Corporate Insolvency and Governance Bill

Lord Kerslake Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

I go back to the point and repeat the words of the noble Baroness, Lady Bowles. Are the banks a party to the moratorium? Are the banks a party to trying to give these people some time, or can they take advantage of their position under the Bill? It would be helpful if my noble friend could make clear from the Front Bench, above peradventure, what the Government’s view is and how Parliament expects banks and financial institutions to behave during these difficult times. We know that it is difficult, but if everybody has to take some pain, surely the banks must not be allowed to ride roughshod over them and work to their own advantage. If we cannot give that assurance to industry and to people going into moratoriums, the whole concept of moratoriums will be largely redundant.

[Lord Kerslake (CB) [V]]

My Lords, I was pleased to add my name to Amendment 75 and congratulate the noble Lord, Lord Stevenson of Balmacara, on proposing it.

The Bill contains some important benefits for companies that get into difficulties, which will help them, help the economy and protect jobs. Insolvent companies or companies that are likely to become insolvent can obtain a 20 business day moratorium period that will allow viable businesses time to restructure or seek new investment free from creditor action.

A good company—sadly, good companies will be affected by the economic impact of Covid-19—would keep its workforce well informed and consult them as a matter of routine. However, we know that, in a period of duress, the employees are often at the back of the queue in finding out what is happening in their own company, even though they are likely to be significantly at risk—perhaps the most at risk—of redundancy, changes in terms and conditions or changes in pension as a consequence of subsequent restructuring, or indeed closure if no resolution can be found.

In these circumstances, the provision in this amendment will provide an important safeguard and reduce the risk of employees being left out of vital decisions and discussions that will affect their livelihoods. I really hope that the Government can see their way to supporting this amendment, or something very close to it.

[Baroness Bryan of Partick (Lab) [V]]

My Lords, I too speak in support of Amendment 75. Although it is much weaker than the original amendments, it touches on an important debate that is happening not just in the UK but in most of the developed capitalist countries about the status of employees in a company.

Nearly 30 years ago, two academics wrote a paper entitled “The End of History for Corporate Law”. As often happens with such pronouncements, they were premature. The authors assumed that shareholder capitalism was unchallengeable. It is now common to hear senior executives and influential economists extol the importance of moving towards stakeholder capitalism. The chief executive of Black Rock, Larry Fink, wrote recently about climate change but said that sharing data should go

“beyond climate to questions around how each company serves its full set of stakeholders, such as the diversity of its workforce”.

The Financial Times reported that a business round table of 151 US chief executives has revised its concept of “purpose of corporation”. They have renounced shareholder value and would instead lead their companies to the benefit of all stakeholders—customers, suppliers, employees and communities. Mark Carney wrote recently in the Economist that companies would be judged on how they treated employees, suppliers and customers, by who shared and who hoarded, and that the corona crisis was

“a test of stakeholder capitalism.”

He might have had in mind companies such as easyJet, which has sought state aid after cancelling most of its flights but went ahead with a £174 million dividend payout while asking employees to take unpaid leave and face substantial changes to their terms and conditions.

This amendment should be knocking at an open door. I am sure that noble Lords will want to accept it, and that what it calls for will become common practice before too long. It is a modest proposal that does no more than require a company to consult the representatives of its employees. I am sure that many of us would want to go further than that, and no doubt this is an issue that we will return to over the coming months and years.

Important Public Services (Border Security) Regulations 2017

Lord Kerslake Excerpts

Tuesday 24th January 2017 Lords Chamber

While we have considerable concerns about the new funding rules, I hope the Minister will at least accept that—to meet Nick Boles’s commitment that there should be successful transformation by the trade unions to these new measures, which many people do not like anyway, and that it should be done at no significant cost to them—there is a real requirement to extend the transition period, at least by six months. I look forward to hearing the Minister’s response.

[Lord Kerslake (CB)]

My Lords, I intend to keep my remarks short, not least because the noble Lord, Lord Foster, made many of the points that I would have made. It is fair to say that this was one of the most contested pieces of legislation that this House has seen. Indeed, during the debate, this Chamber was considerably fuller than it is now. Looking around the Room I feel a sense of nostalgia for the noble Lords who were here for that debate.

It is important to emphasise that the issue of the threshold was one of major concern, because, as the noble Lord, Lord Foster, said, it applied a test that applies to almost no other election. That is an important point. If we see other elections as giving authority to take actions, in many ways having as big a consequence for people’s lives as strike action does, we do not expect the same level of test as we do here. But—and this is the important point—that debate was had and this House acquiesced to a package of changes to the Bill at the time. While I expect no one agreed with absolutely all of what was done, it seemed in the end a fair package given the contested and strong issues. If there are noble Lords who feel strongly that it should go further, I cannot see them in the House this evening.

The point I particularly wanted to raise was that part of that package was a commitment to review the issue of electronic balloting. That was not a small point, because hand in hand with the introduction of the threshold had to be measures that would make the process of voting easier for members. It is in all our interests to see the maximum turnout. Electronic balloting alongside postal balloting was the intended approach. We comprehensively demonstrated during the debate in the House that there were no real impediments to the introduction of electronic balloting. Indeed, it was used by a wide range of organisations already.

I may have missed something, in which case I am happy to apologise on this point, but I have not seen a great deal of evidence of progress on this issue—in particular, of a proposal coming forward from the Government to say either that they have looked at this and it is not viable, or that they have looked at it and it is viable. I would welcome a response from the Minister on that point, because, if there has not been the necessary progress, the House is due an apology. It was an integral part of the settlement agreed at the time.

[Lord Monks (Lab)]

My Lords, the real purpose of the Act was revealed to me by a former Conservative employment Minister, when he simply said, “Bills against the trade union movement don’t cost anything and they don’t half cheer up Conservative associations in the country”. That is the double benefit derived from a trade union Act.

As we can see, the pressure is already on for another round of action—which was what, I guess, the Minister was referring to in his remarks. I will not repeat the speeches that we gave during the passage of the Bill and the situation we have arrived at now, except to say that the regulations on the double threshold are extraordinarily tough, unprecedented in their application compared to other organisations and very difficult for unions to carry through in a way that will not leave them open to legal challenge.

For example, a GCSE teacher is covered in a different way from a teacher of A-levels. In my experience, teachers often teach both. I am not arguing for widening it, I am saying that there will be many borderline areas where it will be most unclear, and very difficult for a union to specify exactly who is covered by the double threshold and who by the turnout one.

I want to emphasise the point of the noble Lord, Lord Kerslake, about electronic balloting. I do not see why this measure could not have been left until we have completed the exercise on electronic balloting—whether it will be permitted or not. That makes a considerable difference to turnout and the impact that this law will have. It could simplify things enormously.

Secondly, I would underline a point made by the noble Lord, Lord Foster, about the political fund adjustment time. Again, this year is a tough one. I am thinking not just about union conferences—everything that the noble Lord, Lord Foster, said in that respect is correct—but also about the check-off agreements with employers. The big unions have hundreds of such agreements. They will have to adjusted, and that is a major task. They will have to be renegotiated in many cases: it will not be done just by an administrative stroke of the pen. They will have to be talked about and explained to the members and to the employers.

These regulations, therefore, are tough, and I echo the request that has already been put to the Minister, to give unions rather longer to respond—an extra six months would be extremely useful.