Directors’ Pay
Debate between Lord Myners and Baroness Wilcox(11 years, 10 months ago)
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Baroness Wilcox
The right reverend Prelate is right; one of the big worries is the great differential which has gradually opened up between the top pay and that of other employees in the company. As we said in the Statement and as I am happy to repeat now, we will be making sure that companies are looking at the increments and the pay rises that are happening at all levels. I know the right reverend Prelate was in business and it is very nice to have a Bishop in the place who knows something about business.
Lord Myners
My Lords, this is the minimum necessary response to a situation in which company directors seem to see their role as driving the cost of everything down except their own remuneration. This is not a strong Statement. The Minister is wrong to suggest the previous Government did nothing. They introduced the Companies Act 2002 which increased disclosure; they introduced obligations for institutional shareholders to publish their votes; they also promoted the Higgs and Walker reviews. So the Minister is simply wrong to say that the previous Government did nothing on this issue. Paragraph 7 of the Secretary of State’s Statement shows that the Government’s policy is both voluntary and binding. When I suggested that earlier this week, the noble Lord, Lord De Mauley, who is in his place, said that he could not envisage a situation which was both voluntary and binding.
However, to questions. First, the Minister says that these reforms will strengthen the hand of shareholders. Can she explain why shareholders could not have introduced these requirements themselves through amendments to the articles of association? I suggest that these reforms do not strengthen the hand of shareholders at all. They already had that power. Secondly, the right honourable Secretary of State said these proposals were introduced in the face of opposition. Can the Minister tell us the opposition to which the Secretary of State was referring in making that comment in paragraph 2 of the Statement? Finally, in her earlier answer the Minister said that employees already have powers to influence company remuneration. Can she tell us what these powers are?
Baroness Wilcox
We have engaged extensively with businesses and investors to come up with a robust, workable and enduring package that helps shareholders to sustain the increasing activism which we have seen.
Baroness Wilcox
I read that to make sure I was absolutely correct because the noble Lord has been quoting paragraph numbers. I would not like him to say that I had made a mistake or moved a comma. Perhaps he will forgive me on that.
It is a radical package. For the first time companies will be bound by a policy approved by shareholders. As to why shareholders did not do more and do it on their own, as the noble Lord knows very well, changing articles is complicated so we wish to help shareholders on their way. The noble Lord is shaking his head vigorously. He has been a Member of this House and has sat on the Labour Benches a long time. He has also been a Minister. During all that time none of this, no matter how frail or small it seems to him now, was done by his party or by him when he was sitting in this position. Let us be clear; one year ago there was not the same level of recognition on the issue of pay. Now business accepts that there is an issue and has been very good in coming forward to have the conversations with us.
Groceries Code Adjudicator Bill [HL]
Debate between Lord Myners and Baroness Wilcox
Baroness Wilcox
My Lords, today’s debate has cast a great deal of light on the important issues addressed in the Bill. I thank all noble Lords for their contributions. I recognise the strength of feeling and depth of experience that we have heard in the debate. I have been asked far more questions than I thought I would on a Bill on which we all seem to agree, with two or three exceptions. I will do my best to answer as many questions as I can.
The noble Lord, Lord Myners, seemed to ask me 100 questions. I am grateful to him for telling me that I can reply to him in writing as long as I copy the response to everyone else. As I said in my opening remarks, the Bill has undergone substantial consultation and pre-legislative scrutiny. Wherever possible, the Government have attempted to find approaches that ensure that the adjudicator’s powers will be adequate while also keeping them proportionate. We intend to keep the costs to business minimal while ensuring that the adjudicator is fully equipped to fulfil his or her role. However, I will, of course, reflect on the comments of the noble Baroness, Lady Randerson, the noble Lord, Lord Teverson, and others, who have expressed their concerns about both those statements. We think that we have allowed tough powers to name and shame from the outset. We have kept back the last resort of financial penalties as a reserve power. I note that many, including the noble Lord, Lord Knight, have questioned this. I have no doubt that we will debate these questions further in Committee.
