Gordon, talked about the reduction in services at post offices. He was right: there is no doubt that there has been a significant reduction in the amount of money generated at the post office level compared with 10 or 15 years ago. Letter volumes are a part of that, as are Government services, driving licences and passports, but what has happened is largely due to consumer behaviour, not our interventions. We do not think it is right for us to dictate to our citizens how they should access Government services.

I am sure the hon. Member for Gordon and other members of the Committee do not go to a post office when they renew their passport or driving licence; they probably renew online. It is far more convenient for people to do that, so we should not dictate to our citizens how they access vital public services. It is very important, of course, that we find other sources of revenue for the Post Office, which I will talk about again in a second.

The hon. Member asked whether the cap would impede delivery if there was a flood of new applications for redress. No, absolutely not. This is just one of the mechanisms by which we deliver compensation. The other mechanisms are through the Horizon convictions redress scheme, which is separate, and the GLO scheme. We do not feel that the cap, as a separate means of delivering compensation, will in any way prevent the right money going to the right people.

I thank my right hon. Friend the Member for Suffolk Coastal for her engagement on the matters important to her. She is right to point out that the subsidy for the uncommercial parts of the network is £50 million. We are trying to make sure that the uncommercial parts become more commercial, to deliver more services—particularly around parcels. The Post Office is moving to parcel hubs. I think 8,000 post offices up and down the country offer their customers at least three different options for sending parcels—Royal Mail, Evri or DPD —and that number is increasing. A range of different parcel carriers can provide services, and those are all revenue opportunities for post offices.

Banking is a lucrative source of revenue for the Post Office and is getting more lucrative. As my right hon. Friend said, bank closures have saved banks around £2.5 billion a year, and that number is increasing, so it is only right that a significant proportion of that saving should go into the Post Office network and improve remuneration through the banking framework. The hon. Member for Brighton, Kemptown said that the banks should be more generous in their negotiations with the Post Office. Those conversations are progressing reasonably well, but we are keen to make sure there is a better deal for the Post Office and that significant amounts of revenue flow into post offices through that source.

Additionally, Government legislation on access to cash means that banks are forced to leave behind in the communities they abandon banking facilities that include post offices and banking hubs. There will be between 500 and 1,000 banking hubs rolled out over the next few years. There are 40 already, but another 60-odd are in the pipeline, so there will be significant numbers of banking hubs around the country, which represent opportunities for postmasters, who tend to get the first bite of the cherry to operate those hubs.

[Lloyd Russell-Moyle]

The banking hubs are particularly good where banks are leaving, but communities already bereft of their bank have not had the opportunity for the post office to come in, so there is still work to be done. Does the Minister agree?

[Kevin Hollinrake]

Yes, I do. There can be timing differences, and we urge the banks to put those facilities in place before they leave those communities. Banks are separate commercial entities, and we have legislated to say that they must provide services such as access to cash in those communities. We have made those steps, and they are resulting in significant numbers of banking hubs being rolled out across the country, which are opportunities for our communities and our postmasters.

My right hon. Friend the Member for Suffolk Coastal mentioned the Kelsale outreach branch, which we have met about. We are keen to support her campaign to ensure those communities are still well served. She is right to point out that there should be transparency around where that money goes. A £50 million annual subsidy is going into the Post Office every year, some of which, potentially, will be provided through the raising of this cap. It is also about the Horizon IT inquiry and redress, and the IT system. The key message we have for Post Office Ltd is that it should be reducing costs at the centre to ensure that more of that subsidy, and more of the income resulting from the services provided by post offices, is going to the postmasters to make those post offices more financially viable, so that we see fewer closures.

The hon. Member for Brighton, Kemptown asked about what criteria we apply when talking about which post offices to put where. There are clear criteria. There are around 11,700 post offices across the country, and 99% of the population should be within three miles of a post office. The hon. Member mentioned a 10-minute drive; three miles in 10 minutes is probably on the same page, depending on where we are talking about—sometimes in north Yorkshire it takes longer than that. Those access criteria were set in 2007-08, during a previous Administration.

The hon. Member for Brighton, Kemptown wants to increase the subsidy. I hear what he says, but I do not know where he is going to find the money—perhaps he could talk to the shadow Chancellor about that. As far as the Government are concerned, we are providing a significant amount of money to the Post Office to ensure that it is sustainable. However, we want it to be independently viable, and that is about driving revenue while reducing costs at the centre. That is our clear strategy. The hon. Member also asked whether all the money for all the schemes is coming through the raising of the cap. No, it is not. There are other schemes and methods of getting money into payments of redress: the GLO scheme and the Horizon convictions redress schemes.

In conclusion, the Government are committed to ensuring the long-term sustainability of the Post Office, and are working closely with it to ensure that the company receives the funding it needs. The Post Office needs to continue righting the wrongs of the past from the Horizon scandal, to go on providing essential services across the UK, and to invest in the future through programmes such as the replacement for the Horizon IT system.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Post Office Network Subsidy Scheme (Amendment) Order 2024.

Draft Code of Practice on Dismissal and Re-Engagement

Kevin Hollinrake Excerpts

Monday 15th April 2024 General Committees

[The Minister of State, Department for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft Code of Practice on Dismissal and Re-Engagement.

It is a pleasure to serve with you in the Chair, Sir Graham. The code of practice, which I will refer to as “the code” for the remainder of the debate, will give legal force to accepted standards about how employers should act when seeking to change employees’ terms and conditions.

The Government have been clear that threats of dismissal and re-engagement should not be used as a negotiation tactic by employers. When the covid-19 pandemic led to cases of dismissal and re-engagement, the Government asked ACAS to conduct an evidence-gathering exercise to help us better understand the issue. Its report was published in June 2021. The Government then went further, asking ACAS to produce new guidance to ensure that employers are clear on their responsibilities when considering making changes to employment contracts. The guidance was published in November 2021. ACAS has also published guidance for employees.

The Government are now going even further to address the use of dismissal and re-engagement by introducing the code, with the aim of ensuring that the practice is only ever used as a last resort and that employees are properly consulted and treated fairly. The code seeks to ensure that where an employer wants to make changes to an employee’s terms and conditions, the employer engages in meaningful consultation with a view to reaching agreement with employees or their representatives in good faith. The code will apply to all employers, regardless of their size, and we expect all employers in relevant scenarios to adhere to what it sets out. Employment tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply.

In accordance with the Trade Union and Labour Relations (Consolidation) Act 1992, the Secretary of State consulted with ACAS on a draft statutory code before publishing it. Between January and April 2023, the Government publicly consulted on a draft code, enabling trade unions, employers and other interested parties to contribute their views. Careful consideration was given to those views, and changes were made to the draft code as a result. The Government are grateful to all respondents to the consultation for their considered and helpful responses. An updated draft code was laid in Parliament on 19 February. The Government response to the consultation was also published on 19 February.

There are calls to ban the practice of dismissal and re-engagement, and suggestions that we should legislate to restrict its use in a manner that would amount to an effective ban. The Government believe, however, that we must preserve companies’ flexibility to manage their workforce in times of crisis. The UK’s flexible labour market is key to economic growth and helping businesses to thrive. Therefore, it is right that we have mechanisms to enable us to save as many jobs as possible.

The code is a proportionate response to dealing with controversial fire and rehire practices, balancing protections for employees with business flexibility. The vast majority of employers want to do the right thing by their employees. For most employers, decisions to change terms and conditions are not taken lightly, and nor is the choice to let members of their workforce go.

The UK is a great place to start and grow a business and has a strong labour market. Its success is underpinned by balancing labour market flexibility and worker protections. It is vital that we continue to strike the right balance while clamping down on poor practice. If the code is approved by the House, it will be issued and brought into effect by the Secretary of State in accordance with the procedure set out in section 204 of the 1992 Act. The Government’s intention is for the code to be in effect by summer. I hope that Members will support it.

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

It is a pleasure to see you in the Chair this afternoon, Sir Graham.

I thank the Minister for his introduction of the code of practice. It has taken more than two years, but we are finally here debating the action promised by the Government on dismissal and re-engagement. When the Government committed to introducing this code, there was a moment of consensus across the political spectrum that the situation we saw with P&O Ferries, which summarily sacked almost 800 workers over Zoom, could not happen again. The Business Secretary at the time, the right hon. Member for Welwyn Hatfield (Grant Shapps), said that

“we will not allow this to happen again…where new laws are needed, we will create them…where legal loopholes are cynically exploited, we will close them, and...where employment rights are too weak, we will strengthen them.”—[Official Report, 30 March 2022; Vol. 711, c. 840.]

Well, I am sorry to say that those legal loopholes remain as open today as they did two years ago, and there is absolutely nothing to stop the outrage of P&O happening again. Why do I say that? It is there in black and white in paragraph 12.3 of the explanatory memorandum to the code of practice, which says that

“the Code does not impose any new legal obligations and operates within the current legal framework”.

That, in the final analysis, is why this code of practice is such a let-down—another promise broken, another capitulation to the bad bosses and another reason why it is time for change.

It has taken two years to get to this point. In those two years, P&O has still been benefiting from Government contracts, and all the while, fire and rehire continues to pollute the country’s industrial relations landscape. While the P&O Ferries case was not wholly a fire and rehire situation, I will return to it later, because it bore many hallmarks of the practice and exposed the gaps in our laws designed to protect workers, where employers with deep enough pockets could use fire and rehire to disregard our laws.

In the wake of the pandemic, there has been a jump in the number of employers using fire and rehire. Research by the Chartered Institute of Personnel and Development found that between 2021 and 2023, the proportion of firms using fire and rehire had almost doubled. Many well-regarded household names attempted to do so, including Tesco, Clarks and British Airways. What was once a seldom-used device has become a mainstream practice and part of a wider pattern of growing insecurity at work. In short, it has become a first choice rather than a last resort.

[Kevin Hollinrake]

The hon. Gentleman raises P&O, which I must point out is specifically not a case of fire and rehire. What is the Labour party proposing to stop another P&O situation happening in future?

[Justin Madders]

I thank the Minister for his intervention, but we have been down this road before where he keeps asking what Labour’s policies are. My answer is, “Call a general election and we’ll have a debate about these things.”

[Kevin Hollinrake]

So you don’t know the plan.

[Justin Madders]

The Minister knows perfectly well where our policies can be found. The new deal for working people has been well advertised and well covered in the press. As he knows, there is a lot of support for our proposals to end fire and rehire.

As a TUC investigation recently found out, around 38,000 employers were using fire and rehire as a tactic. In that context, we need to scrutinise the draft code of practice and consider whether it will end the commonplace use of those tactics. I am afraid that, despite having had two years to get this right, we are no closer to ending the scourge of fire and rehire. The code of practice is vague, it is weak and in its final analysis, it will not prevent another case as egregious as P&O. On that basis, the Government have failed to keep the promise they made two years ago.

Let us take the element that many people found most offensive about P&O: the fact that at the outset, its management were able to look at the sanctions that they were potentially liable for and decide whether they wanted to break the law. The cost of breaking the law was considered as just another business overhead to be factored in when making decisions and, as we saw, P&O decided that the sanctions were not a strong enough deterrent to prevent rule breaking.

It is welcome that the code of practice gives an indication to unscrupulous employers that they cannot get away scot-free with breaking the law. However, we have concerns that the 25% uplift on awards at tribunals for employers who have been found to have unreasonably failed to comply with the code will not be strong enough to deter bad employers.

First, we have concerns about the inclusion of an award cap in the code of practice. As I have mentioned, it was particularly concerning that P&O was able to look at the options and perform a cost-benefit analysis of whether to conform with the law. It knew the maximum penalty it would face in compensation for each employee, which it then priced into its decision. In effect, it was able to treat the law on compensation—a law that is in place to protect workers’ jobs and their dignity—as optional. What the code of practice means, in effect, is that breaking the law remains an option, though it is now slightly more expensive than it used to be.

Laws are only as strong as their enforcement, so we believe that sanctions should reflect the egregiousness of the transgression. If an employer decides to break the law, their sanction should not be capped but should instead be decided on the basis of the facts. That way, any employer tempted to brazenly flout their legal requirements would no longer be able to calculate the costs of doing so, because in the most serious cases that cost would not be knowable and they would have to take their chances in court. Smaller transgressions would be treated by a tribunal. As it stands, the most egregious cases still have a ceiling, which means that those who act with ill intent can still price in the cost of acting unlawfully.

The code of practice therefore retains the status quo, whereby an employer can look at the maximum fixed penalty associated with breaking the law and, in effect, choose whether they will abide by it. It is workers who suffer the consequences. Some bad employers might see consultation requirements as burdensome, but there is a reason why the law requires consultation.

The consultation process is a vital opportunity for the voices of workers and their representatives to be heard, and for alternative proposals to be put forward to save jobs and protect conditions. When consultation works best and is meaningful, it can benefit employers and employees. There are, thankfully, many good employers who understand that and work collaboratively with trade unions. We commend those employers, and we know that they already go above and beyond their legal requirements. However, this code of practice needs to be set in a robust framework for bad employers, who sadly are out there. Frankly, there is no evidence that the 25% uplift will act as a deterrent.

