Growth and Infrastructure Bill

Lord Monks Excerpts

Tuesday 8th January 2013 Lords Chamber

[Lord Monks]

My Lords, this Bill has an ambitious title. To the new reader, coming to it fresh, the title might give the impression that it has ambitious contents; that it is on the verge of giving effect to the Heseltine large-scale urgent initiatives call, which he made so well recently in this House on the basis of his report; that there would be a call for a renaissance of municipal values in the spirit of Joe Chamberlain and other Victorian civic leaders; and perhaps that there would be evangelising for employee share-ownership, and worker engagement and involvement, on a significant scale to shake up British boardrooms and to change some of the bad habits that exist.

However, if one looks at the Bill, frankly, there is none of that. As my noble friend Lord Adonis pointed out, there are no echoes of the impressive Heseltine report and no big ideas reflecting the way in which he approached the problems of growth and infrastructure. Instead, the two most prominent measures are to cut local authority planning powers—unfairly, in my view, blaming them for blocking growth—and to threaten workers’ rights with an implausible proposal to trade shares for rights. In my view, the Bill rather offends the Trade Descriptions Act. The Prime Minister is rather keen on the Ronseal advert, is he not? But the Bill does not do what it says on the tin.

I will leave others to deal with the local government aspects. The noble Lord, Lord Tope, has made an effective start on chipping away at that pillar of the Bill. I shall concentrate my fire on shares for rights and what that might mean. First, I find it unethical that you can trade a statutory right for something in your contract in that way. Perhaps the Minister would tell us whether there is a precedent for this in British law; namely, that having a right is somehow a bargaining chip and something that you can buy and sell. I believe that it must be dismissed as a serious attempt to develop employee ownership: it is more a trashing of workers’ rights. From the list that the Minister read out, if this legislation goes through, the proposals that will have the biggest effect are those relating to redundancy. I shall draw attention to that point.

However, the objections generally are many and various. First, is this proposal really optional? Clearly, it will not be optional for new starters. If an employer says, “There is a job here and it has the status of an employee shareholder—take it or leave it”, the individual will have to operate within that framework. For the existing employee—clearly, I recognise what has been done in the other place about the new unfair dismissal right—there will still be plenty of scope for pressure to be applied to individuals, short of dismissal, to fit in with the employee-shareholder concept. I do not think that any employer, even the few who would be interested in this provision, will be particularly comfortable with having two categories of worker—those who are employee shareholders and others who are regular, standard employees. I shall come to one of the problems that that might create for an employer.

There are questions about how the shares would be valued. When would entitlements become due? Do you lose statutory rights under employment law the minute that you sign the contract? When do you get the money? When do you get rights to the shares? When does the £2,000 kick in? The share side of the equation is fuzzy and there is a lot of scope for the employer. The loss of rights, on the other hand, is absolutely crystal clear. How do you redeem the shares and what do you get from them? Does the employer decide? In the debate in the other place, the Minister said that it could be left to the good sense of the employer and the employee to work out something that is acceptable. As my noble friend Lord Adonis said, that is not an equal relationship, particularly if someone tries to cash in their shares when the company is in some difficulty.

Do the shares confer any rights such as full voting rights and representation in the boardroom, which are common in employee-ownership companies? Let us be clear: around 50% of new firms in this country fold within five years. Is there not a danger that an employee shareholder will find himself or herself with no right to redundancy pay and a bunch of worthless shares? In those circumstances, he or she will be more vulnerable than the standard employee, who will be entitled to redundancy pay. The employee shareholder will possibly be entitled to absolutely nothing. The employer will find it cheaper to get shot of employee shareholders. I believe that most employers will not touch this provision with a bargepole.

The Front Benches in this debate have mentioned different employers’ opinions and I will not repeat them. Those employers who have been critical and have damned the proposals with the faintest of faint praise make up by far the majority. It is not as though employee rights are extensive in this country. Only the United States and Canada offer less protection for the individual employee. The OECD ranks us third in having the most “flexible” labour market, whereby workers can be dismissed most easily. Let us also be clear that rights are being whittled down in other legislation that is before the House, has recently been carried through or is proposed—the latest being a consultation on reduction of the redundancy period. The Enterprise and Regulatory Reform Bill is being considered in Committee tomorrow and will already curb employee rights.

I guess, however, that although most employers will not touch the proposals, some will—not least to explore some of the tax advantages that might apply and to do so in a way that will seek to minimise any real dilution of ownership from their embracing and welcoming groups of employees. If you are going to do employee ownership, the lesson that we have learnt over the years is that it is the companies that really believe in it and want it that make a success of it. The John Lewis approach does not come through coercion or taking rights away from individuals who might at some stage need them.

Employers who go down this particular route should be warned that the processes will be complex. For example, as regards maternity rights, one will need to check exactly who is a parent, how many children they have and all the rest of it. I was talking to my wife about this and we agreed that we are in the market to sell our parental rights, having long since disposed of any further use for them, and many Members of this House would be in the same position. With any powers of reflection, employers would also need to look at their own reputation and that of their brand, which would be at risk if they went down this route. I believe that the scheme will be a lot more trouble to them than it is worth.

I say to those Liberal Democrats who rightly criticised the Beecroft no-fault provisions that this, as my noble friend Lord Adonis said, is a different way of introducing no-fault dismissal. However, I go a little further: it is no-fault dismissal with no compensation. At least Mr Beecroft proposed some compensation and did not go as far as this provision.

In May, the Deputy Prime Minister launched the Nuttall report on employee ownership. In our view, it proposed a sensible way forward and did not include this turkey that we are debating today. So the Government are not entitled to claim the support of Nuttall. The noble Baroness did not do so today, but others certainly have.

I very much hope—it may be a vain hope—that the Government will reflect on the Bill and be prepared to put it to one side to await the response to the Heseltine report. The reports more or less call for the same things and the Bill pollutes the terrain over which the Heseltine exercise ranged so impressively. This messy, ill judged Bill, with a misleading, grandiose title, is not the way to start and not the way to organise a proper response to a serious piece of work. In the spirit of “all being in it together”, one nationism or whatever, in all corners of this House, it would be very wise to wait for the government response to an initiative which is, at present, attracting wide support from all quarters, and which will get behind genuinely ambitious proposals on growth and infrastructure, rather than taking this unworthy route of trashing workers’ rights.