Corporate Businesses and Franchisees: Regulatory Environment

Motion made, and Question proposed, That this House do now adjourn.—(Keir Mather.)

Speaking long before I was born, G. K. Chesterton said that

“big business…is now organized like an army. It is, as some would say…militarism…without the military virtues.”

Heaven knows what he would say if he was alive now, as global corporations have such influence on all our lives.

Yet it is the small and medium-sized businesses in my Lincolnshire constituency and in constituencies across this country that are the backbone of our economy. They also provide the particularities—the colour and shape —of the places that each of us calls home. Those small and medium-sized businesses reinvest in the communities of which they are a part and provide opportunities for local people. We all know them from our daily experience as customers, but we also know them from the representations they make to us as Members of Parliament. Today, I speak in the interests of those small businesses, those entrepreneurs, those people who devote so much of their time, skill and energy for the common good—for the national interest and the common good drive all that I do in this place.

Small and medium-sized businesses employing up to 250 people make up about 99% of businesses, but just think of the influence and effect of the other 1%. When SMEs are accused of wrongdoing or even of breaking the law, they often have little in the way of resources to defend themselves, so they are at the mercy of powerful regulators and the caprice of giant competitors. In contrast, the big multinational companies, which have come to dominate too much of our economy, have armies of compliance officers, lawyers and spin doctors to bat away legitimate concerns.

The fear that many of us in this Chamber have about two-tier justice runs parallel to our certainty that there is a two-tier economy. Faceless, heartless multinational firms often have little in the way of roots here, and many tech firms use such rootlessness to justify decisions to pay little, if any, tax. Corporate behemoths have grown ever larger, ever more dominant in their sectors, ever more detached from their customers, and ever more determined to bend rules and evade justice. In recent years, we have seen profiteering by, for example, the major supermarkets, which very often give their suppliers—primary producers such as the farmers and growers in my constituency—a raw deal. We have seen them distort the food chain, yet take advantage of the disruption brought by the pandemic and the war in Ukraine.

Indeed, the pandemic exacerbated the power of greedy globalists. Following research on 17,000 big firms, the trade union Unite has highlighted that average profit margins have soared by 30% compared with the pre-pandemic period. In 2022, the profits of the 350 largest companies in Britain increased by about 89% compared with pre-pandemic levels. Contrast that if you will, Madam Deputy Speaker, with the plight of smaller businesses, which face ever greater costs and ever more unfair competition from their giant competitors.

What of the claims of the enthusiastic globalists that the world would be a better place as a result of their activities? Do you remember the globalists—those people who were addicted to modernity and change? Who has really benefited? In an economy in which standards of living are falling, productivity has stalled and the state grows ever bigger in the face of rising worklessness, it seems to me that the only beneficiaries of globalisation are a few people at the top of those corporate businesses. We need not monopolies, but a multiplicity of businesses, such as start-up firms, local firms, and firms that innovate and engage in new activities in the economy, rather than cement existing practices. Let us give those businesses what they need, which is greater freedom, while the big corporate monoliths need to be regulated so that they do not exploit the marketplace they dominate.

Think for a moment of the banks. I have a vision of banking—I hope you might too, Madam Deputy Speaker—rooted in a sort of “Dad’s Army” approach: a Captain Mainwaring figure committed to his community, in close touch with his customers and caring about the businesses they run. That was not just a fiction in my younger years. I well remember going to a bank as a young man and asking if I could borrow £500 to buy an old car—I was a student at the time. The manager, a bit like Captain Mainwaring in character, invited me in, gave me a glass of sherry, interrogated me for half an hour and eventually said, “Yes, I think we can probably lend you the £500.” Imagine that scene now. At best, you would have an online connection with someone remotely situated—

You wouldn’t get a car for 500 quid though, John!

I think my right hon. Friend is referring to the £500 he still owes me from the days when I used to work for him.

The point is that nowadays the connection between customers and suppliers has become at best detached and at worst remote. As I say, now you would have a conversation with some remotely situated person who knows nothing about you or your circumstances, and probably cares less.

Will my right hon. Friend give way?

I will happily give way. Is it about the £500?

