Baroness Greengross
To ask Her Majesty’s Government what assessment they have made of how the business community can contribute to resolving the major challenges facing the United Kingdom.
Baroness Greengross (CB)
My Lords, I am sure that all of us in this House are seeking a fairer and more sustainable future. I seek to shed some light on how business can have the greatest impact on some of the big issues involved and be drivers for change where it is needed. Many of the examples I know are through the All-Party Parliamentary Corporate Responsibility Group, which I co-chair with Jonathan Djanogly MP, and which I have been privileged to lead since coming into your Lordships’ House.
In the time available, I can comment on only a very few of the challenges that we face. However, creating meaningful employment is surely one of the most significant ways in which business can contribute to the lives of individuals and communities. For many, it is the only sustainable route out of poverty, as we know, and many businesses proactively help people to gain sustainable employment by building skills, removing barriers to work and making the workplace more accessible for disadvantaged people. One example is Ban the Box, an employer-led campaign to remove the criminal record tick box from application forms. It is a brave and, understandably, often very controversial measure to which, since October 2013, 55 employers have committed themselves. Some 10 million people in the UK have some sort of criminal record, and research suggests that 75% of employers discriminate against such people. When employers Ban the Box, they encourage only a candidate’s skills and abilities to be seen.
The Land Securities Group, a winner of the 2015 Responsible Business Awards, developed its London employment strategy to help disadvantaged people get jobs and to improve the mix, in terms of gender, ethnicity and disability, of entrants into its industry. The strategy has trained 656 people through sector-based work academies designed in partnership with further education colleges, and already 511 of these people have progressed into work.
We all know our population is ageing, with 10 million people in the UK over 65, a number that is projected to double by 2050. Through Business in the Community’s Age at Work programmes, businesses are seeking to meet these challenges and reap both commercial and social rewards. But much more still needs to be done, especially for the over-50s, who do worse in this respect than those over 60. That may seem a bit surprising, but it is a fact.
As we know, black, Asian and minority-ethnic people are under-represented at every management level in the workplace. One in eight of the working age population is from such a background, yet only one in 10 is in the workplace, and they hold only one in 16 top management positions. BITC is, to its credit, doing much work in this field.
Both industry and the economy have changed extensively in Britain in recent times, but benefits and problems have not been equally felt. More work needs to be done in how we source goods and services. The retail sector, especially the food sector, has led the way in this, but much more is needed. For example, the Arc access programme connects social enterprises with business to share expertise and innovation, leading to employment opportunities and local regeneration. The programme has already created 3,000 jobs. BITC’s Healthy High Streets programme will provide intensive support for 100 high streets and help them to realise their potential in our rapidly changing economy.
Business can also help create and develop economically viable and cohesive communities by supporting young people in schools. For example, an initiative called Business Class brings business and schools together to support young people facing disadvantage. I have had a lot of the people involved in this at two receptions here in the Lords, and it is really impressive; it supports 450 schools, impacting on 140,000 people who leave school with a much better understanding of work through knowing at least one business really well. The businesses get incredibly involved with the schools they support, forming long-term relationships.
At this point, I pay tribute to the noble Lord, Lord Baker, and his role in the development of university technical colleges, which are very important. They develop the skills needed by business and industry through training young people between 14 and 19 years old to ensure that they are qualified, ready to work, proud of their achievements and geared to today’s society and its needs. This is a good example of business working with the public sector, which funds the development of these colleges, and which are then very much supported by businesses.
There are many other ways that responsible business can and does all this. We are very aware, for example, of the devastating impact of recent weather patterns. National Grid and the rail industry have worked day and night to restore services to people in the north-west of England. We tend to take this heroic effort for granted, but it is a great example of responsible business in action. The clothing sector is another example, in what it is doing in tandem with WRAP to promote recycling in very many rather exciting ways.
The British food industry is yet another example, with the great success it has achieved in supplying affordable food. Hopefully, it can now turn its attention to doing more to provide healthy food—food lower in sugar, fat and salt—and to assist and promote healthy eating. At the same time, it should stop promoting unhealthy food, especially to children. The amount that the food industry spends today on promoting unhealthy food vastly exceeds what we publicly spend on promoting healthy eating, and rather nullifies the good work. The obesity and diabetes crisis that is occurring under our noses could well bankrupt the NHS in 30 years’ time unless we take urgent action now.
