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Small Business, Enterprise and Employment Bill

Volume 760: debated on Tuesday 17 March 2015

Third Reading

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Small Business, Enterprise and Employment Bill, have consented to place their interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Clause 3: Companies: duty to publish report on payment practices

Amendment 1

Moved by

1: Clause 3, page 4, line 2, at end insert “, and

(b) the company’s performance by reference to those practices and policies”

My Lords, I thank the noble Lord, Lord Mendelsohn, for his diligent scrutiny of the late payment provisions in the Bill. We covered a wide range of areas during the debates. I hope noble Lords are now certain of the Government’s unwavering commitment to tackle late payment and are satisfied with the way that I have tried to address the concerns raised. We are all united in the belief that suppliers should be fairly compensated when they suffer from late payment. I was persuaded by the noble Lord’s arguments and made a commitment to bring forward amendments to specify in the Bill how we intend to use the reporting power in relation to payment performance and interest owed and paid. These amendments deliver on that commitment.

Amendment 1 inserts a reference to “performance” in the Bill. This amendment makes clear that payment performance is a vital component of the new mandatory reporting requirement and that we are committed to include it in regulations. Greater transparency will bring to the fore poor payment performance. Amendments 2 and 3 make express reference to late payment interest as an example of the type of information that may be included in the new reporting requirement. We are committed to using this power in the Bill to require companies to report on the amount of interest owed or paid because of late payment. This new reporting requirement will bring increased transparency to payment performance.

Together with the wider package of measures we are driving forward—to improve public sector prompt payment and strengthen the Prompt Payment Code—this will encourage a change in corporate behaviour. For far too long, large companies in the UK have used their economic power to make gains at supplier expense. The commitment I have made today will help to ensure that suppliers are fairly compensated. I hope noble Lords will feel able to support these amendments. I beg to move.

My Lords, I thank the Minister for introducing these amendments and for her unfailing courtesy throughout the passage of the Bill. We share a deep concern that the scope of late payments and poor payment practices is not only unfair, unjust and damaging to small businesses but is a brake on the entire economic potential of our country. With the sum outstanding approaching £60 billion, the Bill is an important step in trying not just to stop it rising any further but to create the ability to reverse that number as strongly and rapidly as we can.

While we favour additional measures—some of which could be considered in secondary legislation—we are grateful to the Government for recognising the need to add strength to their approach by ensuring that the payment report goes beyond intentions and reports on actual performance. In addition, the interest figure in payments highlights existing late payment legislation. These measures have our strong support and we are grateful to the Minister and the Government for listening and for their positive response and detailed scrutiny of our suggestions.

It may be for the convenience of the House for me to thank the Minister for the letter she sent to my noble friend Lord Stevenson and myself helping to tidy up some of the points of contention raised on Report relating to the co-protections when a pub is sold, the role of the adjudicator in these matters, investment by pub companies and the market rent only option, and the consultation on the code itself and on secondary legislation. We are very grateful for what the Minister has written and believe that it resolves almost all of the outstanding issues at this stage. Again, we offer our strong support for that.

We have good reason to be very proud and supportive of small businesses. One has only to look at the annual reports on European SMEs, published by the European Commission, to know how strong we could be with more focused public policy support. Let us hope that this Bill is a strong step in the way forward in dealing with late payments and prompt payments and ensuring that our small businesses take full advantage of the position that they are in. They are, of course, the backbone of our economy.

My Lords, I am grateful to the noble Lord, Lord Mendelsohn, for his very kind remarks and for giving me the opportunity to return briefly to the matter of pubs. As he said, I sent a letter to the noble Lord, Lord Stevenson, yesterday and I have, for the convenience of the House, placed a copy in the Library.

Noble Lords expressed concern on Report about protections that would be available to a tied tenant whose pub is sold. Let me clarify the position: when a tied pub, owned by a company covered by the statutory code, is sold to another code company, the rights of the tenant under the code will be unaltered and will continue seamlessly. A tenant in this situation will retain the right to exercise the market rent only option after sale if any of the MRO triggers are activated. Where a tied pub is sold by a code company to a company outside the scope of the statutory code—for example, to a family brewer—the tenant will retain all the protections of the code except for MRO until the end of the lease or until completion of the next rent review, whichever comes first. In this scenario, if the purchasing company offers the tenant an agreement on different terms from their existing agreement, the tenant will have the right to a rent review.