The noble Lord, Lord Knight, commented on the impact assessment of the draft Bill. That remains valid; hence there is no requirement for an updated impact assessment. The noble Baroness, Lady Byford, did not approve of the Bill’s “folksy” drafting and noted that the style of writing was unusual. I reassure the House that this is not a mistake. The Bill is one of the pilot plain English Bills that are intended to be easier for everyone to understand. That is what it is intended to be. However, I am happy to write to the noble Baroness on her question about the changes in clause headings and on the consultation.
My noble friends Lord Howard of Rising and Lord Eccles, and the noble Lord, Lord Myners, said that the supermarkets are currently bound by the Groceries Supply Code of Practice and questioned whether an adjudicator was needed as well. The Competition Commission has found clear evidence that the excessive use of buyer power could lead to adverse effects on consumers. The code has the commission’s recommendation, when it first introduced the code, that an adjudicator be set up to uphold it. At pre-legislative scrutiny, the BIS Select Committees in the Commons also concluded that a groceries code adjudicator was necessary. The code allows only individual cases to be resolved and only if a supplier is prepared to raise the issue with the large retailer involved. The adjudicator will be able to investigate suspected breaches involving many suppliers, not just adjudicate individual cases.
The noble Lord, Lord Myners, wishes to intervene. He did make a promise, and I have a lot of questions to answer.
Lord Myners
Is it the Minister’s belief that the supermarket sector is securing monopoly profits? If so, on what basis do the Government derive that conclusion?
Baroness Wilcox
I am sure I did not say that they were securing monopoly profits.
Lord Myners
My Lords, I did not say that the Minister said that, but the assertion that there is excessive use of buyer power over a diffuse supplier community would be evidence of monopoly profits. Do the Government believe that our grocers are evidencing monopolistic behaviour through excessive returns on equity or sales?
Baroness Wilcox
We are basing this on the Competition Commission’s evidence.
A concern was raised about the creation of a new regulatory body and I mention in particular the noble Lords, Lord Haskel and Lord Plumb. The Government are committed to reducing the overall burden of regulation on business. We are not creating a new bureaucracy but appointing an individual to be the adjudicator. I hope I can reassure the right reverend Prelate the Bishop of St Edmundsbury and Ipswich and my noble friend Lady Byford that the small, agile staff will be effective. We will, however, be watching all the way through—this also relates to the point made by the noble Baroness, Lady Randerson—to see that the office has the capacity to work with such large supermarket chains.
The noble Lord, Lord Haskel, thought that arbitration was more vital than the adjudicator’s investigations. I can reassure him that the adjudicator will be able to arbitrate disputes concerning individual suppliers as well as investigate complaints.
In response to the concern of the noble Lord, Lord Borrie, it is correct that the adjudicator probably would not arbitrate himself or herself where he or she had previously carried out an investigation into a similar issue, due to the risk of a conflict of interest. However, in that case the adjudicator would simply appoint a different arbitrator, and the Bill provides for this in Clause 2.
My noble friend Lord Eccles suggested that the Competition Commission was lukewarm in its support for the adjudicator. The commission said clearly in paragraph 11.375 that all but one member of the investigation panel considered the adjudicator to be essential for the monitoring and enforcement of the code, but all six members of the Competition Commission group who investigated groceries agreed that,
“the transfer of excessive risks or unexpected costs by grocery retailers to their suppliers is likely to lessen suppliers’ incentive to invest in new capacity, products and production processes … if unchecked, these practices would ultimately have a detrimental effect on consumers”.
Finance: Equity Markets
Debate between Lord Myners and Baroness Wilcox
Lord Myners
My Lords, on 3 November in the other place, the Leader of the House, the right honourable Sir George Young, said that the Government were considering methods by which shareholders could become members of board remuneration committees. In this House on 30 January, the noble Baroness said that she would welcome employee representatives on board committees. Do those continue to be the Government’s positions and, if so, when will we see some action?