One of the challenges that the All-Party Parliamentary Corporate Responsibility Group has faced is that MPs have not recognised fully their potentially critical role in terms of the leverage and the power that they have in working in their constituencies with the business sector to address many of the challenges we all face. As a result, we, the officers of the group, created an awards scheme last year to recognise best practice, with nominations recommended in each case by MPs. This was enthusiastically taken up by MPs. The first winner was London City Airport, in recognition of its very impressive activities that benefit the area in which it is situated. We were delighted at the number of schemes that MPs nominated and have great hopes for future years.
In all of this, we must not forget that truly responsible business practice should also include setting an example by living an example. Maybe this is a subject for another debate, but business must demonstrate that it has a responsibility to society, not merely in the way it interacts with people but in the way it organises and runs itself: to take one simple example, by paying tax in the UK on monies earned in this country, even if it could evade that payment.
Today, I ask the Minister to focus on areas of policy where government can support employers to drive real change. This should include better integration of health and social care services with employers and employment support services, and enhanced statutory flexible working, to enable people to remain healthy and in work and to work longer. We also need a cross- government national skills strategy for older workers, and for race to be added to the UK Corporate Governance Code. There will be many other ways our Government can help all of us in this, and I am confident that the Minister will soon bring to us many such ideas. I thank her in anticipation of her doing just that.
Baroness Lane-Fox of Soho (CB)
My Lords, I thank the noble Baroness, Lady Greengross, for her wide-ranging and inspirational introduction. I hope to be a ray of sunshine in today’s debate on a rather gloomy afternoon.
I was reflecting on how quickly the business landscape has changed in my career since 1994—it feels rather long, although I realise that it is still relatively short. Even when we started our business, Lastminute.com, in 1997, the idea that we should build in any kind of social responsibility right from the beginning would have been strange, and yet I was somebody who, I hope, had always had that value at my core. When I think about the start-ups at the time and the energy and excitement with which they were being built, very few had a social purpose or the idea of corporate social responsibility hardwired into them. How things have changed.
I was reflecting on the biggest challenges faced by the UK. In an attempt to be ambitious, I picked out the three that I reckon will be hardest to solve over the next 50 years—climate change, gender equality and the technology disruption that we all face. From every angle, each of those challenges is being addressed in a profound and interesting way by businesses, beyond the core nature of their daily commercial life.
Before talking through some examples that I know in detail, I declare an interest as a board member of Marks & Spencer, which is world class in addressing some of the big structural challenges that we face, particularly climate change. Marks & Spencer was one of the first companies to declare itself carbon neutral; to make all its stores carbon neutral; and to launch huge programmes of recycling. Fashions could be brought back to stores and sent back to factories to be remade into other things. It has huge programmes beyond the UK’s shores to help people in countries where we have supply bases. It is one of the first companies to have a really robust and transparent view of every single worker in the supply chain and deployed in the company. The company has an extraordinary and profoundly important influence on the landscape of British business.
Your Lordships may not be aware that, most recently, Marks & Spencer has worked with a new organisation, the Blue Marine Foundation, which is creating huge marine reserves around the world, particularly with commercial and private money. It has created one of the largest protected areas around Lyme Regis to bring back the fish stocks. Fish is already being supplied to Marks & Spencer’s stores, and the fish stocks in Lyme Regis are being rejuvenated with incredible speed.
Marks & Spencer is one example of how a company has taken a huge lead on climate change. Because of that, it has been asked to be part of a global force for good: collectively.org, of which some noble Lords may be aware. It is a website for younger people sponsored by some of the biggest companies in the world but with an absolute focus on the big social challenges that young people are interested in, including climate change. Everything from Coca Cola, to Intel, to Marks & Spencer comes together to help share stories about how to change the world and make it a better place.
The next huge structural challenge that I want to talk about is gender equality. There are so many examples of corporations taking the knotty and important issue of how to encourage more women into work and make sure they are paid the same and not only reach the boardroom but have equal access when they first start work. When I asked on Twitter for some good examples in the UK, I was struck that the only example that people could give that was tangible and not just pontificating and making signals about the direction of travel was Arup engineering, which I thought was interesting. From the beginning, it has had the ambition to recruit women as 40% of its engineering workforce. Apparently, it is very successful—something I was not aware of.
One of my favourite global examples is Intel and its Girl Rising project, which is hugely successful on social media. It is an enormous programme of work with lots of different examples of women all over the world, from Africa to India to south-east Asia, doing incredible things. There is a big programme of funded education for women in work. We need those programmes here in the UK.
The third challenge and perhaps the one that I know best is the technology disruption, which I think many noble Lords wish had never happened—but unfortunately we are stuck with the internet, with all its wonders and some of its woes. I have recently been working on basic digital skills. My noble friend referred to that in her speech, although not directly. We face a profound challenge of skills in this country. As I have said before, the House of Lords—unlike me, not given to hyperbole—described the skills challenge as a “crisis”. That is true the whole way through the chain from basic skills through to how we will fill the 600,000 empty jobs right now in the tech sector and the 1 million jobs that will be empty by 2020.