If the tenant considers that the rent review breaches the code then he or she will be able to refer the matter to the adjudicator for arbitration. The adjudicator will not have powers to investigate non-code companies because the investigation powers are designed to address suspected systemic abuses of the code across many tenants. It would not be right to include in scope companies which are covered by the code only by virtue of the historic ownership of some of their pubs and in respect only of those particular pubs.

I turn briefly to the matter of investment. I have been clear that the Government want to see investment in tied pubs. That is key to the success of the industry, both for pub companies and for tenants. Pubs are at the heart of our communities and our heritage. They are important to the old and the young. We want pubs to thrive. I therefore announced on Report that the Government would set out in secondary legislation how tenants and pub companies can agree a waiver of two MRO triggers in exchange for significant future investment in a pub. I would like to make it clear that the waiver will apply only to the renewal and scheduled rent review triggers for MRO. All other code protections will remain in place during the waiver period. This means that the two exceptional triggers for MRO will remain; namely, a significant price increase and an economic event which impacts on the tenant’s ability to trade. The Government will set out safeguards in the code to ensure the tenant is protected from attempts to abuse a waiver. Any attempt to avoid these safeguards could be referred to the adjudicator for arbitration and redress.

I am grateful to my noble friend. I hoped to get through this afternoon without having to discuss pubs yet again. When a pub is sold by one of the companies covered by the code to a company that is not covered by it—a family brewer was the example she used—who enforces the rights of the tenant against the pub company that is outside the code? At that point, as my noble friend said, it is not part of the code so how does the adjudicator make that work?

I thank my noble friend for that question. The answer is that this is part of the role of the adjudicator. I am very happy to talk further on the detail of how that might work. Of course, that will be the subject of full consultation.

Finally, I reiterate that the Government are committed to that full consultation on the pubs code and the other secondary legislation that is required to deliver Part 4 of the Bill. We will be keen to continue engaging with stakeholders as the secondary legislation is developed. The regulations are of course subject to the affirmative procedure and we intend to ensure that there is a chance to scrutinise this secondary legislation because of the depth of interest in it and its importance. We send the Bill back to the other place confident that we have remained true to the spirit and intention of the measures introduced there, but having made improvements that will ensure that the measures are workable and minimise unintended consequences.

Amendment 1 agreed.

Amendments 2 and 3

Moved by

2: Clause 3, page 4, line 32, leave out “incurred” and insert “owed or paid”

3: Clause 3, page 4, line 33, at end insert “whether in respect of interest or otherwise”

Amendments 2 and 3 agreed.

Amendment 4

Moved by

4: Clause 3, page 4, line 46, leave out subsection (8)

My Lords, the amendments in this group make a number of consequential and technical changes to the Bill. I turn first to Amendments 4, 6, 12 and 13. In Committee, the Government moved a number of technical amendments about the penalties in the Bill. The majority of those related to the penalties in Parts 7 and 8. At the time, it was unclear whether changes to the fines available to magistrates in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 would be implemented during this Parliament. This was because the regulations needed to accompany commencement were yet to be debated in both Houses of Parliament and a number of the amendments were designed to ensure that the penalties worked in either event. As noble Lords may be aware, Section 85 of LASPO came into force on 12 March. As a result, there is no longer an upper limit on fines in the magistrates’ courts. My amendments therefore remove the changes we made in relation to these fines, as they are no longer necessary.

I now turn to Amendments 14 to 16. Noble Lords will be aware that the Deregulation Bill has recently been read in this House for a third time, and yesterday this House considered and agreed amendments made to it in the other place. These technical amendments are therefore required so that the Schedule 9 amendments are based on the text of the Insolvency Act after amendment by the Deregulation Bill.

Finally, I turn to Amendments 7 to 9. Our penalty measure in Clause 150 provides for full and prompt payment of employment tribunal awards. This will reassure claimants that, should they be successful at a tribunal, they will receive the money that they are owed. Clause 150(5) already amends the Employment Tribunals Act 1996 to provide that the affirmative procedure applies to regulations made under the new provisions. However, it does not also remove them from the category of instruments that are subject to negative procedure. Amendments 7 to 9 correct this.