Yes—without interest. I agree with my right hon. Friend. I also agree about something else, which is that people do not realise that the really big global multinationals, for example Amazon, do not really make their profits on what they sell. They hold your data and that is what they really sell, subsequently. That is where they make their money and their profit. You derive no income from that data, but they make a lot of money off the back of it. To try to break that process down and make things more local, we have to start with what we have all been complicit in, which is the idea of getting something for nothing. It is not for nothing—there is a cost.

My right hon. Friend, as ever, makes an apposite comment. The trading of data by big businesses has become a business in itself, in the way that he sets out. By contrast, we need firms to practise responsibility, not parrot slogans and virtue signal. They concentrate power and wealth with little regard to the community in which they sit, or even the country in which they are situated.

I commend the right hon. Gentleman. He is a friend to us all in this Chamber and we all love him because of the wisdom he brings to it. He is also a good friend to Northern Ireland. I say that because he will be very pleased when he hears about what we are doing in Northern Ireland. The Northern Ireland better regulation strategy requires Departments to undertake and publish a regulatory impact assessment when considering new policy proposals or amendments to existing policy that may impact on businesses and to carry out a microbusiness test to assess the impact on businesses of fewer than five employees. Does he not agree, understanding what we are doing in Northern Ireland, that with increased regulation must come increased co-operation to secure better business, which benefits us all—the very thing he is trying to achieve?

As ever, the hon. Gentleman makes an apposite and worthy contribution to our considerations. I simply say this to the Minister. The Government have a lot of power in all kinds of ways. They certainly have the power to regulate the kinds of unfair practices I have begun to set out, but they also have power as a customer. Government procurement has never, under successive Governments, been used as well as it might be to support British businesses, and in particular British small businesses. My challenge to the Minister is to look at that again. Let us look at how the Government, as a huge customer of all kinds of businesses, can support small and medium-sized firms.

Decades of non-intervention, driven by the mistaken belief in the triumph of liberal economics, have resulted in extraordinary numbers of foreign takeovers of British firms. It is also a matter of who owns these corporate giants and overseas companies that own our critical national infrastructure. The Government recently approved the Vodafone-Three merger, and the latter company is owned by a Hong Kong-based conglomerate. I wonder how closely the Competition and Markets Authority looked into the owners and leadership of Three’s parent company, the CK group, and I wonder whether that group has ties with the Chinese state—perhaps the Minister can inform us tonight. This merger must not become yet another corporate bonanza for shareholders at the expense of our national interest and the common good.

I sought this debate in particular following a meeting with a constituent who was previously a Vodafone franchisee, along with others from across the country. I am mindful, Madam Deputy Speaker, of a legal case involving those Vodafone franchisees; I have taken advice from the Table Office and amended my speech heavily as a result. However, I do think it is important to set out some of the context, in the broad terms that I have described, which relates to the behaviour of large companies that adopt the franchise model.

I congratulate the right hon. Gentleman on securing this debate. I refer to my entry in the Register of Members’ Financial Interests, in particular my trade union membership. I wonder whether he shares my view that the merger between Vodafone and Three will have real consequences for both pricing for customers and job losses in Britain.

That is certainly the risk. I think mergers more generally need to be looked at closely. It is why we have the Competition and Markets Authority, and why these things are indeed considered in the terms I have described.

More recently, of course, as my right hon. Friend the Member for New Forest East (Sir Julian Lewis) will know—as a former member of the Intelligence and Security Committee, of which I remain a member—the Government introduced other legislation in respect of security, large businesses, mergers and all kinds of similar and related matters. It is important to gauge the national interest in all kinds of ways when one considers business activity.

However, I will say no more about that, as it would be digressing from my main theme, and I can see an eagerness to intervene—I give way to my neighbour.

I am most grateful to the right hon. Gentleman for giving way. He makes a powerful case about the differences between small businesses, entrepreneurs, franchisees and the big corporates. Does he share my concern that franchisees suffer the risk of what is essentially corporate bullying from the mega-companies—the likes, potentially, of Vodafone—and that they do not have any form of umbrella regulatory comfort? Entities such as the British Franchise Association may sound effective, but they are actually toothless in the face of such corporate bullying.

I have worked closely with the hon. Gentleman—as ever, he and I are on the same page here. He is absolutely right that franchising can be used as a method to exaggerate the power of the business at the heart of the franchise and to weaken the position of franchisees. My assertion is that that is common and is particular in the case of Vodafone.