The issue of basic digital skills is what I have been working on most urgently. We have 12 million adults in this country who cannot use the internet to get the basic benefits of being online, such as saving money— £100 a year even in the poorest households—getting work, because 90% of jobs are advertised online, and just communicating and being safe, as all of us like to be. However, what I have had most success with is the establishment of a charity called Go ON UK. It is entirely paid for by the corporate sector. We have 10 CEOs round our boardroom table from EE to Talk Talk, the Big Lottery Fund, Age UK, E.ON and Lloyds Bank. They all turn up and are dedicated to the cause and we are beginning to make some real inroads. We have created platforms and data to show where the profound problems are, and a heat map so that we can see where digital exclusion exists. We are doing deep dives around areas of the country where we are trying to create places where everyone is brought online.
Noble Lords can imagine that the power of the network of people around the boardroom table is very interesting. When we match the Post Office with Lloyds Bank and messaging from the BBC, we can really begin to create change, because we are able to reach consumers from lots of different angles, not just using the government lever. I firmly believe that this joined-up working will solve problems, and Go ON UKs CEOs around that boardroom table are dedicated to doing just that. I hope that that is a robust and good example of where business is changing.
When I think back to all of the start-ups that are energising the UK—as I am sure the Minister will tell us, there are practically more start-ups in this country than in Silicon Valley—it is an exciting time to be starting a business in the tech sector. Those start-ups come to fruition with a very different set of moral values: it is interesting. Younger people are just more cognisant of the complicated issues that they face and the complicated landscape in which they will operate. I am heartened. An incredible programme has been set up by Founders Forum, the Founders Pledge, which is getting people starting businesses to say that, at exit, 2% of the value of that exit will go to good causes. With £100 million businesses, that can have a really interesting effect. It already has 156 signatories, so I hope that that will lead to real change.
I am also much taken by a good piece of recent research by a media company called Adjust Your Set into what millennials are thinking about business and social purpose. Some 70% of millennials say that they do not want to interact with a company that does not show what its social purpose and value in the world is. I would caution any organisation to take big heed of that, because their consumers of the future will not be their consumers unless they rethink how they position themselves in the world and the wider responsibility that they have as a corporate.
The world is changing. We have some big challenges and I am particularly keen to hear from the Minister how we can keep reducing the silos between the corporate sector and the charitable sector. I have recently started a new organisation, Doteveryone. Even applying for status, whether as a limited company, a CIO or a charity, is just too complicated—it is still far too difficult to do different things. But I am an optimist and I believe that the world is changing in the right direction.
Lord Taylor of Warwick (Non-Afl)
My Lords, I thank the noble Baroness, Lady Greengross, for initiating this important debate today. I have long admired her work across a number of areas, such as equality, elder care and corporate ethics. It is also a pleasure to follow the noble Baroness, Lady Lane-Fox of Soho, who is a true champion in the cause of digital online skills.
I take noble Lords back to the Victorian era. In those days, Britain had no government welfare state. It was the church and in particular Quaker families who recognised the power of business to improve the lives of the poorest in society. Companies such as Cadburys, Rowntree and Fry came out of that movement and became very successful, but their inspiration was driven more by prophecy than profit. Indeed, in my home city of Birmingham, the Cadbury company built Bournville, a whole community of homes for its employees.
Coming now to modern Britain, it seems that one of the major challenges facing us is unemployment, especially youth unemployment. In the UK, youth unemployment is still approaching 1 million, and the fact is that it is even higher in other European countries, such as Greece, Spain and Italy, does not mean that we can be complacent. Business is becoming increasingly globalised as we continue to outsource manufacturing and service industries to low-wage economies.
Recently, I was a guest speaker at a London Fashion Week event held in the Jubilee Room. It may be the first time in parliamentary history that the House of Commons has staged a fashion parade. I hasten to add that I was not part of the fashion parade. Then more recently I attended the launch of Dance UK, an organisation formed only a few days ago which tries to promote dance across the whole range. It reaches from the enormously successful brand of “Strictly Come Dancing” to ballet, hip hop and African dance. Having attended those two events, the thing that I became most aware of was frustration among the young people who want to enter the world of fashion and music but are finding it so difficult to get finance or scholarships. Even when they entered those professions, it is hard for them to stay within them. The UK is a centre of excellence for fashion and music. Those industries are great exporters of our talent and, of course, they are especially attractive to young people. I believe that we need more paid apprenticeships and scholarships for those particular industries to combat the problem of youth unemployment. However, I am not going to ask that more money should come from the public purse for that. There are industries, such as the banks and hedge fund companies, which make vast profits. The UK is especially strong when it comes to the finance sector, and I would like to see the Government looking more to that sector to help combat youth unemployment.
