Oral Answers to Questions
Richard Fuller Excerpts(10 years, 2 months ago)
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Michael Gove
As the Secretary of State who was delighted to appoint a Labour baroness to chair Ofsted, I think my commitment to the independence of the inspectorate is beyond question.
Richard Fuller (Bedford) (Con)
In Bedford the transition from three-tier to two-tier education remains stalled, and there is still no coherent strategy to resolve it. In the circumstances, will my right hon. Friend take a particular interest in applications for funding from schools seeking to achieve coherent change for their pupils?
Small Businesses
Richard Fuller Excerpts(10 years, 6 months ago)
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Chris Heaton-Harris (Daventry) (Con)
I congratulate my hon. Friend the Member for Newton Abbot (Anne Marie Morris) and other hon. Members on securing the debate.
Before I came into politics, I used to wholesale fruit and veg. It was a family firm, which my father started and grew to a decent size. Then I had all the disputes that every son taking over a family firm has with their father, when they tell their sons that they are not doing it right, but we managed to sneak up the turnover of this fruit and veg business, working nights in New Covent Garden, to £7 million a year employing 17 people. We did it in spite of rather than because of the Government. Some of my points will be based on those old experiences, which small businesses in my constituency tell me they still face.
One of the best parts of our jobs as Members of Parliament is going to see small businesses and people taking risks to do good things and start employment in our constituencies. My constituency, like that of every other Member who has spoken, is full of amazing and surprising small businesses. I have a company called Bambino Mio, one of the largest companies dealing in reusable nappies. It started 15 years ago and now exports to almost 70 countries across the world. Another company is Daisy Roots. Many Members with children and grandchildren will have bought a pair of Daisy Roots shoes without knowing about it. EllaPure is a company direct selling all-natural skincare products. It was started by an 18-year-old lad two or three years ago, whom the shadow Minister met at a lunch with me not so long ago. He is a very impressive individual. Those three businesses all come from one small village, Brixworth.
I know that the Government have done lots of good stuff. I am delighted to be behind a Government who have created 1.4 million new private sector jobs since 2010, who are cutting national insurance, benefiting every firm by £2,000 next year, and who have allowed people to start 400,000 new British businesses. One of the things we do really well in this country is enable companies to set up quickly. It is a very simple process, which takes away a lot of the confusion. We have a very good scheme for enterprise zones. Neighbouring my constituency is Northampton, where the Northampton Waterside enterprise zone’s plans to change the face of the town for the better can already been seen.
However, there are many issues that affect micro and small businesses. My hon. Friend the Member for Rugby (Mark Pawsey) talked about employing people. Businesses take a massive risk when they start employing people. Perhaps some Members had never done that before taking people on in their offices here. Any Member who has had a dispute with an employee will understand how difficult it must be for a small business, which might have only one or two employees, when a relationship with an employee does not work and the risk that such employment involves.
Many small businesses complain about bureaucracy. I think we are doing reasonably well on that. Perhaps we could do more, but the thing that I think we could do better is to open up procurement in the public sector. I am sure that the Minister will tell me that we have got rid of a whole tranche of things and that businesses no longer need to provide three years’ worth of audited accounts before being able to bid for Government work. That might have been the policy change and what we are trying to implement, but a small business in my constituency called Mapcite, based in my village, was told that only a couple of weeks ago by the Department with which it was trying to deal. Then there are issues relating to rural broadband, which we are sorting out but which we need to get right. Rural broadband is ultra-important.
Richard Fuller (Bedford) (Con)
I am grateful to my hon. Friend for giving way, not least because it allows me to wish him all the best of luck for his special day. He said that he started working in his family business. Will he also herald the value that family businesses provide in our economy and, in particular, the work of the Institute for Family Business?
Chris Heaton-Harris
Yes is the simple answer to my hon. Friend. I have noted the time, Madam Deputy Speaker, and promise to finish on time.
