Growth and Infrastructure Bill

Debate between Lord Forsyth of Drumlean and Baroness Brinton

Monday 22nd April 2013 Lords Chamber

[Baroness Brinton]

My Lords, I want to start by thanking the Government for the concession on jobseeker’s allowance candidates and the fact that they will be not penalised, but I have to also agree with other colleagues on both sides of the House who have admitted that this is really the rectification of a mistake rather than a major concession. However, it is essential. It is critical because before it, any of the guidance to the DWP and Jobcentre Plus offices would have been unusable and unworkable for this system, and would have put candidates for such jobs at complete peril.

I am also pleased—I will not go into detail about this, but want to refer to it—that throughout the passage of this Bill we have consistently talked about the necessity of independent legal advice. That is not just for those who are currently unemployed and are being sent to interviews by Jobcentre Plus; it actually applies to anyone. I think of a young 23 year-old that I know who has just joined a high-tech company in Cambridge where I think hardly any of the employees do not have at least one degree and most have at least two. However, if you asked that 23 year-old about the way shares work, he would not understand them at all and would clearly need advice as well. Helpfully, the firm that he has joined has made sure that any new employee who gets access to the share scheme gets that advice, so there are some good examples around.

However, if this scheme does not offer that advice where there is an element of two tiers of employment, that means that such advice must be made available. Frankly, I agree with the noble Lord, Lord Pannick, and others who say that it is on a par with the formal legal advice required for compromise agreements.

Following the debate in the Commons last week, I shall focus on the Minister’s referral yet again to this being suitable for small high-tech companies, particularly in university areas and high-tech areas. Confession time: in the 1980s I was a venture capitalist, spinning ideas mainly out of universities, although not only Cambridge University, and that is one of the reasons why I have quite a lot of experience and knowledge of what is happening in those companies now.

It is quite clear that good, small high-tech companies already use employment share schemes, or share schemes for all their employees who come in right at the start. The reason why they do this is that they know it is going to be a very hard road to make the product successful, particularly if it has not even been developed yet. They know that as time goes on further rounds of money will be coming into the company, and that they will be diluted not just once or twice but to a very minimal amount. Therefore, £2,000-worth of shares on day one, which for argument’s sake might represent 10% of a brand new company, might actually end up being a tiny percentage once you have had three, four, or five rounds of venture capital and hedge fund money going in. As a result, an employee will have to wait a very long time before they see any benefit.

Again, having to pay for those shares up front is not just an issue for those who come from unemployment; it is an issue for those coming in at a very low starting salary who, in addition, have to give up their employment rights and are being told, quite frankly—in Cambridge, which I know quite well, everyone freely admits this—that it is extremely unlikely that you will see any return on any investment in the first 10 years of a high-tech company. If you do, then it is a real star and is to be applauded. However, the vast majority, 95% of firms, do not do that, and 90-plus% of the firms do not actually provide a return to shareholders because they are often sold at the point at which the shares are virtually worthless. So please can we stop deluding ourselves that small high-tech companies are perfectly suited to this? The good ones do it already, but why on earth would they then want to give up employment rights in return for an extra part of this very risky journey? It just does not add up.

I was slightly concerned when the Minister referred to self-employment for these sorts of firms. I understood from the chart that we have received with the Minister’s letter, for which I thank him, that they are outside employment law, and I think that the House would accept that. The references being made implied that self-employment might be an option for those working for the firm, and I think that would definitely be against HMRC guidance; if somebody is working principally for a firm then they should not be self-employed. I am concerned that we are perhaps beginning to develop a dialogue of a third tier of employment, and I hope that the Minister will be able to make it absolutely clear that self-employment is only for those who actually have a range of clients and customers and do not work for just one firm.

The noble Lord, Lord Deben, talked about how this might be a point for experimentation, but I think the experiment is already happening and has been happening through the examples that I have been giving, without the need to give up employment rights. In summary, I believe that this legislation is unloved, unnecessary, unwanted and, frankly, likely to be unused. I am concerned that this is not the best use of Parliament’s time. I am in the same position as the noble Lord, Lord Deben; I do not like voting against my own Government, but I just feel that there are too many flaws in this. It is not a hopeful scheme for the future; they are there working at the moment. Please, let us not compromise employment rights in return for shares that are very unlikely, for the vast majority of employees, to be worth anything at all.