Baroness Wilcox
On the Government’s view on shareholder/worker representation on company boards and committees, we decided not to include such proposals in the packet of measures for greater transparency. However, Professor Kay’s independent report will inform all the Government’s judgments from this point.
Companies: Executive Remuneration
Debate between Lord Myners and Baroness Wilcox
Baroness Wilcox
Actually, shareholders are getting more engaged on the issue of pay. They have publicly stated their intention to get tougher, particularly with the large public companies, and we are giving them the tools to do this, which is what the Secretary of State, Vince Cable, said last week. As to the second half of the question—which the noble Lord is perfectly entitled to ask, as he reminded me before we came in here today—my ministerial colleagues Vince Cable and Ed Davey meet regularly with representatives of the TUC and will look to discuss this with them the next time they meet.
Lord Myners
My Lords, I declare an interest as a partner in a fund management firm. The Leader of the House in the other place said in answer to a question from my honourable friend Ms Angela Eagle before the recess that the Government were looking into the case for shareholders being represented on the nominations committees that appoint the independent directors to boards. Vince Cable said nothing on this subject. Can the Minister explain why he was silent on that, and can she assure us that the ministry will ask Professor John Kay to ensure that this is investigated in his review on governance?
Baroness Wilcox
The noble Lord gave the answer in the question that he asked me. Professor Kay will be giving his interim review next month and I am absolutely sure he will be answering the question that the noble Lord has asked.
Employment Law: Unfair Dismissal
Debate between Lord Myners and Baroness Wilcox(12 years, 5 months ago)
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Lord Myners
My Lords, the Minister has spoken about the need to create more employment for young people. How is the Minister going to ensure that new employment opportunities for young people are not achieved at the risk of displacing the employment of older people?
Baroness Wilcox
That is a very interesting question. We are obviously serious about tackling youth unemployment. We have very high youth unemployment. But I am slightly older, and am still employed, and I would like to continue to be so, if that is possible. The balance is that the employer will use the talent that he has got to keep his business profitable. If his business is not profitable and he goes out of business, then nobody has a job.
Economy: Personal Debt
Debate between Lord Myners and Baroness Wilcox
Baroness Wilcox
I am afraid that I cannot answer the noble Baroness’s question because it is not my department, but I will come back to her in writing.
Lord Myners
My Lords, setting aside the Minister’s comments that the Government seek to influence interest rates, can she explain how a reduction of the public deficit over the next five years of 6.9 per cent of cyclically adjusted GDP makes sense when private sector debt, which is already at a high level, as the noble Lord, Lord Haskel, pointed out, is due to increase to 9.1 per cent? Where is the logic about unsustainable debt, to which the Minister spoke?
Baroness Wilcox
I am not inclined to be able to answer that question right now, off the cuff. However, I remind the noble Lord, who is sitting on the Labour Benches, that it is his party which got us into this mess in the first place.
Postal Services Bill
Debate between Lord Myners and Baroness Wilcox
Lord Myners
The Minister started her answer by saying that as things were as they are, and there was no good reason for changing that, they should remain as they are. Surely, however, the Government are making changes, and that is the appropriate trigger for consideration of this factor. From these Benches we are urging that it is essential that the workers in this company, which has always been a very delicate organisation, who have served it loyally over many decades, are entitled to believe—almost as part of the concept of the “big society”—that the Government recognise that there is a degree of mutualisation. After all, that is why the Government are gifting shares to the workforce. So why go only halfway? Why stop at the point of gifting shares and not empower those shareholders to give voice and expression around the board table?