We need to be positive about entrepreneurship in this country. We have a very good reputation across the globe. Amway, one of the biggest direct sellers in the United Kingdom, has 40,000 small businesses working for it. It did a big survey of people’s attitudes to becoming entrepreneurs, and we did not have a bad rate, because 77% of people thought that we have a positive atmosphere in which to build entrepreneurship. However, factors that worked against coming into business included fear of failure, which is a big deal. It is a psychological barrier that a person has to get over when they start a small business. Public funding and start-up loans are pretty indispensible in helping to get over the fear of failure, because people know they have something behind them when they start in addition to their brilliant idea.
I will be celebrating small business Saturday at the iCon centre in Daventry, where there will be a huge networking event for small businesses in my constituency. I congratulate my hon. Friend the Member for Newton Abbot once again on securing the debate.
Start-up Loans
Richard Fuller Excerpts(10 years, 6 months ago)
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Richard Fuller (Bedford) (Con)
Would-be entrepreneurs will recognise the cynical, negative response of the Opposition as evidence that the Labour party does not share their passion for creating businesses. The Minister referred to the 100,000th start-up loan. We were only at 1,000 start-up loans in February and we are now at 10,000 start-up loans, so we might well get to 100,000 start-up loans. What will be the Minister’s response if this policy continues to enjoy the success that it has had so far?
Matthew Hancock
I was getting ahead of myself. Mr Speaker, if we get to 100,000 start-up loans, I hope that I will be able to make a statement about that too.
Qualified Teachers
Richard Fuller Excerpts(10 years, 7 months ago)
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Nic Dakin (Scunthorpe) (Lab)
Having been a college principal only three years ago, I bring the perspective of the head teacher to the debate. In the college I led, the sixth-formers would have expected debaters to refer to the motion. I think that they would have found that much of the Secretary of State’s 30-minute speech related not to the motion, but to peripheral issues concerning free schools and the question of regulation. Those are valid areas of debate, but if he had taken the trouble to read the motion, which I think would have been helpful—it is what I would have advised my sixth-formers to do—he would have seen that it states:
“That this House endorses the view that in state funded schools teachers should be qualified or working towards qualified teacher status while they are teaching.”
Having listened to the contributions from Government Members so far, one might be forgiven for forgetting the important phrase
“working towards qualified teacher status”.
When I appointed teachers, as I did frequently in my 28-year career in education, they either would have teaching qualifications or would be put in a framework in which they could gain them. That was for their benefit and that of their students, and there is a lot of evidence to demonstrate that. I think that any Member who intends to go through the Lobbies tonight ought to look carefully at the motion. If they vote against it, they need to understand what they are doing.
Richard Fuller (Bedford) (Con)
I am grateful to the hon. Gentleman for drawing us back to the motion. If it became Government policy, will he explain what would happen to those teachers currently employed who did not work towards qualified teacher status? Would he want them to be sacked?
Nic Dakin
As a practical person and a head teacher, I would give the people employed in my college a framework in which they could get those qualifications, and we could have accreditation of prior learning, assessments and so on. Those people who have not done the job I did will have theoretical views on this, but I know how it is done, because I have done it day in, day out. The people out there know how they are running their schools and colleges, and the people who work in them know what they are doing as well. We trust them, but they need to be in a framework that delivers. We also need to listen to what parents are saying. In a recent YouGov poll, 78% of parents said that they want the teachers teaching their kids to be qualified.
I have just left a symposium in Portcullis House on the Finnish teaching system. I was reminded that not only do Finnish teachers need a master’s degree in their subject knowledge, but the degree has to deal with pedagogy. That is what teachers need: the knowledge and the pedagogy. That is what I needed when I had teachers standing in front of the kids in my college who I had a responsibility to deliver for. I am sure that is what people up and down the land want.
John Glen (Salisbury) (Con)
I am grateful for the opportunity to contribute to this debate. I was genuinely surprised to see the words of today’s motion, because this debate is based on the fact that fewer than four in every 100 teachers do not have qualified status. If the purpose of the debate is to try to draw out differences between the coalition parties, and sow the seeds of public concern that if free schools and academies expand—I sincerely hope they will—vast numbers of state-educated children will be taught by unregulated, unqualified and unsuitable individuals, it will fail in that objective.
