17 Oct 2012 : Column 381
Mr Wright: I know that the Liberal Democrats have such power and significance in the coalition that they will be able to advance that proposal. If it is one of their manifesto or conference commitments, it will certainly happen. That might not look as sarcastic as it should do in Hansard, Mr Deputy Speaker.
The serious and important point at the heart of amendment 76 and amendment 89, tabled by the hon. Member for Brighton, Pavilion, is the question of the extent to which we can have the green investment bank operating at scale as quickly as possible, ensuring that it can borrow from the capital markets as quickly as possible and be a major ingredient in the stimulus for growth while at the same time being mindful of the deterioration in the public finances that has largely been caused by the Government’s economic policies. The emphasis on austerity means that tax receipts are going down and benefit payments are going up, so borrowing figures have had to rise by more than a fifth in the past year alone.
Let me go back to the point made by the hon. Member for Stroud (Neil Carmichael). I mentioned Government amendments 1 and 3 and I find it baffling that the amendments state that investments can be considered
“whether in the United Kingdom or elsewhere”.
I fully appreciate and support the need to tackle climate change and the transition to a low-carbon economy on an international and multilateral level. The hon. Gentleman was quite right to say that supply chains are somewhat more complex than they would be if they were solely domesticated. How on earth, however, do these Government amendments to an enterprise Bill that was supposedly designed to improve the competitiveness of the UK economy help to stimulate enterprise and economic activity in this sector in Britain? Is there not a huge risk that Britain’s potential as a world leader in this field will be lost as a direct result of the Government’s amendments? I ask the Minister to think again and to reflect on the amendments we have tabled and on the new clause.
As we have only 17 minutes left to debate this subject, which is incredibly important for the future of this country, I shall now take my seat.
Matthew Hancock: I shall try to answer all the questions that have been asked and then leave some time for further comments from other Members who have tabled amendments and new clauses or who wish to speak.
The green investment bank will play a powerful role in promoting the green economy. What we heard from the Opposition suggested that they had introduced such a measure themselves, but this is a coalition measure that is testament to the coalition. It is widely and strongly supported by Liberal Democrats and Conservatives alike and will, I think, help the UK to make a successful transition to a low-carbon economy. I am pleased to have been able to confirm that the European Commission has allowed the bank to make commercial investments in a wide range of sectors. We are therefore fully on track for the bank to be operational within a matter of weeks.
3.45 pm
David Mowat:
I believe the Minister said that the European permission excludes nuclear power, which forms by far the largest part of low-carbon electricity in
17 Oct 2012 : Column 382
this country and is likely to continue to do so. Given that, will he amend the purpose stated in clause 1(1)(a), as it is no longer accurate?
Matthew Hancock: The application, which has just succeeded, did not include nuclear. We do not plan to amend that purpose, not least because the Bill provides that the bank can, in time and if appropriate, be moved from the public sector into the private sector using secondary legislation, without changes having to be made to primary legislation.
Chris Huhne (Eastleigh) (LD): Will the Minister assure the House that when he talks about a powerful institution to support the transition to a green economy, he is talking about a bank that will be able to borrow? I regret that the Bill contains no commitment to that borrowing. If the bank were able to use the public spending allocated as a capital base, it would be able to borrow, and if it were in line with, for example, the Bank Nederlandse Gemeenten in the Netherlands, it would be able to make approximately £150 billion of extensive loans. That would give far greater and more powerful support to the green economy than the funding currently allocated to it.
Matthew Hancock: The Government have already made a clear commitment that the bank will be able to borrow from April 2015, subject to public sector net debt falling as a percentage of GDP, and the borrowing could take several forms, including from the capital markets. I reiterate that commitment today. Nothing in the Bill prevents that from taking place.
As the Bill stands, the bank is allowed to invest only in activities it considers likely to contribute to the achievement of one or more of the green purposes in the UK. Government amendments 1 and 3 would allow the bank to invest in activities it considers likely to contribute to one or more of the green purposes, whether in the UK or elsewhere. The point about global supply chains has already been made powerfully. The amendments will provide important flexibility in the bank’s future activities. We believe that, for the foreseeable future, the bank’s activities should continue to be in the UK, and the Government and the Secretary of State, as shareholders in the bank, will be able to ensure that that is the case.
Mr Mike Weir (Angus) (SNP): As I understand it, under the Bill in its current form, the bank would not be able to invest in a project that crossed borders—for example, a cable from the Republic of Ireland to the UK or a North sea supergrid. Am I correct, or will the amendment allow investment in such projects?
Matthew Hancock: The amendment will allow the bank in future to invest in the UK or elsewhere, but we have amended the bank’s statement of objects in its articles of association so that the bank’s activities are limited to those the board considers will, or are reasonably likely to, contribute in the UK to one of the green purposes. I hope that that answers both questions and addresses the reasonable point made by the Opposition that UK public spending should have a UK focus. We think this is the way to deliver the best of both worlds. The bank’s directors will be required to act in accordance with the company’s constitution to ensure that the bank contributes to the United Kingdom, and there will be flexibility for the future without the need for future primary legislation.
17 Oct 2012 : Column 383
Mr Iain Wright: Will the Minister talk us through a scenario in which an investment decision might be made, say, for offshore wind capability, where prices may be cheaper in, say, Germany than in the United Kingdom? Will cost or the achievement of the bank’s purposes be the key consideration? What conflict and tension exist between cost, value for money and the supply chain capability here in the UK?
Matthew Hancock: Clearly, one reason for establishing a green investment bank is to ensure that it delivers against the green purposes. Of course cost is vital. That is why we are setting up the bank so that it will act on a commercial basis. The crucial point is that it must act in accordance with one or more of the green purposes; otherwise there would be no point in it being a green investment bank.
David Mowat: For clarity on the point that was made from the Opposition Benches, there is a proposal for a very large wind farm in the Republic of Ireland, whose output would come over to the UK through an interconnector and would therefore hit our green purposes. Could we invest in that scheme in the Republic of Ireland under the Bill?
Matthew Hancock: I would want to look at the details of the scheme. However, the amendments that we have made to the articles of association refer to the bank contributing in the UK. I would expect, though I cannot formally confirm, that an interconnector would have an impact in the UK as well as on the other side of the Irish sea. I will write to my hon. Friend with more details.
Amendment 2 was tabled in response to a suggestion from the hon. Member for Hartlepool (Mr Wright) that the designation of the bank should be subject to an affirmative resolution of Parliament. We made it clear in Committee that we are looking towards that. We want to ensure that Parliament has the full ability to scrutinise these issues and I hope the Opposition will support that change in arrangements.
Amendments 4 and 5 deal with directors’ pay. The Government have repeatedly demonstrated their commitment to ensuring that UK companies apply the highest standards of corporate governance. We have already introduced measures under the Bill to require quoted companies to seek shareholder approval for the directors’ remuneration policy. This change ensures that the bank will abide by these new commitments so that it is treated as a quoted company for the purposes of chapters 4 and 4A of part 10 of the Companies Act 2006, and so that the company is required to seek shareholder approval for the directors’ remuneration policy. This requirement would continue if the bank were one day moved into the private sector. I am sure hon. Members on both sides of the House will support the Government’s commitment to the very highest standards of corporate governance.
Opposition amendments 76 and 89 deal with the bank’s ability to borrow. As I said, the Government committed in Budget 2011 to fund the green investment bank with £3 billion to 2015. This is a serious demonstration of the Government’s green credentials and it is an appropriate level of funding for a new financial institution so that it can build market confidence and show a positive commercial return, while mobilising additional capital for green infrastructure projects in accordance
17 Oct 2012 : Column 384
with its green purposes. It is a major injection of capital which underlines our strong commitment to the bank.
We have also already given a clear commitment that the bank will be able to borrow, including from the capital markets. It may help if I explain the legal position in respect of borrowing by the bank. As a company formed under the Companies Act, the bank already has the power to borrow. The bank’s constitution provides, understandably, that the company will not incur borrowing without Government consent. This restriction is imposed by the Secretary of State as shareholder and does not affect the underlying position under company law that the company, as a legal person, has the ability to borrow.
I want to be clear that we are considering carefully the case for the bank borrowing from the capital markets from 2015-16, subject to the caveats I have mentioned. It is too early to make commitments about the level or type of funding. The views of the bank’s board will be an important factor, so we will have to discuss with it the appropriate level and source of future borrowing. We made a firm commitment in Committee to seek state aid approval from the Commission in respect of borrowing before the end of this Parliament. However, we cannot move to seek that approval before we know the mechanism for and quantum of borrowing. The bank’s borrowing will clearly be scored against national debt totals, so it is entirely reasonable for the Government to take that into account as part of our future spending and fiscal plans.
In summary, the Government agree with hon. Members about the importance of the issues relating to the bank’s funding, and their role in highlighting those here is welcome, as the Government want no one to be in any doubt about our serious ambitions for the bank and the green economy. These considerations will clearly be critical to the bank’s future and we will consider carefully how to provide clarity, either through the company’s constitution or by other means, about the legal position with regard to the bank’s borrowing.
Chris Huhne: On the other means, will the Minister commit to looking carefully at introducing an amendment in the other place to put that on the face of the Bill?
Matthew Hancock: We have been very clear about our commitment to allow borrowing and will look at how best to bring that clarity, which I am sure will include discussions with my right hon. Friend and others.
On the amendment relating to small and medium-sized enterprises, we are strongly committed to supporting SMEs and, indeed, are already providing major help to them through, for example, the business growth fund and the regional growth fund. I must declare an interest: a family business with which I am not directly connected is involved in energy efficiency matters. I expect the green investment bank already to benefit SMEs in a number of ways. For instance, some of the smaller funds that have already been set up are likely to generate investments for SMEs, provided that their targeted project size is under £30 million. However, I do not think that introducing a statutory basis would help, not least because it would increase the complexity of decision making in the bank, increase uncertainly and could increase the likelihood of judicial review. Therefore, we cannot support the amendment.