[Lord Forsyth of Drumlean]

Before the noble Baroness sits down, I wonder if she could help us with the question that the noble Lord, Lord Monks asked: what exactly is the nature of the deal that has meant that the Liberals have taken a position that is well beyond Beecroft and which they were previously opposed to?

[Baroness Brinton]

My Lords, I believe that is well above my pay grade.

European Union Bill

Debate between Lord Forsyth of Drumlean and Baroness Brinton

Wednesday 8th June 2011 Lords Chamber

[Baroness Brinton]

My Lords, I shall speak specifically on the 40 per cent threshold and will start by reaffirming the point made by other noble Lords on these amendments going against the Government’s objective of re-engaging with the British people, particularly on major EU issues about transfer of power and competency. I want to reassert the coalition’s intentions on referendums in other parts of our life. The Localism Bill, which we discussed yesterday, has many arrangements in place for referendums.

It might be helpful to remind the House of the other referendum that took place a couple of months ago. I am not referring to the AV referendum but the one in King’s Lynn about an incinerator. After a strong campaign against a local incinerator, the turnout was 61 per cent. It was interesting that there was a division between a county council view and a district council view about whether there should be such an incinerator. The county council view ignored the will of the people. I am afraid that my Conservative colleagues and my noble friends on these Benches suffered some significant defeats in the local elections. Nine councillors were rejected because the people felt that their voice had not been heard after they had been allowed to give it. We miss that opportunity at our peril. I have given that specific example because, in Committee, I raised the issue of the Scottish referendum in 1979 after which there was a significant disconnect. It has taken many years to address it. Some would argue that there is still a legacy of distrust between Westminster and Scotland.

I would prefer the political parties and other groups involved in campaigning for referendums to engage with the public, rather than there being a threshold which, as others have mentioned, could skew the result. You may get not just the “don’t knows” and the “don’t cares” referred to by the noble Lord, Lord Tomlinson, but those who do not support the motion actively being asked not to vote in order to skew the result. Then the public debate becomes about voting and not about the issue. That would be wrong.

The contrast between these two types of referendum is striking. In the first, a real referendum resulting in engagement with the public undoubtedly has helped the public’s perception. The 1975 EU referendum benefited the perception and understanding of the EU for many years. But in Scotland there was a real contrast and, as I have mentioned, serious damage is still there.

Finally, last year, the Lords Constitution Committee stated that there should be,

“a general presumption against the use of voter turnout thresholds and super-majorities”.

Let us heed that sage advice and not support the amendment.

[Lord Forsyth of Drumlean]

My Lords, I find that I am afflicted by the quite well known advice once given to me by the Whips. It was, “Never listen to the debate on any issue”. When I saw this amendment I was rather dismayed because, as my noble friend Lord Lamont pointed out, it replicates exactly the proposal which he, I and others put forward on the AV referendum. I found myself thinking, “Now I have got to be against this because I am against Europe taking more powers from Britain. How am I going to reconcile this in my mind?”. My noble friend Lord Deben has been very helpful in this regard because it is not about the issue of European powers or the role of the European Community. It is about the relationship between Parliament and referendum.

I am going to upset a number of my noble friends by being on an unpredictable side in this argument. My noble friend Lord Risby said that it is now part of the culture in Europe to have referenda. I am rather alarmed by that, because we have a parliamentary democracy. I support this Bill in its intention, which is to give the people a say before a power is transferred, if that should happen. It seems very dangerous to get into a position where we have what is a constitutional innovation—the concept of drop-dead referenda. The moment the vote is cast, that is it. It has become enshrined in law and Parliament no longer has a say. That is a new concept which has crept into our constitution. When we joined the European Union, we did not have a referendum of that form. The Scottish referendum, with all due respect to my noble friend, was not of that form, either. Parliament was still in control and had the final say. My noble friend Lord Deben has been consistent throughout all the time I have known him in his opposition to referenda. I am not against referenda but they must be supported by a substantial group. We could argue about whether 35 per cent or 40 per cent or 50 per cent is the right number, but there ought to be a clear view expressed by the people.

Perhaps I may take up an earlier point. I know nothing about the incinerator but I have been involved in public life long enough to know that if you want to put an incinerator anywhere, you are going to get a majority in a referendum against it. That is why we have elections and that is why we have Parliament. It is in order to take difficult decisions, which, as my noble friend has said, may very well be unpopular. So I am rather inclined to support this amendment for that reason. It seems to be consistent in supporting the constitutional principles which this House should be concerned about. Tempted as I am by the expediency of the case, I think that argument ought to prevail.