My view is that free schools and academies provide freedoms for head teachers and leadership teams to employ individuals from a range of diverse backgrounds—perhaps for shorter periods or on an ad hoc basis to suit the developmental needs of their pupils, or, where necessary, to extend the curriculum. It is right to trust head teachers to appoint the staff they need locally, and to take on experts from industry and those with varied skills who sometimes simply may not have ticked the final box before qualifying. The fundamental principle that teachers are more likely than politicians to know their staff and what they need in their school is undoubtedly true.
Most importantly, academies and free schools will not be free from Government oversight, and the process for becoming an academy or starting a free school is rigorous—in my constituency, several applications have been unsuccessful. If schools get through that rigorous process, Ofsted can come in at a few days’ notice, and Ebacc requirements will involve more and more scrutiny of outcomes. I fear that this debate is really about an obsession with process and uniformity, and discomfort with getting to the heart of education, which is about inspiring young people and securing better outcomes for our children.
Salisbury has a wide range of excellent schools which each have different requirements from their staff. We are about to gain a university technical college that specialises in science and engineering, and a free sixth form with a broader academic curriculum focused on STEM subjects. We also have three sixth forms that have converted to academies, two of which are nationally leading grammar schools. All five institutions will deliver a high-quality curriculum to young people in my constituency, but why should any of them be restricted to a narrower pool of talent on the basis of dogma?
I was recently contacted by a top academic from Southampton university about its teacher training programme. She noted that one of its graduates had been described as “phenomenal” by Ofsted just 10 days after gaining NQT status. While important skills can be taught and honed on teacher training programmes, those programmes cannot fully replicate raw talent and a passion for teaching, which—among some—is evident in the classroom from the start. In other words, teachers may become properly trained through on-the-job training alone, and it seems unnecessary to make high-quality candidates jump through arbitrary assessment hoops and delays, when their skills are being tested and they can demonstrate them to the head teacher’s satisfaction and secure better outcomes in exams at the end of the year.
The university technical college that will open in Salisbury in 2015 has developed a partnership with many local employers, such as defence industry employers, the Army, and the university of Southampton. It will provide brilliant teaching opportunities for industry experts on a part-time basis. Those specialist inputs, which come from individuals who will not have all the teaching qualifications, must be valued in our education system.
Richard Fuller
Is my hon. Friend concerned about some of the terminology? We are using the phrase “qualified”, when what we mean is that someone has a qualification. Those he is talking about are qualified, and we want them to educate our children, whether or not they have a particular qualification.
John Glen
My hon. Friend makes a characteristically wise and perceptive point. We must think more broadly about education and not be held back by dogma in our approach on who we allow in the classroom. We know that Ofsted exists and that there is real rigour in the oversight that we expect in terms of outcomes. I fundamentally disagree with the premise and motives behind the motion. The Government have done a lot to raise standards as well as the expectations of pupils and parents. That is about removing Whitehall interference, and demonstrating our trust in head teachers to employ who they need in individual schools, which will have different appetites and needs to suit their different local populations and employment opportunities. It is right that we continue in that way, and I will vote against the motion this afternoon.
Secondary Schools (Accountability)
Richard Fuller Excerpts(10 years, 7 months ago)
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Mr Laws
I agree with my hon. Friend, who makes an extremely important point. He will know that as part of our proposals on primary accountability, we are significantly increasing the bar for what success looks like at the end of primary school. We are doing that because pupils at the end of primary school who achieve only the level of attainment set as a measure of achievement by the previous Government overwhelmingly go on to fail even the existing five good GCSE measure. We cannot possibly allow a level of success at the end of primary school that prepares students for failure rather than success in secondary school.
Richard Fuller (Bedford) (Con)
Effective implementation is likely to require accountability to run both ways. Head teachers who are inspired by this and other measures to tackle educational underachievement have the right to know that the Department for Education, the Education Funding Agency and Ofsted are there to help them, and that their interactions with those agencies will be courteous, open and effective. Will the Minister do his part, in respect of accountability, to ensure that those agencies support the head teachers who are in the front line when it comes to making these changes happen?