17 Oct 2012 : Column 385
With regard to amendment 78, on the question of independent review, we think that parliamentary scrutiny and the normal corporate law requirements will be important. First, Parliament has a vital role in ensuring that the bank remains green. Secondly, Parliament will oversee the Secretary of State. Thirdly, I have no doubt that the Select Committee and the Environmental Audit Committee will look at the bank, and its accounts and reports will be placed before Parliament. However, it is important to be clear that the bank is a Companies Act company and, as such, directors owe duties to the company rather than directly to Parliament. We dealt with new clause 25 earlier in the debate on nuclear power.
Finally, the green purposes are clearly important as they relate to the essence of the green investment bank and to the company’s green objectives. Our goal is to have a broad definition of what is green. We agree that the reduction of greenhouse gas emissions is a vital objective, which is why four of the five priority sectors relate directly to it. The bank will be required to report on greenhouse gas emissions associated with its own activities and the board has agreed that the bank will also report on the greenhouse gas impacts of its own investments.
Caroline Lucas: I am grateful to the Minister for giving way, because although we have nearly run out of time—we knew we would when the Government voted for the programme motion—I want to put clearly on the record the fact that unless the bank’s ability to borrow is included in the Bill it risks being nothing more than a fund, which would be a tragedy. I say again that if the Liberal Democrats want to vote in line with their own manifesto and their party policy, agreed scarcely a few weeks ago in Brighton, they should support amendment 89, which I would have loved to push to a vote.
Matthew Hancock: The Liberal Democrats and, indeed, the Conservatives are supporting this with £3 billion of Government and taxpayers’ money, and that demonstrates their commitment. However, we need a balance. The new clause would increase again the chance of judicial review. Nevertheless, while we are clear that the overall goal must be carbon emissions, we do not want to rule out other investments, some of which were mentioned by the shadow Minister, and support for wider green measures. We will therefore consider tabling a further Government amendment in the other place to clarify the point that is raised in the new clause.
4 pm
Debate interrupted (Programme Order, 16 October).
The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.
The House divided: Ayes 220, Noes 292.
[4 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Ronnie
Clark, Katy
Clarke, rh Mr Tom
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Donohoe, Mr Brian H.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Elliott, Julie
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goldsmith, Zac
Goodman, Helen
Greatrex, Tom
Green, Kate
Griffith, Nia
Hain, rh Mr Peter
Hamilton, Fabian
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Hermon, Lady
Heyes, David
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Joyce, Eric
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewis, Mr Ivan
Lloyd, Tony
Long, Naomi
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
MacShane, rh Mr Denis
Mactaggart, Fiona
Mahmood, Mr Khalid
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Michael, rh Alun
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murray, Ian
Nandy, Lisa
Nash, Pamela
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Reed, Mr Jamie
Reeves, Rachel
Reynolds, Emma
Riordan, Mrs Linda
Robertson, Angus
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Owen
Spellar, rh Mr John
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Weatherley, Mike
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Susan Elan Jones and
Mr David Hamilton
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Beresford, Sir Paul
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bradley, Karen
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, Alistair
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Djanogly, Mr Jonathan
Donaldson, rh Mr Jeffrey M.
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Farron, Tim
Featherstone, Lynne
Fox, rh Dr Liam
Francois, rh Mr Mark
Freer, Mike
Fuller, Richard
Gale, Sir Roger
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goodwill, Mr Robert
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Heath, Mr David
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hunt, rh Mr Jeremy
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Mr Greg
Laing, Mrs Eleanor
Lamb, Norman
Lansley, rh Mr Andrew
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Mr Edward
Leslie, Charlotte
Liddell-Grainger, Mr Ian
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Loughton, Tim
Luff, Peter
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McCrea, Dr William
McIntosh, Miss Anne
McPartland, Stephen
McVey, Esther
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, Anne
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Norman, Jesse
Nuttall, Mr David
O'Brien, Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, Richard
Paice, rh Sir James
Paisley, Ian
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shelbrooke, Alec
Shepherd, Mr Richard
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spencer, Mr Mark
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, rh Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Tapsell, rh Sir Peter
Teather, Sarah
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Walter, Mr Robert
Ward, Mr David
Watkinson, Angela
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wilson, Sammy
Wollaston, Dr Sarah
Wright, Simon
Young, rh Sir George
Tellers for the Noes:
Mark Hunter and
Mr Robert Syms
Question accordingly negatived.
17 Oct 2012 : Column 386
17 Oct 2012 : Column 387
17 Oct 2012 : Column 388
17 Oct 2012 : Column 389
Mr Deputy Speaker (Mr Lindsay Hoyle): I now have to announce the result of the deferred Division on the question relating to the order on the abolition of the Commission for Rural Communities. The Ayes were 301 and the Noes were 211, so the Ayes have it. I also have to announce the result of the deferred Division on the question relating to sulphur contents and marine fuels. The Ayes were 479 and the Noes were 33, so the Ayes have it.
[The Division list is published at the end of today’s debates.]
The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).
Amendments made: 1, page 2, line 8, leave out ‘in the United Kingdom’ and insert
‘(whether in the United Kingdom or elsewhere)’.
Amendment 2, page 2, line 18, leave out from ‘section’ to end of line 19 and insert ‘—
17 Oct 2012 : Column 390
(a) is to be made by statutory instrument, and
(b) is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.’.—(Matthew Hancock.)
Amendment made: 3, page 2, line 37, leave out ‘in the United Kingdom’ and insert
‘(whether in the United Kingdom or elsewhere)’.—
(Matthew Hancock.)
Amendment proposed: 76, page 3, line 24, at end add—
‘(7) Subject to the approval by the European Commission of the State aid notification concerning the establishment of the UK Green Investment Bank, the Secretary of State shall provide the European Commission with State aid notification concerning the intention to allow the Bank to borrow, including borrowing from the capital markets.
(8) The duty in subsection (7) must be fulfilled no later than 31 December 2013.
(9) It is the duty of HM Treasury and the Secretary of State to either—
(a) permit the UK Green Investment Bank to begin borrowing from the capital markets by April 2015, or
(b) to present to Parliament a report within one month of the passage of this Act giving a clear, certain, alternative date for the UK Green Investment Bank to begin borrowing, based on Office for Budget Responsibility forecasts for the public finances and advice from the Green Investment Bank on its need for borrowing powers,
both subject to the European Commission approving the State aid notification concerning borrowing.’.—(Mr Iain Wright.)
Question put, That the amendment be made.
The House divided:
Ayes 222, Noes 285.
[4.14 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Ronnie
Clark, Katy
Clarke, rh Mr Tom
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Dakin, Nic
Danczuk, Simon
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Donohoe, Mr Brian H.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Elliott, Julie
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goldsmith, Zac
Goodman, Helen
Greatrex, Tom
Green, Kate
Griffith, Nia
Hain, rh Mr Peter
Hamilton, Fabian
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Hermon, Lady
Heyes, David
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Joyce, Eric
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewis, Mr Ivan
Lloyd, Tony
Long, Naomi
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
MacShane, rh Mr Denis
Mactaggart, Fiona
Mahmood, Mr Khalid
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Michael, rh Alun
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murray, Ian
Nandy, Lisa
Nash, Pamela
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Reed, Mr Jamie
Reeves, Rachel
Reynolds, Emma
Riordan, Mrs Linda
Ritchie, Ms Margaret
Robertson, Angus
Robinson, Mr Geoffrey
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Owen
Spellar, rh Mr John
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Susan Elan Jones and
Mr David Hamilton
NOES
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Beresford, Sir Paul
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, Alistair
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Carmichael, rh Mr Alistair
Carmichael, Neil
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Djanogly, Mr Jonathan
Donaldson, rh Mr Jeffrey M.
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Featherstone, Lynne
Fox, rh Dr Liam
Francois, rh Mr Mark
Freer, Mike
Fuller, Richard
Gale, Sir Roger
Garnier, Sir Edward
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goodwill, Mr Robert
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, rh Damian
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Heath, Mr David
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Huhne, rh Chris
Hunt, rh Mr Jeremy
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Mr Greg
Laing, Mrs Eleanor
Lamb, Norman
Lansley, rh Mr Andrew
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Mr Edward
Leslie, Charlotte
Liddell-Grainger, Mr Ian
Lilley, rh Mr Peter
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Loughton, Tim
Luff, Peter
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maynard, Paul
McCartney, Jason
McCartney, Karl
McCrea, Dr William
McIntosh, Miss Anne
McPartland, Stephen
McVey, Esther
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, Anne
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Norman, Jesse
Nuttall, Mr David
O'Brien, Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, Richard
Paice, rh Sir James
Paisley, Ian
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penning, Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shelbrooke, Alec
Shepherd, Mr Richard
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Spencer, Mr Mark
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, rh Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Walter, Mr Robert
Ward, Mr David
Watkinson, Angela
Weatherley, Mike
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wilson, Sammy
Wollaston, Dr Sarah
Wright, Simon
Young, rh Sir George
Tellers for the Noes:
Mark Hunter and
Karen Bradley
Question accordingly negatived.
17 Oct 2012 : Column 391
17 Oct 2012 : Column 392
17 Oct 2012 : Column 393
17 Oct 2012 : Column 394
Amendments made: 4, page 3, line 27, leave out from ‘treated’ to ‘as’ in line 28.
Amendment 5, page 3, line 29, leave out ‘that Act’ and insert
‘the Companies Act 2006 for the purposes of the application to it of—
(a) Chapters 4 and 4A of Part 10 of that Act, and
(b) Parts 15 and 16 of that Act (in respect of a financial year).’.—(Jo Swinson.)
Mr Iain Wright: I beg to move amendment 93, page 51, line 23, at end insert—
‘(1A) A representative of the company’s employees must be consulted in the preparation of any such revision.’.
Mr Deputy Speaker (Mr Lindsay Hoyle): With this it will be convenient to discuss the following:
Amendment 95, page 52, line 5, leave out ‘ordinary’ and insert ‘special’.
Amendment 86, page 52, line 11, leave out subsection (b) and insert ‘(b) and annually thereafter.’.
Amendment 96, page 52, line 17, leave out ‘ordinary’ and insert ‘special’.
Government amendments 26 to 30.
