Bombardier

Debate between Lord Harrington of Watford and Jim Shannon

Thursday 22nd November 2018 Commons Chamber

[Richard Harrington]

I absolutely agree with my hon. Friend. Hybrid technology is the nirvana for the future of jet engine propulsion and much of the money we have put in with industry for research and development is for hybrid technology. I am sure that Bombardier will be at the centre of that. This is about not just Bombardier but other companies in Northern Ireland that are in the supply chain. Northern Ireland is a significant hub. At the air shows I visit, the Northern Ireland exhibition stand is prominent and visited by companies from all over the world.

[Jim Shannon (Strangford) (DUP)]

Just a few weeks ago, I visited the Bombardier plant in east Belfast with the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), just to see it. There was no indication at that stage that there would be any job losses, so the announcement of 490 will affect my constituents in Newtownards. Northern Ireland has 10% of the cut to the workforce of 5,000 jobs globally, at a time when the company made a 57% increase in profits in February. The Minister will understand our angst. Will he outline the discussions he has had about investment in the Northern Ireland branches of Bombardier, which reflect the importance the Government have placed on Bombardier and on funding it in Belfast, at Newtownabbey and, in my constituency of Strangford, in Newtownards? Has the Minister had discussions with Bombardier about its intentions to bring back from Mexico and Morocco the work on parts that were once made successfully in Belfast to reflect the high level of investment the Government have made?

[Richard Harrington]

I commend the hon. Gentleman—I know Newtownards is part of his constituency—as well as the hon. Member for North Antrim (Ian Paisley) for their work and the support they have given to the aerospace industry in their constituencies. The hon. Member for Strangford (Jim Shannon) mentions the parts that are being made in Mexico, and I was not aware of that but will bring it up at my meeting this afternoon and at every contact between my Department and the management.

Whole Company Pay Policy

Debate between Lord Harrington of Watford and Jim Shannon

Monday 16th July 2018 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)]

I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this evening’s debate. This is an important subject, and I commend her passion and her extensive campaigning on behalf of lower-paid workers in our economy. However, I know that she wants more than to be commended by me; she wants answers to her questions. I shall do my best to provide them. I recognise, and sympathise with, her view that executive pay in this country too often seems to exist in a bubble that is disconnected from the pay and experiences of ordinary working people.

I accept the hon. Lady’s numbers. We saw a staggering quadrupling in the average pay of FTSE 100 chief executive officers from the late 1990s to 2011 from just under £1 million a year to more than £4 million. I think that this has been imported from America, where the differences are even larger. Executive pay levels have largely stabilised since then, but shareholders and the wider society have increasingly questioned how such dramatic levels of reward can be justified, both in terms of individual performance and in relation to a company’s pay policy as a whole. The Government share that concern. We are not against CEOs being well paid for doing what is certainly a hugely demanding an important job. We accept that they have a lot of responsibility. For example, if part-time workers are included, Sainsbury’s has 180,000 people, and any one person who is responsible for 180,000 people certainly deserves rewarding well. I do not think that anyone would dispute that.

[Jim Shannon]

The point that the hon. Lady made with passion is that workers who have given effort, commitment and loyalty to a firm should be rewarded. The whole workforce should be rewarded, not just one person.

[Richard Harrington]

I absolutely agree, but pay is earned for several reasons. Hard work is definitely one of them. I am not comparing ourselves, but we are all here at 11.40 pm, so no one could say that we are not working hard. The dispute would come from the second reason for pay, which is how well someone is working and the their responsibilities. I would not ask the hon. Gentleman to intervene to say how well he thinks I am doing, but I certainly know that he and the hon. Member for Mitcham and Morden do a good job. I am not making light of the situation; I mean that reward is partly based on how well someone is doing and partly on how hard they work, but part of it is about responsibility. We would all agree that chief executives have a lot of responsibility, and they should not have job security because they are putting themselves on the line for workers, shareholders, banks or whomever it might be. This is a question of extent and of how much reward is performance related and how much of it is a basic salary. I hope that the hon. Member for Mitcham and Morden and the hon. Member for Strangford (Jim Shannon) do not think that I am trying to make light of this, because there is a significant issue here.

We may disagree on this, but I think the answer lies with transparency and accountability in how executive pay is set and in how it fits with wider employee pay and incentives. The Government have introduced major reforms on executive pay, and the first package in 2013 and the second package approved by Parliament just last week are important. The 2013 reforms compelled quoted companies to disclose each year the total pay and benefits of their CEOs and directors and to explain how that relates to company and individual performance. For the first time—this is important—we gave shareholders a legally binding vote on a company’s executive pay policy, with which all payments to directors must comply. Taken together, the two reforms have forced companies to be much more rigorous and transparent in their approach to executive pay.

