Enterprise Bill [HL]

Lord O'Neill of Clackmannan Excerpts

Monday 12th October 2015 Lords Chamber

[Lord O’Neill of Clackmannan (Lab)]

My Lords, I will avoid the temptation of going down the rates road any further. Equally, I will not try to get into any international comparisons. I am reminded of the story of President George W Bush, who, when discussing French business acumen, said, “The French, they don’t even have a word for entrepreneur”. Therefore, we have to look at what we have here today.

It has to be said at the outset that BIS is not a legislating department. Therefore, by and large, when it gets the chance, its first reaction is, “Oh yes, this is wonderful”. Then it starts saying, “What do we put into it?”. We have a Bill that the generous might call a curate’s egg; others might think of it as a bit of a dog’s breakfast. I suppose that our task will be to make it into a reasonably acceptable curate’s egg at some stage. That is not to say that the Bill is a total basket case and there is nothing we can do about it, but I believe that, when we look at the establishment of a Small Business Commissioner, that position should be more than a kind of citizens advice bureau for 500 businesses per annum.

As the noble Lord, Lord Patten, said, we need to have an element of the big stick in the hand of the commissioner. Advice on payment disputes, frankly, is not enough. We have had discussions on payments matters in this House—I have been a Member for only 10 years—on innumerable occasions. Before coming here, I was chairman of the Trade and Industry Select Committee, which predated BIS as a department, and we engaged in a study on retentions. We got such a feeble response from the Ministers that we called the authors of the response, the civil servants, back in to see us again. That kind of thing does not happen very often with Select Committees. To say that the civil servants were not happy about it is something of an understatement. They had no substantial case to answer. The impression that we had was that the Ministers had been got at by the big building firms and they had told the civil servants to palm something off to the committee.

The fact is that retentions, which are only one element in the payment problems of British small businesses and in particular in the construction sector—I speak as the president of the Specialist Engineering Contractors’ Group—take various forms. Normally, when a building is being constructed, the first element, apart from the foundations, is the steel construction. There are numerous stories of steel construction firms that are not paid until the grass is laid around the car park at the end of the whole job, which might be two and a half to three years later—they have just kept a little bit back. In the intervening period, the steel structure will have been covered by concrete and will have had various other things done to it. The point I am making is that that is a cynical attempt by the major contractors in a lot of construction projects to hold back money that they then use for other purposes. I am not saying that there is anything criminal about what they use the money for. In fact, it might be argued that they are supporting other bits of their business empires. However, it is very inconvenient for the usually rather small businesses that depend on prompt payment.

The issue of retentions has been covered today in the business section of the Times, as has been mentioned. We cannot have a commissioner for small businesses who does not have any teeth or powers relating to payments and the scandals that happen here. Ultimately, most of the small businesses that have grounds for complaint do not take their complaint the whole way because they are frightened that they will never get any repeat business from customers who are late payers. It is therefore a difficult area, but one in which government needs to give leadership. Regulation should not be a source of fear for the good companies. It is a force to make recalcitrant companies implement good practice. Sadly, there are still a number of them. I do not wish to blacken whole sections of British industry, but we know the sums involved and the amounts of money that are written off annually. That requires us to look afresh at the terms of the Bill to see what amendments could be entered into.

As I said earlier, I am not completely negative about the Bill. I happen to think that the apprenticeship provisions are a source of encouragement. We have already had a very interesting discussion about the whole question of training, as the noble Lord, Lord Baker, mentioned. We have examples of good practice in one area, but perhaps we could look at an area that is a bit deficient in Committee—namely, in encouraging public bodies in this regard. Should not the contracts awarded to private companies by public bodies contain encouragement and, indeed, a requirement for those private companies to take on a number of apprentices in the course of the relevant project? I know there were examples of this in the Olympics programme and, I think, at Heathrow Terminal 5. It would not be a bad thing to include a measure of that nature in the Bill to give it a broader base for apprenticeship expansion.

I know from my own personal experience in the east of Scotland where we used to have the Rosyth dockyard and Ferranti, the major defence contractor, as then was, that in the 1950s, 1960s and 1970s they trained about 1,000 people every year—usually boys in those days. When we had for a brief period in Scotland what we called Silicon Glen, a lot of the employees had come out of the dockyards and the high-tech defence industries. There was an assumption that these companies could train more people than they required because they could afford to do so as they were given a financial incentive. That has been lost and it is one of the prices that we paid for privatisation. I will not get into the old argument, but the former public utilities and similar types of companies were extremely good at training people. They often gold-plated the whole process, but that meant that the rest of the industry was able to take up the slack.

I realise that there will be a substantial division between the Government and ourselves on the whole question of exit payments. I do not understand what this has to do with entrepreneurialism. It seems to have more to do with post-election triumphalism and hubris and putting the boot into a certain part of the system. The number of people who will be affected by this measure, but who will not receive massive payments, is very large. We will find that it will prejudice voluntary staff reduction agreements, result in acrimonious litigation, prevent much needed departmental reforms in the immediate short term and could well be grossly unfair as regards the severance and pension arrangements of low-paid, long-term local government workers. Many of us on this side of the House will need great reassurance from the Minister that something can be done about this in a way that will not prejudice the agreements which have been entered into by successive Ministers on how problems of this nature should be dealt with. It seems that a whole raft of undertakings have been thrown out of the window in pursuit of a cheap headline-chasing ploy.

To promote business success and enterprise we need to realise a raft of achievements, many of which are akin to motherhood and apple pie but nevertheless have to be pursued. We could make something of the Bill. As I say, it is a bit of a dog’s breakfast at the moment, but there is within it the grains and elements which could provide a basis for an understanding across the Chamber. We could achieve something which would assist small businesses, promote skills and reassure those people who are pretty certain that their jobs may well be lost as a consequence of government cuts and local government reforms that they will not lose out on what they assumed would be their pensions and final rewards. We are not talking here about the hundreds of thousands of pounds being given to chief executives and the like but about ordinary people who have committed themselves for very long periods of their lives to rates of pay which were considerably less than what they would have got in the private sector, but who stayed because of their commitment to their jobs and because they thought they would get some form of index-linked slightly better pension in their retirement years. In the name of cheap hubris after the election, it would be wrong of us to prejudice these people’s retirement and termination of employment opportunities.