New clause 27—Information about payments to recruitment and remuneration consultants in respect of directors’ remuneration—
‘After section 413 of the Companies Act 2006 (Information about directors’ benefits: advances, credit and guarantees) insert—
“413A Information about payments to recruitment and remuneration consultants
17 Oct 2012 : Column 395
The Secretary of State may make provision by regulations requiring information to be given in notes to a company’s annual accounts about payments made in the relevant accounting period in respect of recruitment and remuneration advice relating to directors, including information specifying any fees that have been paid in proportion to the remuneration agreed for a director.”.’.
Mr Wright: Amendment 93 is in my name and those of my hon. Friends. This important part of the Bill deals with directors’ pay. We rightly spent time in Committee dealing with this, and I do not want unduly to inconvenience the House by repeating the same points, but at the heart of the debate is a disconnect between executive pay and average earnings, and between executive remuneration and the performance of the companies they lead.
As I mentioned in Committee, in 1980 the median pay of the highest-paid directors in FTSE 100 companies was £63,000, and median wages were £5,400. By 2010, the median pay of FTSE 100 directors was £2.99 million, while median wages had risen to £25,900. The ratio of directors’ and employees’ median pay had risen from 11:1 to 116:1. That trend is not confined to the UK, but has been seen throughout the developed world, most notably in the US, where, by 2008, executive pay was 200 times the median household income. Despite the difficult economic times and financial misery faced by millions, average compensation for an FTSE 100 chief executive rose by 12% in 2011, while average wages rose by only 1.4%.
In that environment of growing pay, there is no meaningful correlation between high pay and high corporate performance. Empirical evidence from research carried out in 2009 concluded that companies that pay their chief executive officer in the top 10% of remuneration earn negative results of -13% in terms of both profits and share price in the next five years.
Opposition Members support some of the Government’s reforms—in the interests of cross-party agreement, I should say that they build on work done by the previous Labour Government. However, as we said in Committee, the Government could go further and be slightly bolder. That is the basis of amendment 93, which would ensure that
“a representative of the company’s employees must be consulted in the preparation of any such revision”
to a director’s remuneration package. We anticipate this ensuring that an employee representative could sit on a firm’s remuneration committee in an advisory capacity.
4.30 pm
Amendment 93 is a development of the argument that we pursued in Committee in which we pressed for a representative from the work force to be an active and full member of the company’s remuneration committee. In response to our amendments in Committee, the then Minister, the hon. Member for North Norfolk (Norman Lamb), stated that the Government did not believe in mandating that all companies must have employees on boards. Crucially for his argument—we reflected on this over the summer—he then said that the UK system of corporate governance involved a unitary board, whereas the likes of Germany and Sweden routinely had worker representation on boards. As he pointed out, however, that can happen there in a way that it cannot happen here, because they have a two-tier system of corporate governance, with an additional advisory board on which
17 Oct 2012 : Column 396
employees can play a part. As he also said, in the UK corporate governance system,
“we do not distinguish in law between types of director. They all have the same duties.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 17 July 2012; c. 691.]
That is an accurate reflection of the current situation, and as I said, we have reflected on the then Minister’s comments, which is why we have tabled amendment 93.
We have also been seduced—if that is not too strong a word—by the writing skills, positively Churchillian or Disraelian, of the new Minister, the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock). In an article written for The Sunday Times in November 2011, he wrote:
“Finally, corporate remuneration committees should be made more independent. For all the controversy the suggestion has attracted, why shouldn’t that include leaving a place on the committee for an employee representative, in an advisory capacity, if only to offer a different perspective?”
We fully agree with his sentiment. I have been seduced by those rhetorical flourishes from his Pitt-esque fountain pen, so we look forward to his supporting us through the Division Lobby.
Amendments 95 and 96 would effectively require a 75% shareholder vote. We mentioned this issue in Committee, and I reiterate the powerful arguments put forward by Dominic Rossi, the chief investment officer of equities for Fidelity Worldwide Investment, who has argued that directors’ pay is over-generous and over-complex.
Richard Fuller: The hon. Gentleman is arguing for things he would like to see, but as he is well aware, it is already within the purview of corporations to put an employee on their boards, and shareholder votes can already be held on compensation and can influence that compensation even if they fall short of the 50% hurdle. What compels him to want to make it a legal requirement, rather than to use the market to make these decisions itself?
Mr Wright: It is because, as I tried to explain in my opening remarks, over the past 30 years we have seen market failure and a huge disconnect in the level of remuneration paid to top executives, but that has not ensured commensurate performance among the companies they lead, which is what we need. I think that the Government are onside on this. The shareholder spring and activism that we have seen, including at Trinity Mirror, has largely been the result of initiatives put in place by the previous Labour Government on annual advisory votes on directors’ pay and so on. I know that the hon. Gentleman is very familiar with these issues and will support us in ensuring that shareholders—the people who own these companies—have a proper say.
Richard Fuller:
I appreciate the shadow Minister’s point, but unfortunately, as is often the case, the Opposition are like the ambulance that turns up two days too late and to the wrong address. The market is already responding to these issues, and measures are being taken to change how compensation is made, as he said. The Opposition always rush to legislate restrictive control and put a hand down on aspiration, when the market itself will solve, and is solving, these problems. I fully accept that there is an issue about employee representation in companies
17 Oct 2012 : Column 397
and about the historical lack of alignment between compensation on boards, but he is going the wrong way about resolving it.
Mr Wright: The purpose of the amendments, which have buy-in from Mr Rossi, Fidelity and elsewhere, is not to seek the death of aspiration, but to encourage, incentivise and try to ensure that companies achieve as much consensus as possible on directors’ pay policy—that was also the position of the Secretary of State earlier in the year—ensuring that companies start early in the process and avoid the use of what is a somewhat blunt and brittle tool, whereby the issue is discussed only at the annual general meeting or what-have-you, which can cause tension. Getting in early and talking to shareholders means that the owners and managers of a business can reach some sort of consensus. That is the purpose that amendments 95 and 96 seek to achieve. I quoted Mr Rossi in Committee, and I will do so again:
“Companies have nothing to fear if what they propose is fair and reasonable and clearly aligned to what is good for long-term shareholders.”
The hon. Member for Bedford (Richard Fuller) is a strong and experienced Member of this House and a good champion of businesses. I disagree with what he says about regulation and employment legislation, but he will recognise that getting good consensus on directors’ pay and ensuring that shareholders have the tools at their disposal to hold managers to account is in all our interests.
Amendment 86 would have the effect of creating an annual binding vote on pay policy, an issue that, again, was much deliberated in Committee. I still firmly believe that an annual vote is hardly disproportionately onerous or somehow unduly bureaucratic. Shareholders are used to, and expect, annual corporate reporting on matters such as the annual accounts—whether they are a true and fair view—and the reappointment of auditors. I reiterate the point that I mentioned in Committee and throughout the passage of the Bill: I fail to see how such a proposal can be seen as onerous. In Committee I had a well-thumbed Financial Times editorial from June 2012, which said that
“the business secretary has missed a trick in not going for annual pay votes…His worthy hope is that this might encourage more medium-term thinking about pay. But an obvious worry is that such votes may degenerate into another exercise in box-ticking, with shareholders voting on boilerplate policies rather than specific deals.”
“Executives will restrain their demands only when they perceive a real risk in flouting social norms on pay. Fund managers, who naturally shy from conflict with companies, still need to be encouraged to challenge bosses more—especially on this sensitive topic. Annual votes would at least put them firmly on the spot. Mr Cable’s triennial polls, however well-meaning and thoughtful, may not.”
That point was echoed by the head of the High Pay Commission, Deborah Hargreaves, who stated in evidence to the Committee:
“If you vote every three years on pay policy, it is important that that policy is detailed enough for you to have an effect. The danger is that it could turn into a box-ticking exercise, where you vote on general boilerplate policy recommendations, rather than nitty-gritty details and figures. I felt that an annual vote would include more figures and more detail, and give shareholders more power to make informed decisions about what is going on in relation to pay at the company. If it happened every three years,
17 Oct 2012 : Column 398
the fear is that they may be voting on something vaguer and more bland.”
––
[
Official Report, Enterprise and Regulatory Reform Public Bill Committee,
21 June 2012; c. 137, Q294.]
Again, I cannot see how our proposal would be onerous, and I think Ministers should think again.
The final amendment in this group is new clause 27, the purpose of which is to improve transparency in the disclosure of information relating to remuneration consultants and the manner in which they are paid by companies. Evidence suggests that remuneration consultants have played a key part in hiking up directors’ pay. Work undertaken by Professor Martin Conyon found a direct correlation between higher-than-average directors’ remuneration and the use of remuneration consultants. Further studies have shown that, on average, pay for chief executive officers is 26% higher in companies that use remuneration consultants. As I mentioned in Committee, across the Atlantic the Congress inquiry led by chairman Henry Waxman concluded that remuneration consultants to Fortune 250 companies were paid almost 11 times as much for providing other services to those companies.
Richard Fuller: The shadow Minister is making some good points. Does he believe that the Government should provide guidelines to remuneration committees on how they should set directors’ pay, and on how they should ensure that the correlation with average earnings and with shareholder value growth is maintained?
Mr Wright: That is a fair point. There are already guidelines in place, including discretionary guidance from the industry. We also have the combined code on corporate governance, which provides a degree of guidance. We need to determine whether the issue is sufficiently serious that it requires legislation to provide firm guidance. I shall be interested to hear the Minister’s view on that, given that there is agreement across the House on the disconnect between pay and performance, and the link—which acts almost as a catalyst—between remuneration consultants.
Speaking as a chartered accountant who used to work for a “big four” accounting firm, I see a close correlation between these problems and the crisis in the auditing profession a decade ago. That led to the disclosure of fees and to greater transparency on the audit services and non-audit services provided by the accounting firms. The perception was that in corporate scandals involving firms such as Enron, the thoroughness and accuracy of the auditors’ opinion was called into question when audit firms secured additional, often more lucrative, work away from the statutory audit.
