Growth and Infrastructure Bill

Baroness Brinton Excerpts

Tuesday 8th January 2013 Lords Chamber

[Baroness Brinton]

My Lords, as my colleague and noble friend Lord Tope said, I shall speak principally to Clauses 8 and 27. I want to focus on the importance of rural growth and not just on the issue that I know concerns some people: of large telephone masts going up in areas of outstanding natural beauty. I am grateful to the Minister for making it clear that the Bill excludes that. I start by declaring a past interest. I helped St John’s College, Cambridge to set up its innovation park in north Cambridge 20 years ago and I was a director of the St John’s Innovation Centre until 2010, working with entrepreneurs as they spun ideas out of Cambridge University. I was also deputy chair of the East of England Development Agency until 2005.

The Cambridge phenomenon spread out from Cambridge’s central areas 100 years ago when engineering support companies such as Cambridge Instruments set up in Milton, one of the necklace villages, to provide instruments and other essential products and telemetry for the Cavendish Laboratory and the engineering department to start to use. The phenomenon I shall talk about is not just one of the most recent 10 or 20 years of high-tech growth. Sixty years ago, Trinity College built the first science park on green land, housing some of the new era of spin-outs from the university, including Cambridge Consultants and many others.

Since then, spin-outs and sons and daughters of spin-outs have set up further and further away from the centre of Cambridge because a small medieval city cannot cope with large industrial growth in its centre. In the late 1980s, it became clear that the area around Cambridge was struggling with the problems of rapid growth, including rapid increases in commercial and residential property prices, shortages of qualified staff to work in the area and an infrastructure struggling to cope with a large influx of new residents who needed schools and other services. Some of the new small companies decided to move further out into the fens. Did noble Lords know that, in the 1990s, Ely was a hot spot for high-tech veterinary research products? Software companies have moved further out to places such as Chatteris. While perhaps one does not think of a fen village or town in that way, these companies have done it because they needed lower costs in order to recruit staff and, frankly, to house them.

As IT connections have become more important the lack of broadband—let alone high-speed broadband —has become a serious issue for companies in rural areas. In the past it was not used universally but now all businesses rely on broadband for their effective running, even those we think of as being low-tech. Some friends of mine run a pig farm out on the Norfolk fens; even they use computers and broadband for communications, orders, correspondence and results from veterinary testing—and for access to government advice, which can often be accessed only via the internet now. All of this is done via the superhighway. There has been a serious market failure in providing high-speed broadband in rural areas. Businesses in the fens of Cambridgeshire and Norfolk and in the Suffolk coastal areas all suffer from the lack of this fundamental tool that urban and suburban organisations take for granted, even if it is not as fast as they want.

Clause 8 opens the door to removing the first hurdle faced by broadband suppliers by easing the planning regulations. However, as I have mentioned, it sensibly insists on taking account of areas of natural beauty, and I am grateful to the Minister for making it absolutely clear that Clause 8 will not mean easy access for telephone companies to put masts up everywhere. However, I should say that even I missed a mast in Norfolk which I realised later was actually a very tall Scots pine; they can be quite discreet.

Growth in our economy is vital to the future of UK plc; it is not just a city issue and therefore cannot be restricted to city and urban areas. However, all Governments tend to focus on urban areas. I believe that our rural areas will be key to sustaining and revitalising our villages and the countryside around them, as well as providing real income for the country.

I move on to Clause 27 on employee shareholders. The more conversations I have with Ministers and others about this clause, the more bemused I become. First, let us look at the general principles behind it: certain companies will want to offer ownership to employees in return for those employees giving up some or perhaps all their employment rights. These include redundancy pay, rights to training or flexible working, and parental leave. Three members of my immediate family are already employee owners: one in the food retail sector and two in high-tech leading-edge companies, one of whom has had his shares for more than 30 years. When discussing this clause with them and with senior and junior staff in a number of other companies, it emerged that every single person, from directors and managers to new recruits, said that a reduction in employment rights absolutely counteracts the benefits of owning shares because it demotivates the staff. Even senior directors have said this.

The Government argue that not all companies will want to use this mechanism and claim that small, often start-up high-tech companies are the likely beneficiaries. These are exactly the companies I have been talking to. My own experience in small high-tech businesses in the east of England and Cambridge, and my discussions with the owners of those firms, show the exact opposite. They know that they have to motivate their staff first. That is vital in the early days as specialist companies face product development costs with no sales and often have anxious funders looking over their shoulders. They are worried enough about the future of their organisations.

Let us take another illustration, that of a firm that has been going reasonably well in Cambridge for some time and in which virtually all the staff hold shares. It hit problems during the recession before this one. There was a staff discussion about how to help their company through those tough times, and the staff gave the company a series of loans over the two to three-year period it took to keep it going. Some of the staff in that organisation have said that if the company had taken away their rights, there would have been no motivation for them to say, “We want to save this company”. That is an example of good entrepreneurial spirit—a company where managers and staff work together.

I have two outstanding queries about this clause, one of which has already been alluded to by the noble Lord, Lord Adonis, and raised by my honourable friend Andrew Stunell in another place. It concerns the whole issue of a JSA recipient being offered a job with reduced rights in return for shares when entering a company. It cannot be right to penalise an individual who chooses not to take a job with reduced rights. I know enough people who have been made redundant from one, two or even more jobs who go into something asking, “Why would I give up any of the few remaining rights that I have?”. I want the DWP guidance to be absolutely explicit and statutory. If we do not get that guidance before Committee, I may well table an amendment to ensure that we see something.

I am also concerned about the information that employees will have about the size and nature of their shareholding. They must have access to independent legal advice, which should be paid for by the company and should set out clearly the likely path. Shares do not just go up and down; they are often diluted out of sight in rounds two and three of funding. Employees need to understand that they are taking a substantial risk not just in giving up rights but by having shares at all. Sadly, not all our companies succeed; they certainly do not always see growth. Of those that do, employees often find that a shareholding that looked quite attractive at even 1% in the early days is very small by the time the company is worth anything realistic at all.

Overall, my view is that this clause will not be used. All the consultation responses that I hear say that it will wither on the vine, but the two items that I have outlined will, I believe, provide some protection and cover some of the points that the noble Lords, Lord Monks and Lord Adonis, made about rogue employers trying to use it. I, too, support the Nuttall report and the Deputy Prime Minister’s promotion of it earlier. I believe that it is a more effective way forward by giving employees the right, which my party has long believed in, to share in the benefits of growth of the company. Any company that grows helps UK plc, and is that not what we are all here for?