Environment and Climate Emergency
Debate between Lord Henley and Lord Haskel(4 years, 10 months ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they will take following the adoption by the House of Commons on 1 May of a motion declaring an environment and climate emergency.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Government recognise the urgency of tackling climate change and protecting our environment. Following the Committee on Climate Change report, we have introduced legislation to achieve net zero emissions by 2050.
Lord Haskel (Lab)
My Lords, contrary to the Prime Minister’s misrepresentation, we on these Benches support the Government’s climate change initiative, but can we not do better by establishing a model that other nations can follow? When setting the model, will the Government ensure that there will be no creative accounting in carbon by offsetting imports, using international credits or carrying forward over- performance, and that we will introduce environmental stress testing and report? Then, we can be really proud of our achievement.
Lord Henley
My Lords, I am grateful for the support of the noble Lord and the party opposite. I regretted its Motion on Wednesday last week because, as I made clear in the debate on the statutory instrument, I thought that it was unnecessary. We have set realistic targets following the advice that we received from the Committee on Climate Change—targets that we believe we can and should meet—and, as we set out in the order, we will aim to meet them.
UK Net Zero Emissions Target
Debate between Lord Henley and Lord Haskel(4 years, 11 months ago)
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Lord Henley
My Lords, on his first point, the noble Lord is wrong to say that the Chancellor was trying to squash this: he was merely pointing out potential costs. As was made clear in the Statement, the climate change committee estimates that the annual cost of delivering a net zero target is within the same range as the 80% target was when it was set in 2008. Our own assessment of costs is within that range. It is right that the Chancellor takes an interest in the likely costs—after all, he is responsible for these measures.
The noble Lord is right to point to the importance of what we do about homes. We have an appropriate target and have announced what we want to do about energy efficiency by 2025. We will stick to that date, which will allow us to meet our target.
Lord Haskel (Lab)
My Lords, in the Statement the Minister spoke of a review in five years’ time. Why is this necessary, particularly after what the noble Baroness said? Surely this will be interpreted as showing less commitment? It would provide an excuse to delay investment for five years because it provides too short a timescale. Will the Government give this more consideration?
Lord Henley
My Lords, the noble Lord will remember that the idea of a five-year review was part of the original 2008 Act—which I am sure he supported, because the Act was introduced by a Government of which he was probably part at the time. We will continue with this idea, but we can review matters further if there are changes and developments as we commit. We are bound to review every five years but could do so earlier.
Corporate Governance
Debate between Lord Henley and Lord Haskel(5 years ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to raise public confidence in, and support for, business and industry through better corporate governance.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, we have reformed our corporate governance framework to make businesses more open and accountable. A revised UK corporate governance code gives employees a stronger voice in the boardroom and new legislation requires companies to report on their executive pay ratios.
Lord Haskel (Lab)
My Lords, we are all aware of the declining confidence in companies, particularly those delivering public goods and services, such as Carillion. Care homes are going bust and the probation service is in crisis at the moment. Led by Tomorrow’s Company—I declare an interest—thought has been given as to how we might restore public confidence in the trustworthiness of such companies. The proposal is that the Government should support the use of a British standard for the corporate governance of companies delivering these goods and services, in the same way that British standards enable us to trust public transport and health services.
Lord Haskel
Will the Government insist that companies delivering products and services to the public must satisfy this British standard, and that procurement bodies must also abide by it?
Lord Henley
My Lords, I agree with the noble Lord that public trust in companies and their governance is very important. I assure him that, according to the most recent survey, levels of public confidence are increasing rather than decreasing, as he put it. I am also aware of the work being done by the British Standards Institution in developing two new specifications on sustainable investment management and sustainable finance. It is premature to say whether the Government should expect suppliers to comply but we will obviously consider it carefully in due course.
Productivity: Work-related Stress
Debate between Lord Henley and Lord Haskel(5 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, an estimated 15.4 million working days were lost last year due to work-related stress, depression or anxiety. That is 57% of the total days lost due to work-related ill health. The 2017 Stevenson/Farmer review of workplace mental health made 40 recommendations, all of which were welcomed by the Government.