I would like to hear what the Minister has to say about that, because I do not know how he can confidently assert that a 25% uplift will actually prove to be a deterrent. In response to my written question about the use of compensatory uplifts by employment tribunals, he said:

“Data on the use of compensatory uplifts by Employment Tribunals is not collected.”

That means that the Government do not know how much the compensatory uplift is used in other areas of employment law where there is a similar code of practice. That gives rise to the question: on what basis has it been decided that this measure is effective in preventing employers from failing to follow the code of practice? Does the Minister have evidence of its effectiveness that he can share with us today?

It is also worth reminding Members that this deterrent will not come into force straightaway. As the Minister indicated, secondary legislation is required to amend section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992. He said that that will be introduced this summer. Will he confirm whether that means before the recess or at a later date over the summer? It would be useful to get a date for the introduction of that secondary legislation.

It must also be pointed out that under the current drafting of the code, the sanctions can be awarded only if an employee has been found to have been unfairly dismissed. We know how easy it is for an employer to dismiss a worker in the modern economy. Of course, generally speaking, those with less than two years of continuous service cannot be considered to be unfairly dismissed. Some may sign settlement agreements that offer them their statutory entitlement, but a hard-nosed employer may say, “Well, if you want to argue for an extra 25%, take your chances at a tribunal,” where the cost to the employee might be more than the potential sum to be gained.

On top of that, the code of practice protects only “employees”, meaning that some of the most insecure workers in the labour market will not benefit one jot. To add icing to the cake, or salt to the wound, the Government intend to reintroduce employment tribunal fees, which we know from experience have a significant impact on people’s ability to enforce their rights. Will the Minister provide an assessment of how many people will benefit from this code of practice, and how many employers he believes will not use fire and rehire as a result of it?

Paragraph 14 of the code refers to a 25% reduction in compensation where the employee—not the employer —unreasonably fails to comply. Is it the Government’s intention to give tribunals the power to reduce employees’ compensation in fire and rehire cases, and if so, what element of the P&O case led the Minister to conclude that that was necessary? As the TUC pointed out, the uplift does not cover redundancy situations. As we know, P&O was in part a redundancy situation, where surely the same sanctions should apply. Will the code apply where workers are replaced with agency staff?

Turning to the substance of the guidance, I have made the general point that, as is clear from the explanatory memorandum, the code creates no new legal obligations. That is sadly reflected in the number of times that the code says that an employer “should” rather than “must” do something. I will not list every example—I appreciate that people have other places to be—but there are some important instances where “should” comes in, such as paragraph 16, which says that the employer “should” consult in good faith. Paragraph 23 says that

“the employer should consider what information could be provided about…the proposed changes”.

Paragraph 28 says that the employer

“should genuinely consider the points that are put forward”,

and paragraph 31 says that

“a threat of dismissal should not be used as a negotiating tactic”.

On the last of those, why not say that the threat of fire and rehire “must” not be used as a negotiating tactic? I am pretty clear that that is what Ministers had in mind when they made those promises two years ago. Why is it a requirement only that an employer “should” consult in good faith? Surely we want every employer to consult in good faith; there should be a legal requirement for them to do so.

[Kevin Hollinrake]

There should be.

[Justin Madders]

Employers should do, yes—and that should be enforced in law.

There is a similar issue with the guidance offered in the code on the provision of information and how to conduct consultation with workers. Instead of clearly and unambiguously stating what information employers ought to provide, the code relies on the phrase “as reasonably possible” on numerous occasions. Instead of providing concrete guidance on the timeline of providing information, paragraph 21, for example, simply states:

“Information should be provided as early as reasonably possible.”

Similarly, paragraph 22 states that

“employers should share as much information regarding the proposals as reasonably possible”

in order for employees and their representatives to understand the plans and ask questions. Section D on consultation states that an employer should

“genuinely consider any reasonable alternative proposals”

and should

“consult for as long as reasonably possible in good faith, with a view to reaching an agreed outcome”.

Those statements are not really anything other than restatements of the existing legal principles on consultation, and the repeated references to “should” rather than “must” mean that in reality, the code does not strengthen protection for workers at all.

Insomuch as there is concrete guidance about the provision of information, I suggest that it is insufficient. Paragraph 23 lists the information that could be provided, such as the proposed changes, who will be affected, the business reasons for the changes, the timeframe, any other options considered, and next steps, but those are not the only pieces of information that unions or other representatives will require to propose truly viable alternatives to fire and rehire. It is unclear why the Government have chosen not to be more prescriptive with the types of documentation that could be provided. The TUC recommended that the list be expanded to include information similar to that set out in paragraph 11 of the ACAS code of practice on the disclosure of information to trade unions for collective bargaining purposes. That would mean that unions and other representatives could get sight of more information about a number of elements relating to staff, including productivity and efficiency data.

Perhaps most importantly, financial information would also be available—cost structures, profits, assets, liabilities and forecasts—which would help to formulate a credible alternative plan. In particular, financial information would help those representing the workforce to determine whether the financial position of the company was such that some sort of action was justified, as opposed to the situation that we often see in fire and rehire, where the company is making a healthy profit on the face of it but refers to vague and sometimes intangible reasons for the proposed changes. It may even refer to something as vague as

“the strategic direction of the business”,

which is mentioned in the first paragraph of the code of practice.

Choosing not to include that level of prescription in the code will limit the ability of unions and other representatives to suggest ways to avoid fire and rehire. Indeed, what we are presented with in the code of practice is perhaps the exact opposite of what ought to be best practice.

In particular, paragraph 27 of the code gives employers the opportunity to withhold information should they believe it to be commercially sensitive. The employer alone decides what to disclose, so they can hide behind that catch-all paragraph to keep whatever they want private. Yet the sharing of confidential and commercially sensitive information is commonplace in good industrial relations, and it can be the basis of a shared conversation to find a solution, particularly in cases of fire and rehire, when access to documents such as financial forecasts is critical to unions being able to assess the firm’s position and suggest viable alternatives. Instead of encouraging employers to withhold such information, as the code of practice does, it should suggest ways to facilitate the sharing of sensitive information. The code could easily have talked about circumstances in which it would be appropriate to disclose such information to the appropriate reps, perhaps on the condition of confidentiality, but it chooses not to.

Another glaring omission is the lack of clear and concrete guidance as to how to conduct an effective consultation process. There are comments that remind employers to conduct a meaningful negotiation and process, but no guidance on how to actually go about it. In its consultation response last year, the TUC suggested that the relevant section should include practical guidance about how to go about conducting an effective process. It recommended that there should be guidance on the exchange of written information, including responses to demonstrate that employers have actively considered alternative proposals. Those are the standards that we want to see in a good and effective consultation process. Of course, most employers want to do their best, so why shy away from providing that level of detail?

Instead of paying lip service to the idea of conducting a meaningful consultation, more practical guidance could drive up standards and ultimately improve the outcome of the consultation process. That is far beyond what is included in the code of practice. In fact, paragraph 25 states that the provision of information in writing is not even an obligation, but just “good practice”. Are the Government really saying that the information in consultation exercises does not have to be provided in writing? That sums up the failings evident in the section of the code of practice that deals with information and consultation. It is vague, it is weak and it does not encourage employers to make the most of the opportunities to avoid imposing changes on their workforce.

I want to say a few words about the advice in the code of practice that fire and rehire should be used only as a last resort. The code of practice is clear that it does not mean a last resort in the sense that there is no alternative to the action other than insolvency or redundancies, for example; rather, the suggestion is that it can be used as a last resort if negotiations are not successful. In practice, that means that employers can, as they do now, use the most spurious of reasons for proposing fire and rehire, but as long as they can show that they have attempted some consultation, they can still do it.

That brings me to the question of what an employer will be expected to produce to show that it considers its decision to fire and rehire as a last-resort measure when consulting unions and, indeed, when the matter is taken to a tribunal. Will that include anything to do with the disclosure of financial records, business forecasts or accountancy advice? In the absence of such information, how will unions be able to differentiate between employers considering dismissal and re-engagement as a genuine last resort and those that use it as a scare tactic? These fundamental points should have been addressed in the code of practice.

The original code of practice contained a whole paragraph that stated that, before making the decision to dismiss workers,

“the employer should take some time to reassess its analysis and consider carefully again”.

It listed conditions such as whether it was “truly necessary” to impose the new terms, whether any

“alternative options…could achieve those same objectives”,

and whether the changes would impact those with protected characteristics. In other words, it set out a much more thorough process than we have ended up with in the final version of the code of practice.

The removal of those requirements can be seen only as a capitulation to the interests of bad employers who disliked the idea of having to re-examine their business case to make sure that the imposition of changes was absolutely necessary. The consultation response notes:

“Some respondents indicated that re-examination would be overly burdensome for employers, suggesting a lighter-touch approach with employers reviewing only specific proposals, rather than their entire business strategy.”

I do not think that language sends out the message that fire and rehire is a last resort. It would be helpful if the Minister took the opportunity to explain why the decision was taken to water down the requirements in the original draft code of practice.

It seems clear to me that the changes reflect more of an intent to reduce concerns about the code being burdensome on business than an intent to protect workers from having new terms and conditions imposed on them. I suggest that those are not the actions of a Government intent on curbing the use of fire and rehire. We were clear that the original draft would fail to do so, but now that the draft has been further watered down it seems even more ill-equipped to deal with the scourge of fire and rehire.

Finally, the Minister will be aware that the P&O case led to a report and recommendations by the International Labour Organisation’s committee on freedom of association. That report came out at the end of last year. Can the Minister update us on what actions the Government have taken in response, and whether they intend to implement all the ILO’s recommendations?

What we have before us is a code of practice that fails to deal with the fundamental reason for its creation, which is to stop another case as egregious as that of P&O. It has taken two years to get to this point, yet we are no closer to the protections that workers in this country deserve. The code of practice represents a missed opportunity to right the very real wrongs that we have seen up and down this country for far too long.

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

It is a pleasure to see you in the Chair, Sir Graham; I suspect that this Committee sitting is a lot more sedate than some others that you have chaired recently. It is also a pleasure to follow the Labour spokesperson, the hon. Member for Ellesmere Port and Neston, whose speech I agreed with in its entirety.

The Minister said that most employers want to do the right thing by their employees. I think most of us would probably agree, but too many employers do not. Sadly, that includes some of the UK’s biggest and best-known companies. The draft code is largely useless; it is a lamentable waste of parliamentary time, and I dread to think how many civil service hours were wasted on its drafting. Other than the possible—I stress “possible”—increase of up to 25% in any successful employment tribunal claim following an incident of fire and rehire, the 3,819 words in this document can be distilled to nine: “Please don’t fire and rehire…unless you have to.”

Further to the point that the Labour spokesperson made, paragraph 12 states:

“A failure to follow the Code does not, in itself, make a person or organisation liable to proceedings.”

All it does is potentially beef up the amount awarded to an employee when a tribunal finds that their employer acted outwith the law. That is no comfort whatever to someone who has just been brutally sacked, paid off and forced to claim the pittance of jobseeker’s allowance that the Government like to pretend is enough to live on.

According to the latest figures, it takes nearly a year from the employment tribunal receiving a claim to the first hearing. The 25% premium that breaching the code of practice might add to an award will be welcomed by a successful claimant, of course, but they will have had to wait longer than a year to get it. They will have been forced into alternative employment in the meantime, if they are lucky. It is toothless and a missed opportunity, to say the very least.

As the hon. Member for Ellesmere Port and Neston noted, paragraph 15 states:

“Where this Code states that a party ‘must’ or must not do something, this indicates that that party is subject to a legal requirement. Where this Code states that a party ‘should’ or should not do something, this indicates a recommendation”.

Other than in paragraph 15 itself, the word “must” is used 10 times in the code, of which nine uses reflect existing legal obligations; the only use of the word “must” in relation to the code itself is in the provision stating that tribunals must take the code into account in relevant proceedings. On the other hand, “should” is used another 38 times.

The truth is that the code is little more than a wish list—a tick-box exercise so that it can be said that something has been done about fire and rehire. Moreover, as has been alluded to, a code of practice will have little effect on the likes of P&O Ferries. It, and future employers, will simply factor in the 25% increase in employment tribunal awards into the costs of doing business.

I was at the joint meeting of the Select Committees on Transport and on Business, Energy and Industrial Strategy when we had the chief executive of P&O Ferries, Peter Hebblethwaite, in front of us. Many will remember his contemptible attitude to the law as it stood: he happily admitted that his company willingly and knowingly broke the law when it sacked 800 workers with no notice and no consultation. At the same time that P&O Ferries was evicting staff from ships and shoving their belongings into binbags on the quayside, its parent company DP World was forking over tens of millions to sponsor golf tournaments and was shoving $378 million into the pockets of shareholders, so the Minister will forgive me for being sceptical about the idea that a slightly beefed-up code of practice will make the next Peter Hebblethwaite think twice before dumping hundreds more workers in the skip to save the company a few bob.

