Tuesday Volume 635 30 January 2018 No. 88 HOUSE OF COMMONS OFFICIAL REPORT PARLIAMENTARY DEBATES (HANSARD) Tuesday 30 January 2018 © Parliamentary Copyright House of Commons 2018 This publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 655 30 JANUARY 2018 656 going concern, which is a highly relevant issue for House of Commons Carillion. Will the Secretary of State support such a review? Tuesday 30 January 2018 Greg Clark: The day that Carillion went into insolvency I wrote to the Financial Reporting Council, and I spoke The House met at half-past Eleven o’clock to its chairman, to ask it to investigate the auditors and those who are regulated as accountants. The FRC has PRAYERS agreed to do that, and it announced yesterday that the investigation is under way. I would expect it to learn the lessons for any changes to the regulations that it applies. [MR SPEAKER in the Chair] James Frith (Bury North) (Lab): Will the Minister confirm whether the advice to firms that have lost Oral Answers to Questions money as subcontractors of Carillion is that they take out a loan? Does he think it is acceptable that those firms should be charged interest on taking out a loan, BUSINESS, ENERGY AND INDUSTRIAL rather than getting the money they are owed for jobs STRATEGY they completed as supply chain businesses of Carillion? Greg Clark: On the first day of the insolvency, I had The Secretary of State was asked— in the representatives of all the supply chain organisations. Carillion The first request they made was that we get the banks in to make sure that they treat leniently their customers 1. Diana Johnson (Kingston upon Hull North) (Lab): who were caught up in the insolvency. The banks agreed What assessment he has made of the effect of the to do that, and they put funds aside to support and liquidation of Carillion on the viability of small businesses. assist those customers. Each bank has made commitments [903611] that it will apply leniency to any terms and conditions faced by those businesses. 10. Sir Robert Syms (Poole) (Con): What steps he is taking to support businesses affected by the liquidation Michael Fabricant (Lichfield) (Con): My right hon. of Carillion. [903621] Friend has almost answered my question, because I was going to say that cash flow is as important as profitability. The Secretary of State for Business, Energy and Industrial The problem with lack of cash flow is when the banks Strategy (Greg Clark): I have set up a taskforce bringing become too heavy and foreclose on smaller firms. together small and medium-sized businesses, the Government, local government and trade unions to Greg Clark: That is exactly the point that the businesses assist with the impact on small and medium-sized made. That is why I asked the banks to attend in person enterprises and the supply chain. The taskforce has to meet those businesses, and it is why the banks gave delivered a range of supportive measures, including those commitments and guarantees. It is important for assistance from Her Majesty’s Revenue and Customs Members with constituents who may be affected that for those experiencing difficulties and more than the banks have made that commitment and have made a £900 million of support from UK lenders. promise that they will deal individually with anyone who is so affected. The measures are on each bank’s Diana Johnson: I thank the Secretary of State for his website, but any colleague should come back to me if answer, but, with 30,000 small firms thought to be owed they experience a problem. money by Carillion due to late payments and fees, will he look at the idea of project bank accounts that hold Rachel Reeves (Leeds West) (Lab): This morning, at a money in trust in ring-fenced bank accounts to make joint Select Committee hearing on Carillion, we were sure this situation does not arise again? The Specialist told by the chief executive of the Financial Reporting Engineering Contractors Group wants Britain to follow Council that, before and after the collapse of BHS, he what is already happening in Australia, where such had asked for greater powers to regulate companies and project bank accounts are used in all large public and take action before things go badly wrong. He told us private building contracts. that there was a lack of Government interest in making Greg Clark: I will indeed look at that, and it has been the necessary changes. In the light of the collapse of one of the recommendations of the taskforce. It is Carillion and the threat to thousands of jobs and important that we learn all the lessons and apply them suppliers in the supply chain, are the Government interested quickly, and this is one such suggestion. in taking action now? Mr Speaker: Sir Robert Syms—where is the fellow? I