Lord Haskel (Lab)
I thank the Minister for that reply, but the Government’s latest skills and employment survey told us that we are working harder than ever and are under increased strain. In spite of this, productivity has stagnated. Recent research by McKinsey seems to show that less prescriptive management empowers staff to be more productive and reduces stress. What can be done to encourage this good practice? It would certainly help with the productivity puzzle. It also costs little and could relieve some of the mental health problems we hear about every day.
Lord Henley
My Lords, the noble Lord is right to draw attention to productivity problems, which my right honourable friend the Secretary of State raised in the Industrial Strategy last year. He is also right to talk about work-related stress, which was recognised as a problem by my right honourable friend the Prime Minister in January 2017. That is why she commissioned the review from the noble Lord, Lord Stevenson, and Paul Farmer, which produced its report in October last year. The Government then responded, accepting all the recommendations. The Government will do whatever they can both as an employer, to help to reduce work-related stress, and through setting an example to others and encouraging employers in other fields. We will also take note of the noble Lord’s suggestions.
Industrial Strategy
Debate between Lord Henley and Lord Haskel(5 years, 6 months ago)
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Lord Henley
My Lords, I can assure the noble Baroness that much has happened since the publication in November 2017 of the industrial strategy; indeed, I could speak at length listing all the things that have happened. Again, I ask the noble Baroness to be patient: we will announce the membership of this committee shortly, but we want to make sure we have the right people in place to look at the long-term development and success of the strategy.
Lord Haskel (Lab)
The White Paper promised us a separate council, the purpose of which is to stimulate and motivate action from the Government. Is this why the council has not yet been appointed?
Lord Henley
No. The point of the council, as I made clear to the noble Baroness in my earlier answer, is to look at the long term and at the development of the industrial strategy, and to ensure its success. That is why it is very important that we get the right people, all representing themselves, rather than any particular sector, and covering a whole range of areas and the entire United Kingdom, as I said to noble Lord, Lord Stevenson.
Companies (Miscellaneous Reporting) Regulations 2018
Debate between Lord Henley and Lord Haskel(5 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I beg to move that the draft Companies (Miscellaneous Reporting) Regulations 2018, which were laid before the House on 11 June, be approved.
The United Kingdom has an international reputation for the strength of its corporate governance framework. It is an important factor in making the United Kingdom an attractive place in which to invest and do business. One of the reasons we have maintained this reputation is that we have kept our corporate governance framework up to date.
In this spirit, the Government published a Green Paper on corporate governance reform in November 2016. The Green Paper focused on ways of improving shareholder scrutiny of executive pay and strengthening boardroom engagement with employees and other stakeholders. It also looked at the case for strengthening corporate governance in large, privately held businesses.
The backdrop to the Green Paper was public disquiet about high levels of executive pay and continuing concern about a disconnect between remuneration and performance. There were also concerns about boardrooms being remote, unrepresentative and disconnected from their employees. There was heightened interest, too, in standards of corporate governance in large private companies in the wake of the failure of BHS and some other large private companies.
The Government received 375 written responses to the Green Paper from a wide cross-section of business, professional and trade bodies, and wider society. They also had the benefit of the BEIS Committee’s report on corporate governance. The Government’s response, announced last August, set out a package of reforms combining new statutory reporting requirements, changes to the UK corporate governance code and industry-led measures.
The draft regulations being debated today will implement the new company reporting elements of the reform package. First, all large companies will be required to explain in their annual reports how their directors have complied with the requirements of Section 172 of the Companies Act, including the need to have regard to employee interests and relationships with customers and suppliers. This new information will make it easier for shareholders to hold companies to account and encourage directors to think more carefully about how they are taking account of these matters.
Secondly, very large private companies will need to make a statement about their corporate governance arrangements, including whether they follow a corporate governance code and if so, how. Thirdly, quoted companies with more than 250 UK employees will be required to publish pay ratios comparing the CEO’s remuneration to median employee pay and employee pay at the 25th and 75th quartiles. The ratios will need to be accompanied by an explanation, including the reasons for any change to the ratio from year to year and whether the median pay ratio is consistent with the pay, reward and progression policies for UK employees as a whole. This information will give shareholders new information to assess whether pay at the top is justified and consistent with pay and incentive arrangements in the rest of the workforce.