When British Airways’ parent company, International Airlines Group, pulled the trigger on a fire and rehire action aimed at tens of thousands of staff in 2020, it could only do so in the UK. In Ireland and Spain, it was precluded from taking similar action because those countries have employee protections that stop employers treating their staff like chattels.

I welcome any action or progress that improves the lot of workers, particularly given the removal of so many of their bargaining rights over the past four and a half decades and the attempted defenestration of trades unions in this country—policies that have undoubtedly contributed to the UK falling further and further behind our European neighbours economically and socially—but the Government’s draft proposals are basically a sop to those of us across the House who have highlighted the egregious practices of fire and rehire and pushed for real action. This is not real action; it is a press release that will do nothing to stop the perpetrators carrying on as before.

Many of the provisions of the Trade Union and Labour Relations (Consolidation) Act 1992 that this draft code hangs on to provide for criminal offences where the Act is breached. Perhaps it is time to bring the actions of the likes of P&O Ferries and the issue detailed in the draft code under those kinds of auspices. After all, it seems only fair that employers should be subject to the same potential consequences as employees. Mr Hebblethwaite’s attitude a couple of years back may have been somewhat less arrogant and cocky if he knew that his actions would result in him facing some time at His Majesty’s pleasure in Belmarsh.

[Kevin Hollinrake]

I am aware that the hon. Gentleman has a private Member’s Bill that would ban fire and rehire—that is the position that he has adopted, and I respect it—but with P&O it was not fire and rehire; it was simply fire. What further measures is he suggesting that the Scottish Government or UK Government put in place to stop that happening in the future? P&O already broke the law. Is he proposing criminal sanctions connected to employment law?

[Gavin Newlands]

Of course I would suggest criminal sanctions to end such practices. The Minister is right to say that P&O did not use fire and rehire in the strictest sense, but there were elements relating to fire and rehire. In a sense, it was fire and replace. Those staff members were replaced by cheaper foreign workers. That is the truth: the jobs were not redundant. If I were to bring forward another law, I would ensure fire and replace were also made illegal in circumstances such as those at P&O. As it happens, fire and replace is not new; it was actually proposed back in 2002 by one Tony Blair during the firefighters’ pay dispute.

We have a real problem around employment rights in the UK. The balance has been tipped over the last four and a half decades far too far towards employers and away from ordinary women and men who need the protection of the law against what is thankfully the minority of unscrupulous employers. Forty-five years of continual assault on workers’ rights has left millions essentially at the mercy of bad bosses, or subject to the gig economy and classed as “contractors” by multinational corporations desperate to avoid taking any responsibility for them and their or anyone else’s welfare.

Those lost decades need to be reversed. Sooner or later, the UK parties have to realise that workers’ rights are a fundamental part of building a stronger economy. It is no coincidence that virtually every country in Europe has stronger workers’ rights and better protections for their workers, and also enjoys higher living standards and a more robust, more diverse economy and social infrastructure.

Unfortunately, I do not hold out much hope for an improvement after the next general election. I know that there are many, many good people in the Labour party—including in this room—but the Leader of the Opposition has shown little interest in workers’ rights. I am still waiting for a response to my letter asking for his support of my Bill to ban fire and rehire, and the slew of shadow Ministers proclaiming their admiration for Margaret Thatcher do not inspire much confidence that they will roll back her and her descendants’ attacks on workers’ rights.

--- Later in debate ---

[Kevin Hollinrake]

I thank the hon. Members for Ellesmere Port and Neston and for Paisley and Renfrewshire North for their contributions. I will start with P&O because that has dominated most of the debate, despite the fact that it was not a case of fire and rehire. It was a disgraceful case and it broke the law. I am interested to understand what Members are proposing when we already have a law against this. The SNP spokesperson, the hon. Member for Paisley and Renfrewshire North, said that he would criminalise employment law. His proposal to criminalise some of this stuff might send a shiver up the spine of many employers in this country.

P&O Ferries broke the law, dismissing its workers without warning, which is completely inappropriate, and brought in agency staff to replace them. We have taken action in response, including legislating through the Seafarers Wages Act 2023, and there is an ongoing live investigation by the Insolvency Service into P&O’s conduct.

[Gavin Newlands]

The Minister talks about criminalising employment law or being aghast at the potential for criminalising employment law. I think there are certainly aspects that perhaps should be. How would he describe a business leader who knowingly and willingly broke the law to sack 800 workers and said he would do so again? Does the Minister not think that that person should face a criminal sanction?

[Kevin Hollinrake]

What that business leader did was disgraceful. We impose criminal sanctions on employers very cautiously because we want people to invest in our economy. That is hugely important. We make changes in employment law at our peril. It needs to be balanced between the needs of employers and employees.

[Justin Madders]

Will the Minister give way?

[Kevin Hollinrake]

Perhaps the shadow Minister will answer this question as part of his intervention. In The Telegraph, Archie Norman, one of the foremost business people in this country, who has done tremendous work in making sure that people have good employment opportunities, described Labour’s potential package in the area of employment law and the changes the party intends to make. He said that the changes would reduce flexibility, make it more costly to hire people, deter people from entering the workplace and deter investment. Perhaps the shadow Minister will address Archie Norman’s criticisms when he intervenes.

[Justin Madders]

I could, but I fear that Sir Graham might say I am out of order. It comes as no surprise that a former Conservative MP would want to prevent the extension and strengthening of workers’ rights. The Minister said that there is no room for criminal law, but is it not the case that his Government referred the matter of P&O Ferries to the Insolvency Service for potential criminal proceedings?

[Kevin Hollinrake]

Yes, corporate criminal proceedings, not individual criminal proceedings. I think that what the hon. Member for Paisley and Renfrewshire North refers to is individual criminal sanctions, which would be disproportionate. If the hon. Member for Ellesmere Port and Neston thinks that a Conservative politician is only on the side of the employer, I do not think he has met Archie Norman. Perhaps he might benefit from a meeting with him. He is a very considerate employer who understands the need to treat employees right as well as make sure the framework is right for business in this country.

The hon. Member for Ellesmere Port and Neston asked why the 25% uplift would prove a sufficient deterrent. Clearly, it is a deterrent, because it is more than an employer would have to pay if they go through the simple process of consulting their workforce. I might describe it as bleeding obvious. The actual impact remains to be seen, but we certainly think it is a significant deterrent. The hon. Gentleman asked whether it will be implemented before, within or after the summer recess; we are intending to do so before the summer recess.

The hon. Member for Ellesmere Port and Neston also asked about these provisions applying only to employees with two years’ service. He is right to say that generally, unfair dismissal rights are around only after the first two years, unless there is something like discrimination, for example. I know the Opposition are seeking to change this in their proposals, which we think is disproportionate and wrong. In a collective situation, however, there are circumstances where people who have been in the workplace for less than two years are covered.

On the point about “should” and “must”, we are dealing here with provisions that will be heard before a court. A court can make the judgment, of course, on whether somebody has done the right thing. I think “should” is the right kind of phrase to use in that situation, because a judgment is made and the tribunal can award up to 25% on top of the normal financial requirements if an employer unreasonably fails to comply with the code. That joins the circle, in terms of making sure that this code is effective when people go before a tribunal.

The hon. Gentleman asked about the ILO. We are carefully considering the committee on freedom of association’s recommendations, and will provide information to the ILO in due course.

The hon. Gentleman also asked about some of the changes and said that they have been watered down, but that is not the case at all. We did make changes following consultation, and did some reordering to make it more straightforward, which was based on feedback we received. We also made changes suggested by trade unions, including saying that employers have to speak to ACAS before raising fire and rehire, and adding the award to claims that can attract 25% uplift for non-compliance.

[Justin Madders]

In the Government response to the consultation, there are some lovely pie charts showing the responses.

[Kevin Hollinrake]

Thank you.

[Justin Madders]

I am glad the Minister has been looking at the artwork. A large proportion of responses —sometimes as high as 40%—to the question, “Do you agree?” are categorised as “unspecified”. Is the Minister able to explain what that covers?

[Kevin Hollinrake]

Not off the top of my head, but I am happy to confirm it via separate means.

The hon. Gentleman also said that the code should be more detailed in specifying exactly how a consultation might take place. We think that would be the wrong approach, and that the employer is the right person to determine that, in terms of how he or she consults members of their team. We did not want to get a very lengthy code that would naturally result in being too specific about exactly how that consultation should take place. I think I have covered all the points raised by the hon. Gentleman; he can intervene on me if I have missed anything.

[Justin Madders]

I have just one small point. The code of practice referred to compensation being reduced by 25% for employees not compliant with the code. Is the Minister able to confirm whether it is the intention for that to apply in this case?

[Kevin Hollinrake]

I do not quite understand the hon. Gentleman’s question. Perhaps we can have a discussion about that afterwards.

To conclude, we are taking robust and appropriate action in this area. We believe that a statutory code of practice is a proportionate response to dealing with controversial fire and rehire practices. The code will address the practice of fire and rehire, aiming to ensure it is only ever used as a last resort, and that employees are properly consulted and treated fairly. It clarifies and gives legal force to accepted standards about how employers should behave when seeking to change employees’ terms and conditions. Employment tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the code where it applies. Subject to approval by this House, the code will be in force later this summer, prior to recess, and I hope Members will support it.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Code of Practice on Dismissal and Re-Engagement.

Post Office (Horizon System) Offences Bill

Kevin Hollinrake Excerpts

2nd reading
Wednesday 20th March 2024 Commons Chamber

[Jonathan Reynolds]

I thank the right hon. Member for making those powerful points, which reflect on the nature of the evidence that was given. One of his hon. Friends has already made the point about the role of technological, computer-based evidence in the legal process. To be frank, there is also the Post Office’s approach to the data as it saw it, which I assume it believed to be a way of unveiling wrongdoing, rather than questioning that data. Most of our constituents ask, “How could the number of convictions have gone from five or six a year to 50 or 60 without that being flagged in some way?” Clearly, the powers that be—at the time—thought the data was revealing wrongdoing, rather than necessarily revealing something going wrong.

We can see from the contributions we have already had that all Members participating in today’s debate and who will participate in the Bill’s future stages are mindful that what we are saying is not only important, but might be referenced in future considerations. In that vein, let me clearly state that this legislation, although far from ideal, is the only option on the table for us to resolve this horrible injustice. But let me further state that any incoming Labour Government would never use this kind of action again. There are exceptional circumstances to this case that make it unique, rather than it being a moment to set a precedent for handling any future injustices.

The Post Office Horizon scandal took place over decades, and there is at least a decade’s worth of investigations that demonstrate the falsehoods behind many of the convictions made against sub-postmasters. That bank of evidence will only grow from the independent inquiry led by Sir Wyn Williams. The challenge to righting this wrong is not a lack of clear evidence, but a sheer volume of cases that is overwhelming the appropriate route to justice through the Court of Appeal. I lament that our justice system is under such strain, and it would be remiss of me not to point out that a better serviced Criminal Cases Review Commission could have avoided the extraordinary step that we must now take.

In addition, we must also recognise that a cohort of sub-postmasters with convictions are understandably reticent to take part in another process in a criminal justice system that so badly failed them the first time around. For the purposes of the historical record, an important qualification for taking this step is the scale of cross-party support that the legislation is attracting. I have raised that point with the Minister before, and I believe it to be an essential safeguard.

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

May I thank the shadow Secretary of State for his cross-party and collaborative approach, which has brought us a significant step forward? I recognise the points he makes on the scale of the problem, which is why we have to act in this way. It is probably the least worst option for how we deal with this.

May I push back gently on his point that we have only started to act significantly since the TV drama? We welcome the public outcry that came as a result of the drama, the new attention that has been focused on the issue and the 1,200 new claimants who have stepped forward, but I push back because it is important that the public know that we were acting prior to the drama. We implemented the shortfall scheme in 2020, the inquiry back in 2020 and the GLO compensation scheme in 2021. The Horizon Compensation Advisory Board was put in place early in 2023, and the fixed-sum awards of £600,000 were put in place in autumn last year. We also had the overturned convictions and the exploring of different ways to do that on a mass basis. All these things were in place by the time of the Post Office (Horizon System) Compensation Act 2024, which we considered in December last year, and which the shadow Secretary of State and I spoke to during its consideration. Much work has been undertaken. We very much welcome the new impetus we have all got from the attention that the drama has brought about.

[Jonathan Reynolds]

I am always keen to hear from the Minister. I thought I was fair in making the point he raises in my introductory remarks. I simply make the point that the constitutional significance of legislation like this requires a level of public consent. The statement that the Prime Minister made in January, just after Prime Minister’s questions, would not have been possible without the sheer breakthrough in public consent and the demand for change and for justice that came from that. I will always be fair to the Government’s Ministers, and I point out even to some of their critics that we were dealing with things. We had the legislation that colleagues had worked on. It is fair to say there was less interest in some of that in the Chamber before we had the television programme, but let us be frank that we had the impasse of people not wanting to go back to the process. The estimate we had at the time was 10 to 15 years. That is what brought us to that point, and we have to recognise that, as well as paying tribute to the role that arts and culture can play in bringing things to an audience, which we should welcome.