I hope noble Lords will welcome these various amendments and give them the House’s support.

My Lords, it says in the Companion very clearly that Third Readings are mainly used for tidying up complicated parts of Bills that perhaps have eluded the draftsman or indeed are subject to a change in other places. The descriptions as made by the Minister clearly fulfil all aspects of that and we have no wish to enter into them.

I must say that I was slightly confused by the insertion and then removal and then the reinsertion but in a different way of the Legal Aid, Sentencing and Punishment of Offenders Act provision. However, the Minister has explained the reason for that in a private meeting and we are very happy with the provisions now.

Amendment 4 agreed.

Clause 18: Power to specify regulatory functions

Amendment 5

Moved by

5: Clause 18, page 20, line 22, at end insert—

“( ) Regulations under this section must not specify a regulatory function of the Commission for Equality and Human Rights.”

My Lords, we debated on Report whether the Equality and Human Rights Commission should be excluded from the small business appeals champion in the Bill. I committed to consider the question. Amendment 5 now delivers an exclusion. The Government have always maintained that the EHRC is a very special case and should not be subject to the duty to appoint a champion. We considered that an exemption in secondary legislation would be sufficient, but noble Lords were concerned about this and the potential implication for the EHRC’s “A” status as a national human rights institution. The Government believe that there is only a very small risk here, but we have listened to noble Lords and agreed to eliminate the risk altogether with this amendment, which I know from the debate will be welcomed across the House. I beg to move.

My Lords, I thank my noble friend very much for this concession. I entirely agree with her that nobody in this House thought that the Government were not going to do this. We understood that there was no malice aforethought in any sense at all, but it is surprising how people can make malice if they can find a way of doing it, and many people were suggesting that, in some way, the Government were taking control over this independent body, which would be unacceptable internationally. That is why we made the point, and I, for one, am very pleased that the Government have accepted it. I thank my noble friend for the courteous way in which she has dealt with this and, indeed, the detailed answer that she has given us.

My Lords, this is a strange moment because exactly the same arguments and debates—indeed the same personnel—debated much the same amendment in the Deregulation Bill, as the Minister has explained. The result on that occasion was that the EHRC was not excluded from the Deregulation Bill. In a sense, the points made by the noble Lord, Lord Deben, are entirely correct. I think that we as a House are convinced that the Government do not wish any ill on the EHRC and wish to see its “A” status preserved. We have excluded it from this Bill—which had a small but important adjunct of policy which bit on the EHRC—but we have not excluded it from the Deregulation Bill, which covers a much larger area. Obviously the Minister has skills way beyond those with which she came into this House—and there were many when she arrived. She has gained in strength and capacity. She has been able to do the impossible in going round the magic circle of Cabinet committees in a record-breaking time and I congratulate her on this amendment.

Amendment 5 agreed.

Clause 92: Duty to deliver confirmation statement instead of annual return

Amendment 6

Moved by

6: Clause 92, page 72, leave out lines 5 to 7

Amendment 6 agreed.

Clause 150: Financial penalty for failure to pay sums ordered by employment tribunal etc

Amendments 7 to 9

Moved by

7: Clause 150, page 143, line 34, leave out “41(2)” and insert “41”

8: Clause 150, page 143, line 34, at end insert “in subsection (2)”

9: Clause 150, page 143, line 38, at end insert—

“and in subsection (3)(b) for “regulations” substitute “any other regulations”.

Amendments 7 to 9 agreed.

Clause 156: Power to make regulations to be exercisable by the Treasury or Scottish Ministers

Amendment 10

Moved by

10: Clause 156, page 149, line 47, at end insert—

“( ) The first regulations under section 154(1)—

(a) if made by the Treasury, are subject to affirmative resolution procedure;(b) if made by the Scottish Ministers, are subject to the affirmative procedure.”

My Lords, Amendments 10 and 11 relate to the public sector exit payment provisions and deliver the commitment I made on Report to make these powers subject to the affirmative procedure on their first use. This was in light of a further report by the Delegated Powers and Regulatory Reform Committee and we are grateful for the committee’s scrutiny of the Bill.