New clause 27 would therefore increase disclosure of information relating to payments to remuneration consultants, ensuring that the Secretary of State should make a provision by regulation of notes to a company’s accounts about payments made to the consultants, including information specifying fees that have been paid as a proportion of the total remuneration package of a director. My concern is that, if a contract is so designed, a consultant has an inherent desire to inflate the package to secure a larger fee. If that is the case, shareholders should be made fully aware of it via a disclosure in the annual accounts. As I have said, we applaud the Government’s general direction of travel, but we believe that they could go further, and I will be interested to hear what the Minister has to say about this.
17 Oct 2012 : Column 399
Jo Swinson: Directors’ pay has been very much in the news recently, for reasons that the hon. Member for Hartlepool (Mr Wright) has outlined. Between 1998 and 2000, the average total remuneration of FTSE 100 chief executive officers increased fourfold, which was much faster than the increase in prices or in average remuneration levels across other employers. It was also much faster than the increase in the FTSE 100 itself. There was clearly an issue to be addressed, and the Government opened up the debate on directors’ pay a year ago. We drew attention to the fact that top pay in large public companies had grown rapidly without any clear connection to performance, and we asked what could be done about it. We encouraged business and investors to face up to this difficult issue.
In January, the Prime Minister and the Secretary of State committed to taking action, and in June we introduced bold measures into this Bill. I know that the Bill Committee enjoyed a thorough and engaging debate on this issue before the summer break, and I am pleased that our reforms have received such wide support inside and outside Parliament. Investors agree that this comprehensive package of reforms will help them to tackle excessive pay and to restore a clearer link between pay and long-term performance.
We have tabled six minor and technical amendments to the clauses on directors’ remuneration, which I will outline before I speak briefly in response to the other amendments that have been tabled. The technical amendments will tighten up the legislation and ensure that it is as robust and clear as possible. Business and investors support those amendments. Amendments 25 and 30 correct a technical drafting oversight. They clarify that, for the purpose of identifying when companies will be affected by the new provisions, the relevant financial year is the one beginning on or after the day on which the provisions come into force. That is to ensure that companies whose year starts on 1 October are subject to the provisions.
Amendments 26 and 29 make it clear that the definition of “quoted company” shall be the same as that which already appears in the Companies Act 2006. Amendment 27 broadens the definition of what is meant by a remuneration payment so that remuneration paid to a director in his or her capacity as an executive manager of the company or its subsidiary is also captured. Importantly, that will mean that companies cannot circumvent the new restrictions by paying someone a small fee for being a director and a large salary for being a manager.
Amendment 28 tightens up the provisions relating to payments made to former directors. This will ensure that, where former directors are allowed to benefit from long-term pay schemes that mature after they have left, the payments must be consistent with the company’s remuneration policy—and if not, approved by a separate shareholder resolution. I am sure the House will agree that these minor and technical amendments will strengthen and improve the legislation, and I hope all Members will join me in supporting them.
4.45 pm
Opposition Members have suggested a number of areas where they would like the legislation to go further, but for the reasons that my predecessor, my hon. Friend the Member for North Norfolk (Norman Lamb) made clear in Committee, the Government do not agree that the amendments are necessary. I shall explain why.
17 Oct 2012 : Column 400
Amendment 86 proposes that the binding vote on remuneration policy occurs annually, even if a company’s policy has not changed. The hon. Member for Hartlepool set out various objections to the provisions, saying that they were too onerous and inappropriate. We went for a three-year pay policy and, to be fair, this had nothing to do with being onerous; it was about what investors said would work. The attraction of a three-year policy is that it encourages more long-term thinking and discourages the kind of unnecessary annual tinkering that invariably leads to pay going up and getting ever more complex. That approach is backed by major investors and investor bodies such as the Association of British Insurers. Of course, there is nothing to stop companies having an annual vote on pay policy—they have the flexibility to do so—and there is the safety net of a trigger mechanism to protect shareholders. If they are unhappy with how the pay policy is working out and they reject the annual advisory vote, a binding vote on policy at the next annual general meeting will be triggered.
The hon. Member for Hartlepool asked whether the policy will be too vague and too high-level, but the regulations that inform what happens will clearly and succinctly set out to which types of payments directors are entitled, how the pay links to company strategy, how performance will be assessed and how it will translate into awards under different scenarios. Parliament will have a chance separately to debate the regulations at a later stage. If there were any outstanding concerns, they could be put forward then.
Amendments 95 and 96 would make the vote on remuneration a special resolution, requiring 75% shareholder support to pass. Investors have made it very clear that they want an ordinary resolution, subject to a simple majority. It is important to note that we have seen this year that it is absolutely possible for the majority of shareholders to vote against pay proposals. So far this year, seven companies have lost their pay votes—real evidence that the process can work.
Amendment 93 would require companies to consult an employee representative whenever they wish to propose a revised remuneration policy. I am sympathetic to the intention of encouraging employees to be involved and consulted. We share the view that it is helpful for remuneration committees to seek employees’ views on pay—indeed, some already do—and we are encouraging them to report on how they have taken employee views and employee pay into account. I do not believe that the statutory approach set out in the amendment is the right way forward. It is worth reminding the House of the consultation that closed in September, as the Government will shortly come forward with their response. We proposed that companies should report on whether they sought the views of the work force in setting pay. There are also existing tools such as information and consultation arrangements, which can be used to make sure that employees are engaged. The Government definitely sympathise with the spirit of that intention, but we do not think that the statutory approach provides the right way forward.
Finally, the Opposition’s new clause 27 would allow the Secretary of State to make new regulations requiring companies to disclose how remuneration and recruitment consultants are paid. We do not accept the provision because the Secretary of State already has the power to require that to be part of the director’s remuneration
17 Oct 2012 : Column 401
report. We have already published draft regulations to implement that, whereby companies will have to explain how consultants have been appointed, used and remunerated.
I hope that I have provided some assurance on these matters. I thank hon. Members for engaging in the issues, but maintain that the proposed amendments—other than the Government amendments—are unnecessary, so we shall not support them.
Question put, That the amendment be made:
The House divided:
Ayes 219, Noes 277.
[4.49 pm
AYES
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, Heidi
Ali, Rushanara
Allen, Mr Graham
Anderson, Mr David
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blenkinsop, Tom
Blomfield, Paul
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Campbell, Mr Ronnie
Clark, Katy
Clarke, rh Mr Tom
Coaker, Vernon
Coffey, Ann
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Dakin, Nic
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Denham, rh Mr John
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Donaldson, rh Mr Jeffrey M.
Donohoe, Mr Brian H.
Doran, Mr Frank
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Elliott, Julie
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Fovargue, Yvonne
Francis, Dr Hywel
Gapes, Mike
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goodman, Helen
Greatrex, Tom
Green, Kate
Griffith, Nia
Hamilton, Mr David
Hamilton, Fabian
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Hermon, Lady
Heyes, David
Hodge, rh Margaret
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Hunt, Tristram
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs Siân C.
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewis, Mr Ivan
Lloyd, Tony
Long, Naomi
Lucas, Caroline
Lucas, Ian
MacShane, rh Mr Denis
Mactaggart, Fiona
Mahmood, Mr Khalid
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCann, Mr Michael
McCarthy, Kerry
McClymont, Gregg
McCrea, Dr William
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Michael, rh Alun
Miller, Andrew
Mitchell, Austin
Moon, Mrs Madeleine
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Mr Jim
Murray, Ian
Nandy, Lisa
Nash, Pamela
Onwurah, Chi
Osborne, Sandra
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Reed, Mr Jamie
Reeves, Rachel
Reynolds, Emma
Riordan, Mrs Linda
Ritchie, Ms Margaret
Robertson, Angus
Robinson, Mr Geoffrey
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Owen
Spellar, rh Mr John
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Wilson, Phil
Wilson, Sammy
Winnick, Mr David
Winterton, rh Ms Rosie
Wishart, Pete
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Julie Hilling and
Susan Elan Jones
NOES
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Baron, Mr John
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Beresford, Sir Paul
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, Alistair
Burt, Lorely
Byles, Dan
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
de Bois, Nick
Djanogly, Mr Jonathan
Dorrell, rh Mr Stephen
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Farron, Tim
Featherstone, Lynne
Fox, rh Dr Liam
Francois, rh Mr Mark
Freer, Mike
Fuller, Richard
Gale, Sir Roger
Garnier, Sir Edward
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Gillan, rh Mrs Cheryl
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Gove, rh Michael
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Hague, rh Mr William
Halfon, Robert
Hames, Duncan
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Heath, Mr David
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Horwood, Martin
Howell, John
Hunt, rh Mr Jeremy
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Javid, Sajid
Jenkin, Mr Bernard
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Mr Greg
Laing, Mrs Eleanor
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Laws, rh Mr David
Leadsom, Andrea
Lee, Jessica
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Mr Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lloyd, Stephen
Lopresti, Jack
Lord, Jonathan
Loughton, Tim
Luff, Peter
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
Maynard, Paul
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McPartland, Stephen
McVey, Esther
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, Anne
Mitchell, rh Mr Andrew
Moore, rh Michael
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Newmark, Mr Brooks
Newton, Sarah
Norman, Jesse
Nuttall, Mr David
O'Brien, Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Osborne, rh Mr George
Ottaway, Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Pawsey, Mark
Penning, Mike
Penrose, John
Percy, Andrew
Perry, Claire
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Prisk, Mr Mark
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Redwood, rh Mr John
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sanders, Mr Adrian
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Shepherd, Mr Richard
Skidmore, Chris
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Spencer, Mr Mark
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, rh Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Timpson, Mr Edward
Tomlinson, Justin
Tredinnick, David
Turner, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Walter, Mr Robert
Ward, Mr David
Watkinson, Angela
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Simon
Young, rh Sir George
Tellers for the Noes:
Mark Hunter and
Karen Bradley
Question accordingly negatived.
17 Oct 2012 : Column 402
17 Oct 2012 : Column 403
17 Oct 2012 : Column 404
5 pm
Amendment made: 25, page 52, line 8, leave out from ‘begins’ to ‘or’ in line 9 and insert
‘on or after the day on which section 61 of the Enterprise and Regulatory Reform Act 2012 comes into force’.—
(Matthew Hancock.)
17 Oct 2012 : Column 405
Amendments made: 26, page 53, line 19, at end insert—
‘ “quoted company” has the same meaning as in Part 15 of this Act;’.