Mr Laws
I will certainly do that. Head teachers want to feel that they are supported by all parts of the education system, including our Department, and they want an accountability system which they see as fair and which drives the right incentives. I believe that what I have announced today will give them that.
Oral Answers to Questions
Richard Fuller Excerpts(11 years, 2 months ago)
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Michael Fallon
I note that the hon. Gentleman wants to divert the House from the question about Royal Mail and the more interesting question of whether those on the Opposition Front Bench will support this opening up of Royal Mail to private capital and the scheme to ensure that those who work for the company will share in its success.
Richard Fuller (Bedford) (Con)
13. What recent assessment he has made of the costs and benefits of international students to the UK economy.
The Minister for Universities and Science (Mr David Willetts)
International students provide enormous economic and cultural benefits to the UK. Education exports from further and higher education contribute some £9 billion to the economy. We therefore stated in January that we will place no cap on the number of genuine students coming from across the world to study in this country.
Richard Fuller
I thank the Minister for that answer. We all understand the importance of clearing up the chaotic mess of immigration left by the last Government and the attention that the public pay to reducing the total numbers, but many of us would like to see student numbers excluded from our migration statistics. The economic case has been made by Universities UK and the 1994 Group. Will the Minister reassure me that he is sensitive to these representations?
Mr Willetts
My hon. Friend is right. The first priority was to eliminate abuse so that people can have confidence that students are legitimate. We have now said that we will disaggregate the statistics so that students are separately identified. The next step is a positive education export strategy, which we will produce before the summer.
Industrial Policy and Manufacturing
Richard Fuller Excerpts(11 years, 6 months ago)
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Sir Gerald Howarth
My hon. Friend in my old county makes my point admirably for me. A common feature of both companies that I mentioned is that they both invest heavily in research and development, which the chief executive of Dyson, Max Conze, describes as “the key to success on the world stage”.
I want to concentrate on defence. BAE Systems and QinetiQ both have their headquarters in my constituency and I make no apology for being a strong supporter of Britain’s defence industry. According to Peter Rogers, who was last year president of ADS—the aerospace, defence and security trade body—the UK’s defence industry employed 110,000 people, of whom 25,000 were graduates and engineers, and supported a further 314,000 jobs. Turnover was £22 billion and export sales were just short of £10 billion—a fantastic record and a fantastic success story in manufacturing industry.
The United Kingdom is a world leader in both civil and military aerospace—as you, Mr Deputy Speaker, know better than almost anybody in this House apart from myself, Sir—with Rolls-Royce in advanced aero engineering and propulsion and Airbus providing the most advanced wing manufacturing in the world. On the military front we have Typhoon, with SELEX supplying the radar and MBDA the missile systems. We have a range of companies, from Rolls-Royce and BAE Systems, to EADS UK, Thales, Ultra, Chemring, Cobham, and Marshalls, to tiny bespoke hi-tech companies that should not be ignored given the fantastic contribution that they make to the cutting edge of technology. We need to maintain our leadership of that cutting edge, not only to win wars but to enable us to compete against newly emerging economies.
If I can single out one man for his contribution to this, it is Lord Drayson, who in 2005, when he was the Minister with responsibility for defence procurement, produced a fantastic paper called “Defence Industrial Strategy” in which he said:
“Well targeted investment in R&T is a critical enabler of our national defence capability; it strengthens innovation in our defence industry, produces more capable equipment for our Armed Forces and underpins our ability to operate with high technology allies like the US or France”.
I could not put it better myself.
Richard Fuller (Bedford) (Con)
I agree that the defence industry is an important part of the manufacturing base of our country. Will my hon. Friend contrast the previous Government and this Government in terms of the leadership provided by the Prime Minister? Under Labour, QinetiQ, which now headquarters in his constituency, closed down just outside my constituency with no support from the Government. Under this Government, our Prime Minister went to China and won a contract on behalf of the Aircraft Research Association, which is based in my constituency, thereby securing jobs and securing its future.
