Business Community

Baroness Hayter of Kentish Town Excerpts

Thursday 10th December 2015 Grand Committee

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I thank the noble Baroness, Lady Greengross, for securing this imaginative debate about how business can help to achieve a fairer future for our country, citing some notable examples, including Ban the Box, Age at Work, Diversity, Healthy High Streets, affordable food and better integration of health and social care—a wise agenda. I want to concentrate on business and poverty, concepts not normally grouped together. As the noble Baroness, Lady Greengross, described, business and society are intertwined and interdependent, requiring each other to be healthy and effective to meet their own objectives. If many people are poor, that affects the quality of our society and that is bad for business in all sorts of ways.

The first dimension is productivity. Our productivity gap with the other G7 countries has widened to its largest since 1992, with output per hour falling to 17 percentage points below the average of other leading industrialised nations. There are several hypotheses for why this is, but one is the impact that low pay has on the well-being of workers. For example, a report by Barclays Wealth, Financial Well-being: The last taboo of the workplace?, found that one in 10 employees is struggling financially. Among those who are struggling to make ends meet, 22% said that worry had made them less productive at work. Overall, the report estimates that this negatively impacts the bottom line by around 4%. The report says:

“Employees don’t leave their financial worries at the door when they arrive at work. The impact on the workplace is significant and has a real effect on the bottom line, more than employers realise”.

Secondly, poverty undermines education, and low education attainment in turn undermines skills in the workplace, meaning that employees cannot find the skills that they need, as we have heard from the noble Baroness, Lady Lane-Fox. But there is a potential virtuous circle, as acquiring the right kind of skills plays a massive role in increasing opportunities, improving people’s life chances and social mobility, and lifting people out of poverty. Meanwhile, the UK’s ability to increase productivity and compete rests on skills, so paid and fairly allocated internships, volunteer programmes and apprenticeships all allow more people to compete for valuable experience and support the social mobility needed to stem the flow of poverty from one generation to the next. That enhances life chances yet cannot be achieved without government, business, education and parents working together.

Thirdly, with regard to reputation, companies are increasingly under scrutiny from consumers and the public, as the noble Baroness, Lady Lane-Fox, said. Scandals and shortcomings have reduced public trust and confidence in business. As John Cridland of the CBI wrote in 2013:

“Businesses can only realise their full potential when they command the confidence of the public—the individuals that companies employ and the customers who buy their goods and services”.

People rightly expect companies to clearly show that they are holding themselves to ever higher standards when it comes to payment of tax, executive pay, transparency, customer services, how they treat their staff, sustainability and diversity in business. A clear commitment to help to solve societal problems—perhaps the Quaker way—would do much to enhance the reputation of business.

There is another element, about how businesses allow for the public interest in their day-to-day decisions and negotiations. Take land values: local government might want to sell off some land to raise funds for its community, presumably at the highest price. Another part of the same local authority might want to maximise the amount of social housing on that land, or minimise the harmful effects of a tall development on the local community; but such a policy could reduce the land value. That is a difficult issue that faces local government.

It is, however, also difficult for business. How does it allow for, or even promote, the public interest viewpoint into its thinking? Developer by developer, each decision might help the bottom line, but as a whole, society might suffer from the combination of this assault on the built environment, the social mix and the life chances of local people to find work or homes—all the things that make for a successful economy and society. Sadly, we hear a government Minister suggesting that people should decide whether they can afford to live in London, with apparently no thought as to where the jobs are, the cost of commuting if living on the minimum wage, or the access to family support or childcare for young families. These are big public interest and ethical issues which government alone cannot solve, but with which business needs to involve itself for the good of the whole.

It is in the interest of business to engage with social issues, especially poverty. The questions are about how they can do this and what stops them. Research commissioned by the Beatrice Webb memorial trust—I declare my interest as vice-chair of that trust—found that some businesses would like to do more, but are put off by criticism from anti-poverty campaigners which, they claim, makes them retreat into their shells. It may or may not be the case, but it certainly calls for more and better dialogue—or a contract, in the words of the noble Lord, Lord Taylor—between business and organisations working to address poverty.

The All-Party Parliamentary Group on Poverty has put this into its programme, and will carry this work forward. It is in everyone’s interest to have a world where business flourishes and the fruits of business are used to ensure that all have a standard of living that enables them both to feel part of, and to contribute to, our economic recovery and society.