Amendment 27, page 53, line 22, leave out from ‘person’ to ‘other’ in line 23 and insert ‘—
(a) holding, agreeing to hold or having held office as director of a company, or
(b) holding, agreeing to hold or having held, during a period when the person is or was such a director—
(i) any other office or employment in connection with the management of the affairs of the company, or
(ii) any office (as director or otherwise) or employment in connection with the management of the affairs of any subsidiary undertaking of the company,’.
Amendment 28, page 54, line 27, after ‘be’ insert ‘or has been’.—(Matthew Hancock.)
Amendment made: 29, page 58, line 4, at end insert—
‘(12) In that Schedule, in the first column, after “quoted company”, insert—
“in Chapter 4A of Part 10 section 226A(1)”.’.
Amendment made: 30, page 58, line 13, leave out from ‘begin’ to ‘, and’ in line 14 and insert
‘on or after the day on which that section of this Act comes into force’.—
(Matthew Hancock.)
Matthew Hancock: I beg to move amendment 23, page 47, line 17, at end insert—
“( ) But regulations under this section may make only such provision as may be made under subsection (2) of section 2 of the European Communities Act 1972 or such provision as could be made under that subsection if paragraph 1(1)(d) of Schedule 2 to that Act did not apply.’.
Mr Deputy Speaker (Mr Nigel Evans): With this it will be convenient to discuss the following:
Amendment 75, in clause 59, page 49, line 19, at end insert—
‘(7) The Secretary of State must have regard to any feasibility study commissioned on the licensing of orphan works in advance of the regulations being laid before Parliament.’.
Matthew Hancock:
In Committee, a number of questions were asked about the scope of what was then clause 56—now clause 57—on copyright. The hon. Member for North Norfolk (Norman Lamb), who was a Minister in
17 Oct 2012 : Column 406
the Department at the time,agreed to reflect on the clause and we have also had further discussions with interested parties.
The Government have considered this point carefully and think that amendments to clause 57 are the best way to address the concerns expressed by Committee members and industry stakeholders. I reassure hon. Members that the policy intent behind the clause remains unchanged. The clause was never intended to give the Government the ability to change copyright exceptions in ways that we cannot already change them and I hope that the amendments now make that abundantly clear.
Changes to copyright exceptions are subject to a tightly prescribed list set out in the EU information society directive. The European Communities Act 1972 provide the mechanism by which EU law is applied at a national level—in this case on copyright exceptions. The clause will permit the Secretary of State to make any changes that remove or narrow an exception without affecting the maximum criminal penalties that Parliament has set. Without the amendment, the criminal penalties might have had to be reduced and I do not think that is the aim of the Bill.
The stakeholders who had raised concerns about the clause, including the British Copyright Council, UK Music, the Publishers Association, the Creators’ Rights Alliance and the Premier League, have written to the Secretary of State confirming their support for the Government’s amendments.
Jim Dowd (Lewisham West and Penge) (Lab): The Minister mentioned the enormous concern across the creative sector about the clause and, more particularly, its purpose when it was first introduced. His reference to the fact that all it does is endorse existing law will have confused many people, as they will have wondered why, if that was so, the clause was needed at all. If it is needed, and if the amendments we are discussing go some way to addressing the problem, can he give us an assurance that any exception arising from Hargreaves, the Intellectual Property Office or any other source will be treated as primary legislation? If he cannot do that, will he undertake that every piece of secondary legislation will be introduced individually and will include a comprehensive impact assessment before it is brought to this House?
Matthew Hancock: I can assure the hon. Gentleman that any proposed exceptions will be the subject of secondary legislation and will therefore be debated. Each separate element of a statutory instrument can be debated—that is the function of the secondary legislation procedure.
Amendment 75 would require the Secretary of State to take into account any feasibility study undertaken of which organisation is best placed to issue licences authorising the use of orphan works.
Kevin Brennan (Cardiff West) (Lab): Will the Minister give way?
Matthew Hancock: On this point?
Kevin Brennan: On the point being debated, yes.
17 Oct 2012 : Column 407
Kevin Brennan: It is usual to give way during this stage. What does the Minister think is the maximum number of exceptions that ought to be included within one statutory instrument, given that he has been unable to give the assurance sought by my hon. Friend the Member for Lewisham West and Penge (Jim Dowd) that each exception will be treated separately if secondary legislation is used? Also, will he confirm that in all cases the affirmative procedure will be used?
Matthew Hancock: I give the assurance on the second point: the normal procedures will be used. The normal procedures will govern what goes into one statutory instrument and then, as we all know, debate on a statutory instrument covers all elements of the instrument. That is the procedure for a statutory instrument that is debated.
Amendment 75 proposes that account be taken of any feasibility study before the Government lay regulations on the orphan works scheme—that is, I think, the essence of the amendment. In principle, we understand the need for studies and consideration of such important questions, but we do not think that such a requirement is appropriate in primary legislation. If the proposal is that the conclusions of a feasibility study should automatically and immediately have legislative effect, we have to ask what would happen if the recommendations of a commissioned study could not, for good and legitimate reasons, be accepted. However, I can assure the House that the Government will carefully consider which bodies or body should be responsible for licensing orphan works, including whether they have the necessary independence, expertise, resources and processes.
Although there is some work still to do on deciding which organisation should be responsible, it is unlikely to be a new body. We looked at the arrangements in other jurisdictions: in Canada, the copyright board has that responsibility; in Hungary, the intellectual property office has it. Jurisdictions overseas locate the role in different parts of Government, according to where the appropriate expertise is found. There could be a role for collecting societies to license orphan works of a type where a collecting society already operates in that sector, but many of the orphan works held by museums and archives, for example, are not of types that are currently collectively licensed; such works include unpublished diaries, old photographs and oral history recordings.
In the light of those reassurances and given that the regulations cannot be laid until the work is completed, I ask the hon. Member for Hartlepool (Mr Wright) not to press amendment 75 and the House to support Government amendments 23 and 24.
Mr Iain Wright: I was broadly reassured until the Minister made his comments, but now I am as uncertain as ever. The Public Bill Committee spent significant time debating copyright, and rightly so, as the legislative framework—not regulation, but a legislative framework—governing copyright has been a crucial ingredient in allowing Britain to be at the heart of the global creative and cultural industry.
We lead the world in many parts of that cultural and creative sector, from publishing—as we heard, in Committee the then Minister was keen to talk in vivid and animated terms about “Fifty Shades of Grey”—to the video gaming industry, where we lead the world, to music, and I was particularly keen to talk about the Stone Roses, which was fantastic. The Minister does not strike
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me as being a Stone Roses man; he strikes me more as a JLS-One Direction man. I imagine that he would be keen on that. One Direction seems appropriate, given his closeness to the Chancellor.
We lead the world in different parts of the sector. With a rise in the global middle class, which wants to be entertained, it is important that we continue to lead the world. There are many reasons for our pre-eminence in the industry, not least the solid legislative framework governing copyright and intellectual property. We lose that at our peril.
As I mentioned in previous debates throughout the passage of the Bill, a partnership approach is needed, with Government identifying the competitive sectors in which Britain can lead the world and working closely with business and with those sectors to ensure growth and potential opportunities. We have not yet seen such a partnership approach. It did not seem to exist in the Government’s original drafting of the clause on copyright. The unilateral approach taken by Ministers, without consultation with the industry and—surprise, surprise—without empirical evidence or an impact assessment—where have we heard that before?—caused alarm and uncertainty among stakeholders in the industry and threatened significant and long-term investment decisions for this country.
I quoted in Committee, and it is worth repeating to the House, the submission from UK Music, which said:
“The inclusion of copyright clauses in this Bill came as a surprise to many copyright stakeholders. We widely anticipated copyright legislation, but we did not anticipate that the copyright legislation would be attached to this particular Bill. This ‘surprise’ generated a degree of confusion and alarm amongst our community. This was needless. Better communication between the Government and its key stakeholders would have prevented this.”
Opposition Members entirely agree with those sentiments.
The clause as originally drafted would have given the Secretary of State order-making powers to allow amendment of any exceptions via secondary legislation. This power was considered necessary to deal with the situation where, under the EuropeanCommunities Act 1972, the Government are able to amend exceptions to copyright and performance rights which may, so the Government stated, restrict the maximum statutory penalties. We argued in Committee and tabled amendments to the effect that the wording of the clause was too loose, lacked clarity and provided the Secretary of State with too wide a power to deal with this issue.
In Committee the Government stated that this was not so and that there was no case for our amendment. I therefore welcome the fact, although I am surprised, that the Government tabled amendments 23 and 24, which specify that regulations under this section may make only such provision as may be made under section 2(2) of the 1972 Act. I do not want to be churlish on this point and I am pleased that the Government have listened, albeit somewhat late in the process, to us and, more importantly, to stakeholders.
However, as we have hinted in interventions, there is not complete unanimity throughout the industry when it comes to Government amendments 23 and 24. Some stakeholders, who are looking to invest in the UK, such as British Pathé, are still concerned that the Government have misinterpreted section 2(2) of the 1972 Act. They argue that if that part of the 1972 Act gives the Government powers to change copyright exceptions by statutory instrument, the Government have that right. Nothing in
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the Bill would change that. There is therefore no need to clarify the point in the Bill, because the power already exists. The only reason for writing the power into the Bill in clause 57 would be if it did not exist. The managing director of British Pathé said to me in an e-mail last night that “the statement is redundant” unless that is the case.
There remains a concern among some stakeholders that clause 57 merely allows extensions to criminal penalties relating to exceptions. However, it has been noted that nearly all copyright infringements relate not to exceptions, but to matters such as piracy and theft, which are neither covered in clause 57, nor addressed by the Government’s amendments. Therefore, given the Minister’s move in this regard, which has been welcomed by much of the industry, will he respond to the specific concerns of companies, such as British Pathé and ITN, that remain despite the Government’s amendments? Will he reassure me on that point?
5.15 pm
Kevin Brennan: Will my hon. Friend also seek an assurance from the Minister that, when in future he considers any piece of legislation containing clauses relating to copyright, never again will the umbrella body for the UK music industry be given absolutely no prior knowledge of it? Perhaps the Minister could give the House that assurance when he responds.