Sir Gerald Howarth
My hon. Friend anticipates a point that I was going to make, so let me do so now. I fully concur. I do not think that people in this country really appreciate the extraordinary lead that the Prime Minister has given in the promotion of defence exports. Having been the Minister responsible for defence exports, I can testify to his determination, vigour, enthusiasm and commitment. There is every prospect that that commitment will pay off, because he has seriously re-engaged the United Kingdom with the rest of the world in a way that the previous Prime Minister was wholly incapable of doing.
In respect of defence exports, we are increasingly being required to transfer our technology as well; indeed, that appears to be the only way in which we will be able to win these contracts. In looking at the technology, it is very important to understand the significance of defence research. I have QinetiQ in my constituency, but I also have Roke Manor in Hampshire, which produces fantastic defence research and has 400 engineers. In 2009, BAE Systems invested £833 million in defence research.
We have a good record, but I am afraid that the previous Government do not have such a good record. In 1990-91, at 2009-10 prices, real defence R and D expenditure was £3.8 billion, but in 2009-10 that figure declined to £1.7 billion. In other words, it declined from 11.6% of the defence budget to 4.4% of it. As Lord Drayson said in his 2006 document, “Defence Technology Strategy”, today’s equipment is the result of yesterday’s investment in research. He also said:
“Current threats emphasise that science and technology is fundamental to UK military capability.”
Maintaining a vibrant defence industrial base is not a throwback to a 1960s socialist planning concept, as it appears that some of my colleagues believe, but an essential ingredient in the defence of the realm and in contributing to the export-led economic recovery that the Prime Minister wants and which, as I said, he is leading.
I salute my hon. Friend the Member for Mid Worcestershire (Peter Luff) for his sterling endeavours to ensure that the case for supporting British technology was made within Government, but I fear that the right balance has not been struck. People need to understand the consequences of simply buying abroad. Initially we might get a good price and the kit that we want, but then next time we are told, “The price has gone up, so I’m sorry but you can’t have the same capability.” We then find ourselves on a very slippery slope where we cease to be major players in the world and cease to be able to command our own operational sovereignty. We are facing that issue with the joint strike fighter. There is ongoing argument over our access to the technology. I know that you, Mr Deputy Speaker, know a great deal about that. It is imperative that, as equity partners in the joint strike fighter programme, we have that operational sovereignty.
Seeking to grow the UK’s defence industrial base must not be an excuse for the military to over-specify its requirements or for the industry to inflate its prices. Competition clearly has a role to play in restraining such excess, as the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) suggested. However, other nations, including an increasing number of emerging countries, are investing in military capability development and their demand for our products is likely to decline. That raises the inevitable question: from where will the United Kingdom derive its income in the future? I submit to the Minister that the answer has to be in upping our expenditure on defence research, for all the reasons that I have set out.
As a former Bank of England man and adviser to my right hon. Friend the Chancellor, I say to the Minister that the position of R and D tax credits needs to be looked at again. QinetiQ has pointed out to me that it is being seriously disadvantaged by the Treasury’s proposal to change R and D tax credits to make them above the line, which would remove the fiscal incentive for companies that focus mainly on research, rather than development, to locate their activity in the United Kingdom. Given the strength of feeling around the House this evening about the importance of our manufacturing industry, I hope that the Minister will take back to his friends in the Treasury the need to ensure that we incentivise industry and the Government to invest in our technology. That will be hugely important for the defence of Britain and for our defence industrial base.
Oral Answers to Questions
Richard Fuller Excerpts(11 years, 6 months ago)
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Michael Fallon
I am not sure that we need lectures from a party that introduced six new regulations every working day during its 13 years in office. We have cut red tape and business tax. There is an issue with access to finance. That is why we have set up the business bank, the funding for lending scheme, and a range of other schemes. It is now up to the banks to rebuild their relationship networks to make businesses more aware of the appeals mechanism. We are encouraging the British Bankers Association to do that to make sure that the money that the Government and the taxpayer are providing gets through to the companies that need it.
Richard Fuller (Bedford) (Con)
The Minister understands that every new successful entrepreneur is a new job creator, a new wealth creator, and a new net contributor to paying for our public services. Does he also understand the importance of the intention of people to become entrepreneurs? What is the Department doing to strengthen the entrepreneurial culture in our country?