The professional football industry in this country has a strong influence, especially when we consider that most cities have at least two major clubs. For example, Manchester has United and City, while Merseyside has Liverpool and Everton. I am a patron of Aston Villa, but since it is at the bottom of the league, I shall gloss over that quickly. However, the Premier League is amazingly wealthy, especially from television revenue. Although I know that most clubs have community programmes, the image which has emerged is that of millionaire superstars who are remote from the problems that many of their adoring fans face on a daily basis. How encouraging it was to hear this week of players from Carlisle United, in the lowly fourth tier of professional football, helping the residents of Cumbria who have been affected by the dreadful floods. I hope that that sets a trend whereby some of the football clubs become even more involved in their communities. There are reserve players at Aston Villa who are millionaires, so they can afford to offer some of their time. They cannot score goals, but they can offer their time. Indeed, when we think about it, most of the larger, wealthier clubs are situated in the poorest inner city areas, and many of their fans are unemployed. It is a tragedy, in my view, that these players do not recognise their responsibility to help their communities.
Closer to Parliament, the Westminster Volunteer Centre works with a large number of companies such as Asda, DHL and William Hill to provide mentors for 14 to 18 year-olds. In my own small way, I try to mentor a number of young people. Growing up as a young black man from Birmingham, born of a single mother, I found it very difficult to locate the right mentors, and I would suggest that mentoring is a key factor. I know a little about Greggs, the high street bakers. It runs its Breakfast Club Programme in primary schools in poor areas. Marks and Spencer runs its own Marks and Start work experience programme for unemployed people. The noble Baroness, Lady Lane-Fox, may like to know that a couple of weeks ago I went into Marks & Spencer, where there was a young black boy who had just started work experience. He was so polite and so grateful for the opportunity, so well done to Marks & Spencer.
It is not just big business that can make a difference. The Voice of Local Shops Survey polled more than 1,000 independent retailers across the country, and found that 80% of store owners are involved in their community in some way. Indeed, 71% collected for a local or national charity, and 25% provided sponsorship for local schools and sports teams. I was recently appointed as one of the board directors of the International Small Business Congress, which represents small companies, not only in the UK but globally. The organisation is especially keen to recognise racial and cultural diversity. I know that the noble Baroness, Lady Greengross, understands those problems and I thank her for her comments. It is very difficult when you are black people and you look at society and do not see people like yourself at the top. When I was at school and doing my O-levels and A-levels, I went to see the careers master. He asked me what I wanted to do, and I said, “I want to be a barrister, sir”. He went red in the face and said, “I don’t think that would be a good idea, John”. I said, “Why not? Am I not doing reasonably well?” He said, “Well, you’re coming top in every subject but, John, you need to understand that black people don’t do that sort of thing. I can get you a job in the Post Office”. I have nothing against the Post Office, but I did not want to work there. I happened to have a strong mother who said, “Look, John, if you want to be a barrister, you get yourself there”. Mentoring is vital, especially for people who do not have parents like my mother.
Schools and universities can also be a catalyst between business and society. For some years I was chancellor of Bournemouth University, which has a proud tradition of providing graduates for local businesses, and I was privileged to open its business centre and strengthen the link between academia and business. Lastly, Business in the Community produced a report entitled It’s Time for a New Contract between Business and Society. It made the point that the prosperity of business and society are tied together, and one cannot succeed without the other. It seems to me that a bad attitude is like a flat tire. Unless you change the flat tyre, you cannot make progress. Any business must have a positive attitude if it is to move forward. It is that positive attitude which business brings that can help resolve the major challenges facing the United Kingdom.
Lord Suri (Con)
My Lords, I thank the noble Baroness for securing this debate. This is a very pertinent question for us to consider today. As a businessman, I have often thought of business as the original big society: a way of solving issues and problems that Governments alone cannot fix. What could be a bigger issue than climate change? In many ways, it affects us all. The Secretary of State for the Environment, Food and Rural Affairs suggested this week that it was to blame for the recent terrible floods in Cumbria and Lancashire that have caused £0.5 billion of damage and the loss of many homes. Heavier rain and hotter weather will also come over the next few decades, and will affect our children and our children’s children. The Health Protection Agency projects that higher temperatures will mean a rise in heat-related mortality of 70% by 2020 compared with 2000, which will put further strain on our National Health Service.
