Economy: Growth
Debate between Lord De Mauley and Lord Roberts of Conwy
Lord De Mauley
My Lords, the Government have set out a comprehensive strategy to deal with the challenges we face. Fiscal, monetary, financial, tax and structural reform all play a role to deliver our objective of lasting economic recovery and sustainable public finances. That strategy has reduced the deficit and helped to deliver near record low interest rates.
Lord Roberts of Conwy
I am grateful to my noble friend for that reply. I am sure that the entire House would like to welcome the 65,000 fall in unemployment, which was announced today. Welcome as that news is, we must face the fact that demand for goods and services is slackening, if not falling, worldwide. It is reducing growth prospects in many countries, including our own. Does my noble friend agree that in these circumstances the best that we can do is concentrate on those sectors of industry that have full order books, especially of exports, and on the key areas of housing and infrastructure at home where we can be sure of a return in the longer term? Can we get on with it as soon as possible?
Lord De Mauley
I agree with my noble friend: each of these is vital and we are taking important steps in these areas of exports, housing and infrastructure. However, our strategy goes further. What we need to do is encourage the private sector through a competitive tax system; make the UK the best place to start, finance and grow a business; encourage investment in infrastructure; and improve the flexibility and skills of our workforce. As my noble friend will be aware, we have put in place a range of measures to achieve each of these.
Companies: Executive Remuneration
Debate between Lord De Mauley and Lord Roberts of Conwy
Lord Roberts of Conwy
To ask Her Majesty’s Government whether they will give shareholders in listed companies a binding vote on senior executives’ and directors’ pay and bonuses.
Lord De Mauley
My Lords, the Government have recently consulted on a new model of shareholder voting on directors’ remuneration. This proposes giving the shareholders of quoted companies binding votes on the policy for the remuneration of directors and on exit payments. We are considering the responses and will announce final proposals shortly. These reforms will require primary legislation, and we aim to introduce measures during the Committee stage of the Enterprise and Regulatory Reform Bill in another place.
Lord Roberts of Conwy
My Lords, while I appreciate the Government’s proposals in the enterprise Bill, does my noble friend agree that, even after shareholders are enabled to pass a special resolution on a remuneration report to make it binding rather than advisory, they may still have great difficulties in exercising that power effectively? Should we not have an urgent review of the workings of the remuneration provisions of the Companies Act? Shareholders, especially in big companies, feel increasingly that their interests as owners, and the long-term interests of their companies, are not being given proper priority by top management, which appears to put its own interests first.
Lord De Mauley
Yes, my Lords, there is broad agreement among investors and businesses that the link between top pay and performance has grown weak and that the current pattern of growth in directors’ pay is unsustainable. Binding votes will encourage companies to set out a long-term pay policy that is clearly linked to the company’s strategy. Shareholders have been showing a keen appetite for a challenge on remuneration, and it is important that we give them the tools necessary to keep up this momentum.