Oral Answers to Questions
Richard Fuller Excerpts(11 years, 7 months ago)
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Mr Laws
The right hon. Gentleman has a long tradition of passion for and commitment to the early years in education. We are constantly keeping schools and early years funding under review, and of course we will do what we can over time to ensure that youngsters, at whatever stage of their education, have an opportunity to fulfil their maximum potential.
Richard Fuller (Bedford) (Con)
The pupil premium is an excellent coalition policy to assist children from disadvantaged backgrounds, as is the free school policy. Can the Minister advise us on what efforts he will make to push forward with the free school policy to target areas with a high proportion of students on the pupil premium?
Mr Laws
My hon. Friend makes a very good point. It is right that free schools are being concentrated in many parts of the country where there is disadvantage and where traditionally the performance of the school system has been weak. That will ensure that many disadvantaged youngsters can attend schools producing an outstanding or at least good performance.
Enterprise and Regulatory Reform Bill
Richard Fuller Excerpts(11 years, 7 months ago)
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Jo Swinson
This is not about making it easier to sack people. This is about making it easier for people to come to a mutual agreement, which is, by definition, not sacking.
Richard Fuller (Bedford) (Con)
May I offer my hon. Friend some reassurance that she is charting a middle course? She has heard the concerns of the lawyers on the Opposition Benches who, instead of recognising that our business leaders are going out every day to do the best they can for their employees, assume that they need to be corralled and controlled. There are Members of the House who would like to see the Minister go further in her measures in the Bill to make it easier for business leaders to hire more people so that the current recession becomes a job-filled rather than a jobless recession.
Jo Swinson
I think I thank my hon. Friend for his intervention. The fact that there is criticism from both sides shows that a balanced approach is being taken. I shall make progress as I know that other Members want to speak.
Jo Swinson
The fact remains that there is a massive backlog of employment tribunal claims, there are massive problems with the way the system is working, and there is significant concern in the business community, which has been expressed in the House and in Committee. I shall move on to the other amendments before allowing other Members to have their say.
Government amendments 11 to 15 to clause 13 will ensure that the power in the Bill to amend the unfair dismissal cap cannot be used to introduce a cap based on an individual’s pay without there also being a specified upper limit. My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) raised a concern in Committee that, as it stands, the power in clause 13 could be used to introduce a pay-based cap with no upper limit. Clearly, such a step would increase potential compensation for the very highly paid and could thereby increase risks and uncertainty for employers. As my hon. Friend the Member for North Norfolk who is now the Minister of State, Department of Health, made clear at the time, this is not the Government’s intention. On the contrary, we are seeking to give employers greater confidence in dealing with disputes and to ensure greater realism about the level of awards in order to encourage settlement.
We launched a consultation on proposals to change the cap on compensation for unfair dismissal on 14 September, alongside our consultation on settlement agreements. The consultation includes looking at the overall level of the cap and also the option of introducing a pay-based cap alongside a specified upper limit. We therefore seek to make these amendments to ensure that the power in clause 13 reflects the Government’s policy intentions.
Opposition Members have proposed three amendments to this clause, the first of which, amendment 82, would delete the clause in its entirety. It has been a matter of common agreement for many years that the compensatory award should be subject to an upper limit. What that limit should be is the issue in question. This clause recognises the agreement that exists about the need for an upper limit, but provides a power for the Secretary of State to vary that limit subject to specific considerations. As I have said, we are consulting on what the appropriate limit should be. I am therefore unable to accept the amendment.
