Enterprise and Regulatory Reform Bill

Lord Young of Norwood Green Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord Young of Norwood Green]

My Lords, I congratulate the House on the number of people who have participated in this debate. I admit that we had some concerns about it being on the day before a recess. To paraphrase the saying that goes around in other industries, we wondered whether it might be POET’s day today—push off early, tomorrow’s recess. However, I am happy to say that that did not happen and that we have had a very wide-ranging and forensic debate.

I made a few notes and this Bill was described as a hotchpotch, a patchwork, incoherent, good, bad and ugly. I do not know how to add to that. I also looked at the better descriptions, one of which was that it was wide-ranging. As someone who presided over the Digital Economy Bill, I cannot criticise it for that. If I had to find a phrase, I think that the Bill is a curate’s egg, which is a bit of a cliché but appropriate. As a number of my noble friends have said, it is good in parts. I will cover the parts that make a positive contribution. I join others in welcoming the Minister, the noble Lord, Lord Marland, to the sheer delights of this wide-ranging Bill.

The criticism of many of my noble friends is that the Bill will not do what the Minister says that it will do; namely, encourage growth and investment, and create a fair environment. Indeed, it is incoherent. I noted carefully the points made by the Minister. He said that it will deal with the fear of employment tribunals, which is what some employers say and, of course, what Beecroft said. The Minister said that it will streamline directors’ pay and that it will deal with the gap between pay and performance.

However, he did not say whether it will deal with the ever-increasing gap between the pay of the directors and the average pay of those workers who carry out the work in the company, to which I will return. Although there are some good bits of this Bill, overall, we do not believe that it will make a contribution to growth and investment or have a positive impact in terms of reducing regulation in a way which would be fair to all concerned. I will say why that is so in my contribution.

There was one aspect that the Minister did not cover, or if he did I missed it—it must have been a low-level whistle blow—but there have been plenty of contributions on that particular matter so I am sure that he will deal with it in his response. My noble friend Lord Stevenson rightly criticised the Bill for having no overall vision. Business leaders have told the Government that they are unimpressed with its lack of a clear and coherent growth strategy. My noble friend rightly said that this is a Beecroft-like Bill and gave the first warning that a lot of the changes and recommendations are not based on evidence. Along with many of my noble friends, he referred to the recent report of the noble Lord, Lord Heseltine, on growth. I welcome the Minister’s response on that issue.

As regards the Green Investment Bank, I am looking round the Chamber but cannot see the noble Lord, Lord Smith—somebody I met in a previous incarnation as a BBC governor—but I am sure that he will bring a lot of experience to this matter. For us the concern about the Green Investment Bank is the fact that it is not actually a bank, as the Minister told us. But putting that to one side for a minute, when will it be allowed to borrow? Will it be a lender of last resort and what will be its impact on lending to SMEs? Those questions have been raised in the debate.

We have heard some fascinating comments on the Equality and Human Rights Commission. As one of the architects of the legislation behind that, the noble Lord, Lord Lester, brings a wealth of experience to that matter. He criticised Clauses 57 and 58 on third-party harassment and vulnerable minorities. A clear difference of opinion has emerged on this issue. I and my noble friends are worried about the general remit of the Equality and Human Rights Commission. I take this opportunity to welcome back the noble Baroness, Lady Campbell. I congratulate whoever it was behind the scenes in the House who assisted her to make a full contribution. It is great to see her back making that contribution. We share her concern about the general remit. A number of noble Lords made very powerful contributions on that issue, not least the noble Lord, Lord Ouseley, who also brings a wealth of experience to the debate. He asked where the evidence was with regard to third-party harassment. Noble Lords asked about the evidence time and time again.

I turn to directors’ pay. I pay tribute to the noble Lord, Lord Tugendhat, for his contribution. I hope it does not blunt any career chances or capacity to act with the Government that he might have had. My tribute is sincere because he made a careful analysis of directors’ pay based on experience and evidence. The noble Lord mentioned a two-thirds vote, transparency, bonuses being linked to the short term, the consultants’ remuneration merry-go-round whereby they all keep rewarding each other, and last but by no means least, the bit that the Minister did not address: that is, not just the gap between pay and performance but the really worrying gap between the pay of directors and the pay of median workers in a company.