Finally, I think I speak for everyone in the Chamber when I say that in no way does anyone take lightly what we are proposing to do today. This action is unprecedented, and we should make every effort possible to ensure that such action never again has to be considered.

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[Marion Fellows]

I thank the right hon. Gentleman for his intervention. I am surrounded by lawyerly people and I am not a lawyer. In fact, I sat in a room last night for a briefing where I was surrounded by lawyers and even the lawyers were agreeing that they could not agree on the right way forward. The right hon. Gentleman is absolutely correct, and the Scottish Government will do that, but they cannot do it until we see what happens with the Bill as it is brought towards enactment and until we can take into consideration all the amendments that may be necessary for Northern Ireland. That will create a delay. Yes, the Scottish Government can—I cannot say they will, because I am not a Member of the Scottish Parliament or the Scottish Government—and it is possible for the Scottish Parliament to pass a Bill in three days, but it must be aligned with the exoneration Bill passed here. Otherwise, Scottish victims will not be treated equitably and fairly.

On 10 January, the Minister spoke in this place to, I believe, the hon. Member for Edinburgh West (Christine Jardine) and said he saw no reason at that point why there could not be UK legislation. At an Interministerial Standing Committee on 12 March, the Secretary of State for Levelling Up, Housing and Communities said that he saw no reason why that could not happen. Yet a few days after that the Bill arrived in Scotland with no mention of Scotland at all. It is the Scottish Government’s belief that the Bill could be amended to take into consideration the differences in legal terms. For example, amendments would be needed to bring about alignment on embezzlement and to cover all the different crimes, if you like—well, not crimes, because the sub-postmasters did nothing wrong—so that the Bill would apply in Scotland. The Bill could clear the decks of all the things sub-postmasters were charged with and convicted for, so it is all possible. The issue is one of timing, with sub-postmasters in Scotland being told, “Okay, you’ve waited, but you’ll have to wait longer.”

In this place, and right across the work I have done over the past few years on the Post Office, there has always been cross-party agreement on getting things sorted out for the victims. As the hon. Member for Stalybridge and Hyde said, that is the point of the whole thing. It is about the victims. It is about what has happened since “Mr Bates vs the Post Office” was broadcast. I sat with my daughter-in-law, who is herself a lawyer—I don’t hold that against her—and she kept saying, “Is this true, Marion? Is this true?” and I had to say that yes, it was.

[Kevin Hollinrake]

I thank the hon. Lady once again for the all the work she does. As I have said to her on a number of occasions, our officials are working together on a weekly basis and I have met my counterparts in Scotland on this issue. She will acknowledge that the UK Parliament is taking a political risk. This is unprecedented and unpopular in some quarters. Does she not accept that, as politicians, there are times when we have to stand up and accept the political responsibility and accountability for doing the right thing in our own jurisdictions, just in the way the right hon. Member for Orkney and Shetland (Mr Carmichael) said?

[Marion Fellows]

I agree with the Minister—of course I do—but let us think back to the victims. Scottish victims should not have to wait any longer than victims across the rest of the United Kingdom. If the Scottish Government were to expedite a Bill in the Scottish Parliament without knowing exactly where this Bill will end up—already today there has been talk of amendments to it to help Northern Ireland—then that would not be right either.

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[Paul Scully]

I did not, but the issue is worth looking at. This is a human scandal, and it is not just about the postmasters who were directly affected. I am not sure how we start to unpick that as it gets wider and wider, but I hope and trust that the Government will reflect on it as we do the wider learning.

[Kevin Hollinrake]

I was tempted to intervene on two of the interventions I heard, but that is impossible here. It is certainly possible that the person who had the contractual relationship with the business concerned, such as a small post office, could submit a claim to the Horizon shortfall scheme, which could include amounts that should be paid to individuals who worked for them so that they can be compensated through that route.

Given that we are looking at public sector or quasi-public sector organisations, it would be dangerous to assume that there is a problem with governance. As my hon. Friend said, from the Back Benches I dealt with a number of scandals that involved private sector organisations, such as Lloyds and the Royal Bank of Scotland—we saw years of obfuscation around similar kinds of problems. We should not jump to conclusions. We should probably let the inquiry report first, and have a debate from there.

[Paul Scully]

My hon. Friend makes a really good point. To follow on from the intervention from my right hon. Friend the Member for Haltemprice and Howden, it is difficult for us as parliamentarians, and doubly difficult for Government Ministers, to speak with authority on behalf of a public organisation—rather than the private sector, which we do not speak on behalf of—without necessarily having all the facts, because there is only so much we can drill into.

Obviously, we want to right the wrongs of the past and make sure as best we can that the people’s situations are restored so that they can have a future for themselves and their families. There is also the case of the Post Office itself. The Post Office still has more branches than the banks and building societies put together. I know that there have been closures in certain areas—that is a whole other debate, perhaps for Westminster Hall—but none the less, the Post Office has a massive impact on people’s lives, especially in rural communities. We must not forget that when we are looking at the Post Office, its brand and its overall aim. This is not a reflection on the current management or anything like that. We have to give the Post Office a future.

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[Mr Jones]

They were hiding, yes, because of shame and things such as that. It is only now that we realise what a massive miscarriage of justice this was that people have had the confidence to come forward. This Bill will help with that.

I shall come off Capture, because I think the Minister has got my point, but I return to those cases that have already gone to appeal. I do not criticise the Government on this, but we must find a system for dealing with those few cases that have gone through. It is no good the Court of Appeal hiding behind the fact that they have gone through, because, as the hon. Member for Sutton and Cheam has said, new evidence has come out of the inquiry that was not available to the courts at the time. We cannot just leave those people hanging—I cannot remember off the top of my head how many individuals there are, but there are not that many.

[Kevin Hollinrake]

Let me just clarify that point. A total of 1,200 people have come forward since the TV dramatisation. Seven people have taken their case to the Court of Appeal and been heard, and six have been refused leave to appeal, which makes a total of 13 in that cohort.

[Mr Jones]

What a fine research assistant the Minister is! He is right: the number is in single figures. Let us look at those cases. Let us see whether we can move forward on this. I am not criticising the Government for not including those individuals. I understand why they are not in the Bill, but we need to look at them. There are things that came out of the inquiry that would have changed the outcome in some, but perhaps not all, of those cases. If we do not look at them, those people will be left outside the remit of the Bill.

On the territorial extent of the Bill, I think the case was made earlier in relation to Northern Ireland. I see no reason why the Bill should not include Northern Ireland. We have cross-party support for it in Northern Ireland, and, as I understand it, the Executive are on board as well. We need to recognise that in Committee. I have to say to the hon. Member for Motherwell and Wishaw (Marion Fellows) that I have less sympathy with the idea of including Scotland in the Bill. Not because those individuals should not get justice—they should—but because the issue is different in Scotland. There are, in fact, two issues. First, there is the legal position: the way things are prosecuted in Scotland is very different from how it is done in the UK. Furthermore, there is a mechanism to do it, so the Scottish Government just have to get on and do it. I accept what she is saying about waiting to see what we do, but they would need cross-party support in the Scottish Parliament if that were to go forward. I do hope, however, that some amendment on Northern Ireland is brought forward in Committee, and I would certainly support it.

Finally, let me talk about the notification of individuals. Reference was made earlier to record keeping, which was not brilliant at the Post Office. We have to try to find “reasonable steps”, as the Bill says, to notify individuals. We need to look at that, because, again, some of these cases will be legacy cases. Sadly, some people will have passed away before they were able to get justice. Perhaps we need to say how we get to those cases that are possibly more difficult to get to than others.

To conclude, the Bill is long overdue, which makes this a historic day. I think of the woman I sat in front of in her council flat in the north-east of England, whose life has been ruined for the past 20 years, and who has had daily trauma because of the injustice and financial heartache that she and her family have faced. With the Bill, she will finally get justice; if that is the one thing I do in my time in this House, it will make me very happy.

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[Mr Carmichael]

I do not think it is unfortunate, but highly fortunate and deliberate, that we are in the UK, but we will save that debate for another day. The compensation can and will be paid on a UK-wide basis. Given the timescale that the Government have outlined so far, we would expect the convictions to be quashed on the basis of this Bill by the middle of July. That gives the Scottish Parliament time to meet the same timescales, so that victims in Scotland have their cases quashed by that time.

[Kevin Hollinrake]

The right hon. Gentleman is making some important points about the way the prosecution systems work in different parts of the UK, which we must take into account. On the point by the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) on paying redress, the key thing is overturning the conviction. Once that conviction is overturned, wherever in the UK, that individual will have immediate access to the redress scheme wherever they are in the UK. There is no hiatus, as he described it.

[Mr Carmichael]

I am grateful to the Minister for that. Those who are not convicted will have access to compensation through the historic shortfall scheme—a process available to them at the moment.

[Kevin Hollinrake]

The Bill relates only to overturning convictions. There is a discussion about territorial extent, which I understand and am happy to continue to discuss. The three compensation schemes—the Horizon shortfall scheme, the group litigation order scheme and the overturned conviction scheme—are all UK-wide, so that whatever detriment is experienced, wherever they are in the UK, there is no delay to compensation. There is no difference, in terms of compensation, between one part of the UK and another. We are keen to expedite it wherever it is in the UK and we have work to do.

[Mr Carmichael]

I do not really need to answer that, so I will take the hon. Lady’s intervention.

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

For Members of the House, the wider public and, most of all, the victims of this horrendous scandal, today’s Bill cannot come soon enough. The day that the convictions are finally quashed, redress is finally paid and those victims can get on with their lives cannot come soon enough. The Bill will quash relevant convictions of individuals who worked, including on a voluntary basis, in post office branches and who suffered as a consequence of the Post Office Horizon IT scandal. It will quash, on a blanket basis, convictions for various theft, fraud and related offences during the period of the Horizon scandal in England and Wales.

The Bill is an exceptional response that recognises the constitutional sensitivity and unprecedented nature of the situation. The Government are clear that given the factually exceptional nature of the case, the legislation does not set a precedent for the future relationship between the Executive, Parliament and the judiciary. The scale and circumstances of the prosecutorial and investigatory misconduct means that a rapid approach is needed to deliver long overdue justice, while respecting the separation of powers and delicate constitutional balance.

I first spoke on the matter from the Back Benches some years ago, in the context of other scandals involving the Royal Bank of Scotland and Lloyds Bank, after a gentleman called Paul Marshall, a barrister involved in the cases, wrote to me drawing parallels between the Post Office Horizon case and the banking scandal. It was back in March 2020 that I first spoke about the issue and Lee Castleton’s tragic case. Because of the scale of the injustice, the depth of the damage and the despair, and the unacceptable delays in delivering justice, we must act in this exceptional manner.

I will touch on points raised in contributions to the debate. I thank the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), and the shadow Minister, the hon. Member for Bethnal Green and Bow (Rushanara Ali), for their collaborative approach. I join them in thanking one of my predecessors, my hon. Friend the Member for Sutton and Cheam (Paul Scully), on the tremendous job he did. We all wish him well in whatever he chooses to do in his new life, but I remind him that he still has work to do in this place because we have much work to do.

I gently push back on some of the points made by the shadow Minister, who said that the TV drama had stimulated the work that has gone on in recent weeks and today. We are public servants and we should respond to public outcry, so I welcome the new attention focused on the issue by the general public, the media and the House. However, I remind hon. Members and, most importantly, the victims that we put many measures in place to try to deal with the matter, not always as successfully or as quickly as we would have liked: the Horizon shortfall scheme and the inquiry, which started in 2020; the group litigation order compensation scheme; the Horizon compensation advisory board, on which the right hon. Member for North Durham (Mr Jones) sits so effectively; and the £600,000 fixed-sum awards for those whose convictions had been overturned, which was put in place last autumn. The exploration into how we might overturn convictions more quickly began some months before the TV dramatisation came to our screens. Indeed, the Post Office (Horizon System) Compensation Act 2024 assigned a deadline date that proved difficult for some of the victims.

The shadow Secretary of State pointed to possible service level agreements, in response to issues raised by the Business and Trade Committee about timings for compensation. As he and the shadow Minister know, there are service level agreements in the current compensation and the group litigation order compensation schemes that say there will be a response to 90% of final claims submitted within 40 days. We are hitting 87% against that metric, so we are making progress. We are considering such agreements in elements of the new scheme and other schemes, so I will come back to the House about that.

The hon. Member for Stalybridge and Hyde raised the point about Northern Ireland, as many other Members have, and we are taking that very seriously. We are sympathetic to the issue, particularly as the Assembly is newly formed. The requirement for public consultations in that jurisdiction may delay things, and we will bear that in mind in our deliberations.

The shadow Minister quite rightly raised the point about the impact of this not just on the victims, but on the victims’ families, their children and their spouses. Indeed, terrible things have happened to many of those families, including break-ups and suicides. We have all witnessed on our TV screens the extent of this problem. We will certainly consider mental health support for the affected individuals.

