Corporate Governance

Lord Lea of Crondall Excerpts

Tuesday 29th November 2016 Lords Chamber

[Lord Lea of Crondall (Lab)]

My Lords, the noble Lord argued that the remark made by my noble friend Lord Mendelsohn could be refuted on the grounds that there had been no back-pedalling by the Prime Minister since her original speech on this subject. But you have only to read her speech about putting workers on the board, and then look at the Green Paper, to find that my noble friend’s statement is absolutely accurate. Perhaps the noble Lord would consider that.

I have two questions. One arises from the complacent tone of the first section of the Statement, which states that,

“our framework of company law has long been admired around the world”.

That may have been true 200 years ago. It was certainly in the Victorian era that we put together the basis of company law that exists to this day—which is that the company is the shareholders. It has nothing to do with other stakeholders. Is the Minister aware that the issue that arises from that is that there is no priority for the involvement of the workforce in the policy-making of the company?

The Minister referred to competitiveness and so forth. In Scandinavia, where there are board representatives and works councils, people go to these companies when there is a merger or something and the first question—a friend of mine had this experience—of the chairman of the works council is, “Mr Struthers, if you take over our company, how will that improve our world market share?” When he got home he said, “No one has ever asked me that question in this company”. So the value of the involvement of workers’ representatives is not the flavour of this Green Paper. Will the Minister acknowledge that that is a defect in it?

[Lord Henley]

My Lords, I completely reject what the noble Lord, Lord Lea, said. He said that that is not the flavour of this Green Paper. But the Green Paper makes it quite clear that a number of options are being put forward. We are seeking views on a range of options that companies could take up to improve the connection between the boardroom and the workforce and other interests. It looks at the idea of creating advisory panels and of the designation of non-executive directors to take formal responsibility for articulating a particular perspective. It looks at appointing more individual representatives at board level to take forward a particular perspective. It looks at strengthening reporting requirements around the duties of company directors to have regard to the interests of employees, customers and others. It is quite clear that we are inviting views on all subjects. I will take note of what the noble Lord, Lord Lea, said—as will others, I am sure. That is the point of a Green Paper and that is the point of the Green Paper before us.