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Written Statements

Volume 747: debated on Tuesday 19 March 2024

Written Statements

Tuesday 19 March 2024

Business and Trade

Post Office: Horizon Inquiry Participation Costs

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

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.

2 of 3 out of:

Micro

Small

Medium

Large

Old

New

Old

New

Old

New

Old

New

Annual turnover

nmt* £632k

nmt £1m

nmt £10.2m

nmt £15m

nmt £36m

nmt £54m

£36m+

£54m+

Balance sheet total

nmt £316k

nmt £500k

nmt £5.1m

nmt £7.5m

nmt £18m

nmt £27m

£18m+

£27m+

Average number of employees

nmt 10

nmt 50

nmt 250

251 +

*nmt = not more than

The Government will also remove several low-value, obsolete or overlapping requirements from the directors’ report, and from the directors’ remuneration report and policy; make it easier for companies to issue digital annual reports; and fix some technical issues in the audit regulatory framework that have been identified following the assimilation of EU law into UK law.

In total, these changes will deliver a deregulatory saving of around £150 million per year to UK companies, with small and medium-sized companies set to benefit by approximately £145 million per year.

The regulations will directly benefit both preparers and users of annual reports and accounts. They will remove low-value and duplicative information and make annual reports shorter, more navigable and better focused. Preparers of annual reports—UK businesses up and down the country—will have more time to spend on running their business. Users of reports—investors and shareholders—will be able more easily to access relevant information to support effective decision making.

By refining the framework and delivering deregulatory cost-savings for business, the Government are taking action to strengthen the UK’s business environment and our international reputation as a great place to do business.

And the Government intend to go further. The Government intend to consult later this year on amending the definition of a medium-sized company for company reporting so that the threshold on the maximum number of employees to be classified as a medium-sized company is increased from 250 to 500. It will also consult on exempting medium-sized companies from having to produce a strategic report and on exempting smaller public interest entities from audit tendering and rotation requirements. This will further reduce the bureaucratic burden on companies that are the lifeblood of the UK economy, meaning that they would not be subject to the more stringent reporting and accounting requirements faced by large businesses. I will update the House on these further proposals in due course.

[HCWS354]

Culture, Media and Sport

Football Governance Bill

I wish to inform both Houses that the Government have today introduced the Football Governance Bill into Parliament, marking a critical milestone towards the establishment of an independent football regulator.

Football is a defining part of our national identity, with clubs bringing fans and communities together week in, week out. It is a multibillion-pound industry with a truly global footprint, and we are committed to securing its future growth. But in recent years it has become clear that there are systemic issues at the heart of our national game that the industry has failed to resolve itself, despite repeated calls for reform. The consequences of these issues can be catastrophic.

The collapse of clubs like Bury and Macclesfield Town, the devastating impact of the pandemic and the failed attempt by some English clubs to join a breakaway European super league have all demonstrated the financial issues in the game and the need for more accountability to fans.

This legislation is the next step in our ongoing commitment to safeguard the future of football clubs for the benefit of communities and fans. It follows the Government’s White Paper, “A sustainable future—reforming club football governance”, published in February 2023, which built on the fan-led review of football governance’s recommendations and set out a comprehensive plan to introduce an independent regulator.

In developing the Bill, we have taken the time to carefully consider the full range of recommendations set out in the review and we believe our policy will legally achieve the proposed outcomes while ensuring a proportionate approach.

Introducing an independent football regulator will strengthen the governance and financial resilience of football clubs to protect the national game and clubs’ links with their communities and fans. The regulator will not intervene in or seek to change the sporting fundamentals of the game we love—it will ensure a more sustainable future, with fans at its heart, for generations to come.

The regulator’s primary purpose will be to ensure that English football is sustainable and resilient for the benefit of fans and the local communities football clubs serve. It will achieve this by:

Operating a licensing system, where all clubs in the top five tiers of the men’s English football pyramid will need a licence to operate.

Establishing a new, strengthened owners’ and directors’ test to make sure a club’s custodians are suitable and to protect fans from irresponsible owners.

Setting a minimum standard of fan engagement and requiring clubs to comply with new FA rules on club heritage, giving fans a veto over changes to the badge and home shirt colours, as well as the strong existing protections for club names.

Requiring clubs to seek regulator pre-approval for any sale or relocation of their stadium.

Preventing clubs from joining breakaway leagues that do not have the support of the fans or that threaten the heritage or sustainability of English football.

Having a backstop power to intervene in the distribution of broadcast revenue when the leagues fail to reach an agreement—subject to certain thresholds being met.

Establishing a compulsory “Football Club Corporate Governance Code”.

The regulatory regime will be designed to be proportionate and, as such, the regulator will not adopt a “one size fits all” approach. Instead, it will tailor any intervention to the specific circumstances it faces and in doing so will avoid placing unnecessary regulatory burdens on clubs. The regulator’s approach will be advocacy-first: aiming to work constructively with clubs and then leagues to resolve issues wherever it can. Only where this has proven ineffective, or in the most urgent cases or serious instances of non-compliance, will the regulator have powers to intervene more directly or strongly.

