Enterprise and Regulatory Reform Bill

Baroness Ford Excerpts

Wednesday 14th November 2012 Lords Chamber

[Baroness Ford]

My Lords, I begin by drawing attention to my interests in the register—in particular, that I chair one plc remuneration committee and serve on three others. I greatly welcome the provisions contained in Clauses 70 to 74 of the Bill. These provisions mirror what the more responsible companies are already doing and I could not possibly take any exception to them. This probably confirms, as the noble Lords, Lord Tugendhat and Lord Gavron, already said, that the Government have not gone far enough. I absolutely echo the comments made by those noble Lords and encourage the Minister and the Government in going further in these provisions for executive remuneration, as they would find support from right across the House.

I also welcome the provisions about cartels, about which I hope to say more in Committee, and the simplified bankruptcy procedures which will be, sadly, enormously valuable to small businesses that find themselves in that position. It is really the position of small businesses that I would like to talk about today, because, before coming to your Lordships’ House, I spent most of my executive career in business, specifically in creating and growing successful businesses in property, businesses services and, finally, publishing. I therefore have first-hand experience of what it actually takes to create and build a successful business: to take a thought out of your head and go the whole way to that happy day when you send out your first invoices. I understand what that takes and, by implication, how to achieve growth in the economy because it is from the small business sector that any growth will come.

I agree with the noble Lord, Lord Low, that—sadly—there is virtually nothing in this Bill that will help the vast majority of new and growing businesses. In terms of the signals we are sending to that sector of the economy, can we really say that our biggest priority in the current environment, however worthy, is the creation of a new competition authority? Perhaps we should not be surprised by this set of priorities from the Government. Over the past couple of months we have seen some genuinely bizarre signals. The idea floated by the Chancellor that individuals should trade their employment rights for shares in their company is simply ludicrous. The concept that individuals can participate in approved share schemes is, of course, eminently sensible and most decent businesses do that as long as these are fair and liquid. But to link this with the removal of employment rights is just plain wrong. I cannot think of a single small business which would want to do this or would want to be associated with it as an idea.

However, that is what seems to pass for enterprise policy from this coalition Government. The Government seem to have missed the basic point about most British businesses; namely, that they are owned and run by decent, fair-minded people who have absolutely no wish to remove employment rights but who each day work extremely hard to create good conditions for their workforce and strive to have harmonious relations, especially in smaller companies where—I can tell noble Lords from my own experience—the difference between success and failure is frequently that your staff will go the extra mile for you and with you.

That is not to say that some changes to employment law are not desirable and sensible. I sat on employment tribunals for many years in the 1980s and 1990s. When you do that job, you realise quite quickly that there is rarely, if ever, only one side to a story. It was frequently clear to me that had there been an opportunity for conciliation earlier in the process, a huge amount of time, emotion and cost could have been saved. When we come to those clauses in the Bill, I will be interested to see how the Government propose to balance sensible changes with maintaining important rights for employees. I think that we will have some lively debates during our discussions of those clauses.

If the Government see fit to create a green investment bank, which I completely support, why do they not also see fit to do something really practical for the thousands of small businesses which, despite massive government backing for the high street banks, still cannot access debt or debt at reasonable terms? When I set up my own businesses, the support of my local bank each time was absolutely critical. Often, that meant the implicit support also of the Government. The small firms loan guarantee scheme, which was in place at that time, enabled banks to loan a sensible amount of money to new businesses, typically up to £250,000. In the event of a default, the Government guaranteed 90% of the amount back to the banks. That did not mean that the banks lent willy-nilly or without any proper diligence but it did mean that they had confidence to lend to new businesses, in particular those which did not have a track record. In my experience, that is completely absent at the moment from the lending regime of the high street banks.

That scheme was responsible for thousands of successful businesses getting up and running in the 1980s and 1990s, and made the difference between success and failure in that first, always fragile, year of trading. By all means let us have a green investment bank but why can we not also deliver funding for small businesses as well, which we know are the backbone of the UK economy and without which we will not achieve the growth we so desperately need?

I am sure that owners and managers of businesses are not preoccupied, sadly, with the measures in this Bill. They are preoccupied with interest rates, accessing finance at the right cost, cashflow, chasing bad debts and slow payers, recruiting and keeping good staff, and with having the right supply chain and the right routes to market. I have never enjoyed myself as much as when I set up my own businesses. But I never got up in the morning wondering how to get around the health and safety regime, wishing that employment law was weak, looking to dilute people’s human rights, or thinking that all my Christmases would come if only the competition authorities were reorganised. I do not believe for one minute I was unusual in that. Do the Government really think that this Bill will make one iota of difference to the small business economy?

We owe it to the decent hard-working businesses in this country to do very much better. The Government really need to get a grip of their enterprise policy. Indeed, it would be good to find that they have discovered an enterprise policy that will deliver the changes that are really needed today. Sadly, this Bill, which I look forward to debating in detail and improving, in my opinion wastes a golden opportunity.

--- Later in debate ---

[Lord Marland]

My Lords, I thank all noble Lords for this excellent debate. I am very grateful to the noble Lord, Lord Young of Norwood Green, for his cheerful and genuine support on the Bill. I am also grateful to my noble friends Lord Gardiner of Kimble and Lady Stowell of Beeston who have been extremely supportive throughout, and to our officials who have had to endure a six-and-a-half-hour marathon. There is much to digest, and this is clearly not the point where we go into hand-to-hand combat on some of the key issues. That is for Committee, and I look forward to it.

I have been in business all my life. The Bill redresses some of the imbalances that have developed, particularly in the area of employment, and it comes as no surprise that Members who have had affiliations with the trade union movement feel strongly about these issues, which they take seriously—as indeed do we. I respect their views, but we must remember that workers have rights and, of course, so do the employers. This is what this Bill sets out to do.

The noble Baroness, Lady Ford, said that in her working life she never came across issues of health and safety. I do not think that she has been talking a lot to other business people if that is what she thinks, because to many companies the health and safety issue is becoming really strangling, as are the tribunals, the long process and the time that it takes up.

[Baroness Ford]

Perhaps I may gently say to the noble Lord that I was aware that he was taking a comfort break during most of my speech. I never said any such thing and I suggest that he looks at Hansard to see what I actually said.