Baroness Wilcox
I can only repeat that, as we all know, the previous Bill failed. We hope that this Bill will succeed. We want as much flexibility as possible when it comes to selling Royal Mail. We have faith in the fact that the people who have worked for this company for so long should be offered the best possible opportunity. We are offering the biggest ever issue of shares to the employees of the company—over 10 per cent. That is a wonderful voice that they will have. No one is saying that no one will finish up on the board. We are saying that we cannot put this in legislation. We need to keep this as flexible as possible to get the best possible price and the best possible deal. The noble Lord, Lord Myners, of all people, City man that he is, knows what I am talking about. I ask that the noble Lord, Lord Young, withdraw his amendment.
Post Offices
Debate between Lord Myners and Baroness Wilcox
Baroness Wilcox
The noble Countess makes a valid point. We will certainly look into this.
Lord Myners
Will the Minister endorse the view that the Post Office should be able to obtain a banking licence in its own name, thereby allowing people to bank with an organisation that is universal in its coverage, that, unlike banks, is not closing branches, and, importantly, that is trusted?
Baroness Wilcox
The noble Lord knows this subject very well. I have a long note here on how complicated, expensive and difficult it is to set up one of these licences. We have looked at the idea of a state-backed post bank, but it would be simply unaffordable in the current financial climate.
National Minimum Wage (Amendment) (No. 2) Regulations 2010
Debate between Lord Myners and Baroness Wilcox(13 years, 4 months ago)
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Baroness Wilcox
My Lords, I am grateful to all noble Lords who have participated in the debate. I believe that the regulations raise important issues of principle about the minimum wage and the rights of workers and employers, so it is essential that we give them very careful consideration. I was therefore happy to hear the comments today and to hear some supporting views, which is always nice. I really had not taken it on board that my noble friend Lord Cotter had been a member of the national minimum wage committee in another place. Hearing that he sat for 24 hours, our Chief Whip would, no doubt, remind us that other people in other places sit longer than we do. However, it was a wonderful piece of work and it has been supported over the years.
The noble Lord, Lord Myners, asked several questions and I think that I can answer a goodly few. On the first, we recognise that workers participating in travel and subsistence schemes may see a small reduction in their take-home pay as a result of the changes in the regulations. However, our experience is that the direct cash benefit to the worker is minimal in comparison to the direct cash benefit to the employment business. We consider it wrong in principle that profits should be made by employers from low-paid workers through the application of salary sacrifice schemes. There is evidence that significant numbers of low-paid workers do not understand the way in which these schemes work. Indeed, the noble Lord, Lord Young, pointed that out in his remarks.
The regulations will remove the risk that, by participating in travel schemes, low-paid workers will not be able to meet the requirements for entitlements to earnings-related benefits, in particular the basic and additional state pension. Again, I pick up on something that the noble Lord, Lord Young, said: let us make sure that everybody knows and understands what is happening to them because they are already complaining that they do not at the minute. We must be very sure that what we do makes that clearer.
On the second question from the noble Lord, Lord Myners, about a percentage of temporary workers as opposed to workers on the national minimum wage, we estimate that approximately 1 million workers are earning that national minimum wage so 90,000 is, for interest, roughly 10 per cent of that total. His third question was on why we have not waited until the result of the judicial review to put forward the regulations. We consider that the judicial review application has no merit and we are strongly defending ourselves against it. There are good reasons for the Government to make these regulations and we are confident that the court will agree with us. We therefore see no reason to delay the regulations until the result of the judicial review is known.
On the noble Lord’s fourth question, it says here that there is an error in paragraph 10.1 of the memorandum, for which we apologise. We thank the noble Lord, Lord Myners, very much for bringing it to our attention. Yes, jolly good. On enforcement compliance, this Government are firmly committed to the national minimum wage and to effective risk-based enforcement. Enforcement is essential in ensuring a level playing field for legitimate businesses and in protecting workers who are at risk of abuse by those who refuse to play by the rules. BIS has published a strategy for national minimum wage compliance. It focuses on how the compliance and enforcement landscape should look over the next three to five years and recognises that our approach must continue to be based on intelligence and data. In the context of reduced budgets we will need to prioritise, but we are clear that underpayment is not an option. The strategy will help us to make informed choices to ensure that we have the right tools for the job and that resources are focused where they are most effective.