This legislation also recognises that English football is a source of significant importance to fans and communities across the country. It will establish a new regulatory framework in a way that ensures the regulator must seek to minimise adverse impacts on financial investment in English football or on club competitiveness, and minimises the impact on sporting outcomes in general. This will balance the need for change to secure the long-term future of our national game and the need to restore fans’ place at its heart with the importance of ensuring continued global success.

In developing these proposals, we have undertaken significant engagement with a broad range of stakeholders and experts. This has included regular meetings with the Premier League, the English Football League, the National League, the Football Association (FA) and the Football Supporters’ Association (FSA), as well as official and ministerial-level meetings with clubs across the football pyramid. I want to thank all who have engaged with us throughout the entire process, and helped us shape the Bill.

We will continue to work and engage with industry, fan groups and across Parliament as the Bill progresses to ensure we can deliver on urgently needed regulation. Alongside the legislation, the Government have established a shadow regulator, which will act as a forerunner to the regulator with responsibility for set-up activity and preparatory work for the regulatory regime.

I would welcome the support of colleagues across both Houses as we take this important legislation forward.

[HCWS358]

Telegraph Media Group Ltd: Acquisition

On 26 January 2024, I issued a public interest intervention notice (PIIN) in relation to the anticipated acquisition of Telegraph Media Group Ltd (TMG) by RB Investco Ltd on the grounds of the need for accurate presentation of news and free expression in newspapers.

The PIIN triggered a requirement for Ofcom to report by 11 March on the media public interest considerations and the Competition and Markets Authority (CMA) on jurisdiction and competition issues. I issued a statement on 12 March to confirm that I had received those reports and undertook to set out my “minded to” decision on the next step in this process: whether or not to refer the merger to a fuller phase 2 investigation.

On the basis of the regulators’ assessments, I can now confirm that I am minded to refer this merger to a phase 2 investigation on the grounds of the need for accurate presentation of news and free expression of newspapers.

The CMA has found that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; a finding that is a prerequisite for me to be able to refer this matter for a further investigation at all. However, it does not believe that it is or may be the case that this merger has resulted, or may be expected to result, in substantial lessening of competition within a market or markets in the United Kingdom for goods or services.

Ofcom has found that it is or may be the case that the potential merger situation may be expected to operate against the public interest, having regard to the specified public interest considerations. In particular, it considers that International Media Investments (IMI), a majority partner in RB Investco’s parent company, may have the incentive to influence TMG in a way that could potentially act against the public interest in the UK by influencing the accurate presentation of news and free expression of opinion in The Daily Telegraph and The Sunday Telegraph newspapers.

I will be publishing both the CMA and Ofcom reports in due course, copies of which will be deposited in the Library of both Houses. I will also publish the letters to both parties setting out my “minded to” decision.

I am now required by legislation to allow the parties the opportunity to make representations to me before I reach a final decision. I have given them until 9 am on 25 March 2024 to respond.

I will aim to make a further statement on any decision I may come to as quickly as possible.

The pre-emptive action order I issued on 29 January 2024 will continue to apply to the merging parties and related entities until a final decision has been taken on matters described in the January PIIN.

In the meantime, given the ongoing quasi-judicial nature of this process, I am unable to comment substantively on the matter of this case.

I had also issued a PIIN on 30 November 2023 in relation to the anticipated acquisition of Telegraph Media Group Ltd by RedBird IMI, which was then RB Investco’s parent company.

The CMA has found that arrangements as described in the November PIIN are no longer in progress or in contemplation. I accept the CMA’s findings on this matter and this PIIN now ceases to be in force.

[HCWS357]

Home Department

Brook House Inquiry: Government Response

The Government are today publishing their response to the Brook House inquiry. The Government are grateful to the chair of the BHI, Kate Eves, for her review and welcome this important contribution to ensuring the safety and welfare of those in detention. The response has been laid before Parliament as a Command Paper, CP 1041, and copies are available in the Vote Office and on gov.uk.

This inquiry, in which the Home Office was a core participant, was in response to an investigative current affairs documentary broadcast in September 2017, which included covert footage of abuse of detained people at Brook House immigration removal centre by a small number of contracted service provider staff. The inquiry was established on 5 November 2019 and published its report on 19 September 2023. The inquiry formally closed on 31 January 2024.

The aim of the inquiry was to establish the facts of what took place and ensure that lessons were learnt to prevent those shocking events happening again. The Government expect the highest standards from contracted service providers.

The Government wish to highlight the significant improvements that have been made since 2017 to uphold the welfare and dignity of those detained across the estate including strengthening safeguards, promoting a culture of transparency and improving the oversight of contractors’ performance. The Government are confident the measures taken so far in responding to the BHI have gone a long way to addressing many of the key concerns raised, and will continue to reflect on the findings from the inquiry ensuring that they are fully embedded into the development and implementation of new and emerging policy initiatives.

[HCWS356]