However, more needed to be done, in particular to increase transparency and accountability in how pay at the top relates to pay and reward across the rest of the company. It is vital that companies demonstrate cohesion and a comprehensible line of sight between executive pay and the pay of other employees. They are all part of the company, and part of its success, and a confident organisation should be willing and able to explain how its approach to pay is consistent across all its employees. That is why the Government are now implementing major new statutory and code-based reform measures on executive pay as part of a wider package of corporate governance reform.

The headline reform measure—this is directly relevant to the hon. Lady’s speech—is to require all quoted companies to disclose and explain the ratio of their CEO’s pay to both the median average and the quartile pay of their UK employees. The pay ratio statement must include an explanation of

“whether, and if so why, the company believes the median pay ratio for the relevant financial year is consistent with the pay, reward and progression policies for the company’s UK employees taken as a whole.”

That will allow shareholders, employees and other interested parties to see how pay in the boardroom relates to wider employee pay throughout the company and, importantly, whether and how the directors of the company believe the differentials are justified. This is not just about employees, important though they are, because shareholders have strongly backed the introduction of pay ratio reporting and will be watching closely both the figures and the explanations, which they have made clear must be meaningful and relevant.

UK shareholders are increasingly vocal and assertive in holding companies to account on executive pay and other issues, which the Government support. The Government requested the Investment Association to establish the world’s first public register of shareholder dissent, so that there is a publicly monitored record of companies that receive more than 20% votes against executive pay packages. Halfway through the first year, there have been 140 significant shareholder rebellions on pay and other matters—more than the total for the whole of last year.

The Government have asked the Financial Reporting Council to consult on a number of new executive pay provisions in the UK corporate governance code, including a requirement for remuneration committees to explain what engagement with the wider workforce has taken place on how executive pay aligns with wider company policy. I am pleased to say that this new measure forms part of the revised corporate governance code published by the FRC earlier today—this is very topical—as part of a wider package of corporate governance reforms that require companies to put in place one or more of either a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director. It is complicated, but we are making developments. Companies will have to report on how they have had regard to the interests of employees. The statutory instrument was approved by Parliament last week and requires large companies to report each year on how they have had regard to the interests of their employees and on how it has influenced the decision making of directors.

All these measures will be in place from the start of January 2019, and I take the opportunity to thank everyone in this House, particularly the Business, Energy and Industrial Strategy Committee and the all-party parliamentary group on corporate governance, for their constructive contributions to this agenda over the past two years.

Before I finish, I will address some of the questions raised by the hon. Member for Mitcham and Morden.

Construction Sector Deal

Debate between Lord Harrington of Watford and Jim Shannon

Thursday 5th July 2018 Commons Chamber

[Richard Harrington]

The sector deal shows that those types of skills will be adapted to building. Digital technology, artificial intelligence and precisely the STEM skills that my hon. Friend mentions are an important part of the sector deal and of the future construction industry.

[Jim Shannon (Strangford) (DUP)]

What discussions have there been with the devolved Assemblies on match funding for energy-efficient new builds? What is being done to encourage every region to make full use of this initiative?

Oral Answers to Questions

Debate between Lord Harrington of Watford and Jim Shannon

Tuesday 13th March 2018 Commons Chamber

[Mr Speaker]

Thank you.

[Jim Shannon (Strangford) (DUP)]

What discussions has the Minister had with the Treasury about the impact of Her Majesty’s Revenue and Customs’ new end-use procedure changes on the gas and oil industry?

[Richard Harrington]

I will give a very succinct answer, as you have requested, Mr Speaker. I do not know, but I will happily meet the hon. Gentleman to discuss it.

Oral Answers to Questions

Debate between Lord Harrington of Watford and Jim Shannon

Tuesday 7th November 2017 Commons Chamber

[Richard Harrington]

The Government consider the security of smart meters to be very important, and the whole smart meter programme was designed with the approval of the cyber-security body and all the other relevant authorities.

[Jim Shannon (Strangford) (DUP)]

How does the Minister intend to make the process for switching between gas or electric companies easier for those with smart meters, as the process is extremely convoluted, to use a Ulster-Scots-ism, at present, with customer smart reading going dumb and manual readings having to be sent out?

[Richard Harrington]

The hon. Gentleman should be aware that the SMETS 2 programme involves complete compatibility between all the different meters, enabling people to switch. The current system that is being installed, SMETS 1, will be applicable for that in, we think, about a year, when the software allows that to happen.