Amendments made: 19, page 16, leave out lines 14 and 15.

The reference in clause 30(2) to clause 28 is no longer correct if clause 28 is left out of the Bill. The rest of clause 30(2) (which provides that Part 4 of the Bill extends to the whole of the UK) is reproduced in Amendment 20, so the whole of clause 30(2) can be omitted.

Amendment 20, page 16, leave out lines 18 and 19 and insert—

“(a) in section 24—

(i) subsections (1), (2)(c) and (3), and

(ii) subsection (4) so far as relating to a compromise or arrangement under section 899 or 901F of the Companies Act 2006,

(b) Part 1 so far as relating to the provisions mentioned in paragraph (a), and

(c) this Part.”

This amendment and Amendment 21 secure that clause 24(4) extends to Northern Ireland in relation to company compromises and arrangements, but not company voluntary arrangements. This is for consistency with the extent of the legislation covering those matters.

Amendment 21, page 16, leave out line 21 and insert—

“(a) in section 24—

(i) subsection (2)(a), and

(ii) subsection (4) so far as relating to a company voluntary arrangement,”.—(Paul Scully.)

See the explanatory statement for Amendment 20.

Third Reading

Queen’s consent signified.

I beg to move, That the Bill be now read the Third time.

It is a pleasure to lead the Bill on Third Reading. I thank Members on both sides of the House for their support and for the many insightful contributions we have had throughout the Bill’s passage—I say that slightly tongue in cheek, because the Bill has gone through in good time. That is because of the collaboration we have had and the understanding of the need to pass this legislation with good speed, but there has none the less been some really constructive scrutiny. I am especially grateful to the shadow Ministers, the hon. Members for Feltham and Heston (Seema Malhotra) and for Brentford and Isleworth (Ruth Cadbury), for their positive engagement throughout.

These debates, and indeed the continued challenges presented by the ongoing pandemic, have emphasised just how important it is that we continue to support tenant and landlord businesses in navigating the impacts of the pandemic. The Bill does that by facilitating the resolution of certain pandemic-related commercial rent debts and supports landlords and tenants on the road to recovery. It is a purposefully focused and narrow Bill, addressing rent debt accrued by businesses mandated to close if that rent debt is attributable to a protected period as set out in the Bill.

The Bill establishes a temporary binding arbitration scheme for such rent debt, which will be delivered by independent arbitral bodies. There has been welcome debate about the specifics of the scheme, especially around the fees, as well as about the ability of arbitrators to determine the viability of businesses. We will continue to assess the impact of the cost of arbitration on businesses, especially small and medium-sized enterprises, to ensure that the binding arbitration scheme is not prohibitively priced. Guidance will be published for arbitrators, with comprehensive input and engagement from arbitrators themselves. Arbitral bodies will be empowered to deliver the scheme with confidence.

Following agreement on Report, we have made some technical amendments to better achieve the aims of the scheme. Those minor changes include clarifying certain provisions, including the definition of “service charge”, but we have also made a more substantial amendment in removing the delegated power for Northern Ireland to introduce similar provisions to those in the Bill. That was done at the request of the Northern Ireland Executive. They initially looked at this and wanted to be included, but as they looked further they realised that sufficient provisions were already in place. However, we are grateful for their engagement on the Bill.

The outstanding commercial rent debt still poses a significant threat to commercial tenants and landlords in England and Wales. I welcome the recognition from both sides of the House of the need for the Bill.

I thank the Clerks of the House for expertly steering the legislation through the House. I also thank my private office—Rhianna Patel and Guy Brindle—and the officials who have worked on the Bill: Charles McCall, Carl Creswell, Jessica Barnaby, Radhika Sundaram, Hamza Shoaib, Geraldine Haden, Jane Chelliah-Manning, Matthew Beese, Henry Hutton, Louise Dobrin, Sarah Machen and Jahan Meeran.

This Bill demonstrates the Government’s commitment to supporting the orderly resolution of commercial rent debt accrued during the pandemic, and I am pleased to have supported its passage. On that basis, I commend it to the House,

As we move on to Third Reading I would like to thank the Minister for his engagement with us and for meeting us outside the formal Committee and other stages of the Bill. I also thank the Whips on both sides, the civil servants, the Clerks of the House, all those who gave evidence, Parliamentary Private Secretaries and all colleagues who contributed to proceedings on the Bill.