Finally, quoted companies will be required to illustrate for shareholders the impact of future share price growth on the value of share-based incentive plans. This will give shareholders a better understanding of how significant share price growth over a performance period can increase executive pay. It will also encourage remuneration committees to avoid mechanistic pay outcomes linked to share price growth. None of these reporting requirements will apply to small businesses. The measures are aimed at quoted, large and very large companies. The total costs for business arising from the new reporting requirements are expected to be £16.7 million in year one, and £9.8 million annually thereafter.
The reporting obligations complement and reinforce other elements of the corporate governance reform package. For example, the new requirement for large private companies to make a statement about their corporate governance arrangements is linked to work being undertaken by James Wates and a business and wider society coalition group to develop voluntary corporate governance principles for use by large private companies. These principles are currently being consulted on with a view to finalising them by the end of the year. Other links are with the Financial Reporting Council’s UK Corporate Governance Code. The new requirement on companies to state how they have had regard to the employee and other wider stakeholder issues in Section 172 of the Companies Act will help to underpin revisions to the code.
These changes include a new provision requiring boards, on a comply or explain basis, to establish at least one of three robust methods for gathering the views of the workforce: a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director. The FRC has been consulting on these changes and expects to publish the final revised code this month. In addition, the Investment Association, at the Government’s request, has launched a public register of companies encountering significant shareholder dissent of 20% or more to executive pay packages and other resolutions. This is shining a light on companies which are not listening to their shareholders, and in particular on companies that face significant opposition in successive years.
I refer briefly to the final part of the regulations, which relates to reporting by community interest companies. The Companies (Audit, Investigations and Community Enterprise) Act 2004 requires CICs to produce a community interest company report annually, including information about directors’ remuneration. The obligation covering small CICs was inadvertently removed when associated provisions regarding small companies were repealed in the course of implementing the accounting directive in 2015. This was not part of the corporate governance reform package, but these regulations represent a good opportunity to correct the earlier error. It is uncontroversial and does not involve any change in policy. Indeed, small CICs have continued to file the information. I commend these regulations to the House.
Lord Haskel (Lab)
My Lords, I welcome any attempt to raise the reputation of business and to increase the trust and confidence in business in the eyes of the public, so I very much welcome these regulations, but I wonder how effective they will be.
These regulations require public companies and large private companies to publish pay ratios and other data to show that the directors are taking into account the broader interest of customers, employees and communities, as the Minister has explained. These data are useful to provide more information to enable shareholders to question the directors and, if necessary, to vote at shareholder meetings. But who are the shareholders? Many shares are held by institutions, which are reluctant to act as long as the financial returns are as expected. Frequently they have a limited and sometimes short-term interest in the company. Also, much share trading is carried out by algorithms—and who knows on what formula they base their decisions? There are still many day traders active, and their trading, again, is based purely on numbers. As I understand it, this is the way the majority of shares now change hands.
I ask the Minister: even if the published data leads to naming and shaming, how effective will these regulations be in changing behaviour? I know there is a lot of concern about misleading comparisons between companies, but perhaps we should ask for other data to be published, such as benchmarking data on productivity so that shareholders can compare how well their company is doing in comparison with competitors.
Surely, there must also be concern about the reliability of the numbers. The big four accountancy firms almost exclusively audit for the large companies that are the subject of these regulations; they are also their financial advisers. In their role as financial advisers to these companies, I am sure that they will have lots of schemes to make the ratios look a lot more attractive. This joint relationship has come in for a lot of criticism recently. Is there any sign of any change so that these regulations will become more effective?
I welcome the rules applying to large privately held businesses. Most respondents in the consultation wanted to see more data about these companies and I hope that these regulations will produce it. Generally, I welcome these regulations, but would like to see them widened and made more effective.
Airbus
Debate between Lord Henley and Lord Haskel(5 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, Airbus is important to the United Kingdom and we want continued investment in the UK industry from Airbus in the long term. The analysis that Airbus has published is based on a no-deal scenario, which we neither want nor expect. The Government remain committed to a trading environment with the EU that is as free and as frictionless as possible. We are confident that a Brexit agreement will be reached to our mutual benefit.
