I beg to move, That the Bill be now read a Second time.
The Small Business, Enterprise and Employment Bill has two fundamental purposes, one of which is to help small businesses grow and succeed, and the other is to ensure that the UK continues to be regarded as a trusted and fair place in which to do business. It is an extensive Bill, and I fear that if I talked through the 12 parts, 149 clauses and 10 schedules, we would have a speech of Fidel Castro-like proportions from me now, and I do not want to stray in that direction. I apologise to the House in advance that I may therefore have to gloss rather superficially over what are some very complex and meaty issues. There will, as a consequence, be many happy hours spent in Committee. I am pleased to say that the Minister for Business, Energy and Enterprise, my hon. Friend the Member for West Suffolk (Matthew Hancock), who has just enjoyed a welcome and deserved promotion, will be leading our team in Committee.
I thought that the most useful way of introducing the Bill is not to follow through the mechanics of the Bill itself, but to dwell on four big themes that flow through it in different ways. The first relates to employment. We want to make changes to the legislation in a way that benefits both employees and employers to ensure that employees are not disadvantaged by unacceptable practices, be they exclusivity clauses in zero-hours contracts or underpayment of the national minimum wage.
I am coming on to that matter in detail. I do not know whether the hon. Gentleman will be happy to wait until we get to that section.
Secondly, I want to ensure that our companies are trusted and transparent, so that they cannot conceal ownership or control and that they engage in good corporate behaviour. Thirdly, I want to help our small businesses get access to the finance they need to grow and export, compete in public sector procurement and address some of the issues around late payment. Fourthly, I want to support the Government's regulatory reform agenda, ensuring that ineffective, out-of-date and burdensome regulation does not hold back our businesses. Those are the four basic themes of the Bill.
Indeed, I believe that in the hon. Gentleman’s constituency unemployment has fallen by 46%, and he is gracious enough to have acknowledged that. We are in the first stage of the long-term recovery. There are, of course, issues around low pay and low productivity that will require investment, and that is where our long-term commitment to growth and industrial strategy is important. We want employment that is high-quality and secure, and all the evidence suggests that, compared with most parts of Europe, British employment in this recovery is more permanent and secure than elsewhere, although clearly there is more to be done.
That leads us to zero-hours contracts, which as far as we can establish apply to around 2% to 4% of jobs. The issue has aroused a great deal of concern because of its implication that many people are insecure in their work, and on the back of those concerns I initiated a call for evidence and a consultation on how we should deal with the problem. Two contrasting views came to light. There were indeed shocking examples of abuse, many of which are captured in the problem of exclusivity clauses that we have now committed to end. At the same time, it was clear that zero-hours contracts have a genuine positive role in the labour market and are appreciated by many individuals because of the opportunity they provide, as well as the advantages to employers. Indeed, recent research from the Chartered Institute of Personnel and Development, which has done much of the authoritative work in this field, contrasts satisfaction levels in zero-hours contracts with other work, and whether people are treated with respect by their senior management. It shows that zero-hours contracts are marginally better in both those criteria than other forms of employment.
The measures in the Bill to prohibit exclusivity in zero-hours contracts are to be welcomed, but why not just ban zero-hours contracts? Is the Secretary of State seriously saying that the only way to have a flexible labour market is to have zero-hours contracts?
(10 years, 4 months ago)
Commons ChamberMy hon. Friend describes a trend that is apparent across the country. As I said a few moments ago, almost half a million new jobs were created last year, and I am delighted that Kettering is sharing in that positive story.
Every week when Parliament is sitting, I get on the train in one of the poorest parts of the European Union and get off in the richest, with a twelvefold difference in wealth per head between west Wales and inner London. Does the Secretary of State acknowledge that the only way to address this record of shame is to fiscally empower the nations and regions of the UK and have a deliberate strategy, as in Germany, to redistribute wealth between the wealthiest and the poorest parts?
In many respects, the Welsh economy is sharing in the wider picture. Its unemployment rate is slightly lower than the national average. My hon. Friend the Member for Ceredigion (Mr Williams), who represents that area of Welsh Wales, is very active in promoting that part of the country, which benefits substantially from European assistance.
(10 years, 10 months ago)
Commons ChamberOn the contrary, the share register is dominated by large long-term institutional investors, most of whom hold the savings of millions of our citizens.
This afternoon, I am due to meet for lunch that great Welsh export and one of the world’s best rugby players, George North. As the Secretary of State knows, George North was bought by Northampton from the mighty Scarlets at a very reasonable price during the summer. Does he think that the hedge funds feel the same as Northampton Saints, because they have acquired the Royal Mail crown jewels at a cut price?
No; in fact, the offer was framed in such a way as to ensure that the shares were acquired predominantly by long-term institutional investors. A few hedge funds are involved and, indeed, some hedge funds take a long-term view.
If there are particular defects or a genuine breakdown in universal services in an area we can consider that, but that is not my understanding of how the service operates.
The Secretary of State mentioned increased profitability in states where postal services have been privatised, but was that achieved on the back of increased prices and reduced delivery days, as in Holland? What does he think the effect will be on small businesses located in rural areas if costs spiral and delivery days are reduced?
Costs will not spiral and, as I said in an earlier answer, the regulator has imposed a cap on the cost of a second class stamp. Other elements that small businesses in rural areas need, such as a guarantee of the universal service obligation, lie at the heart of what I have been saying this afternoon.
The Germans do indeed have a very good system of export support and trade finance. They do many of these things well. Partly in response to that, in the earlier period of this Government I introduced a new range of short-term trade finance products that we had not had before. They are now picking up a substantial amount of interest, and in the Budget the Chancellor announced £1.5 billion for medium-term—three to five-year—export credit guarantees, which are now being implemented.