The other major contribution in that debate—and that is not to denigrate any one else who contributed on that particular area—was from my noble friend Lord Gavron who brings a wealth of experience: 29 years as a CEO and he is wearing incredibly well. I like the phrase “being a connoisseur of mistakes”. I suppose we all are in one way or another in organisations that we have taken part in. He made a powerful point about the directors of public companies whose pay has increased 50 times in comparison to that of their median workers. The question of dividends and bonuses was raised and last, but by no means least, the impact on motivation and performance. We recognise that the Government have gone some way to addressing the concerns about directors’ pay. However, there is a wide-ranging view—I do not know whether it is a consensus—that the Government have not gone far enough. We will probe this with further amendments in Committee.

I will return to the contributions from my noble friend Lady Ford and the noble Lord, Lord Bates, in my conclusion. In their different ways they gave us a different analysis which is worth addressing. There are some areas that I will not cover, given the time available, as I want to be swift. I welcome and congratulate the noble Lord, Lord Currie of Marylebone, on his appointment and wish him well. He gave us a very wide-ranging and balanced analysis of business, consumers and competition which was exceedingly interesting.

There were a number of very powerful contributions on health and safety and whistleblowing. My noble friend Lord MacKenzie of Culkein reminded us, as did the noble Lord, Lord Low of Dalston, how important whistleblowing has been in exposing some really serious injustices and bad practices in a wide range of industries, not least in the health service. Upsetting the balance in that particular piece of legislation is a real worry and I hope the Minister will address it.

My noble friend Lord MacKenzie of Culkein, with his particular experience in health and safety, pointed us to the dangers of Clause 61 and the fact that hundreds of lives have been saved by health and safety legislation. The Parliamentary Under-Secretary of State for Skills, Matthew Hancock, said, on 16 October:

“We all have different reasons for coming into politics. When I was growing up, I had one of the experiences that brought me to this place, concerning the over-burdensome intervention of health and safety officers. I worked in a family computer software company when an over-long health and safety investigation took place, which took up huge amounts of time for the officers and senior management. The only result at the end of it was the recommendation that some bleach in a cupboard must be labelled correctly. After a sign was put up saying, “There is bleach in the cupboard. Please do not drink it,” the company was passed under the health and safety regulations”.—[Official Report, Commons, 16/10/12; col. 191]

That is a Minister showing what I can only describe as contempt for something that is fundamentally important. Does he really believe that that is the only thing you are doing when you carry out risk assessments? If we were living in a society where there were no deaths or serious injuries due to industrial accidents we might have cause for such complacency. However, testing electrical equipment and doing fire risk assessments are not overblown requirements of the Health and Safety Executive. Perhaps the Government think that attitude is the right approach to health and safety.

I only have a few minutes left so I return—with apologies to a number of my noble friends for not referring to them—as I said I would, to the interesting debate involving my noble friend Lady Ford about the purpose of this legislation. How would it really assist growth in the economy? She drew our attention to the concern of SMEs and the fact that they are looking for investment and finance. Those are what they need in their businesses. She drew our attention also to another piece of legislation that is coming along and invites workers to trade their rights for shares in the company. That was an analysis of what business really required to grow.

The noble Lord, Lord Bates, told us that it was all about the wealth creators and getting the Government off their back. That did not acknowledge the role of the workers as wealth creators in those companies as well as the role of the people who own the companies. He talked about big companies making mistakes by employing the wrong people. This is what worries me about this whole piece of legislation. It suffers from what I call DDA, dysfunctional displacement activity, inasmuch as it seems to come from the belief that if you signal to employers, “If only we make it easier for you to get rid of people, it will solve your problem”.

It was my noble friend Lord Monks who said that there is a low road and a high road. A lot of the Bill is about the low road, rather than the high road of investing in skills. If you wanted to send a message to companies about how to look after their employees who, after all, are the most valuable part of their company, it surely would be about training and investment. I heard an interesting statistic from the Chartered Management Institute, which said that only one in five managers get any training at all. If you wanted to send a positive message, rather than a lot of the negative messages in the Bill, that is one that I could recommend.

I am conscious of the time. I apologise to my noble friends and others whose superb contributions I have been unable to address. I look forward to the Minister’s response.