Draft Companies (Directors’ Remuneration Policy and Directors' Remuneration Report) Regulations 2019

Tanmanjeet Singh Dhesi Excerpts

Wednesday 15th May 2019 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

I beg to move,

That the Committee has considered the draft Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019.

It is a pleasure to serve under your chairmanship, Ms McDonagh. The draft regulations will add certain new requirements to the reporting of directors’ remuneration by publicly quoted and traded companies. They will give shareholders more information to assess how the rewards to directors match performance, for example by requiring companies to provide more detail about the award of company shares to directors.

The new requirements are contained in new European directive 2017/828, which is more commonly known as the revised shareholder rights directive and is due to be transposed into UK law by 10 June 2019. The draft regulations will implement articles 9a and 9b of the directive, which cover the reporting of directors’ remuneration, to the extent that they do not already have effect in UK law. Other parts of the directive are being implemented by Her Majesty’s Treasury, the Financial Conduct Authority and the Department for Work and Pensions. For example, the FCA and the DWP are implementing new obligations for asset managers and pension funds to report on how they engage with the companies in which they invest on behalf of their clients.

The draft regulations will add a small number of requirements to the directors’ remuneration policy and the directors’ remuneration report that publicly quoted companies are already required to produce under the Companies Act 2006.

The main change to the directors’ remuneration policy is that companies will be required to provide additional detail about the arrangements under which directors can eventually exercise their shares. The Government believe that that will be a valuable addition to the existing framework for executive pay reporting. The award of company shares to directors is of great interest to shareholders because it has the potential to better align the interests of directors with the long-term success of the company. The draft regulations also provide for the remuneration policy to set out more information on directors’ service contracts and highlight key changes introduced since the previous policy.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

How will the draft regulations affect the deplorable and widening gap between the highest and lowest paid within companies, or the unsatisfactory gender pay gap? What are the Government doing to tackle those issues?

[Kelly Tolhurst]

As I had started to outline, the draft regulations, which implement the shareholder rights directive, will require more information to be included in remuneration reports so that shareholders have more information when they vote and make decisions on policy. As hon. Members know, we implemented ratio reporting last year, the whole idea of which is to give shareholders more transparency on what executive directors are earning in comparison with the rest of the organisation’s employees, so that they have more information to exercise their votes.

[Mr Dhesi]

And the gender pay gap?

[Kelly Tolhurst]

That is a wider conversation. The draft regulations relate to remuneration reports, whereas the gender pay gap is part of a wider discussion.

I will make some progress on detailing the draft regulations. The main new requirement proposed for the remuneration report is for companies to compare the annual change in directors’ remuneration with the annual change in average employee pay over a rolling five-year period. This will provide greater transparency on how pay in the boardrooms of quoted companies aligns with pay and reward across the company as a whole. It will also complement a new obligation introduced by the Government last year for quoted companies to disclose and explain each year the ratio of their chief executive officer’s total annual pay to the average pay of the company’s UK employees. The draft regulations additionally propose that future remuneration reports show the split between fixed and variable pay for each director in each year. Taken as a whole, the new measures will further strengthen confidence that the UK’s executive reporting framework is based on transparent, consistent and accessible public reporting to shareholders.

I will also highlight two provisions that will ensure the compatibility of the new measures—which, as I have said, originate from the revised shareholder rights directive—with the UK’s existing company law framework. The first concerns the scope of the companies covered by executive pay reporting. The UK’s existing executive pay regime applies to quoted companies, whereas the shareholder rights directive that the draft regulations will help to implement applies to traded companies. In practice, the vast majority of traded companies are also quoted, meaning that their shares are both tradeable on the regulated markets and quoted on the FCA’s official list. The draft regulations address this small technical difference in company definitions between the directive and UK company law by providing for executive pay reporting to apply both to quoted and to traded companies, whether or not they are quoted on the official list.

The second provision, which will ensure compatibility between the new measures from the directive and existing UK law, is a small procedural change to the Companies Act to allow shareholders to retain their existing right to a binding vote on any proposed payments to directors that would otherwise be outwith the terms of the directors’ remuneration policy. This procedural change provides that shareholder approval for any payments to directors outwith the remuneration policy result in an amendment to the policy for the purpose of those payments. In this way, UK law will be compatible with the requirement in the directive that all payments to directors must be in line with a shareholder-approved remuneration policy.

Furniture Manufacturers

Tanmanjeet Singh Dhesi Excerpts

Wednesday 23rd January 2019 Westminster Hall

[Maggie Throup]

As I outlined earlier, the Government have produced an export strategy, which I would encourage all SMEs to look at and take part in. That is one of my messages today.