I hope that the UN Climate Change Summit talks in Paris will be fruitful, but more and more onerous regulation on climate action can often be a poor means of achieving lasting change. I believe that any solution has to come from the Government, yes, but also from business. I was gladdened to read last week that an increasing number of large corporations have realised their corporate social responsibility to their consumers and will commit to sourcing all their energy from renewables, through the RE100 initiative. Some businesses, such as Unilever, are going even further and trying to become carbon positive, on which I congratulate them. Whether they succeed depends largely on the quality of the research and product output that is conducted by businesses in the private sector, which are already making great strides with renewables and carbon capture technology. At every step when tackling this generational issue, business will have to be deeply involved if there are to be successful results.
Another challenge that the UK faces relates to employment. The current figures are relatively good, but more can be done to make this country into the high wage, high productivity and low welfare state that our Prime Minister wants us to transition to. The best way to decrease unit labour costs and boost productivity is through investment by the Government and business. The Government must do their bit on education and infrastructure, but the huge role that business plays in training, developing and nurturing talent is often overlooked. Business investment here reached 11% of GDP in the second quarter of 2015, the highest level since 2000. Businesses are increasingly ploughing their retained profits back into the workforce, because they can see the gains that will secure their future. In my business, I have been able to do that because of the business-friendly environment that the Government have created.
From the data, we see that productivity has broken free of its time lag and is again on the rise. This is a real example of business fixing social problems. If we are to fix social problems we must move away from a top-down, heavy-fisted government approach, regulating the problem away. We must work with business, because the interests of socially-responsible businesses are the interests of their consumers.
Lord Stoneham of Droxford (LD)
My Lords, I, too, thank the noble Baroness, Lady Greengross, for initiating this debate. I dealt with her particularly on issues concerning the elderly, but it is good to grapple with these issues of business and social purpose. I was also delighted to hear the noble Baroness, Lady Lane-Fox, talking about Marks & Spencer. It reminded me of an incident earlier in my life when Lord Sieff, who was on the board of the Independent, started to bring in performance and efficiency indicators for the newspaper. I was, down the supply chain, the principal print contractor for the Independent when it started. It was partly his initiatives—that guidance—that led us to build a business that became one of the foremost contract printing businesses. That shows the importance of big businesses supporting and working with their supply chains.
On the main subject of the debate, the foremost priority for the country and for business has to be getting the right kind of economic recovery over the next five years. All the issues that we confront—more exports, business investment, innovation—have historically been long-term disappointments in the British economy. Therefore, if I wanted to pinpoint key issues for business management and business in this country, ones that will affect society as a whole, they would be concentrating on better management effectiveness and improving the skills of the labour force. This will become more apparent and important as the labour market tightens—as it is doing—and we can no longer rely on immigrant labour to fill shortages. If business rebuilds the apprenticeship framework, and puts emphasis on much higher skill levels, it will help rebalance one of the key social issues of our time: still having high-status academic study and, sadly, low-status non-academic study. That is one of the greatest challenges that we face, and business has a very important role in redressing that balance.
It is also important that business pays attention to its image, and is alert to issues that undermine that image. The noble Lord, Lord Taylor, mentioned Cadbury’s. The company not paying taxes—however legal, though clearly contrived—is an issue, and is damaging. It happened, sadly, not just when Cadbury’s became a US company: it was something endemic in Cadbury’s before it was taken over by Kraft. I think there should be a little more emphasis on Quaker values in this debate—government and business working together out of mutual interest to deliver social purpose and economic success. These are linked issues.
I also took three examples. They are very different from those of the noble Baroness, Lady Lane-Fox. I have taken the issues of prisons, housing and regeneration. Prison reform is one of the key areas of public sector reform. I am very excited by the new Secretary of State. I did not think I would be, but I was very disappointed when Ken Clarke stepped down that we began to lose some of the reforming mode that we had in the early part of the coalition Government. There has to be a recognition in the public sector that if we are to reduce public spending in prisons, we also have to reduce reoffending. We cannot do it without radical changes. One of the keys to reducing reoffending is to provide better skills training in prisons and jobs immediately on release.
I would like to highlight Timpson. It is not a natural company for a Liberal Democrat to mention, but it surprised me a few years ago to hear its chairman say on the radio that something like 10% of his workforce were ex-offenders. The company specialises in shoe repairs and key cutting, so it might have been thought that risk reputation would not have encouraged it to think out of the box, but it has done. Since then, I have had all my shoe repairs done by that company. It said that it was dealing with pretty damaged people, that it supported them, and that it recognised that in prison one-third needed a job, one-third needed health treatment and one-third were probably people that one would not want to employ. He said that the one-third who needed a job were the ones to concentrate on.