Lord Haskel (Lab)
My Lords, the Minister’s reply does not actually get us any further. Indeed, Airbus is not alone. Is he not aware that it is these pious hopes and lack of clarity that force all responsible businesses to make contingency plans, to plan for the extra cost of disruption to the flow of goods and people, to plan for the absence of agreed standards on safety, certification and dispute resolution, and even to plan for possible tariffs? Will he take these concerns more seriously and respond in much clearer terms?
Lord Henley
My Lords, I and other Ministers take these concerns seriously. That is why my right honourable friend the Secretary of State responded to this point yesterday in another place and made it quite clear that he was listening to the concerns of Airbus, just as I made it clear that we were. The important point to remember is that the analysis put forward by Airbus was based on a no-deal scenario. As the noble Lord is aware, we will continue to negotiate, and we hope that those negotiations will achieve a result that will be good for British business.
Proposed Merger of Sainsbury’s and Asda
Debate between Lord Henley and Lord Haskel(6 years ago)
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Lord Henley
My Lords, I note what my noble friend has to say. I do not want to rehearse all the arguments that we went through when the Grocery Code Adjudicator was established some years ago, but I accept that it is a very difficult question when we are dealing with the imbalance between the very big supermarkets on the one hand and, on the other, those further down the supply chain, particularly small producers and growers. However, I give an assurance to my noble friend that the powers of the Grocery Code Adjudicator will always be kept under consideration by my right honourable and honourable friends and by the department as a whole. Obviously we want to see fairness between the supermarkets and their suppliers, just as—this is equally important in all retail matters—we think it important to ensure that the interests of the consumer are kept first and foremost at hand. It is the consumer that we are most interested in.
Lord Haskel (Lab)
My Lords, we are still members of the single market. Is this a matter large enough to involve the Commission?
Lord Henley
No, my Lords, on this occasion the CMA will be doing this job. I think we can all say—even the noble Lord might agree—that, thankfully, the Commission will not be involved in any way at all.
Brexit: Galileo Space Project
Debate between Lord Henley and Lord Haskel(6 years ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to continue United Kingdom participation in the Galileo space project after Brexit.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the United Kingdom has made clear to our European partners our desire to continue the United Kingdom’s involvement in EU space programmes, including Galileo, provided that the UK and UK companies can continue to participate on a fair and open basis. The Government are engaging with the EU to this end.
Lord Haskel (Lab)
My Lords, the Government have threatened to withdraw their support if we are not a fully participating member and not trusted with all the security arrangements. Does the Minister agree that that saying “If you do not trust us, we will go elsewhere and we want our money back” is an empty threat unless we have a practical alternative? What is that alternative and does it deal with the worrying lack of trust, which could extend to other matters relating to security, defence and our safety?
Lord Henley
My Lords, given our history, I find the lack of trust very confusing, but certainly we can look at other options. We have made it clear in a letter that my right honourable friend has sent to all appropriate Ministers in the other 27 countries that we wish to continue to participate in this programme. So far, we have had only a letter from the Commission itself setting out its view that we should not take part. In our view, that would be folly of the worst sort: it would increase costs for the whole programme by €1 billion and possibly delay it for three years.
Public Services: Corporate Governance of Businesses
Debate between Lord Henley and Lord Haskel(6 years, 2 months ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to ensure a high standard of corporate governance at businesses that provide essential public services.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Government’s corporate governance reform package will strengthen the United Kingdom’s corporate governance framework. Secondary legislation to be brought forward will require reporting on how company directors take their employee, supplier, customer and other stakeholder interests into account when carrying out their duties. It will also require quoted companies to publish and explain the ratio of their CEOs’ pay to the average of their United Kingdom employees.
Lord Haskel (Lab)
My Lords, I hear what the Minister says but this is the second Question we have had this afternoon about public services. Does this not indicate that the system of fines and regulation is just not working? Will the Government introduce a new purpose-driven classification to be adopted by companies which are privately owned but publicly guaranteed, because we have to ensure continuity of their essential public services? It must be a classification that ensures a standard of behaviour that is responsive to the public and ensures that company policy and company metrics are aligned to the public interest and not just to shareholder value.
