Businesses: Rights and Responsibilities

Viscount Eccles Excerpts

Thursday 8th December 2016 Lords Chamber

[Viscount Eccles (Con)]

My Lords, I think I may find it very difficult to follow my noble friend Lady Couttie because in my long experience of business I have not come across quite the range and frequency of bad behaviour that she has—I have been involved in small companies. My noble friend Lord Hodgson’s theme, with which he ended his introductory remarks, is the struggle to maintain liberal values and make sure that they work. In pursuing that endeavour, it may be right to think about what might be wrong with our liberal values, not necessarily from everybody’s point of view but from that of a lot of people.

If I may be pardoned, I will start with a story, to follow on from the noble Baroness, Lady Bowles. The boss of Polly Peck, riding very high at the time, came to see me and suggested that my organisation, the Commonwealth Development Corporation, should sell all its citrus interests—grapefruit and oranges in Swaziland—to Polly Peck. I said to my colleagues, “If you don’t mind, I will deal with this, because this chap, with his liquid brown eyes, is far too clever for me. And if he’s far too clever for me, it would be very risky to let any of you go to see him”. So I went to his office, in Grosvenor Square I think it was. The carpets needed mowing and the mirrors were clearly all double, and there were great big pictures of tigers doing unspeakable things to each other. So I went back to the office and said, “Having seen what I’ve seen, we cannot do business with Polly Peck”—and we did not.

In declaring some sort of interest I point out that I, like many others, have been a rolling stone. I have been the chairman of three companies that would probably be described as FTSE 250 companies. None of them now exists. One went by way of a large construction company into Norwegian ownership and into liquidation. Another went to an American company, and the third went to a Japanese company. I have also been the chairman of a small company, which I am happy to tell noble Lords still exists and sends five or six containers of iron castings across the channel every week. I have also been the leading non-executive director of a large public company, which again does not exist anymore. However, many of your Lordships will be familiar with Aga cookers, and that was part of that company. Aga is still going strong, and is owned by an American company.

When, many years ago, I used to bicycle across the wilderness between Stockton and Middlesbrough, we used to say that the foggy atmosphere had a burnt cheese smell to it. That was because ICI Billingham was there, on the left hand side. I never would have imagined that the ICI would disappear—that would never have come into our thoughts.

My first experience of corporate governance came in 1968, when I became the chief executive of a company. Among other things, we were in the nuclear power station business. This company, in fact, installed more graphite cores in gas-cooled reactors than any other company ever has or ever will. I think it must have carried quite a lot of responsibilities. It did not seem too burdensome, but I am sure there were responsibilities. As to rights, I do not remember even thinking about them—it would not have occurred to me that I had any rights. What would they have to do with doing a good job on behalf of my customers?

Of course, this was all before Maxwell and the bouncing cheque, and long before Cadbury, the famous Quaker family firm, now gone via Kraft to some company called Mondelez. I still like and buy fruit and nut bars, and they are priced at £2.05 or £2.10, depending where you go—except that almost always, in either Tesco or Sainsbury’s, you can get them for £1.50. As a consumer, I wonder, “If they can sell them to me for £1.50, why did they ever put them on the shelf at £2.05 or £2.10?”.

All this leads me to think back and wonder about the predilection we have for the long term. It does not seem to me at all easy to think long term if you have had the experiences I have over a long life. Chief executives are not in a good position to think about the long term: they do not last very long. Executive directors also find it difficult to think about the long term: many of them do not last very long either.

It may be that in pursuing our liberal values, we miss a few important points. Where have we come since 1968 towards this Green Paper, which has been described by the noble Lord, Lord Monks, as weedy? I entirely agree, but probably for rather different reasons. All through that period, we have been slowly applying our liberal values. Cadbury, Greenbury and the 2006 Act all concentrated on social and economic values.

Now we are in a time of upsets, and perhaps we are going into a time of authenticity—Boris leading. We are also in a time of extreme growth of knowledge and an ability to do all sorts of things, as the previous debate showed, which we do not have the resources to do. Although we have been informed by liberal values, we have two problems. One is that we are not very good at making choices or explaining why we make them. Secondly, there is increasing recognition that those liberal values do not deliver for everyone. Once again, we are trying to do things for everybody, but does everybody think that they are going to succeed?

I live in the north-east, and I used to supply a lot of equipment to the Durham coalfield. The coal in the Durham coalfield and under the North Sea is coking coal of the finest quality. Those miners were some of the most amazing people you could possibly meet: the way they looked after each other—and you, when you went down the pits—was incredible. Their communities were amazing.

Come the day when there was a 40,000 tonne bulk carrier and 80 foot seams of coking coal in Australia, nobody could keep the Durham coalfield open, no matter how hard they worked, how hard they tried or how good their equipment was. Their seams were, if they were lucky, four foot thick. In some of those pits centred in Sunderland, they had to go three miles out under the North Sea. It did not matter what you did, you could not compete. That coking coal was coming to the Redcar blast furnace, which has now closed. I am not sure what we really think about the Green Paper and tightening the screw on corporate governance one more turn, but I tell you that the people in that part of England were knocked out by conditions over which they had no control. They think that we try to do our best, but they also think that we do not succeed.