Mr Wright: I absolutely agree. I will take this opportunity to wish my hon. Friend a happy birthday for yesterday—a birthday he shares with several other Members, not least the eminent Chair of the Culture, Media and Sport Committee, the hon. Member for Maldon (Mr Whittingdale). My hon. Friend made two important interventions. When he intervened on me he mentioned the lack of consultation and the surprise of important stakeholders, such as UK Music, about these provisions. That is not the way to have clarity about Government policy on something as important as the creative and cultural sectors. I hope that that is a wake-up call, because we have seen the Government do the same elsewhere, for example with the feed-in tariffs and the oil and gas tax charges. To move without any concern for what stakeholders are thinking is not in the best interests of the British economy and industry.
The second point that my hon. Friend made, when he intervened on the Minister, relates to the use of statutory instruments. I rose to say that I felt more confused as a result of the Minister’s comments than I did when I entered the Chamber today. Part of our discussions in Committee was about the fear of bundling some of these points into a single statutory instrument. The Minister must have served on a delegated legislation Committee during his time in the House and will know that the only way the House can express a view on such instruments is by voting in favour or against; there is no way we can express a view on individual provisions. Therefore, will he clarify to what extent he will be able to bundle points relating to copyright exceptions into single SIs, which would not allow the House to express our views?
I now to turn to our amendment 75, which proposes that the Secretary of State
“must have regard to any feasibility study commissioned on the licensing of orphan works in advance of the regulations being laid before Parliament.”
17 Oct 2012 : Column 410
We are not against the concept of orphan works, as I mentioned in Committee, provided that safeguards are in place to ensure that the party that wants to use the work has undertaken a diligent search. I recognise—the Minister alluded to this—the huge benefits that could be unlocked as a result of orphan works licensing. For example, I can anticipate SMEs building new platforms and applications for the re-use of digitised content, with innovation and new business models coming forward to use the content commercially so that Britain can lead the world, enriching the research and cultural environment and thereby consolidating the UK’s position as the destination of choice, whether literally or online, in the 21st century as the place for education and research, particularly in the cultural sector.
The Bill provides the legislative framework for orphan works licensing but is, as is probably inevitable and desirable in primary legislation, high-level and somewhat vague in detail. The crucial details that stakeholders will be looking for have yet to be determined and will be available via regulations. However, it would be useful to get on the record as much certainty and clarity as possible about the Government’s intended direction of travel in order to allow the industry, including existing players and potential new entrants to the market, to start gearing up to use the licences commercially. The purpose of our amendment is to probe the Minister on his intended direction of travel and ensure that a feasibility study considers certain aspects of the policy and that the Government take these findings into account, not in a completely solid way but making sure that these matters are addressed.
Will the Minister indicate the identity of the authorising body or bodies? He mentioned it briefly in his opening remarks, but it would be useful to put a little bit more meat on the bones. What sort of time scale is he working towards? When does he anticipate that the introduction of such schemes, and the laying down of regulations as a preliminary step, will take place? What will be the scope of the orphan work licensing schemes? Will this be done on a sector-by-sector basis? Will it be based on a “specific types of work” approach, or will there be a big bang in which all possible orphan work schemes will be incorporated from day 1?
Will the Minister outline how he anticipates that any diligent search on a work-by-work basis will move forward? I am fairly sure that every such search will have to be done on an individual work basis rather than by batching works together. Am I right in that thinking, or is he considering any change in the individual works versus batch approach? Could diligent searches be re-used within a certain time period? How will the Minister—again, this is part of the feasibility study leading into the regulations—strike the balance between the rights of the licensee, allowing the licence holder to commercially use the rights arising from that licence, and the rights of the relevant rights holder? What will happen in the event that the parent comes forward? How will remuneration be worked out in such an event? Will a certain amount of time be stipulated in regulations following the awarding of an orphan works licence?
We lead the world in the cultural and creative industries, and many people will want to take that away from us for a variety of reasons. We need to make sure that we can maintain our competitive advantage. That requires close co-operation, with an active industrial sector strategy
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between the industry and Government. Sadly, during the passage of the Bill, that has been lacking in the provisions on copyright. I hope that the Minister has learned his lesson and look forward to his comments.
Mr John Whittingdale (Maldon) (Con): We do not have a lot of time, and I do not want to detain the House unduly. However, although it is recognised that this matter forms only a small part of the Bill, the importance of the creative industries to our national economy, and the contribution that they are making to growth, is so essential that we need to look very carefully at anything that affects the livelihoods of those working there—and the creative industries rest on the protection of intellectual property rights.
On Second Reading, I suggested to the Secretary of State that clause 57—then clause 56—could be used to make substantial changes to copyright law through statutory instruments. I am grateful to him for meeting representatives of a wide range of creative industries to discuss those concerns. That has led, to some extent, to the amendment that the Government have tabled. As the Minister said, several representatives of the creative industries, such as UK Music, the British Copyright Council, the Publishers Association and the Premier League, have said that they are now satisfied.
However, as the hon. Member for Hartlepool (Mr Wright) said, that is not a unanimous view across the industry. The Minister has assured us that this is about enforcing penalties but, despite the Government’s amendment, the clause does not mention penalties. I am therefore still not clear as to why the Government did not accept the suggestion that they make it absolutely explicit in the Bill that it is all about penalties. Instead, it talks about exceptions, and it still allows changes to be made to copyright law by statutory instrument. Following the Hargreaves report, there is still great suspicion on the part of many of those in the creative industries that there is an intention to try to dilute intellectual property rights. They fear that the clause could be used—perhaps not by this Government but by a future Government—to bring forward changes to copyright law.
Those fears have been expressed, as the hon. Member for Hartlepool said, by a wide range of organisations, including Associated Press, ITN, Getty Images, the Press Association, British Pathé, Agence France Presse and Deutsche Presse-Agentur. I will quote one sentence from the letter they have sent that sums up the problem that the Government face:
“It therefore remains our concern that…the true purpose of Clause 57…as drafted”
“it will be used as a vehicle to push through a number of changes to copyright exceptions recommended by the Hargreaves Review, which we discussed with you at our meeting because of the detrimental impact to business and the creative industries as well as…ultimately…to the UK’s future economic growth.”
I welcome the Minister’s assurance that that is not the Government’s intention, but it must be of concern that a number of organisations that are important to this country retain that suspicion. Anything that the Government can say or do now to allay that suspicion and make it clear that they do not intend to implement the Hargreaves recommendations in a bundle, via a
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statutory instrument, would be extremely welcome and would reinforce the point that the provision is not about that, but about criminal penalties.
Pete Wishart (Perth and North Perthshire) (SNP): I do not know whether I should break out into song and wish a belated happy birthday to the hon. Members for Cardiff West (Kevin Brennan) and for Maldon (Mr Whittingdale), or declare my favourite band. Whenever the hon. Member for Cardiff West and I appear in the Chamber together, I always try to plug MP4, because we comprise half the band. We will conclude our world tour of UK party conferences this Saturday, which is worth noting as a landmark occasion.
I agree with and endorse what the Chair of the Culture, Media and Sport Committee said about the value of copyright to our creative industries. It is the very essence of what underpins our success and probably makes the UK the leader in so many sectors throughout the world, from music, drama and film to Premier League football. It is the one thing that makes sure that we can continue to deliver that immense conveyor belt of talent that excels right around the world.
We muck about with copyright at our peril and must tread carefully with regard to copyright exceptions. We have to know exactly what we are doing, which is why impact assessments are vital and why the Minister’s confused response alarms me and is of concern. We have to know what the exact impact will be on all the sectors and everybody involved in the creative industries, and listen carefully to what they have to say.
I welcome the amendment, but only half-heartedly. For once, the Government have listened to representatives from the creative industries, who have not received a particularly good welcome from them over the past few years. They feel undervalued and sense that their concerns, which they make eloquently to the Government, are ignored and that, if they are listened to, it is in a half-hearted way.
The issue of copyright exceptions is important. We have had the Hargreaves report, the Government’s response to it and the Intellectual Property Office’s examination of how the report’s recommendations could be implemented. I am sure that the Minister will be thrilled to know that he is about to receive the report by the all-party group on intellectual property, of which I and the hon. Members for Maldon and for Lewisham West and Penge (Jim Dowd) are members. It will suggest various ways in which IP policy could be better formulated across Government and across Departments, and suggest the need for a real champion of IP copyright, because that is what is missing.
We need a proper investigation and an impact assessment. The assumptions that underpin a number of the Hargreaves recommendations are nonsense. The examples that caught our eye related to copyright exceptions, such as the assertion that an exception for format shifting would be worth £2 billion to the UK economy. The funniest assumption was the claim that an exception for parody of intellectual property could increase the UK economy by £600,000. Those assumptions were challenged, but they were asserted by the IPO without any real foundation. That is why this House has properly to consider copyright exceptions. If we do not, we will be left with that sort of nonsense. We have to make sure that that does not happen again.
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I join others in calling on the Minister to listen to the concerns that the creative industries still have about the potential bundling together of proposals in secondary legislation. The Rolls-Royce model is primary legislation, whereby Members of Parliament can come to the House to have a proper debate and kickabout on proposals for copyright exceptions. If that is not to happen, the Minister must provide a better assurance that there will be separate pieces of secondary, delegated legislation, with full impact assessments, so that we can understand the impact that any further copyright exceptions will have on all the relevant sectors.
Jim Dowd: To reinforce that point, the wooliness of the Minister’s response, if it is left like that this evening, will have created an awful lot of work for his colleagues at the other end of the building. There are people down there who know better than most Members of this House precisely what the Government’s lack of decision—or else their attempt to hide what they are doing—really means.
5.30 pm
Pete Wishart: I am grateful to the hon. Gentleman because he is spot on. The other House has people who have looked at these issues over a long career, who know the dangers and who understand that we have to tread sensitively and carefully when we look at copyright exceptions.
I hope that the Minister listens to the concerns that have been raised not only by the creative industries, but by hon. Members who have an interest in copyright issues. I hope he will give us the assurance that there will be no bundling of copyright exceptions in secondary legislation and that we will have full impact assessments if there are further copyright exceptions. He must also do something to convince those of us in the House and those in the creative industries who still have major concerns about what is being proposed.