My hon. and learned Friend the Member for Bromley and Chislehurst (Sir Robert Neill) talked about a sunset clause. Interestingly, following his intervention on a sunset clause, three other legal opinions on a similar matter did not all agree with his point. The key thing is that all convictions are quashed the day this legislation comes into effect, which should be in July. Irrespective of the fact that we may not have identified somebody in the list of people whom we will write to following the passing of this Bill, their conviction will have been quashed. If they come forward to self-certify and we look at their case, that conviction will have already been quashed; we just need to mark the record.

The right hon. Member for Orkney and Shetland (Mr Carmichael) spoke about political accountability, which I shall come back to a bit later, because he raises some very important points. My right hon. Friend the Member for Haltemprice and Howden (Mr David Davis) said that this matter should have been dealt with in the courtroom. I think that we would all have preferred to see that. I have described this process in the past as the lesser of two evils. We must acknowledge that the first of the 983 convictions were overturned in 2021. Thus far, only 102 convictions have been overturned. That pace of progress cannot be countenanced, which is why we have taken this particular approach. I thank him, though, for his kind words on my work, but I reiterate that the Secretary of State has been hugely supportive of everything that I have been asked to do and that I wanted to do in this space. The same applies to the Prime Minister and the Chancellor of the Exchequer and many other Ministers right across Government.

Let me turn now to the hon. Member for Motherwell and Wishaw (Marion Fellows), for whom I have a great deal of time and with whom I have spent a great deal of time working on this issue. Her work on the all-party group on post offices is also invaluable. I fully understand her points about Scotland. She wants to ensure that her legislation works simultaneously with this legislation. We believe that that can happen in Scotland. There are no barriers as such with Scotland in the way that there are potentially with Northern Ireland. We also must bear in mind that the Lord Advocate tends to have a different opinion as to whether this is the right way to go about things. In taking this route, we have had to make some difficult political choices. One is to exclude cases that have been heard by the Court of Appeal. That is the decision that we had to take here—as I say, these were very difficult choices. The point about political accountability is important, which is why we decided to use this objective criteria route. The hon. Lady’s objective criteria would have to be different. For instance, Scotland has a different prosecutorial system, so the legislation cannot be identical. There are differences whichever way we look at this, so I am sure that this debate will continue.

[Ian Paisley]

I thank the Minister for giving way. He knows that we have huge admiration for the way that he has tried to wrestle his way through these issues. At the end of these proceedings, I intend to lay an instruction to the House motion. Is that necessary? Can the Minister tell us now that he will take this on and include Northern Ireland in the Bill?

[Kevin Hollinrake]

I understand the hon. Member’s point. I can tell him from this Dispatch Box that it is something on which we will continue to have dialogue. I have talked to his colleagues today and yesterday. In fact, I met the First Minister, the Deputy First Minister and the Justice Minister yesterday to discuss these matters. They raised some interesting points that we need to take into account. I am very happy to keep those conversations ongoing, so I will happily have a further conversation with him after this debate.

[Chris Stephens]

The Minister is showing his customary politeness and kindness. He has outlined the discussions with Northern Ireland. The main issue is how we get a solution that satisfies everyone across these islands, so will he also have those discussions with the Scottish Government, particularly around the territorial issue, and will he say something about Asda employees in Scotland who are also caught up in this?

[Kevin Hollinrake]

I absolutely give the hon. Gentleman that assurance. We want everything to happen simultaneously. Our ambition is to get the legislation passed by July. If people choose the fixed sum award route, we can pay compensation rapidly. They have two choices of route to take. The £600,000 can be delivered very quickly—literally within weeks of passing the legislation. We want to pass the legislation by July; we could be paying compensation as quickly as by August. Exactly the same thing can happen in Scotland if the Scottish Government effect the legislation at the same pace. My officials are working with officials of the SNP-led Government in Scotland on a weekly basis to try to ensure that that is the case. I have met with my counterpart in the Scottish Government to talk about this issue.

I did not quite get the hon. Gentleman’s point about employees. He might want to intervene on me again, so I can address it properly.

[Chris Stephens]

A number of Members have mentioned, as I have, the particular issue of Asda employees in Scotland. Has the Minister thought about that?

[Kevin Hollinrake]

Employees generally are an issue, because they do not have a contractual relationship with the Post Office, which is required to enter the compensation scheme, but if the company itself did have one it could make a compensation claim that could then be passed on to that individual. I am very happy to discuss individual cases with the hon. Gentleman, or with other Members.

I pay tribute again to all the work of my hon. Friend the Member for Sutton and Cheam. I agree that this was a case of human failure as well as technological failure, and that the wheels of justice are moving too slowly. That is why we have stepped in in this way. I am always grateful for the work of the right hon. Member for North Durham, not least on the Horizon compensation advisory board. He has made some important recommendations, which we have adopted. He gave a four-legged analogy about the person I am: he called me more shire horse than show pony, which I take as a compliment. I would describe him in a four-legged way as well: he is a cross between a terrier and a rottweiler, and he is highly effective in the way he approaches this issue.

The right hon. Gentleman asked about convictions relating to pilot versions of Horizon. That is why we have set the date at 23 December 1996. That is the first point of the roll-out of an application called Pathway, which was a predecessor Horizon application. We think that the legislation, and therefore the redress schemes, capture—if I can use that word—cases that relate to the pilot schemes in clause 8.

As the right hon. Gentleman knows, we look at the Capture system slightly differently. Capture is a stand-alone spreadsheet rather than a network computer system. There is no remote access, for example. The key thing is that what we are doing here is exceptional and unprecedented. We have the body of evidence because it has been before a court. Part of the reason the court made its decision in 2019 was based on the Horizon issues, as it put it. We do not have that body of evidence with Capture. We are keen to talk to him to ensure that we look at the evidence. That conversation will continue.

The right hon. Gentleman talked about the power to make consequential provision. We do not see that as giving us the ability to include another group of people; there are different reasons why that power is in the Bill. It is for matters that are a consequence of the Bill, which we do not think is the right vehicle to include people, for example, who have been affected by the Capture system. As I say, we will continue to discuss that.

As I said earlier, we understand the arguments about Northern Ireland, and we will continue to engage, as we will with other Members of this House. In terms of reasonable steps, the process is in development. It is about marking the records and writing to individuals. When we have passed the legislation, we will write literally that day, or the next day, to those individuals to say, “You’re conviction has been quashed,” and we will give them details about how to claim compensation.

[Mr Kevan Jones]

I know that the Minister is committed to ensuring that everyone is contacted. What about the legacy cases—when people have passed away? Will someone try to contact their estates, for example?

[Kevin Hollinrake]

Those are challenging issues. The key thing—I hope the right hon. Gentleman takes this in the right way—is that what we are doing here to quash convictions does not require people to come forward. When the conviction has been quashed, we will contact the most relevant person in that context. Those people can take forward a claim in exactly the same way, and it will be considered in exactly the same way, as any other claim. The estate, the families, can claim compensation.

[Mr Jones]

I agree with the Minister, but I think this needs to be given some thought. Perhaps the advisory board might look at legacy cases in which people have passed away, because those entitled to compensation might not come forward. We might have further discussion about that.

[Kevin Hollinrake]

I am very happy for us to look at that, and to work with the right hon. Gentleman and the advisory board. I take this opportunity to pay tribute to him, Lord Arbuthnot, Sir Chris Hodges, and Professor Richard Moorhead for their work in this area. We will continue to work closely alongside the right hon. Gentleman.

My hon. Friend the Member for North Norfolk (Duncan Baker) recognised the work of people other than me on this matter—not least the Secretary of State, the Prime Minister and the Chancellor. I recognise that he is the only serving postmaster in this place, so we always listen carefully to what he says. Like him, we encourage people to come forward to claim compensation.

The people not included in the legislation—those who have been convicted as a result of prosecution by the DWP—can still appeal in the normal way, and I encourage them to do so if they feel that there are grounds for that. My hon. Friend asked about Fujitsu and the quantum it is due to pay. Our view has always been that we should let the inquiry conclude and determine responsibility. We will then know the extent of the compensation bill, and that will be the right time to have a conversation about contributions, for which Fujitsu has already accept a moral responsibility; we welcome that. Although the Post Office has had a chequered past in this regard, I believe that it has a very bright future, and we are keen to ensure that it does. We should always keep that in mind.

I understand what the right hon. Member for East Antrim (Sammy Wilson) said about the territorial extent of the Bill. As I said, I met the First Minister, Deputy First Minister and the Minster of Justice for Northern Ireland yesterday, and I will continue to do so. We are determined to ensure that measures are brought forward as quickly as possible in all areas of the United Kingdom. The right hon. Member makes a compelling case about the need for public consultations in his jurisdiction. We are aware of that. There are 26 cases in Northern Ireland, and we are keen to ensure that they are overturned as quickly as possible. We will continue work to ensure that that happens.

The right hon. Member for Orkney and Shetland talked clearly about ensuring that prosecutors are accountable for their role. Decisions were taken in Scotland. He was right to say clearly that a legislative consent motion does not offer the same level of parliamentary accountability, and I think we should all reflect on that. His final words were “accountability makes a difference.”

The hon. Member for North Down (Stephen Farry) talked about his preference for the measures to be UK-wide. We understand that; we have had several conversations and will have many more, I am sure. I understand his point about the risks of judicial review and of delays to public consultation. He feels that he makes an overwhelming argument. We will keep those conversations going.

I concur with the shadow Minister, the hon. Member for Bethnal Green and Bow, and echo her tribute to Alan Bates, Jo Hamilton, Lee Castleton, journalist Nick Wallis, campaigner Dan Neidle, another journalist Tom Witherow, Lord Arbuthnot, Karl Flinders and many others, including many Members of this House. We pay tribute to them for their work. We recognise the profound impacts that the Horizon scandal has had on those who were falsely accused. It has taken too long to get to this point, and our ambition is to get this legislation through both Houses by July and compensation paid to the victims by August. Through this Bill, we will exonerate those who were so unjustly convicted of crimes that they did not commit and provide fair redress as swiftly as possible. I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Shared Parental Leave and Pay (Bereavement) Bill

Kevin Hollinrake Excerpts

Committee stage
Wednesday 20th March 2024 Public Bill Committees

[Tracey Crouch (Chatham and Aylesford) (Con)]

I congratulate both colleagues—the hon. Member for Ogmore and my hon. Friend the Member for Broxtowe—on bringing forward this vital piece of legislation. It is interesting that there is a public perception about what we do in this place, and this Bill is exactly what people do not see. It has come about from a surgery appointment that showed a clear gap in shared parental leave. I congratulate both Members on the important work that they have done on this issue. I hope that those of us who are introducing the Bill never have to go through those tragic circumstances, but if we do, we should be comfortable and confident that we and our constituents will benefit from it.

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

It is a pleasure to serve with you in the Chair, Mr Paisley. The Bill will provide bereaved parents with the support and protection that they need during one of the most devastating periods of their lives. Although we estimate that the number of people affected by these circumstances is thankfully low, the emotional strain and physical toll of caring for a new child while grieving the loss of a partner is simply unimaginable. I am pleased that the Government are able to support this important piece of legislation.

On Second Reading, the ambition of the Bill gained cross-party support in the House, and I am pleased to hear a similar sentiment being expressed today. Since Second Reading, we have discussed our plans for the Bill with stakeholders and we look forward to continuing to work with them. I also thank my right hon. Friend—sorry, my hon. Friend the Member for Broxtowe; it is only a matter of time. His tenacious campaigning efforts were a key factor in getting the Bill to this stage.

[Theo Clarke (Stafford) (Con)]

I echo the Minister’s sentiments on the cross-party support for the Bill. I particularly commend my hon. Friend the Member for Broxtowe. I remember when he came to see me several months ago to tell me about the case of his constituent in relation to my birth trauma inquiry. I was pleased to support this Bill, and I spoke in his related debate in Westminster Hall on his ten-minute rule Bill. I am delighted that the Bill has been taken forward and that we are finally closing this legal loophole to support constituents like his.

[Kevin Hollinrake]

I congratulate my hon. Friend on her campaigning work on a slightly separate but related issue. She does a fantastic job and we are making great progress. This place is no stranger to repetition, but it shows that persistence pays, and my hon. Friend the Member for Broxtowe has done a fantastic job pressing for change over a number of years, so he deserves the accolades he has received today.

I am glad to be working with the hon. Member for Ogmore, who has been incredibly collaborative and constructive in his discussions. I am sure he will deliver the Bill in good time and I thank him for his hard work and approach.

It was necessary for the Government to move a motion in the House to issue an instruction to allow the Committee to consider amendments to the Bill that would otherwise be out of scope. The instruction was debated and approved in the House on 5 March. Let me briefly summarise the changes to the Bill’s scope that it permits. First, we felt it was necessary to broaden the Bill’s scope to enable us to consider paternity leave as well as shared parental leave as the appropriate vehicle to deliver the entitlement. Secondly, the Bill’s scope was expanded to allow the Committee to consider the inclusion of bereaved fathers and partners who have their child through other routes, such as adoption or a surrogacy arrangement.

