Private Equity (Transfer of Undertakings and Protection of Employment) Bill

I am grateful to the hon. Gentleman. There seems to be a new tactic: the hon. Members at the very back of the Labour Benches ask me to come on to my points, then the promoter of the Bill anticipates them. That is kind and generous of him, but I shall try to make some progress. I am not sure why Labour Members are so reluctant for me to do so. The Bill is intended to:"““Extend the application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 to the acquisition and disposal of substantial shareholdings by private equity companies; and for connected purposes.””" Responding to an intervention that I made, the hon. Member for Nottingham, East tried to define ““substantial shareholdings””. He said that it was defined in the explanatory notes, but I have not had them, as I made clear. From his response to my intervention, I am still not sure what a ““substantial shareholding”” is, and what constitutes a shareholding that might be considered a controlling interest. For example, there has recently been great controversy about Sky's stake in ITV, which I believe is about 17.9 per cent. A lot of people say that it gives Sky too much power, but I am not sure whether such shareholdings would be covered by the Bill. Does a controlling interest mean that someone must have more than 50 per cent. of the shares in a business? Will he be clearer about what he means by ““substantial shareholdings””? Key features of the Bill include the imposition of information and consultation of employees obligations similar to those that apply in the context of a business transfer. The Bill would also make void post-acquisition changes to contracts of employment unless the changes were made for an economic, technical or organisational reason. The Bill would restrict the ability to vary or rescind any union recognition agreement following an acquisition, and would introduce a new right to apply to court to seek an injunction to prevent a transaction from being completed until ICE obligations were complied with. The combination of collective redundancy consultation obligations, rights under collective agreements, and ICE agreements already provide employees with a broad range of protections and rights to receive information and take part in consultation. If those mechanisms are used as part of a constructive dialogue, they should be sufficient to protect employees during all share acquisitions. As far as I can see, the Bill affords additional protection in two main respects. First, it protects trade union recognition, and secondly it provides the ability to secure compliance with information and consultation rights. That does not seem particularly necessary. From a legal and commercial perspective, it is inappropriate to amend TUPE to address private equity acquisitions and not trade acquisitions. In practice, post-acquisition, a trade buyer is more likely to wish to achieve greater synergies with their own business, and give rise to job losses, than a private equity house that is investing in a business with a view to making it work more effectively and prosperously, so that it can avoid selling the business in a distressed situation in future. Private equity works as a business not just in one way, but in many ways. Contrary to what the hon. Member for Nottingham, East, suggested, private equity can be used not to take over a company and cause it uncertainty, but to shore it up and ensure that no future sale causes workers uncertainty. Implementing the Bill and bringing private equity acquisitions into the scope of TUPE could give rise to an uneven marketplace and provide trade buyers with an unfair competitive advantage. I should be very interested to know what view the Minister for Employment Relations and Postal Affairs takes of the Bill. I do not know whether the Government have the appetite to introduce further legislation regulating employee consultation or trade union derecognition rights. I am not sure whether that kind of action was part of the Warwick agreement that the Government signed up to before the last election, when they had run out of money. I am not aware of any Government proposal to introduce a similar measure. I should be grateful to learn from the Minister whether the Government—or, as the hon. Member for Ribble Valley asked, the European Union—plan to introduce any regulation on the subject. What transactions might be caught under the Bill? The Bill applies to the acquisition and disposal of substantial shareholdings, as we have discussed. A ““substantial shareholding”” may mean an interest in shares such that the undertaking holding the interest can exercise a dominant influence over the employee and entity. As I said earlier, I do not know what constitutes a controlling interest. Would it be 51 per cent., or a lower figure? As my hon. Friends the Members for Ribble Valley, and for Christchurch (Mr. Chope), said, we do not know how a private equity company is defined. That could be dealt with in separate regulations. It is also unclear what would come within the scope of ““connected purposes””—a phrase used in the Bill.