I shall move on from Brexit. As shown across my constituency, furniture manufacturers require a highly skilled workforce to retain their international reputation for quality. The skills of an upholsterer are passed down from generation to generation—often in the form of an apprenticeship, then finely tuned over a number of years, which can span well past the usual age of retirement. The industry therefore needs support from Government to help it to bring new generations of craftsmen and women through the system with the right skills to ensure that this type of art survives throughout the 21st century.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

I thank the hon. Lady for securing this very important debate. She is just about to highlight excellent British craftsmanship. Just as in her constituency, in Slough there is an array of manufacturers, designers and fitters of furniture for bedrooms, kitchens and so forth. We pay tribute to those individuals for their craftsmanship. Does she agree that their high-quality, skilled jobs are an asset to the local and national economy?

[Maggie Throup]

I completely agree. I would like to invite the hon. Gentleman to be a member of the all-party parliamentary group.

UN Climate Change Conference: Government Response

Tanmanjeet Singh Dhesi Excerpts

Wednesday 16th January 2019 Westminster Hall

[Anna McMorrin (Cardiff North) (Lab)]

I beg to move,

That this House has considered the UK Government response to the UN climate change conference 2018.

It is a pleasure to serve under your chairmanship, Mr Betts. I thank all colleagues who are here for this important debate, particularly on a day such as this. I was disappointed that the Government felt it was not necessary to give an oral statement following their attendance at COP24. I am pleased that we have the opportunity today to debate and ask the Government the important questions about the action they are taking on climate change.

World leaders arrived at the UN climate talks in Katowice last month with a mandate to uphold the 2015 Paris agreement and respond with urgency to the climate crisis the world is facing. The Intergovernmental Panel on Climate Change report warned of the urgency of this crisis when it recently stated that we must act now to cut emissions in half and limit global warming to 1.5° within the next 12 years, or face catastrophic impacts of climate change.

Global temperatures have been rising for over a century, notably speeding up over the last few years, and are now the highest on record. We know that this causes negative impacts, such as melting of Arctic sea ice, rising sea levels, prolonged heatwaves and chaotic weather conditions. We know why. We release carbon dioxide into the atmosphere by burning fossil fuels for energy, farming, industry and transport, to name a few. These carbon emissions are causing the earth to warm faster.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

I thank my hon. Friend for securing this important debate. According to the latest UN report, there will need to be a tripling of ambition globally to avoid more than 2° of warming, and a fivefold increase in ambition to avoid 1.5° of warming. Does my hon. Friend agree that the Minister should highlight what additional measures she is planning to ensure that the UK cuts its own emissions and, at the same time, what additional support the Government will give to developing countries around the world, so that they will meet their targets, too?

[Anna McMorrin]

Absolutely. I thank my hon. Friend for that important intervention. I am coming to his exact point. It is now more urgent than ever that we take action to cut greenhouse gas emissions.

--- Later in debate ---

[Anna McMorrin]

My hon. Friend makes an important point. If we are to take the threat seriously, we need to resource it properly, and not just in the Minister’s Department but across Government, and to make it an absolutely priority.

[Mr Dhesi]

My hon. Friend is making a powerful speech. Does she agree that climate change is an interlinked issue? We are asking our Government to make representations to the Trump Administration and others who tried to block proceedings at COP24, but we need to make sure that we emphasise to them that climate change is connected to issues such as immigration, which are at the fore in the Brexit debate here and in the US, where they are trying to build walls. If we do not help developing nations, such as the Maldives, Bangladesh and others, which will be partially or fully submerged, we will have even more immigration and desperation from the residents of those nations.

[Anna McMorrin]

My hon. Friend makes an excellent point. Climate change affects everyone, everywhere. We in this country have a duty to protect those suffering and most at threat, including those on the frontline where those changes are taking place. That is climate justice and it is why adequate finance needed to be agreed at COP24.

Erasmus Plus Programme

Tanmanjeet Singh Dhesi Excerpts

Thursday 21st June 2018 Commons Chamber

[Lloyd Russell-Moyle]

I agree it is very likely that the European Union would want our engagement to continue, which is why, to some extent, this is an easy door to push against and walk through. The foreign students coming into the UK are economically an export for us, because they bring foreign money to invest in this country. It might seem strange but higher education is a net export, as it brings cash into this country.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

We would all acknowledge that the Erasmus+ scheme has been of huge benefit to our country. Indeed, over the past 30 years, 600,000 people from the UK have benefited. Erasmus+ is unique in providing additional funding for disadvantaged and disabled students, which is why the Government should fully support the scheme.

[Lloyd Russell-Moyle]

I totally agree, and I believe the Government are in favour of the Erasmus+ scheme. We have heard positive sounds from the Government, but we now have to put our money where our mouth is.

Erasmus+ is a valuable resource that contributes a vast amount of scope and depth to the British university and youth sectors. My former colleagues and I spent three years in and out of Brussels negotiating the current scheme, which was formed in 2014, and it brought together the Socrates, Erasmus, Leonardo, Grundtvig and Youth in Action programmes—the higher education, technical education, schools exchange and youth work programmes—and sometimes we forget that Erasmus+ incorporates all those different sectors of exchange.

