Financial Services Bill

Lord Knight of Weymouth Excerpts

Committee stage
Wednesday 10th March 2021 Grand Committee

To conclude, this will be a long journey, but one which we need to set out on without delay, and all those who believe that our present system, for all its inadequacies and imperfections, provides the best hope for our society as a whole, should be joining in. I beg to move.

[Lord Knight of Weymouth (Lab) [V]]

My Lords, I am happy to put my name to and support Amendments 108 to 110. I pay tribute to the noble Lord, Lord Hodgson, for introducing the amendments.

From President Biden, to the OECD, to the UK Government, everyone around the world wants to “build back better”. The amendment is squarely in that vein. As we all start to see a path out of this pandemic, the economic consequences loom ever larger. The same people most likely to have lost their lives due to Covid are now losing their livelihoods. In this country, our challenge of rebuilding also must address our new life outside the European Union. We must account for the threats and opportunities of new trading arrangements and a new regulatory environment, and the Bill is a part of that. I see opportunities here to move to more intelligent regulation of the financial sector as we move into this new reality.

The financial sector is a strategically important part of the UK economy, as the Committee knows, employing up to 2.2 million people. The sector will play a critical role in financing the country’s recovery from the Covid-19 crisis. There is therefore an opportunity for the Government to deploy strategic regulation to steer the sector towards a greater consideration of the importance of good work.

As has been said, these amendments would ensure that financial regulators understand and give due weight to the importance of creating sustainable good work across the United Kingdom. The amendments have been designed to build on the great work of the Institute for the Future of Work, which was established following the Future of Work Commission, of which I was a member. We found that good work builds resilience, prosperity and well-being. I commend the institute’s Good Work Charter and Good Work Monitor to the Committee; as the noble Lord, Lord Hodgson, said, it found that the availability of good work is an important determinant of health and social outcomes. This is reinforced by the findings of the Carnegie Trust. Conversely, when good work is not available it places a strain on government finances through the higher cost of health and welfare services, and depleted tax revenues.

On Budget day last week, those of us on the National Plan for Sport and Recreation Committee, whose meeting I am missing at the moment and to which I send my apologies, were lucky enough to hear from the Deputy Prime Minister of New Zealand, Grant Robertson. He is currently the Finance Minister and the Sports and Recreation Minister for his country. I was struck by what he said when he launched New Zealand’s first “well-being Budget” in 2019:

“In the election that led to the formation of this Government, New Zealanders were asking a core question: If we have declared success because we have a relatively high rate of GDP growth, why are the things that we value going backwards like child wellbeing, a warm, dry home for all, mental health services or rivers and lakes that we can swim in?”


He went on to say that the Treasury should be responsible for,

“measuring and focussing on what New Zealanders value—the health of our people and our environment, the strengths of our communities and the prosperity of our nation.”

I argue to the Committee that we need a similar mindset shift. We need to start by accepting that not all that we value can be measured by EBITDA, a balance sheet or shareholder value. Then we need to think about what we value and how to incentivise and regulate for that.

I have worked in the public, voluntary and private sectors. I run my own business, have started co-ops and charities, and worked at chief officer level for private equity-owned businesses. My current commercial clients include a US B corp, and one heavily financed by US venture capital. In my range of work, I too often see an increasing values imbalance the more that the enterprise is engaged with financial services businesses. Good business balances shareholder value with customer value, staff value and societal value. Too often, values are sacrificed for shareholder value. If one thinks only of the value of financial services in financial measures such as share price, one is missing the rounded value of the sector. This is like thinking that all the value of a school is in test scores, or all the value of a job candidate is in their qualifications. A growing number of investors do not see business in that way. Between 2016 and 2018, the proportion of UK investors integrating environmental, social and governance guidelines into their investment decisions grew by 76%. Up to $2 trillion of UK assets are now managed according to those ESG principles.