The noble Lord, Lord Jones, also talked about his time in the other place. He spoke with Welsh passion about the national minimum wage. It was very nice to hear him and good to have his support for the work going forward. I hope that we do not disappoint him.
The noble Lord, Lord Young, talked of the beneficial effects of the previous Government’s work in this area and of closing the gap between men and women’s pay. To that, I would say, “Yes, but we are not there yet”. We will keep trying to improve on the previous Government’s work. The noble Lord also paid tribute to the excellent work of the Merits Committee. I agree with that, as I am sure would all other noble Lords.
I was asked whether we would make sure that people were properly informed of the changes. Yes, we certainly will. I was asked also whether workers will face a claw-back of overpaid tax credits at the end of the year as a result of their pay being adjusted. No, they will not. For tax credits to be adjusted downwards for 2010-11, there would need to be a substantially greater increase in taxable pay for 2010-11 than will arise from the proposed amendment to the regulations.
There were one or two other questions which the noble Lord, Lord Myners, very kindly put to me as I was waiting for the answers to the first ones. I am not sure that I am able to answer them all at the moment; if that is the case, I shall write to him.
Lord Myners
I congratulate the Minister on doing a superb job in answering the questions. Many members of the coalition Government would do well to study the skill, openness and sincerity with which she attempts to answer questions and, indeed, succeeds in doing so.
I have only one question to ask at this point; it is fortunate that we have a Minister from the Department of Business with us to answer it. Which is the right rate of inflation? The Government are using CPI for changing benefits and pensions, but they are using RPI for increasing the payments that students make in connection with university education. Both decisions come from the same department of state. Can the Minister put my mind at ease and tell me which is the relevant index to be used for the purpose of determining fair value for people on low incomes or of paying for their education?
Baroness Wilcox
I think that the noble Lord, Lord Myners, will understand the answer that I can give him. The Government will consider the recommendations of the Low Pay Commission when deciding on the appropriate rates for the national minimum wage.
Lord Myners
That is a very good answer to a question that I did not ask but I am happy to leave it at that.
Baroness Wilcox
I am told that this Government never commit—at least, not at this moment—so I think that I just have to say that we are considering the Low Pay Commission’s recommendations.
Lord Myners
This Government may never commit. They pledge, but we know what the pledges are worth. However, it is right to point out that the Low Pay Commission’s recommendations on hourly rates have never been rejected by government. I sincerely hope that this Government will respect the commission’s independence, integrity, foresight and professionalism and not lightly even contemplate rejecting its recommendations.
Baroness Wilcox
I am sorry, my Lords. I was being flippant and was somewhat thrown by the question, which is a little wide of the regulations that I am introducing today. Yes, of course, we shall be listening very carefully to the Low Pay Commission. We shall remember its independence and integrity, which we will honour. If there are no further questions that anyone wishes to put at the moment, I commend the regulations to the Committee.
Minimum Wage
Debate between Lord Myners and Baroness Wilcox(13 years, 5 months ago)
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Lord Myners
My Lords, I declare an interest as a former chairman of the Low Pay Commission. May I ask the Minister two simple questions? First, will she confirm that there will be no encroachment on the independence of the Low Pay Commission? Secondly, will she confirm that there will be no diminution in the funds available to survey and enforce compliance with the national minimum wage?
Baroness Wilcox
On the first question, I do not have any answer at the moment. I think that everything seems to be as it is. In the remit of the 2011 report, the Low Pay Commission was asked to review the labour market position of young people, including apprenticeships and internships. The commission will continue to do its work and report to the Government by the end of February next year, when I will return with that finding.