On the amendments tabled by the hon. Member for Ogmore, new clause 1 provides many of the key provisions of the revised Bill. It establishes the legal method—paternity leave—that will be used to deliver the entitlement, and it expands the group of parents who can be included in the entitlement. I am pleased that we have been able to extend the Bill’s scope to include the parents of children through domestic adoption and to give us the power to include in regulations those who are parents through surrogacy and international adoption. No parent with a newly born or adopted child should be in a position in which they do not have access to statutory leave to care for their child in the event of the death of their partner.

Crucially, the new clause requires regulations to be made that set out that a surviving parent can take this kind of leave even if they do not meet the continuity-of-service provisions, and that enable a surviving parent to take paternity leave even if they have previously taken a period of shared parental leave prior. The new clause also enables the regulations to make provision for the tragic situation in which the child also dies. The regulations can allow a surviving parent to remain on leave for a period after the child’s death because the Bill sets aside the requirement that in such circumstances parents must use their leave to care for the child or support the other parent.

New clause 1 also gives the Secretary of State the power to make regulations that enable a parent to take keeping-in-touch days while they are on paternity leave, and the power to make regulations to give enhanced redundancy protection to parents who take paternity leave in such tragic circumstances, after they return to work. The provisions in the new clause are essential to deliver the intent of the Bill, so I agree with them. As Members will have seen, the provisions of new clause 1 will replace those in clause 1, so it is necessary to leave out clause 1.

Amendment 5 changes the long title to accurately reflect the Bill’s amended contents. I agree that it is necessary to ensure that the long title accurately reflects the Bill’s contents.

Like the hon. Member for Ogmore, we intend to vote against clause 2, which contains provisions that we do not consider to be necessary, including a wide-ranging Henry VIII power, a power to make transitional and savings provisions, and a stipulation that an affirmative procedure will apply to regulations. To clarify for the Committee, such a stipulation is not necessary in relation to the substantive powers because the powers in the 1996 Act that the Bill amends are already subject to the affirmative procedure. As is standard practice, the power to make commencement regulations is not subject to a parliamentary process.

Amendments 3 and 4 are largely technical. Amendment 3 refers to the statutory instrument necessary to commence the Bill, while amendment 4 is consequential on new clause 1. I agree that the amendments are necessary.

Let me address the point that my hon. Friend the Member for Broxtowe made about pay. Again, he has been a doughty campaigner on this issue. I understand his concern, but we do not believe that it is right. Currently, no statutory pay entitlements, including statutory maternity pay, are available on the first day of a job. This is because employers, apart from small businesses, are required to contribute towards the cost of statutory parental pay, as well as meeting the costs associated with their employee’s absence from work, and new employees have not yet had time to make reasonable contributions towards their employers’ businesses. But I am sure that will not stop my hon. Friend campaigning on the issue in future.

[Alicia Kearns (Rutland and Melton) (Con)]

We come to this place to be a voice for our constituents, and I thank the Government for supporting this Bill—including the amendments that may or may not be voted for or against.

On that point around pay, I gently make the point to the Government that I fully endorse the view of my hon. Friend the Member for Broxtowe that there should be pay associated with this to support those families. I cannot imagine the agony of losing your partner and being left—hopefully, at least—with your baby and then facing the injustice of finding out that you do not have the leave not only to live through and recover from your trauma, but to care for that baby. This is important. We come to this place to right wrongs, and, today, the two hon. Gentleman, who I call my friends—the hon. Member for Ogmore and my hon. Friend the Member for Broxtowe—have done that. I thank them both for righting those wrongs. This is why we come to this place.

[Kevin Hollinrake]

My hon. Friend makes some very strong and worthwhile points, and I thank her for those.

To conclude, I would like to thank the Committee members for their valuable contributions. This Bill is an important extension of support and protection for parents facing one of the most challenging situations of their lives. The Government take pride in endorsing this private Member’s Bill, aligning our efforts with an unwavering commitment to bolstering workers’ support and to cultivating a high-skilled, high-productivity, high-wage economy.

I thank all hon. Members, but I particularly thank my hon. Friend the Member for Broxtowe and the hon. Member for Ogmore for working with me to develop this Bill into a piece of legislation that will work effectively for parents and businesses alike. I look forward to working with them during the future stages of the Bill.

[Chris Elmore]

I start by thanking the Minister most sincerely. There is a process with private Members’ Bills —perhaps I am issuing state secrets from the Government and Opposition Whips Offices—where handout Bills are worked through to ensure that private Members’ Bills can be delivered. This was not one of those Bills. I say this sincerely: the Minister, and indeed his officials, have been incredibly constructive in working with me to ensure that we do not let the perfect get in the way of the good, as the right hon. Member for Staffordshire Moorlands—I call her my right hon. Friend—says a lot in her Procedure Committee work, although I do not think that she invented the phrase. This Bill is that; we have made a significant step in the right direction, and, throughout the course of employment rights legislation, these things often started as leave, and then moved to the next step, and so on and so forth. Indeed, I do not think that shared parental leave was in legislation until the Cameron Administration, and I think that paternity leave was invented by the Blair Administration. These things move and change throughout history, regardless of party politics.

That brings me to my broader point. I pay tribute again to the hon. Member for Broxtowe, because he has been a huge advocate for his constituents, but he has also been very good in lobbying me—a skill in itself—to convince me to take on the Bill. However, as I said on Second Reading, I do not want this Bill to help many people, because the whole point of it is to support people in their darkest hour, and nobody—Conservative, Labour, Scottish National party or Plaid Cymru—would want anybody to face this horror: the joy of being a parent and the unimaginable loss of losing a partner. Being a parent should be nothing but joy—and exhaustion, particularly when they are first born. It should not be about just blind grief. I am trying to understand how that feels, but I cannot imagine it, and I hope that I never have to face it. The numbers are small—and thank God for that—and I hope that they always remain small.

I would like to place on the record, although I mentioned them briefly, the Minister’s officials. I have had an insight into the work of the civil service over the past few weeks, and all I can say is that I am hugely impressed by it. The work that they have done has been wonderful. I also thank my staff, particularly my researcher, Alex Williams, who has spent many an hour working through this Bill, including with civil servants—I thank him for that. It is always nice to get one’s staff in the Hansard records, as it is not always something that we manage to do.

I thank all Members for their contributions. It is right to say that this House works best when it works cross party. These are the things that are not seen. This is genuinely a Government and Opposition Bill, and that is how these Bills should be; they should be about cross-party working as often as we can.

To move to a technical point, I reiterate the importance of this piece of legislation, and I hope that as we move to our decisions, under your stewardship, Mr Paisley, we will get the noes and ayes in the correct place—we will see how this works out. I hope that the Bill can proceed successfully to the next stage, to Report and Third Reading. It is my intention to vote against clause 1; I understand the procedural reasons for that. Good luck, Mr Paisley.

Post Office: Horizon Inquiry Participation Costs

Kevin Hollinrake Excerpts

Tuesday 19th March 2024 Written Statements

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

In October 2023, I announced our intention to provide funding of up to £150 million, plus any contingency that may be required, to support the Post Office fully participating in the Post Office Horizon it inquiry and to support the delivery of redress to postmasters.

Since then, those costs have increased and the Government have decided to provide access to contingency funding, and award a further £40 million to ensure Post Office can continue to deliver this important work. The Government remain determined to address the wrongs of the Horizon scandal.

In accordance with the Subsidy Control Act 2022, the Department for Business and Trade’s assessment of the funding’s compliance with the subsidy control principles was previously referred to the subsidy advice unit. A report was published, which concluded that the Department had

“conducted an assessment which considers the subsidy’s compliance with the subsidy control principles in line with the Statutory Guidance”.

[HCWS355]

Simpler Corporate Reporting

Kevin Hollinrake Excerpts

Tuesday 19th March 2024 Written Statements

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

Yesterday, the Government announced our first set of intended regulatory changes as part of our commitment to make the non-financial reporting framework smarter, simpler and better for business. These changes focus on reducing regulation on small and medium-sized companies, ensuring that reporting requirements are proportionate, so that those companies can focus on their growth and delivering for their customers.

The Government intend to lay legislation this summer to lift the monetary thresholds that determine company size by 50%, in order to take account of inflation and to reduce burdens on smaller businesses, a change that we are able to make following the UK’s withdrawal from the European Union—see table. Overall, the effect of these changes is that 5,000 large companies would be reclassified as medium-sized and access more proportionate reporting; 13,000 medium-sized companies would be reclassified as small companies, enabling them to benefit from exemptions to statutory audit requirements as well as the ability to file simpler accounts; and 113,000 small companies would be reclassified as micro-sized companies, which will allow them to file simpler accounts—a benefit for more than one in every four businesses that are currently classified as small.

Draft National Minimum Wage (Amendment) (No. 2) Regulations 2024

Kevin Hollinrake Excerpts

Monday 18th March 2024 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 National Minimum Wage (Amendment) (No. 2) Regulations 2024.

It is a pleasure to serve with you in the Chair, Mr Hosie. The purpose of these regulations is to raise the national living wage and national minimum wage rates on 1 April 2024. They were laid on 13 January and approved by the House of Lords on 12 March.

We are delighted to say that this uplift will see the achievement of one of our core pledges: for the national living wage to reach two thirds of median earnings by 2024. The target was set with the intention of ending low hourly pay, in line with the OECD definition, for those eligible. Now, on the 25th anniversary of the minimum wage, that target will be met—a genuinely historic moment.

We have achieved that on time, in spite of the difficult global conditions of the past few years—the huge economic impact of the pandemic, the shockwaves of the war in Ukraine and recent cost of living challenges. That is something that the Government, and every parliamentarian, should be proud of. Indeed, we should also be very proud of the contribution from businesses, who have obviously borne the greatest burden of paying it.

I will turn shortly to the detail of the regulations, but I will first thank the Low Pay Commission. We have once again accepted all of its recommendations for the national living wage and national minimum wage rates. Its diligent approach to conducting detailed analysis and carrying out a range of stakeholder engagement has continued to pay dividends, enabling the Government to strike the right balance in giving millions of workers a well-earned pay rise, without harming businesses—the lifeblood of our economy—or adversely impacting the balance of the UK’s labour market. I extend my thanks to all of the commissioners, including Bryan Sanderson, whose term as chair ended around the turn of the year. I look forward to continuing to work closely with the Low Pay Commission, including the newly appointed chair, Baroness Stroud.

Turning to the rates themselves, once these regulations have secured parliamentary passage, the national living wage will increase on 1 April to £11.44 an hour—a record 9.8% cash increase of £1.02. As well as hitting our goal of seeing the national living wage reach two thirds of median earnings, we are also delivering on our pledge to extend eligibility from workers aged 23 and over to those aged 21 and over. By including 21 and 22-year-olds in the national living wage, these regulations will put more money into the pockets of more workers.

Given that younger workers remain more susceptible to economic shocks, the national minimum wage rates for those under 21 years old will remain in place. However, in making its recommendations, the LPC noted that employment among workers aged between 16 and 20 has been strong in recent months, and that the previous large increases to the national living wage have widened the gap to those younger workers entitled to the national minimum wage at lower rates. We are therefore pleased to deliver a significant uplift to the other national minimum wage rates.

These regulations will increase the rate for 18 to 20-year-olds to £8.60 an hour—a rise of 14.8%, or £1.11. The minimum wage for workers above school leaving age, but under 18 years old, will increase to £6.40 an hour—up by £1.12, or 21.2%. The same applies to the apprentice national minimum wage rate, which applies to apprentices aged 19 and under or in the first year of their apprenticeship. The accommodation offset, meanwhile, which is a daily rate, will increase by 9.8%, or 89p, to £9.99.

The Government published a comprehensive impact assessment when these regulations were laid, including an equalities assessment. Hon. Members will note that this impact assessment has once again received a green, fit-for-purpose rating from the Regulatory Policy Committee. I also note that the net cost to business is £217 million per annum.

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

I am very grateful to the Minister for showing his customary politeness in giving way. In the impact assessment, I do not see any reference to UK Government employees. Does the Minister know how many UK Government employees will benefit from the provisions he is laying out today?

[Kevin Hollinrake]

I do not know that figure, but the hon. Gentleman raises an interesting point. He is not just talking about the overall number of Government employees—I do not know that number either—but the ones that are on national living wage. I am very happy to look at that, and I will be interested to hear his reflections later. Perhaps he will enlighten us on what he believes that number to be.

We estimate that three million workers will receive a direct pay rise as a result of this uprating. The increase to the national living wage will represent a boost of more than £1,800 to the gross annual earnings of every full-time worker on the national living wage compared with this year, and a boost of £8,600 compared with 2015, when the policy was first announced. To put that in context, when this year’s uprating comes into effect in April, the national living wage will be approximately 70% higher than in 2015. Meanwhile, the consumer price index has increased about 30%, so it has increased at over twice the rate of inflation.