Lord Henley
My Lords, we have always made it quite clear that the importance of public services will come first. In terms of the affair of Carillion, which I think the noble Lord was alluding to without mentioning its name, my right honourable friend the Secretary of State made the situation clear in his initial responses. We have also made it clear that we need to see some degree of reform of corporate governance. That is why we brought forward that reform package and why the Financial Reporting Council has been consulting on its revisions to the code; when those come forward we will take that on further.
Better Regulation
Debate between Lord Henley and Lord Haskel(6 years, 5 months ago)
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Lord Henley
I do not know how the noble Baroness received it, but she will be aware that it was an internal letter from me to colleagues within government. As far as I am concerned, that amounts to a leaked document.
Lord Haskel
I can shed a little light on the subject. The letter was from the Minister to the Public Accounts Committee in another place.
Lord Henley
I think the noble Lord is referring to another letter. The postal service has been quite busy. I will come to the comments of the Public Accounts Committee in due course. I am referring to what amounts to a leaked document.
Manufacturing: Digital Technology
Debate between Lord Henley and Lord Haskel(6 years, 6 months ago)
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Lord Haskel
To ask Her Majesty’s Government what is their response to the Made Smarter Review on the benefits of applying digital technology to the manufacturing industry, published on 30 October.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, Her Majesty’s Government welcome the Made Smarter report and thank Juergen Maier and the industry team for their work in outlining the huge potential that digitalisation offers to United Kingdom manufacturing. We look forward to working closely with industry to ensure that the United Kingdom can capitalise on the massive benefits of digital technology, which this report makes so clear, and realise its potential to be a global leader in the industrial digital technology revolution.
Lord Haskel (Lab)
My Lords, I am pleased that the Government welcome the report, as I do. As the report says, digitalisation can deliver a much-needed boost to our productivity. However, the report also points out that it is a disruptive technology for jobs and businesses. In implementing the report, what arrangements will the Government make for those who are displaced? Will there be a safety net? What procedures will the Government implement to ensure that people are not damaged by this?
Lord Henley
As the noble Lord will be aware, the report is quite big—246 pages. It was published on Monday. I arrived in the department on Monday, so I cannot claim to have read it from cover to cover at this point. No doubt he will criticise me for that, but I will start on it over the weekend. We recognise that this technology presents great challenges, including for raising productivity. The noble Lord is right to talk about the challenges of the fact that, in creating new, higher-paid and higher-skilled jobs, it creates a threat to other jobs—something we went through in the first Industrial Revolution when the spinning jenny and other things came in. It also creates opportunities for new jobs, which is what we want. I think he will accept that at this stage, with a 246-page report having been published only on Monday, it is a bit early for the Government to make any pronouncements on it.
European Union: Trade
Debate between Lord Henley and Lord Haskel
Lord Haskel
To ask Her Majesty’s Government whether they have given undertakings to different sectors of industry regarding trade with the European Union; and, if so, whether these will be incorporated in their industrial strategy.
Lord Henley (Con)
My Lords, as the Prime Minister has said, the Government want British companies in different sectors to have the maximum freedom to trade with and operate in the single market and to let European businesses do the same here. The industrial strategy will make clear that building a productive, open and competitive business environment is vital in delivering an economy that works for all.
Lord Haskel (Lab)
My Lords, this Question was originally put down when assurances were given to Nissan regarding Brexit and the EU. It remains topical because everybody else is still waiting for a reply. Will the Government confront this uncertainty? Will they show some leadership and give the sense of direction that is needed to enable and encourage the investment and the organisation so that everybody else can get on with the job of raising the productivity that we so desperately need?
Alcohol: Minimum Pricing
Debate between Lord Henley and Lord Haskel(12 years, 1 month ago)
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The Minister of State, Home Office (Lord Henley)
My Lords, as I said in my earlier Answer, the Government will launch a consultation on the level to be set for a minimum unit price for alcohol. The Government will consider a range of issues in detail as part of this consultation.
Lord Henley
The noble Lord understands the law very well. He is absolutely correct in that. These are matters for enforcement and we think that they should be taken up by the police and, subsequently, the licensing authorities. It is possible to remove the licence from an individual or a pub if it sells alcohol to someone who is obviously inebriated.
Lord Haskel
My Lords, have the Government considered achieving the minimum price by raising the tax rather than the price? If you raise the tax, we all benefit. If you raise the price, it is a windfall for the drinks industry.