I was pleased to see a quote in the Times today, which reminded me of the company. The chief executive of Timpson said that the remarkable thing was that the people he took from prison tend to be more loyal and after being in prison they are obsessed with turning up on time. Other companies are following Timpson’s example. If we are to have reform in the prison sector, this area is fundamental.
I turn to housing. Not only do we have to house more people, we need to counter rising house prices which are currently distorting investment and saving in the economy. This is a huge problem in a sector where capacity has been destroyed in the recession; where there is going to be an increasing reliance by developers on outsourced contracting; and where there is going to be a rush to build more houses which could affect quality. There is huge potential for market failure in a very cyclical industry.
I am afraid that if the Government concentrate on only one part of the market, which is owner occupation, it will be severely distorted. The Government have to reach across all sectors: owner, rented and social housing. I declare an interest as chairman of Housing & Care 21. This is an industry which has to address skills, supply chains and costs and it needs steady growth. But we have seen the marginalisation of housing associations.
Housing associations have spent a lot of time building up skills. They have been important in the counter-cyclical building of homes when the private sector was no longer in a position do so. They pay attention to vulnerable people who need not only a home but help with skills training to get back into the labour market. At the moment, the Government are marginalising this area, which needs to be part of a partnership covering all sectors of the industry. This will have social benefits as well as benefits for the economy.
Finally, I turn to regeneration. There is a report in the Financial Times today about the great divide between London and the south-east and other parts of the country, particularly our northern cities. We know we have the big project in the northern cities, but I re-emphasise that it is not just about reforming local authorities, it is about creating partnerships between businesses and communities. There are no quick fixes.
In my own city of Portsmouth in the 1990s we transformed the economy from recession by a partnership between the local authority, businesses, the Navy, housing associations, the university and developers. So its image was transformed, employment diversified and we laid a base, although it was not a complete base, for future prosperity. There is still much to do, but a partnership was absolutely essential.
So the right type of economic recovery is essential if it is to last; businesses are going to need to be very focused and competitive to survive, improved business investment and productivity will be essential to success, and the public and private sectors need to work together, because they will find that there will be more mutual benefit than they realise.
Baroness Hayter of Kentish Town (Lab)
My Lords, I thank the noble Baroness, Lady Greengross, for securing this imaginative debate about how business can help to achieve a fairer future for our country, citing some notable examples, including Ban the Box, Age at Work, Diversity, Healthy High Streets, affordable food and better integration of health and social care—a wise agenda. I want to concentrate on business and poverty, concepts not normally grouped together. As the noble Baroness, Lady Greengross, described, business and society are intertwined and interdependent, requiring each other to be healthy and effective to meet their own objectives. If many people are poor, that affects the quality of our society and that is bad for business in all sorts of ways.
The first dimension is productivity. Our productivity gap with the other G7 countries has widened to its largest since 1992, with output per hour falling to 17 percentage points below the average of other leading industrialised nations. There are several hypotheses for why this is, but one is the impact that low pay has on the well-being of workers. For example, a report by Barclays Wealth, Financial Well-being: The last taboo of the workplace?, found that one in 10 employees is struggling financially. Among those who are struggling to make ends meet, 22% said that worry had made them less productive at work. Overall, the report estimates that this negatively impacts the bottom line by around 4%. The report says:
“Employees don’t leave their financial worries at the door when they arrive at work. The impact on the workplace is significant and has a real effect on the bottom line, more than employers realise”.
Secondly, poverty undermines education, and low education attainment in turn undermines skills in the workplace, meaning that employees cannot find the skills that they need, as we have heard from the noble Baroness, Lady Lane-Fox. But there is a potential virtuous circle, as acquiring the right kind of skills plays a massive role in increasing opportunities, improving people’s life chances and social mobility, and lifting people out of poverty. Meanwhile, the UK’s ability to increase productivity and compete rests on skills, so paid and fairly allocated internships, volunteer programmes and apprenticeships all allow more people to compete for valuable experience and support the social mobility needed to stem the flow of poverty from one generation to the next. That enhances life chances yet cannot be achieved without government, business, education and parents working together.
Thirdly, with regard to reputation, companies are increasingly under scrutiny from consumers and the public, as the noble Baroness, Lady Lane-Fox, said. Scandals and shortcomings have reduced public trust and confidence in business. As John Cridland of the CBI wrote in 2013:
“Businesses can only realise their full potential when they command the confidence of the public—the individuals that companies employ and the customers who buy their goods and services”.
