Financial Services Bill

Debate between Lord Hodgson of Astley Abbotts and Earl Howe

Committee stage
Wednesday 10th March 2021 Grand Committee

[Earl Howe (Con)]

My Lords, I am grateful to my noble friend Lord Hodgson for directing the Committee’s attention to a set of issues that lie at the heart of the agenda for workers’ rights and social justice in the workplace. Let me begin by saying to him that the Government are committed to making the UK the best place in the world to work, and I found myself in considerable sympathy with a great deal of what he said about the connection between employee well-being, high-quality work and national prosperity.

The Government certainly have a role in furthering those ends, and I hope that my noble friend will agree that we have already made good progress in bringing forward measures that support our flexible labour market, while also ensuring the protection of workers’ rights, such as: banning the use of exclusivity clauses in zero-hours contracts; extending the right to a written statement of core terms of employment to all workers; closing a loophole whereby agency workers are employed on cheaper rates than permanent workers; introducing a right for agency workers to receive a key facts page when signing to a company; and quadrupling the maximum fine for employers who treat their workers badly.

The Government are committed to bringing forward measures to establish an employment framework that is fit for purpose and keeps pace with the needs of modern work practices, in due course. We are also committed to building back better from Covid-19. Alongside the Budget, we published our wider economic plan for significant investment in skills, infrastructure and innovation, in Build Back Better: Our Plan for Growth.

During the pandemic we have taken unprecedented action to protect jobs, most notably through the coronavirus job retention scheme—one of the most generous such schemes in the world. And from April 2021, the national living wage will increase by 2.2%, from £8.72 to £8.91, and will be extended to 23 and 24 year-olds for the first time. Taken together, these increases are likely to benefit around 2 million workers.

I fully appreciate that if we are to build back better, progress should be measured by more than just dry economic trends. However, most people would agree that a large part of human and civic well-being lies in people’s livelihoods, and I remind the Committee that in last week’s Budget the Chancellor set out his plan to protect the jobs and livelihoods of the British people.

Amendments 108, 109, and 110 would essentially require the FCA to have regard to “sustainable good work” when conducting their functions, and to embed this principle in the financial system as a whole. Financial services firms would then be required to apply the principle in all their activities, including investment decisions.

The FCA is responsible for a large number of firms and has been given three operational objectives: to protect consumers; to protect and enhance the integrity of the UK financial system; and to promote competition. So I am afraid I do not believe that the FCA is the right body for this function, given its current role, particularly as the issues go far beyond the subject of financial services.

Amendment 122 would require the FCA and the PRA to consider the impact of employee share schemes on sustainable economic growth. The Government want to support hard-working people to share in the success of the businesses for which they work. To encourage this, we offer several tax-advantaged employee share schemes. These provide a range of tax benefits to participating employees and businesses. We keep all employee share schemes under review, to ensure that they remain effective in these ways.

However, once again I do not believe that the UK’s financial services regulators are best placed to carry any changes forward. It is important that they remain focused on their core objectives. Giving them a diffuse set of objectives could undermine focus on consumer protection, financial stability and the sound functioning of financial markets. The body best placed to keep employee share schemes under review is the Government, and we see no need to impose this additional condition on the FCA and the PRA. So, while I am the first to acknowledge the importance of the matters that my noble friend has raised in this debate, I hope he will understand why I do not think it appropriate to amend the Bill in the way that he proposes.

[Lord Hodgson of Astley Abbotts (Con) [V]]

My Lords, I am exceptionally grateful to everybody who has taken part in this debate, including the noble Lord, Lord Knight of Weymouth, who was the first to raise the concept of building back better, which was later picked up by everybody, including my noble friend the Minister.

I am grateful to the noble Baroness, Lady Bowles, who always brings a degree of detailed and forensic expertise to these areas. Of course, I am well aware of her work with the employee share ownership association, as I am of the work of my noble friend Lord Holmes of Richmond on employee ownership trusts, which are critical. I share the interest of the noble Lord, Lord Tunnicliffe, in finding out the results of the consultation that is under way in this general area. It is not often that I find myself supported by the noble Baroness, Lady Bennett of Manor Castle, but I am glad to have her along for the ride. The noble Baroness, Lady Kramer, was certainly right to remind us all how fast everything is changing and that we need to make sure that we are not trying to tackle yesterday’s problems and failing to tackle tomorrow’s.

I am not surprised that my noble friend the Minister could not accept these amendments. He rightly emphasised the work that the Government have done both in employment generally and as a result of the pandemic. If he had accepted the amendments, I probably would have fainted with surprise and been unable to reply to the debate. However, this issue is not going to go away. The weakness of our present regulatory system is that it merely catches and tries to prosecute the bad. In this part of the century, given all the challenges we face, the system should be doing more than that; it should be encouraging the good. This is an area where good could be encouraged, and that would have a huge trickle- down effect on our society as a whole.

Perhaps I may leave noble Lords with a quote from Robert Kennedy, who said that GDP measures

“everything … except that which makes life worthwhile”.

I beg leave to withdraw the amendment.