Greg Clark: I do not agree with the hon. Lady. I call Antoinette Sandbach. engaged the FRC immediately, and it is very important that we and the FRC learn the lessons. We will apply Antoinette Sandbach (Eddisbury) (Con): The local whatever is appropriate that comes from those inquiries. authority pension fund forum has called for a review of accounting standards, having received opinion that there Mr Speaker: The hon. Member for Poole (Sir Robert are substantial legal flaws in international reporting Syms) says that he was not told of the grouping. If that standards. The opinion states that the standards do not is so, it is a discourtesy—I hope it is not so. Maybe it got enable anyone to make a meaningful assessment of a lost in the post. Let us hear from the fellow. 657 Oral Answers 30 JANUARY 2018 Oral Answers 658 Sir Robert Syms: The collapse is really bad news for explain to the House and all the businesses affected why many smaller businesses, many of which will have their the Government took no action last July and why many capital wiped out. What discussions has the Secretary are on the verge of bankruptcy today? of State had with banks about forbearance in keeping those businesses going so that there is proper competition Greg Clark: Retentions and project bank accounts in this market for the future? have been the subject, in response to those and other concerns, of a consultation on specific measures, which Greg Clark: I apologise to my hon. Friend if he did closed very recently.That came out of the recommendations not receive notice of the grouping—I am sure that is my that were made. Part of the taskforce that we have error. established includes these representative bodies, and On engagement with the banks, each of them has they know that they have my commitment to take all responsibilities to its customers to help them through the necessary actions to learn the lessons and protect difficult times. The banks have explicitly committed to any future concerns against things that could be learned help them with any cash flow difficulties that they from this case. experience, and I expect the banks to deliver on it. Low-paid Workers 18. [903630] Alison Thewliss (Glasgow Central) (SNP): Scottish training firm TIGERS—Training Initiatives 2. James Cartlidge (South Suffolk) (Con): What steps Generating Effective Results Scotland—is working hard he is taking to ensure that low-paid workers are remunerated with the Scottish Government, Skills Development Scotland appropriately. [903612] and the Construction Industry Training Board to place 126 apprentices who used to be placed in partnership The Parliamentary Under-Secretary of State for Business, with Carillion. What is the Secretary of State doing to Energy and Industrial Strategy (Andrew Griffiths):The encourage small businesses to step forward to fill that national minimum wage and national living wage rates gap and ensure that all apprentices can complete their are recommended to the Government by the independent training? Low Pay Commission. To ensure that workers are paid fairly and that non-compliant employers are caught, the Greg Clark: The hon. Lady raises an excellent question, Government provide £25.3 million to Her Majesty’s and I want to pay tribute to the CITB, which has been Revenue and Customs for minimum wage enforcement working closely with its Scottish colleagues,for a magnificent —that is an increase from £13 million in 2015-16. Last response. It has been able to not only contact but offer year, HMRC secured arrears of wages for 98,000 workers, continuity to all the apprentices—I think I am right in totalling £10.9 million. saying that—to give them the ability to continue their training. That was a formidable, agile response to an James Cartlidge: I thank my hon. Friend for that urgent situation, and it deserves the praise of the House. answer and welcome him to his deserved new position. I very much welcome the national living wage as a way of Rebecca Long Bailey (Salford and Eccles) (Lab): In boosting the wages of our lowest-paid workers. Does he July last year, the Government were warned by the share my surprise that there are those who criticise its Federation of Small Businesses and the Specialist generosity, given that the only international comparator Engineering Contractors Group that Carillion was is The Economist’s Big Mac index, under which we have transferring risk to its subcontractors. They highlighted the most generous minimum wage in Europe aside from that Carillion’s payment period was doubled from 65 to that of its richest country, Luxembourg? 120 days, that Carillion made money on the back of early payment by charging fees, and that regulation 113 of Andrew Griffiths: I completely agree with my hon.