People rightly expect companies to clearly show that they are holding themselves to ever higher standards when it comes to payment of tax, executive pay, transparency, customer services, how they treat their staff, sustainability and diversity in business. A clear commitment to help to solve societal problems—perhaps the Quaker way—would do much to enhance the reputation of business.
There is another element, about how businesses allow for the public interest in their day-to-day decisions and negotiations. Take land values: local government might want to sell off some land to raise funds for its community, presumably at the highest price. Another part of the same local authority might want to maximise the amount of social housing on that land, or minimise the harmful effects of a tall development on the local community; but such a policy could reduce the land value. That is a difficult issue that faces local government.
It is, however, also difficult for business. How does it allow for, or even promote, the public interest viewpoint into its thinking? Developer by developer, each decision might help the bottom line, but as a whole, society might suffer from the combination of this assault on the built environment, the social mix and the life chances of local people to find work or homes—all the things that make for a successful economy and society. Sadly, we hear a government Minister suggesting that people should decide whether they can afford to live in London, with apparently no thought as to where the jobs are, the cost of commuting if living on the minimum wage, or the access to family support or childcare for young families. These are big public interest and ethical issues which government alone cannot solve, but with which business needs to involve itself for the good of the whole.
It is in the interest of business to engage with social issues, especially poverty. The questions are about how they can do this and what stops them. Research commissioned by the Beatrice Webb memorial trust—I declare my interest as vice-chair of that trust—found that some businesses would like to do more, but are put off by criticism from anti-poverty campaigners which, they claim, makes them retreat into their shells. It may or may not be the case, but it certainly calls for more and better dialogue—or a contract, in the words of the noble Lord, Lord Taylor—between business and organisations working to address poverty.
The All-Party Parliamentary Group on Poverty has put this into its programme, and will carry this work forward. It is in everyone’s interest to have a world where business flourishes and the fruits of business are used to ensure that all have a standard of living that enables them both to feel part of, and to contribute to, our economic recovery and society.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
My Lords, I thank the noble Baroness, Lady Greengross, for her Question. I enjoyed the wide-ranging debate and the range of examples that we have gathered together this evening. Over the past decades, I have been impressed by the noble Baroness’s work addressing so many issues faced by the aged in our society and by her work with Age UK, with BITC and, of course, with Jonathan Djanogly on responsible business practice. That includes companies such as Electricity North West, which was recognised at the Responsible Business Awards this year for having recruited households to its power saver challenge.
I wanted to mention Electricity North West today partly because, of course, it and several other companies, as mentioned by several noble Lords, are wrestling with a difficult challenge as a result of the catastrophic floods in Cumbria. Our hearts are completely with the families, the pensioners and the businesses going through such unbelievable difficulties as the rain continues. As a Government, we are making £60 million available, which will help ensure that affected businesses can get back on their feet.
I was delighted to hear from the noble Baroness, Lady Lane-Fox of Soho, about the practical steps being taken by Marks & Spencer on climate change, such as the revitalisation of British fish stocks. Of course, her own experience and efforts are part of the digital revolution. She is an inspiration in showing how big companies and charities can work together. This is for us all, not just a government matter. I believe that businesses make an enormous contribution to addressing the challenges facing society. The fact is that all the resources available to government for schools, hospitals, housing, welfare and defence ultimately depend on the wealth that the business sector creates and the taxes that it properly pays in the UK. I have found that business is also a great source of innovation. This matters in many of the areas we have discussed today. Companies in the digital world are pivotal to the UK economy and, indeed, to continued small business creation and growth. We made it clear in the Autumn Statement that we were investing £1.8 billion in digital technology. In health and social care, digital devices are making the monitoring of diseases so much easier.
Much the most important contribution the business sector can and does make to our national well-being—probably 95% of its contribution—is to run businesses efficiently, innovatively and successfully so that they take on more staff, pay them more and in most cases—it should be in all cases, of course—pay more taxes. My noble friend Lord Suri is a brilliant example of the contribution that business can make to society with the jewellery firm that he has built up. I was so inspired by his comments this evening. I agree with the noble Lord, Lord Stoneham, that this is not only about skills. As he has often said, better management is vital and is especially important to growing the economy. As he also said, people should pay their taxes. I think that we will come back to his notion of Quaker values in future discussions.
Economic efficiency has a direct read-across to national welfare but, of course, the business sector also has an impact in softer ways. I endorse what was said about the British food industry and the supply of food at great prices. I know that it has worked closely with the Food Standards Agency to reduce fat, salt and sugar, although there is still much more to do. Customer trust is important, as the noble Baroness, Lady Hayter, said. I enjoyed working with her on reforms to consumer rights.