This first use will be the substantive one to establish the exit payment recovery regime. The regulations will contain full details of the government subsectors, the types of exit payments included, the circumstances in which recovery is mandated and the amount to be recovered. They will also set out the duties upon the persons and employers involved to retain and communicate information and facilitate the repayment.

Amendment 11 allows for changes to this first set of regulations to be made by the negative resolution procedure. These subsequent regulations will contain the minor and technical changes which will be aimed solely at ensuring that the regime remains up to date and fit for purpose. For example, changes will be required to reflect any new public body that is created or closed. I beg to move.

My Lords, this is very much a technical issue. The amendment responds to the recommendations by the DPRR Committee and satisfies in full that committee’s concerns. When the Minister introduced the amendment just a few seconds ago, he did not refer to the supplementary memorandum by BIS which was circulated recently by the committee relating to whether or not the Delegated Powers and Regulatory Reform Committee had in some way impinged on the powers of the Scottish Parliament on this matter. Can he add a few words just to make sure that the record is clear on that?

Amendment 10 agreed.

Amendment 11

Moved by

11: Clause 156, page 150, line 1, at beginning insert “Any other”

Amendment 11 agreed.

Clause 160: Fines on summary conviction in England and Wales: transitory provision

Amendment 12

Moved by

12: Clause 160, leave out Clause 160

Amendment 12 agreed.

Schedule 2: Registration of childcare: premises

Amendment 13

Moved by

13: Schedule 2, page 163, leave out lines 1 to 3

Amendment 13 agreed.

Schedule 9: Abolition of requirements to hold meetings; opted-out creditors

Amendments 14 to 16

Moved by

14: Schedule 9, page 252, line 10, leave out sub-paragraph (37)

15: Schedule 9, page 252, line 16, leave out from “(3A)” to “In” in line 19

16: Schedule 9, page 252, line 19, leave out “that decision” and insert “a decision of the creditors for the purposes of sub-paragraph (2)(b), or of the preferential creditors for the purposes of sub-paragraph (2)(ba),”

Amendments 14 to 16 agreed.


Moved by

My Lords, perhaps I may take this opportunity to thank the Minister for the way in which she has led this long and incredibly complex Bill over the past few months. She has been exemplary in offering meetings and has made sure that we have been fully briefed by officials, for which we are very grateful. Whenever debates have raised issues that she felt needed further consideration, she has written to us, thus carrying on a practice started by her predecessor; while he was pretty good at it, she has been exemplary and has won hands down in that race.

We said at the beginning of the Bill that we would like to work closely with her if we could because the Bill was in the right place in what it was trying to achieve and there were many things on which we could agree. Indeed, we felt that in some senses it could have gone further. I hope the Minister agrees that that has proved to be of considerable benefit to the process of getting the Bill to the position it is in now.

I want to make sure that recognition is duly paid to my team, my noble friends Lord Mendelsohn, Lord Mitchell, Lord Young, Lady Hayter and Lady Jones, who have all had to appear at various times during the passage of the Bill because it covered so many different aspects of the Government’s work. We also had the innovation of having a Back-Bench liaison Peer, my noble friend Lord Watson of Invergowrie. As well as taking a particular interest in the PSC register, he also worked very hard to make sure that Back-Benchers were fully involved. That helped to stimulate the debates and get us through the work. We have also benefited from a very hard-working legislative assistant, Nicola Jayawickreme, our former apprentice in our office at the end of the corridor, who has grown in stature and confidence as this legislation has progressed. So apprenticeships do work.

Having spent a lot of time in areas that perhaps we did not expect to when the Bill was first introduced, and having become expert in the intricacies of how pub companies and pub tenancies work and the implications of various activities in that area, as well as lots more, let us say “Cheers” to this Bill as we wish it on its way.

My Lords, I endorse the words of the noble Lord, Lord Stevenson, by thanking the noble Baroness, Lady Neville-Rolfe, for her unfailing courtesy and competence throughout the transaction of the Bill. I also thank the noble Lords, Lord Mendelsohn and Lord Stevenson, for their efforts to improve the Bill and to work with all of us who have been engaged on it over the past few weeks. I thank my noble friend Lady Janke, who has been assisting me on these Benches. I particularly thank all the officials who have dealt with our replies and the detail of queries that we have had on the Bill throughout the past few weeks.