Lord Henley
My Lords, I have to be very careful about what I say about changes to the taxation regime. It is slightly more complicated than that in that you would have to even out the tax rates on different forms of alcohol, which vary a great deal. That is one of the reasons why sometimes you find the two-litre bottle of cider that I mentioned earlier being so much cheaper than equivalent forms of alcohol. At this stage, we are looking at minimum pricing but no doubt it would be possible to look at other matters as well.
Clothing Industry: Ethical and Sustainable Fashion
Debate between Lord Henley and Lord Haskel(13 years, 2 months ago)
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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)
My Lords, I start by answering one question from the noble Baroness, Lady Quin, on the Defra website. I am not sure exactly what her concerns are, but I will look at that very carefully and get back to her in due course. I offer my congratulations to all other speakers in this debate, and to the noble Baroness, Lady Young, on introducing it on this subject. Like my noble friend Lord Addington, I faced a certain amount of ribaldry about the fact that I would have to answer such a debate. I do not think—unlike the description given of the noble Lord, Lord Hunt, by the noble Baroness, Lady Quin—that I am the sort of person that one would see on the catwalk, and no one would expect to. But when I saw my noble friend the Chief Whip today, decked out in leather and quite a lot of bling—I do not know if other noble Lords saw her—I thought that it might be more appropriate for her to respond to the debate, but she was not prepared to take on that role, and there we are.
There is a lot that I want to say and quite a number of points that I want to address that the noble Baroness and others have raised. I start by offering my congratulations on the work that she has done in trying to put together again an all-party group—I cannot remember if it is a new all-party group or whether it is resurrecting the old one—on this subject. I wish her well on that. I understand that she is hoping to have the first meeting of that group on 16 March—that is what I was advised. That is the day before the next meeting that we have on the sustainable clothing road map, which is right and proper. I hope that those two things can go ahead consecutively on those dates. I offer her my best wishes.
I will run through very quickly some of the noble Baroness’s questions before I get to the main part of my speech. She asked about tax breaks for ethical, green fashion businesses. Noble Lords will know that I will not comment on that because it is more than my job's worth to comment on anything to do with Her Majesty's Treasury, but no doubt it will be passed on to colleagues. She also talked about the important role in terms of government procurement. I was reminded about that when I looked at the obituaries today, which announced the sad death of the last remaining son of the late Monty Burton of Burton the tailors. In that obituary, I was reminded that Burton the tailors provided a third of all uniforms for the British Army during the war and a large number of the demob suits afterwards. Therefore, one is reminded of the importance of the Government as a purchaser in this field. The Government feel that they have an important role to make sure that they get their exemplary action over to others. In Defra, I hope that we can lead that and encourage other government departments to behave in the right way.
The noble Baroness also asked about the supermarket adjudicator. The noble Baroness, Lady Quin, commented on it. Again, this is not something that we plan to extend to clothes, but no doubt we will look at the idea that she has put forward in due course. Initial plans for a supermarket adjudicator are related to food, but it is a perfectly valid point and one that should be looked at.
Finally and this again was raised by others, the noble Baroness talked about the problems of cotton and the CAP and the fairly appalling distortions in that. She and others will know that we are in the middle of the process of renegotiating the CAP. Dare I say it, we cannot make any promises about what we will achieve as a result of attempts to reform the CAP, but Her Majesty's Government will be pushing very hard on it and we recognise that there are some fairly major distortions in there, particularly in relation to the production of cotton in Portugal, Spain and, to a much lesser extent, Greece. That is certainly something that Her Majesty's Government should be aware of and will push for.
Economically, the clothing and fashion industry is an important component of national and global economies, as all noble Lords made clear. Textile supply chains are long and complicated. They involve actors from the agricultural, chemical fibre, textile, and apparel industries, the retail and services sector, and—thinking particularly of part of my own department—waste recovery and treatment operations.
As the noble Lord, Lord Addington, said, historically we had a major textile manufacturing base. As the noble Lord, Lord Sugar, reminded us, 90 per cent of the UK’s clothing is now imported. We have seen a major migration of our textile industry abroad. However, I remind the noble Lord that we still have a considerable clothing manufacturing business even if 90 per cent has gone abroad, and a lot of that is in SMEs and involved in what we might refer to as ethical and sustainable fashion. I note again what he had to say about his ideas, which should be looked at. Those businesses are ones that we should continue to encourage and support.