Finally, I remind hon. and right hon. Members of one further important change we have introduced to the minimum wage regulations. The Low Pay Commission recommended that minimum wage exemption for live-in domestic workers, which the Employment Appeal Tribunal had found amounted to indirect discrimination against women, should be removed. Due to legislation we passed earlier this year, it will be removed from the statute book from 1 April, protecting more of the UK’s vulnerable workers from exploitation.

We recognise that businesses and workers alike remain keen to hear about the future of the minimum wage. I can therefore confirm that we will be publishing the 2024 remit to the LPC shortly. The remit will ask it to provide recommendations for the national living wage and national minimum wage rates to apply from April 2025. The Government and the LPC will continue to monitor closely the impacts of these increases on the economy, and carefully consider our future ambitions.

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

It is a pleasure to see you in the Chair this afternoon, Mr Hosie. I thank the Minister for outlining the changes these regulations make to implement the new rates of minimum wage, as recommended by the Low Pay Commission, to which I also pay tribute for its sterling work. I will refer to some of the findings from its annual report during my contribution.

I also—he should really steel himself, because I do not do this often—congratulate the Minister on delivering the promise to match the minimum hourly rate to two-thirds of median wages. I think that has been eight years in the offing, but we have got there. In achieving this figure, the Low Pay Commission recommended a rise that represents the largest increase in cash terms since the introduction of the minimum wage. That is clearly welcome news for those working in minimum wage jobs, as is the extension of the entitlement to all those over the age of 21. It represents a 9.8% increase for those older than 21, with the hourly rate of the main rate—the so-called national living wage—now at £11.44 an hour. That equates to an annual increase of just over £1,800 for someone working a 35-hour week, and clearly we in the Opposition welcome that.

While I understand the Government are keen to celebrate this year’s levels, I would caution them not to be too overconfident, because anyone who has taken the time to study the Low Pay Commission’s report will see that much more needs to be done before work in this country pays in the way that it should. There are clear warning signs in the report about the persistence of insecure work and in-work poverty.

No one here will need reminding that the rates of inflation we have had to endure in recent years have thrown workers—and, indeed, everyone in this country—into a cost of living crisis. Inflation rates peaked at 11.1% in October 2022 and have been hovering around 4% and 5% even now. Between April 2021 and April 2022, household bills doubled, and the price of essential goods and services increased at a magnitude not experienced since the 1970s and 1980s. The Low Pay Commission report notes that energy, food and transport costs were at the “highest rates recorded” since the CPI series began, way back in 1989. Even in September last year, when inflation was beginning to come down, energy prices were still increasing by 5% and food inflation was 12.2%.

Last year I raised concerns that, in the face of such high levels of inflation, the minimum wage uplifts were not large enough to prevent a real-terms cut to the rate. That has been confirmed by the Low Pay Commission report, which states that the past two years’ increases in the minimum wage have in fact represented a cut in real terms due to inflation. I am pleased that the commission is confident that today’s increases will restore the value of the minimum wage in real terms, but I am also aware that the increases do not undo the previous two years, when pay did not keep up with the cost of living and hardship has endured as a result.

[Kevin Hollinrake]

As I said, the national living wage has outstripped inflation twofold during the period since its implementation. At one point in time, the Opposition talked about a national living wage of £15 an hour. Is that still the hon. Gentleman’s policy? Is that his personal policy or the Opposition’s policy?

[Justin Madders]

That very interesting question is some way outside the remit of the regulations. Of course, if the Minister wants to talk about what our policies will be, he should advise the Prime Minister to call a general election—but perhaps we are not quite there.

My question for the Minister is about the inflationary spikes of the last couple of years. What mechanisms are being looked at to ensure that the minimum wage increases at a rate that reflects those in real time? The evidence gathered by the Low Pay Commission on how workers have been affected is truly sobering. In Belfast, the commission found that supermarkets had introduced payday pantries, which provide food for workers in the run-up to payday. A care worker in Manchester told the commission,

“Most of my colleagues are using food banks.”,

and stated that that was not a new, post-pandemic problem. Such examples chime with responses in trade union surveys. In autumn 2022, Unison found that 17% of respondents had skipped meals and that 20% had asked for a loan from family or friends. In May 2023, USDAW found that 46% of its members surveyed were worried about food bills, 15% had turned to food banks and 42% had missed meals in the last year to pay for bills. If anything, the situation has been getting worse. The Joseph Rowntree Foundation’s yearly poverty report states that the proportion of households in poverty with at least one working adult increased from 61% in 2021 to 64% in 2022. The poverty rate across the country as a whole is now more than one in five, and poverty has not fallen for 20 years.

It is worth saying a few words about why, despite the Minister’s comments, minimum wage increase have not eradicated in-work poverty, which is what we would like to see. Of course, I commend the Government for reaching their 2016 pledge to increase the minimum wage to 60% of median wages by 2020 and to two thirds of median wages by this year. Indeed, the impact has been that the number of employees on low hourly pay has fallen consistently; the fall since 2015 is estimated to have been about 20%.

However, the graph on page 62 of the Low Pay Commission report reveals that on two issues we still have an awful long way to go. It is hard not to be struck by the large disparity between men and women in terms of low pay—a point I shall return to—and the persistence of low weekly pay as opposed to low hourly pay. That instructive graph shows that increasing the minimum wage floor is only one of the tools needed to tackle problems in the labour market, and that it has largely left unaffected the issue of low pay for those on weekly earnings. There is clearly an issue about the number of hours people are working.

The Low Pay Commission annual report highlights the wide gap between men and women. Consistently since 2011, roughly 15% of men in employee jobs have been on low weekly pay, despite the increases in the minimum wage. The percentage of women on low weekly pay is double that of men, at roughly one in three. That has fallen gently since 2011, when the rate was around 41%, but that large disparity is still there. Will the Minister say whether there are any plans to deal with that gender pay gap and the question of hours worked?

To adequately address the problems in our labour market, we have to consider not only the number of hours but the quality and insecurity of work. Citizens UK has estimated that there are 6.1 million workers currently trapped in insecure forms of work, 3.4 million of whom are on low pay. That amounts to 19% and 11% of the total workforce respectively on low pay. Low pay is not an inherent condition for those in insecure work, however; those on low pay are around five times more likely to be in insecure jobs.

It is noted in the Low Pay Commission’s report that those insecurely employed struggle to get adequate hours, still receive late shift notices and are on zero-hours contracts. Respondents noted that workers in sectors such as hospitality had to take on multiple jobs to obtain full-time hours, which brings the challenge of having to juggle their availability in order to be accessible for both.

In its fieldwork, the Low Pay Commission found that workers continue to struggle to get contracts that reflect their actual hours worked. It was also noted that employers are still allocating shifts with as little as a day’s or just a few days’ notice, with some workers interviewed even stating that they had had shifts cancelled on the day they were meant to be in work. That is clearly a problem that is not going away. I ask the Minister this: how is someone supposed to plan for the future when they do not know how many hours they will work from week to week or month to month? What can a worker do if they are told they are surplus to requirements on a particular day when they might have already paid out for childcare or transport costs? Such practices erode the gains that we have made on the minimum wage.

As I say, I will not be entirely negative—the Minister would not expect me to be so. Positive steps have been made this year. We particularly welcome the removal of the 21 to 22-year-old age category. That measure was found to have broad support among those contacted by the Low Pay Commission. But as I mentioned last year, we are sad to see the Government continuing to support age discriminatory bands for those over the age of 18. Why should someone’s age determine their pay? A young adult is unable to go to their landlord and demand lower rent or to tell the cashier at the supermarket that they should have a discount because they are under the age of 21. Their bills are no cheaper than anyone else’s, yet for some reason we expect young people to make ends meet on lower pay.

That is accentuated by the fact that the rates have grown more slowly for younger workers. The gap between the main rate and the 18 to 20-year-old rate has grown massively since the Conservative party came to power in 2010. The Low Pay Commission report shows how the 18 to 20-year-old rate hovered around 85% of the value of the adult rate throughout Labour’s time in office. It then fell to below 80% between 2011 and 2013 and has continued to fall since 2015.

The minimum wage rate now for those aged 18 to 20 is just over 70% of the adult rate—around 15% lower than it was under the Labour party, rubbing salt into an already unjust situation. I appreciate that the Minister has referred to an above-rate increase for 18 to 20-year-olds this year, but is that part of a concerted plan and strategy to bring back the differential that existed under the Labour Government?

Eligibility is only half the battle. Unfortunately, entitlement to a minimum wage does not translate directly into securing that rate of pay. Enforcement is key and the right to be paid a minimum wage remains an important part of the enforcement universe. Questions, therefore, ought to be asked about the effectiveness of enforcement, as too many workers still report being underpaid.

Data from the annual survey of hours and earnings shows that, despite the total number of people reporting being paid less than the minimum wage having fallen since 2019, last year 365,000 workers were still being underpaid by their employer. As a share of the minimum wage coverage, that has increased since 2019, at a rate of 23.4%. That means that of those who earn on or around the minimum wage, around a quarter of them are not actually receiving it. That is certainly something that we need to see more action on.

From what we have seen from the Low Pay Commission’s report, workers in certain sectors are impacted more than others. I spoke last year in the same debate about the impact in the social care sector and raised the findings that Unison had shared with me about the exploitation of domiciliary care workers. I mentioned then that 73% of those workers were being underpaid. They were not being paid for the travelling time. I also stated that record keeping by employers was found to be way below the standards expected and that the complexities of those pay calculations made it incredibly difficult for employees to establish whether they had in fact been underpaid.

It was therefore pleasing to see that the Low Pay Commission had dedicated some space in its annual report this year to discussing those issues. It noted that the amount of arrears that His Majesty’s Revenue and Customs recovered for non-payment of the minimum wage

“pales into insignificance when compared to the average amount of arrears that Unison secures”

for social care workers—well done to the trade union Unison, but should it not be HMRC’s job to recover arrears and ensure the minimum wage is paid properly in the first place? Is it the case that HMRC is unable to properly decipher the records, or is it going lightly on social care employers?

--- Later in debate ---

[Kevin Hollinrake]

I thank hon. Members for their contributions. The passage of the regulations will provide a boost to the incomes of 3 million workers, rewarding many of the lowest paid people in society for their contribution to the economy and protecting them from exploitative wage levels.

The shadow Minister, the hon. Member for Ellesmere Port and Neston, talked about the increases in the living wage. There is not just an increase above inflation over that period of time; it is more than double the rate of inflation. I invite him to again clarify exactly where he thinks it should go. On whether we will raise the expectation above two thirds of the medium wage, that is again something that I am sure we will set out in our manifesto. From a personal perspective, having talked to many businesses around the country, as we have done today at our SME Connect event, I know that many, particularly in hospitality, social care and other sectors, are finding life difficult right now. We should always bear in mind the needs of businesses and try to strike a balance between the impacts on businesses and the benefit that people get from higher wages.

The hon. Member raised a point about the gender pay gap. I note that, according to a recent report by the Office for National Statistics, the gender pay gap has

“decreased across all major occupational groups”

over the past two years, and the accountancy firm BDO said it decreased over the past six years, so that gap is definitely narrowing. He raises the valid point that more women are on the national living wage, but of course they benefit disproportionately from an increase because there are more of them. I do not think that any of us will rest until that gap is narrowed further. The hon. Member talked about predictable hours. We have legislated on predictable hours in line with the Taylor review. I think the actual term is the right to request predictable terms and conditions.

[Justin Madders]

On the Minister’s point about how the minimum wage has increased over the past eight years, why is it still the case that so many people are in in-work poverty? How many people have actually made that request for predictable hours under the legislation?

[Kevin Hollinrake]

There has been a significant decrease in the number of people in absolute poverty—millions of people since 2010 and 400,000 fewer children in absolute poverty, which we all welcome. As I said before, in pushing the national living wage as high as we have done, we are putting burdens on businesses. We want to ensure that we strike a balance, and that is our concern with this. We always take into account the concerns of employers as well as workers.

[Sir Desmond Swayne]

I entirely accept the point the Minister makes with respect to the definition of poverty, but the hon. Member for Glasgow South West makes a fair point in drawing attention to the number of people, particularly those employed by Government, who are claiming benefits notwithstanding being paid the minimum wage. It behoves Government to make some analysis of the extent to which the taxpayer is subsidising low wages, albeit one of the principal concerns drawn to my attention by small businesses is every increase in the minimum wage.

I accept that this is a very difficult equation to have to deal with, but I have always suspected that the former Chairman of the Work and Pensions Committee, Frank Field, was right in his assumption that universal credit, like tax credits before it, was actually just subsidising a low-wage economy that would not otherwise exist. There are clearly costs that are not worth incurring here.

[Kevin Hollinrake]

My right hon. Friend is right to say that part of the rationale behind the national living wage is to ensure that wages that employers pay are not being subsidised. The total cost of the welfare system is around £303 billion, some of which is a result of the issue he raised. To me, that is wrong and that is one of the reasons why we would like to see the national living wage increased. Nevertheless, we do not want to see that at the detriment of jobs in our economy.