I will touch briefly on the Labour amendment. I support it and think that it is sensible to ensure that we have a proper assessment before we move on to the licensing of orphan works. Orphan works have been hotly debated a number of times in the House, particularly when discussing Hargreaves. The matter has caused great anxiety and unhappiness, particularly among photographers, who have massive concerns about how their industry is threatened by the Hargreaves exceptions on orphan works. It is entirely sensible to have a proper assessment before we proceed with the licensing of orphan works. I heard the Minister’s response to the plea from the Labour spokesman for the assessment. I hopethat the proposal will be considered properly. We need to hear more about what the Minister intends to do to ensure that we do not do anything wrong in the licensing of orphan works.
Most importantly, we must hear from the Minister that he will do the right thing by the creative industries, that there will be no bundling of legislation, and that Members of this House will have a proper opportunity to scrutinise and debate such measures.
Sir Malcolm Bruce (Gordon) (LD):
I defer entirely to the Members who have engaged in the debate hitherto, but I have been alerted this week to outstanding concerns among those involved in intellectual property that the
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Government have not fully taken account of their concerns and reservations. I heard what the Minister had to say, including his assurance that the Government amendments are designed to achieve that. I have also spoken to the Secretary of State and passed him the detailed reservations that have been communicated to me.
Nevertheless, I have been advised that the uncertainty that the creative industry or intellectual property sector feels may be having a negative effect on commercial decisions. It has been reported to me that some business interests are actively considering relocating out of the UK because of their concerns about the uncertainty. The Minister has made it clear that that is not the Government’s wish or intention. I accept that that is said in good faith. However, I ask him to consider the representations that are being made and to reflect on whether the Government amendments will allay the practical concerns. I appreciate that our consideration is at a late stage, but, as has been mentioned, the legislation will go to another place. Those who are in that place will no doubt want to bring forward more detailed proposals if they are required.
The concern, which has been articulated much more eloquently by others, is that we could lose intellectual property rights in a bundle of legislation that goes through in a Committee Room, without adequate debate or amendment. That could have far-reaching and negative commercial consequences. In recognition of the Government’s dilemma, I would say that we need to strike a balance. It is understood that excessive protection of intellectual property rights can be contrary to free trade. Of course, it is important that we get the balance right. Equally, those who are creative in any sector have the right to know that they will not suddenly find their intellectual property taken away from them at short notice. Protection against that must not be weaker in the UK than elsewhere in the EU or in the rest of the world.
The importance of this matter has been communicated to me by people who know better than I do. They are still concerned that what the Government are doing will threaten the commercial viability of UK investments, and I am sure that is not the Government’s intention.
Matthew Hancock: I welcome the Opposition Front Benchers’ support for the two Government amendments in this group. I want to reiterate the value of intellectual property, which is underpinned by our copyright regime, to the UK economy not only in the past but, I imagine, increasingly in the future. A strong IP regime is vital to the creative industries, in which we thrive and are hugely successfully. Ensuring that that regime is right and strong is a crucial part of having a strong economic future. The Digital Economy Act 2010, which strengthened many areas of law, and the extension of the length of copyright in music indicate the Government’s commitment to a strong and supportive intellectual property regime.
I will go through the points that Members have made. It is simply not correct to suggest that these proposals have not been widely consulted on. Indeed, they are based on recommendations in the Hargreaves review, which itself drew on extensive evidence. The response to that review was followed by a formal consultation, which received almost 500 written responses. There has been extensive work with interested parties following that. I reiterate the Government’s willingness to engage
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with stakeholders including Members, many of whom have a long-standing interest in the subject. Members throughout the House share not just birthdays but interests, and their engagement must and will continue.
The Government will announce their policy intent with regard to the exceptions recommended in Hargreaves this autumn. Exceptions can be introduced, extended and updated using the existing provisions of section 2(2) of the European Communities Act 1972. The proposed way forward represents no change to how exceptions can be introduced and updated under the existing provisions. The problem is that the criminal penalties available in statute brought in under that Act carry a maximum penalty of two years’ imprisonment. In the case of many of the offences that we are discussing, penalties are longer than two years and can be up to 10 years. It is in the interest of those who want to ensure that their copyrights are protected to make sure that criminal penalties are that high. We do not want to have to bring them down to two years, in order to use the 1972 Act. Clause 57 is not needed to implement Hargreaves, but it allows us to do so in a way consistent with the existing, stronger criminal penalties, which I know the industry and many stakeholders support. Having received that reassurance, the British Copyright Council, UK Music, the Publishers Association and the Premier League are happy to support the Government amendments.
Jim Dowd: On that point, why does the Minister not do what was suggested by the hon. Member for Maldon (Mr Whittingdale) and simply put in a tightened disciplinary regime and nothing else? Why is that so difficult for the Government to accept, if that is the sole purpose of the clause?
Matthew Hancock: Because we want to ensure, as and when technical amendments are considered, that we do not have to water down criminal penalties because of the way that the measures are introduced.
We are not in a position to announce a precise timetable for work on orphan works, but we expect it to be concluded during 2013 and certainly before any regulations are made. I commit the Government to discussing the details with Opposition Front-Bench Members, and others, during that process.
The Government amendments have been tabled with strong support for the IP regime on which much of our industry is based, and although the Government recognise the probing nature of the Opposition amendments, and commit to continued analysis of and engagement on those issues, we do not think that they should be included in the Bill.
Amendment made: 24, page 47, line 33, at end insert—
“( ) But regulations under this section may make only such provision as may be made under subsection (2) of section 2 of the European Communities Act 1972 or such provision as could be made under that subsection if paragraph 1(1)(d) of Schedule 2 to that Act did not apply.’.—(Matthew Hancock.)
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Amendments made: 31, page 59, line 34, leave out ‘17(1)(c)’ and insert ‘17(2A)’.
Amendment 32, page 60, line 14, after ‘50,’ insert ‘[Osborne estate],’.
Amendment 33, page 60, line 14, after ‘54’ insert ‘and [Estate agency work]’.
Amendment 34, page 60, line 15, at end insert—
‘() section [Civil liability for breach of health and safety duties] extends only to England and Wales and Scotland except that it also extends to Northern Ireland so far as Parts 1 and 4 of the Health and Safety at Work etc. Act 1974 extend there,’.
Amendment 35, page 60, line 16, leave out ‘section’ and insert ‘sections’.
Amendment 36, page 60, line 16, after ‘52’ insert
‘, [Equality Act 2010: third party harassment of employees and applicants] and [Equality Act 2010: obtaining information for proceedings]’.
Amendment 37, page 60, line 16, leave out ‘extends’ and insert
‘and paragraphs 1, 52 to 54, 56 and 61 of Schedule [Adjudicators: minor and consequential amendments] extend’.
Amendment 38, page 60, line 17, leave out ‘section’ and insert ‘sections’.
Amendment 39, page 60, line 17, before ‘51’ insert
‘[Listed buildings in England: agreements and orders granting listed building consent],’.
Amendment 40, page 60, line 17, before ‘51’ insert
‘[Listed buildings in England: certificates of lawfulness],’.
Amendment 41, page 60, line 17, after ‘51’ insert ‘ and [Adjudicators]’.
Amendment 42, page 60, line 17, leave out first ‘Schedule’ and insert ‘Schedules’.
Amendment 43, page 60, line 17, before ‘16’ insert
‘and [Local listed building consent orders: procedure]’.
Amendment 44, page 60, line 17, after ‘17’ insert
‘, Schedule [Adjudicators: bankruptcy applications by debtors and bankruptcy orders] and paragraphs 2 to 51, 55, 57 to 60 and 62 of Schedule [Adjudicators: minor and consequential amendments]’.
Amendment 45, page 60, line 22, at end insert
‘except that section [Power to provide for equal pay audits] extends only to England and Wales and Scotland’.—
(Matthew Hancock.)
Amendments made: 46, page 60, line 26, at end insert—
‘() section [Osborne estate];’.
Amendment 47, page 60, line 26, at end insert—
‘() section [Power to provide for equal pay audits];’.—(Matthew Hancock.)
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): I beg to move amendment 69, page 60, line 30, at end insert—
‘(d) Sections [Local authorities: powers relating to deemed consent] and [Restriction of advertisements relating to property letting].’.
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Mr Speaker: With this it will be convenient to discuss the following:
New clause 4—Town and country planning: Amendment of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007—
‘(1) Class 3 of Schedule 3 to the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, (Classes of advertisements for which deemed consent is granted) is amended as follows.
(2) In item 3A, after “sale”, leave out “or letting”.
(3) In item 3A(2), after both uses of “sold”, leave out “or let”.
(4) In item 3A(2), after “sale”, leave out “or letting”.
(5) In item 3A(8), after “sale”, leave out “or letting”.’.
New clause 5—Town and country planning: responsibilities of housing authorities—
‘(1) Local authorities in England which enjoy day-to-day responsibility for housing policy within their local authority area may make by-laws regulating for all or part of the authority the display of external advertisements concerning property lettings.
(2) If a housing authority has not specifically provided for the display of external notices advertising a property to let then such a notice is not permitted.’.
New clause 6—Town and country planning: offences—
‘(1) It shall be an offence to display an external notice prohibited by subsection (2) of section (Town and country planning: responsibilities of housing authorities).
(2) A person guilty of an offence under subsection (1) is liable, on summary conviction, to a fine not exceeding level 4 on the standard scale.
(3) A person guilty of a second or subsequent offence under subsection (1) is liable, on summary conviction, to a fine not exceeding level 5 on the standard for each seperate such offence.’.
New clause 7—Town and country planning: commencement and extent—
‘(1) Sections (Town and country planning: Amendment of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, Town and country planning: responsibilities of housing authorities, and Town and country planning: offences) come into force two months after the day on which this Act is passed.
(2) Sections (Town and country planning: Amendment of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, Town and country planning: responsibilities of housing authorities, and Town and country planning: offences) extend to England only.’.
New clause 20—Local authorities: powers relating to deemed consent—
‘(1) Part 2 Regulation 7 of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007 is amended as follows.