In the Secretary of State’s assessment, what would be the implications of a Brit EU exit on the export sector?
I am going to Luxembourg tonight. I hope that by the end of tomorrow we will have to agreed to launch those very important negotiations. This is potentially the biggest trade deal that has been accomplished for many years, and it will have major implications—positive implications—for British exporters, particularly in sectors such as cars.
I beg to move, That the Bill be now read a Second time.
I recognise that we face serious competition this afternoon, but let me begin by putting the Bill in the wider economic context. Our economic strategy has two key elements, one of which is to maintain a credible fiscal policy. That policy has led to this country’s borrowing costs dipping to record lows in recent weeks. If we were without a believable deficit reduction strategy, we would have been forced to adopt one by market panic. Although fiscal credibility is necessary, it is not sufficient. A lasting recovery has to be built on the back of sustainable sources of demand and, above all, exports and stronger business investment. We are seeking to bring that about in extremely difficult international conditions, though some encouragement can be derived from the fact that 630,000 private sector jobs have been created in the past two years—almost twice the number lost in the public sector.
We also need to deal with the persistent imbalances that the previous Government did so little to address. Gross financial imbalances, a bloated banking sector and property speculation are not a basis for a sustainable recovery. A reliance on domestic demand and the neglect of exports has meant that we have been left behind in international markets. Legislation cannot, of itself, remedy those problems and generate economic activity, but the Enterprise and Regulatory Reform Bill is an important building block none the less. This far-reaching package of measures will scrap the unnecessary bureaucracy that is holding back companies, overhaul the competition framework, and boost business and consumer confidence.
Will the Secretary of State give the House categorical assurances that this House and the other House will not use the Bill to include the recommendations of the Beecroft review, with specific reference to sack-on-the-spot?
I can give a categorical assurance. Of course, as the report has now been published, the hon. Gentleman may be aware that it contains a number of proposals, many of which are admirable, sensible, and being implemented, but on the particular proposal that he mentions, we will most definitely not be proceeding in the way that he outlines.
I am tempted to engage in a long disquisition on that subject, having been involved in the debates on IR35 10 years ago. It is primarily a tax issue. As some Opposition Members will remember, the IR35 measures were introduced primarily to avoid a particular form of tax avoidance using national insurance, so if we have to do more on IR35 we will look to my colleagues in the Treasury, rather than this Bill.
Let me turn to directors’ pay. Fairness is important, and never more so than when the fiscal situation we inherited has forced upon us difficult decisions that affect everybody in society. That principle extends to executive pay, which for some years has behaved in a way that is unrelated to the rest of the economy or performance.
There is a well-established case for the regulation of directors’ remuneration, given the inherent conflict of interest when directors set their own pay. Moreover, shareholders in a number of companies have shown that they are increasingly angered by soaring pay for top executives that is unrelated to company performance. Their willingness to challenge rewards for failure is admirable, but I want this “shareholder spring” to be more than just a passing, seasonal phenomenon.
In developing our proposals, we have worked intensively with businesses and investors to create a workable package that helps shareholders to hold directors to account, while avoiding unnecessary red tape on business and unrealistic demands for investors to micro-manage pay. Responses to our consultation showed clear support for strengthened shareholder voting rights in order to improve the link between pay and long-term performance, while still allowing boards the flexibility to devise and deliver pay policy.
In the past it has been too easy for companies to ignore a significant adverse vote from their shareholders. That is why the Bill includes a provision to give shareholders binding votes on directors’ pay. We intend to introduce new clauses in Committee, when we have analysed in detail the responses to our consultation and finalised our proposals in that area.
What consideration has the Secretary of State given to creating remuneration bodies that include company employees? Surely such bodies would have a wider remit and far greater buy-in.
That is an issue on which we have frequently exchanged views across the House, and we do indeed want to see employee consultation, but we are not mandating employee representatives on boards, which I know some people have called for, and we have made that very clear in the past.
(12 years, 10 months ago)
Commons ChamberUKTI has no presence in Wales, so what discussions has the right hon. Gentleman had with the Welsh Government to ensure that UKTI is doing its best to promote Welsh exports?
Of course the Welsh Government, as a devolved Government, have more responsibilities of their own in this field, but Wales is part of the UK and I will do my best to work with my Welsh Government colleagues to promote exports. I have already talked to the Secretary of State about getting more Welsh businesses represented on UKTI missions and on projects of that kind.
(13 years, 6 months ago)
Commons ChamberI accept the general argument. We accept that the ECGD is an agency of Government that needs reform. It has been heavily constrained in recent years by judicial reviews of some of its export activities. Of course we have to respect the courts, but the ECGD clearly needs to do more and perform a wider range of functions. What we are announcing today for small-scale enterprises is a key step forward.
The latest figures from Her Majesty’s Revenue and Customs indicate that Welsh exports fell by 6.3% in the previous four quarters. Considering that UKTI has no presence in Wales, what is the Secretary of State doing to ensure that my country, traditionally an exporting nation, is at the heart of this strategy?
I did not totally follow the hon. Gentleman’s point about the statistics. Just to go over what the most recent statistics from a couple of days ago tell us, exports actually grew by 6% in the last quarter of last year, compared with the previous quarter. We should not read too much into that, because we are in abnormal conditions, but exports, along with business investment and manufacturing, are now growing. Wales, as a manufacturing and export centre, as he says, should be benefiting from that, and I hope that it will.