Business Community

Lord Stoneham of Droxford Excerpts

Thursday 10th December 2015 Grand Committee

[Lord Stoneham of Droxford (LD)]

My Lords, I, too, thank the noble Baroness, Lady Greengross, for initiating this debate. I dealt with her particularly on issues concerning the elderly, but it is good to grapple with these issues of business and social purpose. I was also delighted to hear the noble Baroness, Lady Lane-Fox, talking about Marks & Spencer. It reminded me of an incident earlier in my life when Lord Sieff, who was on the board of the Independent, started to bring in performance and efficiency indicators for the newspaper. I was, down the supply chain, the principal print contractor for the Independent when it started. It was partly his initiatives—that guidance—that led us to build a business that became one of the foremost contract printing businesses. That shows the importance of big businesses supporting and working with their supply chains.

On the main subject of the debate, the foremost priority for the country and for business has to be getting the right kind of economic recovery over the next five years. All the issues that we confront—more exports, business investment, innovation—have historically been long-term disappointments in the British economy. Therefore, if I wanted to pinpoint key issues for business management and business in this country, ones that will affect society as a whole, they would be concentrating on better management effectiveness and improving the skills of the labour force. This will become more apparent and important as the labour market tightens—as it is doing—and we can no longer rely on immigrant labour to fill shortages. If business rebuilds the apprenticeship framework, and puts emphasis on much higher skill levels, it will help rebalance one of the key social issues of our time: still having high-status academic study and, sadly, low-status non-academic study. That is one of the greatest challenges that we face, and business has a very important role in redressing that balance.

It is also important that business pays attention to its image, and is alert to issues that undermine that image. The noble Lord, Lord Taylor, mentioned Cadbury’s. The company not paying taxes—however legal, though clearly contrived—is an issue, and is damaging. It happened, sadly, not just when Cadbury’s became a US company: it was something endemic in Cadbury’s before it was taken over by Kraft. I think there should be a little more emphasis on Quaker values in this debate—government and business working together out of mutual interest to deliver social purpose and economic success. These are linked issues.

I also took three examples. They are very different from those of the noble Baroness, Lady Lane-Fox. I have taken the issues of prisons, housing and regeneration. Prison reform is one of the key areas of public sector reform. I am very excited by the new Secretary of State. I did not think I would be, but I was very disappointed when Ken Clarke stepped down that we began to lose some of the reforming mode that we had in the early part of the coalition Government. There has to be a recognition in the public sector that if we are to reduce public spending in prisons, we also have to reduce reoffending. We cannot do it without radical changes. One of the keys to reducing reoffending is to provide better skills training in prisons and jobs immediately on release.

I would like to highlight Timpson. It is not a natural company for a Liberal Democrat to mention, but it surprised me a few years ago to hear its chairman say on the radio that something like 10% of his workforce were ex-offenders. The company specialises in shoe repairs and key cutting, so it might have been thought that risk reputation would not have encouraged it to think out of the box, but it has done. Since then, I have had all my shoe repairs done by that company. It said that it was dealing with pretty damaged people, that it supported them, and that it recognised that in prison one-third needed a job, one-third needed health treatment and one-third were probably people that one would not want to employ. He said that the one-third who needed a job were the ones to concentrate on.

I was pleased to see a quote in the Times today, which reminded me of the company. The chief executive of Timpson said that the remarkable thing was that the people he took from prison tend to be more loyal and after being in prison they are obsessed with turning up on time. Other companies are following Timpson’s example. If we are to have reform in the prison sector, this area is fundamental.

I turn to housing. Not only do we have to house more people, we need to counter rising house prices which are currently distorting investment and saving in the economy. This is a huge problem in a sector where capacity has been destroyed in the recession; where there is going to be an increasing reliance by developers on outsourced contracting; and where there is going to be a rush to build more houses which could affect quality. There is huge potential for market failure in a very cyclical industry.

I am afraid that if the Government concentrate on only one part of the market, which is owner occupation, it will be severely distorted. The Government have to reach across all sectors: owner, rented and social housing. I declare an interest as chairman of Housing & Care 21. This is an industry which has to address skills, supply chains and costs and it needs steady growth. But we have seen the marginalisation of housing associations.

Housing associations have spent a lot of time building up skills. They have been important in the counter-cyclical building of homes when the private sector was no longer in a position do so. They pay attention to vulnerable people who need not only a home but help with skills training to get back into the labour market. At the moment, the Government are marginalising this area, which needs to be part of a partnership covering all sectors of the industry. This will have social benefits as well as benefits for the economy.

Finally, I turn to regeneration. There is a report in the Financial Times today about the great divide between London and the south-east and other parts of the country, particularly our northern cities. We know we have the big project in the northern cities, but I re-emphasise that it is not just about reforming local authorities, it is about creating partnerships between businesses and communities. There are no quick fixes.

In my own city of Portsmouth in the 1990s we transformed the economy from recession by a partnership between the local authority, businesses, the Navy, housing associations, the university and developers. So its image was transformed, employment diversified and we laid a base, although it was not a complete base, for future prosperity. There is still much to do, but a partnership was absolutely essential.

So the right type of economic recovery is essential if it is to last; businesses are going to need to be very focused and competitive to survive, improved business investment and productivity will be essential to success, and the public and private sectors need to work together, because they will find that there will be more mutual benefit than they realise.