Labour supports the Bill. Where we believe that it could be further improved we have laid out our arguments, and I hope that such debate will be helpful as the Bill is taken forward in the other place. Labour recognises the need for a fair arbitration system to deal with these difficult rent arrears. No otherwise viable business should face an overwhelming burden from rent arrears incurred as a result of a very difficult time during lockdown and through no fault of their own. Neither should those businesses feel that they are on their own without due arbitration, without a burden-sharing process and without a Government and a Parliament on their side. At the same time, we recognise that commercial landlords also need a clear and predictable mechanism through which to seek to recoup levels of rent arrears fairly, recognising the ability to pay as viable businesses navigate the ups and downs of our economic recovery.

Crucially, the guiding mechanism of any arbitration system must ultimately be fairness and must be in the long-term interests of British businesses and jobs. By ensuring that the arbitration process must aim to preserve viable businesses and do so fairly, while also preserving landlords’ solvency, the Bill offers a balanced arbitration process. As such we support it.

The timing of the Bill, however, was somewhat disappointing, because we called for action over rent debt and wider business costs earlier last summer, ahead of the end of restrictions; indeed, I met with UKHospitality, the British Beauty Council, the Federation of Small Businesses, the Night Time Industries Association and many others. The Minister will have had such meetings too, and heard of the huge ongoing burden that businesses were facing over rent payments; yet it seemed to take the Government months after we, and other stakeholders, made that call to produce the Bill and to set out the arbitration process for rent arrears. In that time, the covid pandemic continued to hit businesses hard, in sometimes predictable and sometimes unpredictable ways as new waves were coming through, particularly those on the frontline of our high streets and communities.

Rent debt remains a heavy burden for those businesses and their commercial landlords. Indeed, the Bill’s impact assessment notes that, according to the Treasury analysis, the total amount of deferred rent liabilities may be at around £9 billion by March 2022. It is likely that businesses and landlords could have been helped by the legislation being introduced a little earlier, but we move forward, and as the Bill moves forward the issues around affordability and accessibility should be further tested. The Minister alluded to that in his speech on Third Reading.

Businesses up and down the country have had a very tough Christmas period, despite the period of October to the new year being called the golden quarter for many hospitality and retail businesses, in which they hope enough revenue can be made, particularly in December, to make up for and steer through the fallow months of January and February. That period has been incredibly difficult this time around. UKHospitality found that the average hospitality venue lost over £10,000 in the weeks leading up to Christmas, with Christmas day takings down 60% compared with those in 2019. A December survey—the period between some of the stages of the Bill—by the Night Time Industries Association found that the outstanding business debt from their members was, on average, around over £200,000 per unit.

Businesses need help with their rent debt, but they will not be able to access it if the cost of arbitration in the Bill is too high. It is vital that the Government continue to listen to the views of Members of this House, and Ministers should ensure that arbitration fees are capped. It is also vital that all viable businesses can access the arbitration process, including those that no longer occupy their premises. I heard what the Minister said in relation to how the courts might interpret that in the context of the intentions behind the Bill, but that issue may well be raised further in the other place. The Government must ensure that there are enough arbitrators, as we have raised, to deal with all cases, and that the arbitration system works consistently and fairly.

We recognise that, as the scheme comes in over March and into April, businesses will also be hit by the hike in national insurance contributions, as well as the ongoing labour shortages, supply chain shortages, rising prices and rising inflation. It is why, in the context of business cost challenges, we continue to believe that the hike in national insurance contributions will be the wrong move at the wrong time. It will be right when viable businesses, we hope, start to recover, and when the arbitration process comes in and they are expected to repay any rent arrears. It is critical that any arbitration system that is created is administered within the context of a wider supportive environment for businesses. I hope that the Minister will keep that under review, and perhaps raise the issue with his Treasury colleagues.

Labour supports the Bill, which addresses a commercial issue on which we have called for action. It provides a fair system for helping landlords and tenants to find a solution to rent arrears under a binding arbitration system. Its measures must be kept under review so that the outcomes that it is intended to achieve are supported, and the process does not otherwise become one that loses the confidence of those it is there to support. On that basis, I wish colleagues in the other place every success in their ongoing scrutiny of the Bill as it moves forward.

Question put and agreed to.

Bill accordingly read the Third time and passed.