Our consumption of clothes and textiles and so forth can have positive economic effects on not only our own country's economy but, as was made clear by a number of speakers, a great many developing countries. But alongside those positive effects, there are a wide range of environmental and ethical implications.
Alongside those positive effects, there is a wide range of environmental and ethical implications. Environmentally, we must consider the impact of fibre production all the way through the process, whether the water or the fertiliser—I have been given a figure for the amount of fertiliser used throughout the world on cotton; about 25 per cent of all pesticides go into that. I will correct that figure if I have got it wrong.
We also have to consider the greenhouse gas emissions when fossil fuels are processed into synthetic fibres. As the fibres are made into fabrics, there may be hazardous waste. The noble Lord, Lord Addington, mentioned the cotton and dyeing industry and the effluents from the dye and finishes.
As noble Lords have reminded us, ethical issues are associated with access to markets, trade terms for producer markets—that is why I wanted to mention the CAP—and concerns about labour conditions in clothing factories, sweatshop conditions and child labour issues.
Once we have bought clothes, there are the significant factors of water, detergents, greenhouse gas emissions associated with washing and drying them, and the waste produced at the end of life. Waste issues are close to my department. They have hit the headlines recently. Concerns about the impact of fast fashion are well founded. I was given an interesting statistic earlier. We buy about 2 million tonnes of clothing a year and discard about 1 million tonnes. It seems to me that our wardrobes are growing at an unsustainable rate, but I ask all noble Lords and Ladies to look at their wardrobes to see what is happening. Where are the clothes going?
The noble Baroness, Lady Quin, rightly referred to the sustainable clothing road map, which was established in 2007. It is a concerted effort by the whole clothing supply chain to understand and address its environmental and ethical impact. The road map provides a platform for sharing evidence and industry best practice to help catalyse change throughout the sector. From the evidence, the road map has prioritised certain hotspot areas where business can act to reduce the environmental and ethical impact of its clothing. The road map has produced an action plan under which more than 40 organisations, throughout the lifespan of clothing manufacture, retail and disposal, have committed themselves to specific actions to reduce their impact. A large number of big high street names are involved—Nike, Tesco, Adidas. I add that it involves not just big retail but people such as the Salvation Army, the Textile Recycling Association and Oxfam, because they have a role in disposal—reuse—which comes very high up in our waste hierarchy, because it is obviously far better to reuse or recycle clothes than to send them to landfill.
I assure the noble Baroness, Lady McIntosh, who I think asked about education, that the Salvation Army is committed to the educative process of encouraging people to think of recycling and re-use and, as she put it, repair of clothing rather than throwing it out. People of my father's generation were even taught how to darn socks. I have never learnt that art and, I fear, now tend to throw out socks, but a different generation did different things. Within Defra, we have funded evidence projects on emerging fibres, reuse and recycling of clothes, clothes cleaning and the public understanding of sustainable clothing, and we will do more where appropriate.
I am now getting warning signs from my colleagues, but I should talk a little about what other government departments are doing, because DfID did considerable work when it recently launched its RAGS programme—that is the responsible and accountable garment sector challenge fund, which is a £3 million fund which supports projects aimed at improving the conditions of vulnerable workers in the ready-made garment production industries overseas. The fund is aimed at workers in low-income countries that supply the United Kingdom market such as India, Bangladesh, and a certain number of countries in Africa.
I can also mention the ethical trading initiative, supported by DfID, which drives practical action on better working conditions in the supply chains of its companies. It has brought businesses, trade unions and non-governmental organisations together to tackle poor working conditions. Some 60 companies in the United Kingdom are now members making progress in this initiative.
I could go on; there is much that I would like to say if the time were available. I am trying to assure you that we are doing our bit and that we will continue to work in all these funds. I look forward to the next meeting, on 17 March, on the sustainable clothing road map, and I am sure that the noble Baroness, Lady Young, will be involved in that.
Lord Haskel
Before the Minister sits down, could he tell us what percentage of clothing—