Draft Higher Education (Access and Participation Plans) (England) Regulations 2018

Tanmanjeet Singh Dhesi Excerpts

Thursday 11th January 2018 General Committees

[Gordon Marsden (Blackpool South) (Lab)]

If it is not too late, Mr Davies, I wish you and the whole Committee a happy new year. It is a great pleasure to serve under your chairmanship.

I congratulate the Minister on his first outing. He and I are not complete strangers to facing each other across the Dispatch Box. Before he took up his current position, he had a relatively brief spell in the Department for Education, where he covered careers advice. I remember that we had one or two exchanges on the Floor of the House on that issue.

I welcome the Minister warmly to his new position. I appreciate how difficult it is to master the elements of a brief only a couple of days after coming in on the back of what was a, shall we say, interesting reshuffle. I therefore will understand if he is not able to answer immediately the various questions that I put to him, but we would obviously want to have some detailed responses after the Committee.

This is a very important debate to kick off, if that is not too much of a colloquialism. We know the scope of the consultation that the Government put out before Christmas on the Office for Students. That consultation was relatively brief, considering the implications of the run-up to Christmas being part of the timeframe, so it would be interesting to learn just what the level of response was. We expressed some concern about whether the period would be adequate. The submissions will undoubtedly include access and participation, which we are discussing with these regulations, and I hope the Minister and his officials will respond to them generously.

The regulations are part and parcel of what I imagine will be—the Minister and I might groan at this—a succession of statutory instruments or delegated legislation that will have to come before Committees such as this in the next two to three months so that the Government can meet their objective of getting all the necessary secondary legislation through before the Act can be formally implemented. Will he confirm that things will happen in the usual fashion, with the Act coming into force in full in April once the SIs have gone through?

The regulations are an important part of the process, not least because of the lengthy and useful debate we had in Committee. The Minister has already mentioned his predecessor the hon. Member for Orpington, to whom I pay tribute for the civility with which he answered the detailed questions we asked him on all these areas, including access and participation. The record will show that on the whole we did not press matters to Divisions on the basis—this is important for the new Minister to recognise—of the former Minister’s assurances about various things not needing to go into statute because they were implicit in the OFS guidelines and would be carried through. Through this whole process, we will look carefully to ensure that officials and ultimately the new Minister honour the letter and spirit of what his predecessor said in those rather detailed exchanges we had in Committee and on Report.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

As was previously outlined, clarity on responsibility is important. In particular, it is important that the director for fair access and participation, rather than any other individual, is responsible for deciding on an access plan and approving it.

[Gordon Marsden]

I am grateful to my hon. Friend for making that point. It speaks to a central part of the legislation that we need to consider, particularly in the context of access and participation. I will not go further on that for the moment because I will come on to it in due course. The former Minister said that there has to be a new architecture under the Bill because in many respects the OFS has a different role from that of HEFCE. Therefore, these issues are important. I thank my hon. Friend for raising them at this early stage, and I will come to them in my remarks.

The regulations are important to activate and generate what the Government want to do on access and participation, and what the OFS needs to do. I am afraid that that is where I part company slightly with the Minister. He said in his introduction that good progress had been made, although, as Ministers always should, he wisely used the great caveat, “There is more to do”. There is indeed more to do; although improvement has been made in some areas, far more must be done by both institutions and Government to ensure that higher education is accessible to all and that we can support students through their studies. The recent end-of-cycle report from UCAS offered some concerning statistics, stating that young people from the most advantaged backgrounds are still 5.5 times more likely to enter university with the highest entrance requirement than their disadvantaged peers. The OFS will need to press on that challenge, as little progress has been made in narrowing the gap between those most and least likely to enter higher education since 2014.

It is also a challenge in certain regions. In London, for example, 18-year-olds are now 25% more likely to enter HE than those across England as a whole, and 43% more likely than 18-year-olds from the south-west, for example. That is not just an issue for the OFS or higher education institutions, of course; it is not even necessarily an issue entirely for the Minister or me, given our remits. As the Sutton Trust has said, many of the issues go far back into primary and secondary education as well. However, they are important. As Les Ebdon, the director of fair access to higher education, said last month,

“people with the potential to excel are missing out on opportunities. This is an unforgivable waste of talent”.

The statistics often focus on increasing the number of 18-year-olds going to university, and the Government, when they first introduced the Bill and the White Paper, took that approach. During the progress of the Bill, we were glad to see them wake up a little more to issues such as part-time and mature students, and the one in 10 people in further education who take HE courses. As my hon. Friend the Member for Keighley mentioned earlier, there are still severe concerns about the situation of part-time and mature students. Since 2010-11, part-time participation has fallen by 61% and the number of mature students has declined by 39%. That is a concern for our overall economic performance. Over the next 10 years, there will probably be about 13 million vacancies, but only 7 million school leavers to fill them. If we do not empower people and give them chances, our productivity, our economy and all sorts of things will suffer.