(2) In item (1) delete “Secretary of State” and insert “local authority”.
(3) In item (1) delete “upon a proposal made to her by the local planning authority”.
(4) In item (1) delete “she” and insert “the local authority”.
(5) In item (2) delete “ Secretary of State” and insert “local authority”.
(6) In item (2b) delete “her” and insert “the local authority’s”.
(7) In item (3) delete “Secretary of State” and insert “local authority”.
(8) In item (4) delete “Secretary of State” and insert “local authority”.
(9) In item (5) delete “ Secretary of State” and insert “local authority”.
(10) In item (5b) delete “the local planning authority and to any other” and insert “any”.
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(11) In item (5) delete part (c).
(12) In item (5b) delete “her” and insert “the local authority”.
(13) In item (5c(i)) delete “she” and insert “the local authority”.
(14) In item (5c(i)) delete “her” and insert “the local authority’s”.
(15) In item (6) delete from “Where” to end and insert “Where the local authority makes a direction it shall send a copy of its reasons to every person who has made a paragraph (3) representation.”.
(16) In item (7) delete “unless the Secretary of State otherwise directs”.
New clause 21—Restriction of advertisement relating to property lettings—
‘(1) Local authorities in England which enjoy day-to-day responsibility for housing policy within their local authority area may make by-laws restricting for all or part of the authority the display of external advertisements concerning property lettings.
(2) It shall be an offence to display an external advertisement concerning property letting in areas or cases where the Local Planning Authority has, under subsection (1), passed a by-law prohibiting external advertisements concerning property letting.
(3) A person found guilty of an offence under subsection (2) is liable, on summary conviction, to a fine not exceeding level 4 on the standard scale.
(4) A person found guilty of a second or subsequent offence under subsection (2) is liable, on summary conviction, to a fine not exceeding level 5 on the standard scale for each such offence.’.
Amendment 91, line 7 after ‘directors;’, insert
‘to make provision about advertisements concerning property lettings;’.
Mr Brown: New clause 21 is subsidiary to new clause 20, as are amendments 91 and 69. I will not speak to new clauses 4 to 7, which offer an alternative way of dealing with the same problem. I believe that new clause 20 offers the better of the two routes forward, and I am grateful to my right hon. Friend the Member for Leeds Central (Hilary Benn), the Front-Bench spokesman on these matters for the parliamentary Labour party, for suggesting it to me. New clause 21 sets out the offences; amendment 69 sets the date of enactment, which will be the same as for the rest of the Bill. I have been advised by the Public Bill Office that amendment 91 is a technical necessity for my principal proposal.
I wish to amend regulation 7 of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, so that matters relating to the control of estate agents’ “To let” signs are under the control of the local authorities that make byelaws about such matters, rather than being governed by primary legislation and the central regulation that currently applies. The proposals do not abolish the central regulation of the original enactment; they merely give local government the right and ability to supplement it. That could mean extending the use of “To let” signs, but it is far more likely to mean restricting it.
This is a moderate proposition, and when I introduced a ten-minute rule Bill on the subject it had all-party support and its First Reading was not opposed. The problem is that the “To let” sign regime is widely abused in urban areas, and properties with short-term leases find that the signs are left up all year round. Why would an estate agent or landlord want to do that? Because the sign serves as a form of advertisement for the lettings agent. In the modern era, the signs do not facilitate the search for flats; they just advertise the estate agent.
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5.45 pm
Local authorities want to deal with the matter, but the available route involves a long and complicated procedure between the local authority and the Department. My local authority in Newcastle upon Tyne has been trying to introduce a licensing regime for five years now, but has not yet done so—not for want of trying on its part. I understand from speaking to my right hon. Friend the Member for Leeds Central that it took Leeds city council, which got a head start on Newcastle in that respect, six years to introduce the regime, but it works well.
If the Government believe in cutting bureaucracy and in a doctrine of subsidiarity—in other words, that a decision is best taken at the lowest appropriate level of government—surely they believe that the regulation of “To let” signs is a matter for local government, and not a matter that the Secretary of State and his Ministers, who have a lot of other important things to do, should concern themselves with detail by detail, local authority by local authority.
Different local authorities may make different decisions on the matter. I say let them. Set the people free!
Matthew Hancock: I commend the right hon. Member for Newcastle upon Tyne East (Mr Brown) for his assiduous and long-standing opposition to “To let” signs. I wonder what has driven him to this position, but I recognise and celebrate his tenacity in finding occasions on which to make such proposals in the House—[Interruption.] I might have a little bit of good news for him, if Opposition Members would care to listen.
I appreciate that the proliferation of “To let” signs can be a serious problem, but new clause 21 is slightly disproportionate. The right hon. Gentleman pointed out deficiencies in the current remedy for the local planning authority—seeking a direction under regulation 7 of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007—but his solution is to ban “To let” boards unless a local authority makes byelaws to allow them.
Mr Brown: That was my alternative proposal, which I have not moved. My more moderate proposal would allow the local authority to supplement the statutory regulations rather than replace them.
Matthew Hancock: I agree with the right hon. Gentleman on allowing local authorities to have the power to change the situation on the ground with regard to “To let” signs. The powers exist, but there are very few applications for them—there have been only 10 in the past six years—which indicates that the problem is not hugely widespread, although it is a serious issue in some areas.
The directions tend to fall into two groups. The first is where there are large houses in sensitive architectural areas, such as Kensington and Chelsea in London, or Brighton and Hove. The second group is where there is a large concentration of student houses, such as in Leeds, Loughborough, Nottingham or Newcastle. Authorities in such areas have already successfully obtained directions and are exercising the necessary control. Therefore, the ability to take control is in law.
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The right hon. Gentleman’s solution is to ensure that, instead of being able to apply, more often the power would need to be put in place, but that would be an extra burden. I understand the concern, however, and agree that the Secretary of State has more important things to do. New clause 20 proposes to take the Secretary of State out of the decision-making process. I shall take that point away and discuss it with ministerial colleagues, including in the Department for Communities and Local Government, and with him. I hope that he can take that assurance and that we can take things forward from there.
Mr Nicholas Brown: I am grateful for the Minister’s assurance. I wrote to the Department at the time of my ten-minute rule Bill on this subject offering to co-operate with the Government by putting it into Committee and accepting their amendments and any tidying up they wanted, if they agreed to facilitate the Bill’s progress through the House, which, as he will know, is in their gift—without it, I would have had to overcome many more hurdles. I am grateful for his assurance, then, and I hope that he stays in office long enough to implement it, because the previous Ministers did not even have time to answer my letter before being dispatched elsewhere—or, in the case of one of them, just dispatched! I look forward to working with him, and, given his assurance, I will not press my amendment to a vote. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Matthew Hancock: I beg to move amendment 21, page 42, line 38, leave out ‘, other than the Scottish Ministers,’.
Mr Speaker: With this it will be convenient to discuss the following: Government amendment 22.
Amendment 63, page 43, line 1, leave out ‘may’ and insert ‘must’.
Amendment 64, page 43, line 4, after ‘specified period’, insert ‘, or’.
Amendment 65, page 43, line 6, after ‘specified period’, insert ‘, or’.
Amendment 66, page 43, line 10, leave out line 10 and insert ‘If the provision is made by virtue of subsection (2)(a), it includes’.
Amendment 67, page 43, line 19, leave out ‘may’ and insert ‘must if necessary’.
New clause 26—Review of legislation relating to health and safety at work and application of sunset and review provisions to this legislation—
‘(1) The Secretary of State must—
(a) carry out a review of the effectiveness of all existing legislation relating to health and safety at work, and
(b) prepare and publish a report setting out the conclusions of the review.
(2) The review and report must quantify, in particular—
(a) the effectiveness of the legislation in terms of reducing deaths, injuries and sickness in the workplace,
(b) the human cost, and full societal costs of work-related injuries, deaths and ill-health in terms of pain and suffering, injuries, sickness and years of life lost, and
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(c) the full societal costs of the impact of the legislation including those costs resulting from welfare and healthcare spending, and resulting from the number of days lost in the workplace due to ill-health.
(3) Subordinate legislation under section 14A of the Interpretation Act 1978 in respect of any provision relating to health and safety at work may not be made until after the report has been published.’.
Matthew Hancock: Amendments 21 and 22 are technical amendments, the effect of which I hope will be straightforward and non-controversial. The changes proposed in Clause 50 will support the implementation of the Government’s policy on reducing the burden of regulation by allowing a sunset and review provision to be included in any future secondary legislation. They will enable the Government to put in place a robust and enduring system for tackling obsolete, burdensome or ineffective regulation, in line with the principles set out in the sunsetting guidance first published in March 2011.
I am pleased to say that those principles and the proposed change in the clause are widely supported and received detailed scrutiny in Committee before the summer. The changes proposed in clause 50 are permissive, broad in scope—intentionally so—and apply to powers to make subordinate legislation falling within the scope of the Interpretation Act 1978. Without qualification, this would include powers in a UK Act of Parliament exercisable by Scottish Ministers, whether in relation to matters devolved to the Scottish Parliament or in relation to matters reserved to Westminster.
Following earlier consultation with Scottish Ministers, however, agreement was reached to exclude powers exercised by Scottish Ministers from the effect of the changes. Among other things, that is consistent with the convention, under the present devolution settlement, which has cross-party support, that the Westminster Parliament will not normally legislate on matters devolved to the Scottish Parliament, without the consent of the Scottish Parliament. That seems reasonable to me.
Following further consultation with interested parties, it has become apparent that a further change is required to address the related issue of the powers of non-ministerial Scottish bodies and other persons under UK legislation. For example, the Registration of Births, Deaths and Marriages (Scotland) Act 1965 provides the registrar with various powers to make subordinate legislation in areas of devolved competence. Equally, the Court of Session has powers under successive UK Acts, most recently the Court of Session Act 1988. Because these are powers to make subordinate legislation within the meaning of the Interpretation Act 1978, they would also be in the scope of the changes proposed in clause 50. The effect of the Government’s amendments is to ensure that the powers exercised by non-ministerial Scottish bodies and other persons that fall within areas of devolved competence are excluded.