There is still a balance to be struck on making sure people have the opportunity for predictable hours. That is covered in the legislation we have introduced. I understand that the policy of the hon. Member for Ellesmere Port and Neston is that anybody who has been in work for 12 weeks and is on a contract can request those hours in terms of as a permanent position. I think that is the policy that the Opposition are going to introduce. It will be interesting to see what impact that will have on employers, particularly employers of seasonal workers.

There is a balance to be struck between business and workers. I point out that there are 4.2 million more jobs in our economy than there were in 2010. That is a huge success story. There are 1.2 million fewer people unemployed and looking for work. That is a huge achievement. Some of the policies that Labour always tend to bring forward end up costing jobs. Every single time we have had a Labour Government, unemployment is higher at the end of their term than it was at the start.

[Justin Madders]

Is the Minister aware that an election is about to be called, because he has spent the last couple of minutes talking about Labour policies rather than the statutory instrument? If he is so convinced that our policies are bad, why won’t he let the public decide?

[Kevin Hollinrake]

I am purely responding to the points that the hon. Gentleman raised, to try to make him understand there is a balance to be struck in the economy between jobs and pay. That is the balance we are trying to strike.

The hon. Gentleman and the SNP spokesman, the hon. Member for Glasgow South West, made points about enforcement, which we take very seriously. We have doubled the compliance budget between 2015-16 and today to £27.8 million. We have ordered employers to reimburse £100 million to 1 million workers. We take this very seriously.

The naming and shaming scheme was suspended during covid. I understood why, but I was very keen to reintroduce it. It is the principal deterrent. I reassure the hon. Member for Ellesmere Port and Neston and other members of the Committee that, whenever we are about to do a naming round, we write to all the employers and tell them that they are going to be named. We get a lot of push-back, and we push right back again. There is no excuse for not paying the minimum wage. We have named a total of 3,200 businesses since 2013, including more than 500 just last month.

The hon. Gentleman raised the point about the vacancy in the Low Pay Commission. We are actively seeking candidates for that; if anybody is out there listening, I am very happy for them to come forward. I am very confident that new chair Baroness Stroud will do a fantastic job.

The SNP spokesman said that he wants a higher living wage, which I completely understand. He is very willing to nail his colours to the mast, unlike the Opposition, about where he thinks that should be, but I gently push back to him as well on the balance we need to strike here. The hospitality sector in Scotland is struggling as well as ours, and others are too. We must make sure we get that balance right. I have to say that in Scotland the failure rate in hospitality is even worse, being 30% higher than it is in England. That is partly down to the fact that Scotland has not passed on the rates money for those hospitality businesses, as has been done in England. The average pub in Scotland is £15,000 a year worse off because of that policy.

[Chris Stephens]

Surely, the big problem in the hospitality industry is the fact that worker after worker is being discriminated against in that industry. Zero-hours contracts are rampant—people turn up for a shift and they are told the shift has been cancelled. Surely that is the big problem. The Minister is not seriously defending bad employers, is he?

[Kevin Hollinrake]

I would never do that; as a former employer myself, I would never do that. However, I do not accept the picture that the hon. Member paints. The hospitality sector is a fantastic sector in this country, with many good businesses and many good employers. For him to trash the reputation of the sector in that way, saying that zero-hours contracts are “rampant” in the sector—I think that he should just check his language. That sector does a fine job under very difficult circumstances, and the circumstances are far more difficult in Scotland.

Regarding the Low Pay Commission, the hon. Member made the point about younger workers on lower pay. That is a very fair point; he raises it time and again. It is our position and the position of the Low Pay Commission that younger people are more susceptible to a weaker labour market. That is why we have different rates. I declare my interest—I have daughters of that age who earn the lower rates of the minimum wage and I am very happy that that is the case, because I would rather that they had a job than no job at this point in time.

The minimum wage and the national living wage are floors, not ceilings. If good employers pay more, and many do, clearly we welcome that.

I will just conclude—

[Chris Stephens]

Before the Minister concludes, can he answer this question about UK Government employees? How many of them are on the national minimum wage? Can he say whether the Government have a plan to deal with that situation?

[Kevin Hollinrake]

As I said before, I do not know the answer to that question; if the hon. Gentleman wants to put down a written question on the subject, we can give him an answer to it by separate means.

This debate is an important reminder of the good that Government can achieve—a sentiment that I am sure will be echoed by Committee members. I thank the Low Pay Commission once again for its advice this year, which has been as expert as ever, and I commend the regulations to the House.

Question put and agreed to.

Resolved,

That the Committee has considered the draft National Minimum Wage (Amendment) (No. 2) Regulations 2024.

Draft Economic Crime and Corporate Transparency Act 2023 (Consequential, Supplementary and Incidental Provisions) Regulations 2024 Draft Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024

Kevin Hollinrake Excerpts

Thursday 14th March 2024 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 Economic Crime and Corporate Transparency Act 2023 (Consequential, Supplementary and Incidental Provisions) Regulations 2024.

[The Chair]

With this it will be convenient to consider the draft Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024.

[Kevin Hollinrake]

It is a pleasure to serve with you in the Chair, Ms Vaz.

The first set of regulations were laid before the House on 30 January 2024, the second on 19 February 2024. These regulations form part of a series of secondary legislation needed to effectively implement the Economic Crime and Corporate Transparency Act 2023, which I will refer to as “the 2023 Act”. The measures effectively form the basis of a civil penalty regime and offer data- sharing help to ensure that we can fight economic crime.

The 2023 Act is a landmark piece of legislation, which demonstrates the Government’s commitment to tackling economic crime. As I have stressed on many occasions, it will bear down on kleptocrats, criminals and terrorists who abuse our open economy, will significantly strengthen the UK’s reputation as a place where legitimate business can thrive, and will drive dirty money out of the UK.

Passing the 2023 Act was of course only the first step on the journey to make these reforms a reality. We now face the task of designing and implementing the many new processes and procedures at Companies House, underpinned by a substantial programme of secondary legislation that consists of some 50 statutory instruments.

The first of those instruments has been approved by both Houses, which means that I am glad to announce that the first of the 2023 Act’s reforms has already taken effect. Companies House has started to cleanse the register and quickly remove names and addresses that have been used without consent. Going forward, Companies House is turning its attention to register entries that it knows to be problematic and is beginning to remove what it has already identified as manifestly fraudulent filings.

For example, last week there were media reports of hundreds of rogue filings at Companies House, totalling approximately 800 “satisfaction of security” forms. I am pleased to say that, thanks to the registrar’s new powers, all of these fraudulent filings have been taken down swiftly by Companies House. That would not have been possible prior to 4 March.

Although that is already a major improvement, there is much more work to be done. That is why we are here today to debate the next set of regulations in the reform programme.

I will first address the financial penalty regulations. Currently, obligations in the Companies Act 2006, which I will refer to as “the 2006 Act”, relating to the functions of the registrar are enforced primarily through the criminal justice system. The only civil penalty regime that Companies House currently operates under the 2006 Act is the accounts late filing penalty regime, where a company automatically incurs a penalty for failing to file its accounts on time. That regime will remain unaffected by these regulations.

The 2023 Act sets out that the registrar may impose a financial penalty as an alternative to criminal prosecution where the registrar is satisfied beyond reasonable doubt that a person has engaged in conduct amounting to a relevant offence under the 2006 Act. In turn, this instrument sets out the procedure for the imposition and enforcement of financial penalties.

If the registrar suspects that a person has committed a relevant offence, she may issue a written warning giving them at least 28 days to make representations about their conduct. If the registrar is satisfied beyond reasonable doubt that the person has committed a relevant offence, she may issue a penalty notice in writing to that person, giving them 28 days’ notice to pay the penalty. The instrument sets out that financial penalties imposed by the registrar may be fixed, a daily rate or a combination of both. The penalties will be based on the severity of the offence, up to a maximum total of £10,000. In certain cases, more than one penalty can be imposed. This flexibility allows proportionate and effective targeting of those who commit an offence.

The instrument gives the registrar the power to vary or revoke financial penalties on a case-by-case basis —for example, if new information comes to light that aggravates or mitigates any offence. The instrument also sets out the grounds for appeal and the court’s powers in relation to the appeal. This adds to the tools available to the registrar to promote compliance and maintain the integrity of the UK companies register. It means that the registrar will now have the discretion to choose to pursue a financial penalty or to pass over to law enforcement to consider criminal sanction. It is important to note that the 2023 Act allows that, where a civil financial penalty is imposed on a person, it can contribute to that person being disqualified from acting as a UK director.

All of this means that we are striking the right balance between deterring non-compliance and not unduly burdening small business. Companies House’s new intelligence hub will also strengthen the registrar’s role in fighting organised crime. The hub will use data science to identify patterns and threats of economic crime on the register. Via new data-sharing powers, Companies House will proactively share its analysis and intelligence with law enforcement partners and supervisory bodies. That will ensure that evidence of organised crime can be pursued by the most appropriate agency.

This instrument makes minor changes to the Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023. These technical changes ensure consistency between the two financial penalty regimes.

As of 11 March 2024, 30,614 overseas entities had registered with Companies House. A further 857 overseas entities had notified Companies House that they had disposed of all their interests in land before the register opened. That is a very good rate of compliance, as Companies House estimates that 10% of the entities originally in scope are dissolved or struck off. Many of these entities are in the process of being restored to their respective register, and Companies House has been working with overseas jurisdictions to ensure compliance with the requirements.

Companies House has taken robust action against the entities that have failed to comply with the requirements. As of 11 March, more than 400 penalty notices had been issued, with penalties totalling more than £20 million. That includes cases in which Companies House has received representations and appeals that are ongoing.

The next phase in the compliance process is imposing charges against land held by overseas entities where penalties remain unpaid. I will provide a progress update when we debate the next set of regulations relating to the register of overseas entities, which we will lay in Parliament in the coming months.

The other of the two instruments before us today is the Economic Crime and Corporate Transparency Act 2023 (Consequential, Supplementary and Incidental Provisions) Regulations 2024, which make minor consequential amendments to the 2006 Act and the Economic Crime (Transparency and Enforcement) Act 2022. They also introduce minor technical changes to eight pieces of secondary legislation. These regulations ensure that the changes made to the 2006 Act will also apply consistently to the law governing other business entities registered in the UK where that is possible. For example, this lifts restrictions on the use and disclosure of certain data by the registrar, allowing her to share that data more widely, and particularly with public authorities for purposes connected with the exercise of their functions.

In conclusion, I emphasise that the regulations are a further step towards effective implementation of the 2023 Act. I hope that Members will support them. I commend both sets of draft regulations to the Committee.

--- Later in debate ---

[Kevin Hollinrake]

I thank Committee members for their valuable contributions to the debate. The shadow Minister asked about resources; the Government provided £63 million to start the work at Companies House on the change from having a dumb register to having a proactive registrar who maintains the integrity of the register. Also, £20 million was provided last year through the economic crime levy, which will be one of the future sources of funding. The key area for funding is the uplift in the registration fees and annual filing fees at Companies House. It used to be £12 to register a company; it is now £50. It used to be £13 to lodge an annual return; it is now £34. We think that provides Companies House and the Insolvency Service, which is the enforcement body for such matters, with the extra resources needed, and hundreds more people will come as a result. It will also fund things such as the intelligence hub, which is hugely important.

The hon. Member for Glenrothes might want to alert Companies House about the address that has been used improperly. Companies House should then deal with that, and can do so much more quickly as a result of the new powers.

[Peter Grant]

I am sure it will come as no surprise to the Minister to hear that Mr Barrow has already done that. We look forward to that company being removed from the register quite soon. One of the things that I found interesting is that the address used is not the company’s registered address.

[Kevin Hollinrake]

I am happy to talk to the hon. Gentleman offline about that particular case, but any Member of this House or member of the public can alert Companies House about incorrect filings. As I say, as a result of what we have already done, that can be acted on much more quickly.

The hon. Gentleman talked about disqualification, and yes, absolutely, penalties can, as I said in my opening speech, contribute to a decision on disqualification. The penalties are civil penalties, but where the registrar feels that the conduct or offences are sufficiently serious, they can pass that on to the relevant prosecution body —the Insolvency Service, the police, the National Crime Agency or others. That is the kind of approach that Companies House typically takes.

The hon. Gentleman raised Blackmore Bond again, and has done a fantastic job of raising that on so many occasions. We have finally seen the FCA actually do something about it, as a result of much work. I remind the hon. Gentleman that what underpins the whole regime is the recognition that it is impossible, given the number of records, for Companies House to be a policeman of every single record and everything that happens. Five million companies are on the register, and 800,000 were registered last year alone, so it is not practical to look at every single one, but there are serious consequences if people improperly or falsely file information, particularly if they do so maliciously. They can be sentenced to up to two years in prison. That underpins the regime as well.

I thank you, Ms Vaz. The debate has highlighted the need for a robust financial penalty regime at Companies House, as well as consistency in the law that governs business entities. I commend both sets of draft regulations to the Committee.

Question put and agreed to.

Draft Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024

Resolved,

That the Committee has considered the draft Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024.—(Kevin Hollinrake.)