My Lords, I briefly add my congratulations and thanks to the Minister and all her officials for their unfailing help and courtesy in the area that I was especially interested in. I set up and ran a small business throughout the 1980s and 1990s, so I had a particular interest in this Bill. There were many areas where I felt that I might have made a useful contribution. Nevertheless, it is a good Bill and I felt that I should focus my efforts on one area: the protection of whistleblowers. The Bill includes significant improvements in such protections. Again, I thank the Minister particularly for the constructive and thorough way in which she has engaged with those complex legal issues and managed to achieve significant progress.

However, there is still more that could be done. This is a rare legislative opportunity. There are still glaring gaps in protection for whistleblowers and I think the House will agree that those courageous individuals who blow the whistle on their employers, often at considerable detriment to themselves and their families, deserve all the protection that Parliament can give them. When the next scandal in protecting the public happens—as I am afraid it will, unfortunately—and when the inevitable inquiry finds out that more could have been done to encourage whistleblowing, all of us may have cause to regret that we did not do more on this occasion. However, this is a good Bill, which does a huge amount for small business. I welcome it and wish it all the best in its progress on to the statute book.

My Lords, as a representative of the rebellious tendency on this Bill, I thank my noble friend for the considerable improvements to the Bill as a result. It has been an example of the House of Lords at its very best. We now have something that will make a difference in a lot of areas and which has removed some of the things that might have made a difference in the wrong way. We owe a great deal to the Minister responsible because, as the noble Lord, Lord Stevenson, said, she has achieved things that many others have not.

My Lords, I thank noble Lords for their warm and gracious words and put on record my thanks to everyone who has played a role in supporting the rapid passage of this sizeable Bill through our House. I start by thanking the Lord Speaker and all Deputy Speakers who have facilitated our proceedings, as well as the clerks, the doorkeepers and our skilful reporters in Hansard. As other noble Lords have done, I thank the excellent, hard-working, never-complaining members of the Bill team and officials from the 12 departments who have supported our debates.

This is a wide-ranging Bill. We have considered it from A to Z: right from access to finance through to zero-hours contracts and beyond. We even mentioned Gibraltar and fish and chip shops. I thank all noble Lords for their contributions to our debates and for the detailed scrutiny they have given the Bill. Having benefited from the expertise for which this House is renowned, the Bill now returns to the other place much improved.

We have heard a range of expert voices from the opposition Benches, helped by their excellent apprentice. I am grateful to noble Lords, particularly the noble Lords, Lord Stevenson and Lord Mendelsohn, and the noble Baroness, Lady Hayter, who are in their places, and the noble Lords, Lord Young of Norwood Green, Lord Mitchell, Lord Grantchester and Lord Watson, and the noble Baronesses, Lady Jones. I thank them for their constructive, but challenging, approach and for working with me and my officials outside the Chamber.

We have added new provisions on equal pay and on whistleblowing. I thank the noble Lord, Lord Wills, for mentioning that and for the stand he has taken in that area. We have reached agreement on the vital pubs measures in a form that is workable to deliver the protections that tied tenants need. I also thank my noble friend Lord Hodgson for providing the perspective of the pub investor so eloquently. Although there has been a lot of passion on either side of the debate, I am glad for the drinkers among us that it was mild-mannered and that nobody has been left feeling too bitter.

Finally, I thank my noble friends Lord Popat, Lord Newby, Lord Nash and Lady Verma, who have so expertly assisted me at the Dispatch Box, as well as my many noble friends who have supported the Bill from the government Benches, especially my noble friend Lord Stoneham, who has attended every day and made the most excellent contributions. I also thank my noble friends Lord Borwick, Lady Harding and Lady Mobarik, who gave us the strength of their business experience on this, their maiden Bill, and my noble friends Lord Lee, Lord Flight, Lord Ridley, Lord Phillips, Lord Freeman, Lord Deben—and his rebellious tendency—and Lord Young of Graffham, who was the inspiration for our public procurement measures.

It is now vital that this Bill proceeds to Royal Assent swiftly so that we can start to reap the benefits for small businesses. It will open up new opportunities for small businesses to innovate, compete and secure finance—to create jobs, to grow and to export. As we call last orders on the Bill, I am sure that is something all noble Lords will want to toast.

Bill passed and returned to the Commons with amendments.