Yes, convener, and thank you very much. Good morning, everyone.
I am grateful for today’s opportunity to address the committee in respect of the motion that was lodged by the Cabinet Secretary for Finance, Employment and Sustainable Growth on 8 August. As you will know, the United Kingdom Government’s Small Business, Enterprise and Employment Bill was introduced in the House of Commons on 25 June and will shortly begin its Westminster committee stages. It aims to remove what are regarded as unnecessary impediments to business and includes a wide range of measures that are aimed at promoting economic growth.
The majority of the bill’s provisions are reserved to the UK Parliament, but what we are concerned with today are the provisions that fall within this Parliament’s devolved competence and which require a legislative consent motion to allow the UK Parliament to legislate on them. I will therefore concentrate on the areas that are contained within the motion and will be happy to address in writing any other queries outwith today’s proceedings, should the committee so require.
The LCM covers three areas: improving access to finance through the assignment—or, as we say in Scotland, the assignation—of receivables; the sharing of information in relation to education and training; and corporate insolvency. I will briefly outline each area.
First, the ban on assignment of receivables measure—as it is referred to in the UK bill; in Scots law, it is called the ban on assignation of receivables—is aimed at improving small businesses’ access to finance by removing legal barriers that can prevent them from selling their invoices to third-party finance providers, and thereby seeks to improve liquidity and cashflow for small business and increasing prospects of sustainability and growth. Viable businesses need access to finance for investment and growth; indeed, the committee recognised as much in its report on access to finance and alternative financing models, which it published earlier this year. This change, which is aimed at delivering a positive impact by nullifying the impact of clauses in business contracts that prohibit a business from selling its invoices to a third-party finance provider, should directly benefit small businesses. As the provision affects contract law, which falls within the legislative competence of the Scottish Parliament, it will require the Scottish Parliament’s consent.
The second measure that is outlined in the LCM relates to the extension of the sharing of information about individuals for the purposes of assessing the effectiveness of training and education. Under existing legislation, the Scottish ministers, the secretary of state and Her Majesty’s Revenue and Customs are able to share information about benefits, tax and education for the purposes of assessing the effectiveness of the provision of training and further education for people aged over 18. However, information about higher education is specifically excluded, so the measure will enable the assessment functions to include people aged under 18 in order to capture all school leavers as well as those in higher education, and to allow us to identify wage and employment outcomes for those who have undertaken training, or further or higher education in Scotland. As the measure will affect the assessment of education and training services, it falls within the Scottish Parliament’s devolved competence and therefore requires the Scottish Parliament’s consent.
The third and final area of the LCM is corporate insolvency. The measure aims to reduce complexity and to improve the efficiency of insolvency processes, which will reduce the costs of administering insolvency proceedings and could lead to higher returns for creditors. The UK Government believes that the whole package, not just the insolvency measures that are outlined in the LCM, will benefit creditors by an estimated £30 million per annum. Although the actual benefits remain to be seen, the aim clearly chimes with the principle that was set out by this Government in our Bankruptcy and Debt Advice (Scotland) Act 2014 of securing the best return for creditors by ensuring that the rights and needs of people who are in debt are balanced with the rights and needs of creditors and businesses. On that basis, we think it sensible that the measures be extended to cover Scotland. As the measures relate to devolved areas of corporate insolvency such as receivership and the process of liquidation, they fall within the Scottish Parliament’s legislative competence and therefore require legislative consent.
The committee should also note that a supplementary legislative consent motion on public sector exit payments might be brought before members at a later date. The bill includes a provision to ensure that exit payments are recovered when high earners return to the same part of the public sector within 12 months of their leaving. It was agreed that, due to the measure’s complexity and its late addition to the bill, UK and Scottish Government officials would continue their discussions on the detail of the policy and the desirability of an LCM on the provision. If agreement is reached on the policy, we will lodge a supplementary LCM in due course.
The Scottish Government is already creating a supportive business environment and has progressed a range of successful initiatives to deliver better regulation for all. In recognising that Scotland’s businesses are the primary drivers of sustainable economic growth, we welcome policies that complement our continuing programme to improve the performance of our businesses, and make Scotland a more open and competitive place for companies to do business.
I ask the committee to support the draft legislative consent motion.