Businesses also directly or indirectly pay for the training of much of the UK workforce, ensuring that the UK can grow and prosper. I agree with the assessment of the noble Baroness, Lady Greengross, of the vital role that older workers play. Workers aged 65-plus bring a unique wealth of experience and skills to many workplaces, not just this one. For example, McDonald’s has reported 20% higher performance in its outlets where workers aged over 60 are employed.
However, as has been said, youth unemployment remains high. My noble friend Lord Taylor said this. The good news is that youth unemployment is at its lowest level since 2006, and the employment rate for young people who have left full-time education is up to 74%—the highest in more than a decade. However, there is more to do, and it has to be everywhere, not just in finance or football, particularly at Aston Villa. Everybody needs to play their part. As my noble friend said, mentoring can make a huge difference. We all have a duty to mentor people, which is actually very enjoyable.
In the last Parliament, more jobs were created in the UK than in all the other EU member states combined, with most of those jobs being created in the private sector. However, there are certainly areas for improvement. It is true that we have performed less well on skills. We know that skills are one of the major drivers of productivity growth, accounting for around a fifth of UK growth over the last 30 years. That is why we have committed to significantly increasing the quantity and quality of apprenticeships in England to 3 million starts. The noble Baroness, Lady Lane-Fox, described the digital challenge in skills. I commend all that she has done and I was interested to hear about Go ON UK. A huge amount needs to be done on digital skills. As she says, they feed start-ups and scale-ups, which is what we need if we are going to stay ahead in global markets.
Frankly, there has been a steady decline in the amount and quality of training undertaken by employers over the last 20 years, so a UK-wide apprenticeship levy will be introduced for all larger employers in the public and private sectors to help fund the increase in quantity and quality of apprenticeships that we need. We are encouraging large businesses to train more apprentices than they can themselves use. We are doing more to help small businesses as well by offering them apprenticeship support. We have made a commitment to address the proportion of apprenticeships started by young people from BME communities and to increase it by 20%, and to encourage employers to think of apprentices from diverse backgrounds as the norm.
Many major companies have put training programmes in place: BAE Systems, for example, opened a new £5 million training academy in north Lincolnshire recently, which will take on more than 60 apprentices. There are lots of examples. I join the noble Baroness, Lady Greengross, in commending the work done by my noble friend Lord Baker and his role in developing university technical colleges. It is an amazing model and obviously links in with household names such as National Grid, Toyota and Siemens, and really helps to get the economy going.
Businesses tend to reflect the local communities in which they operate, and we can be proud of the fact that the UK achieved a female employment rate of 69% in the last year. This is the highest figure ever recorded in the UK. It is also the second-largest annual increase among the G7 and the highest in Europe. The noble Baroness, Lady Lane-Fox, gave us more excellent examples, including Arup and Intel. One of my ministerial priorities is to press ahead with Women on Boards, a successful voluntary initiative supported by government and led by the noble Lord, Lord Davies, who has done a great job doubling female representation on boards since 2011. There are now no all-male boards—unimaginable, frankly, in 2010—and the companies mentioned here have played a part in that. We are now focusing on the talent pipeline to ensure that women are able to move through a company and that skills and talent are recognised.
A start has also been made in addressing BME representation, with Sir John Parker of Anglo American now leading a business endeavour with a view to ending monocultural boards in the FTSE 100 by 2020. I was delighted to hear about the work on Ban the Box and the comments of the noble Lord, Lord Stoneham, about the training and employment of ex-prisoners. John Timpson’s record is amazing, as has been mentioned; there is also Halfords and Virgin. They are all doing more work in this area and we want others to join them. Ex-cons, given a job, are loyal and have learnt to turn up on time.
The noble Baroness, Lady Hayter, talked about the flatlining of productivity. I am delighted that the Government have decided to address this with the launch of our productivity plan in July. Part of this is the productivity leadership group of business leaders chaired by Sir Charlie Mayfield. I listened carefully to her observations and to those of the noble Lord, Lord Stoneham, whose comments about housing, regeneration, skills, apprenticeships and education are all relevant to this cross-cutting productivity work. We need to bring that together and create a sense of momentum. This includes 200,000 starter homes by 2020 and of course the right to buy. There is more to do, but we have five years to do very good things.
To conclude, there is much for the Government and other stakeholders to do, but business can contribute—and I believe is contributing well—to resolving some of the major challenges facing the United Kingdom. We have heard this evening about some more things that we should be doing.