Amendment 70, tabled by the hon. Member for Hayes and Harlington (John McDonnell), seeks to remove the upper limit of three times median salary. The effect of this would be to allow the cap to be set at any amount. This would clearly run counter to the objectives that I set out a moment ago of greater confidence for business and greater realism for claimants. The hon. Gentleman tabled a further amendment to the clause, amendment 71, which would require the Secretary of State to consult the TUC and the CBI before deciding on a figure for median annual earnings where the figure published by the Statistics Board is more than two years old. I cannot envisage a situation in which such information would not be produced by the ONS in any two-year period but, should such an eventuality ever arise, the Secretary of State will be under a duty to act reasonably and rely upon relevant information. The Secretary of State and other Ministers meet the TUC and CBI regularly to discuss a range of matters, so there is little to be gained from placing a requirement to consult the TUC and the CBI on the face of the Bill. I am therefore unable to support either of the hon. Gentleman’s amendments.
I turn now to the amendments to clause 14 tabled by my hon. Friend the Member for Bedford (Richard Fuller). Amendment 58 would delete clause 14 in its entirety. Amendment 59 seeks to restrict the imposition of a financial penalty to those businesses employing more than 10 people—that is, to exempt micro-businesses. I want to make it clear, as did my predecessor in Committee, that the introduction of this discretionary power for tribunals is not intended to penalise employers indiscriminately. It will be used only when an employer has breached an individual’s employment rights, and when that breach has been accompanied by aggravating features—for example, where there has been a deliberate decision to act in a way that breaches the employee’s rights, or where the same employer repeatedly acts in an unlawful manner.
When we first proposed the introduction of financial penalties, we had thought to make the imposition of the penalty automatic when there was a finding in favour of the claimant, but we listened to the concerns expressed by business during the resolving workplace disputes consultation last year and revised our proposals to give the tribunal discretion to decide when a penalty was appropriate. Good employers—those who try to do right by their employees—have nothing to fear, regardless of their size. A genuine mistake will not be grounds for the imposition of a penalty. However, those businesses which the tribunal considers have acted deliberately or maliciously will rightly, I believe, face the prospect of a financial penalty. They will no longer be able to gain a competitive advantage over businesses that abide by their obligations.
I cannot stand here and defend bad employers. I recognise the good work that my hon. Friend the Member for Bedford has done to support the interests of small businesses, and I am sure he does not want to defend bad employers either. I hope he will not press his amendments, as the Government are unable to support them.
Richard Fuller
Of course I do not wish to defend bad employers but as the Minister knows, almost all employers are good employers who do the right thing. Will she address the general principle, which is not so much about the points that she mentioned? Why are the Government trying to get in on the financial action? This is about money that will go to the Government. It is nothing to do with the relationship between the employer and the employee. The money will not go to the employee. Why is it so important that the Government get their take?
Jo Swinson
My hon. Friend is right to point out that the majority of employers are good employers. I am sure hon. Members in all parts of the House find that to be so when they visit local businesses in their constituencies. Even in the case of good employers, a mistake will occasionally be made and they will end up at a tribunal. That is why, in response to the consultation, we removed the automatic imposition of a penalty. Any penalty will be based on the circumstances of the case and will be imposed by the people who have heard all the facts—the tribunal. It will be imposed only on employers who have deliberately flouted the law or done so in a malicious or aggravated way.
On the point about financial penalties, this is not some kind of revenue-raising scheme; it is about ensuring that the right incentive structure is in place by creating a further penalty for businesses that deliberately flout the law. That will incentivise the right kind of behaviour. For the reasons I have just outlined, that will be fairer on the vast majority of businesses that are good employers and that should not lose out to those employers that gain some kind of advantage by treating their employees badly.
Richard Fuller
The Minister again mentions an additional penalty for those employers. Is she aware that the Law Society has stated:
“Uplifts on compensation of up to 25% are already available in cases of unreasonable breach of the Acas Code on Disciplinary and Grievance Procedures”?
Is that not a sufficient additional penalty?
Jo Swinson
I do not believe that what we have at present is sufficient. Although they make up a small portion, there are clearly too many employers who do not comply properly with their obligations. I think that it is quite right that we send a clear signal and make it clear that those employers can expect to face a bigger consequence at a tribunal than those well-intentioned employers who try to do the right thing but fall foul of the law because of an error—after all, we are all human.
Opposition Members also seek to amend clause 14. Amendment 92 seeks to address the issue of non-payment of employment tribunal awards by proposing that an employer should pay a penalty for each period that an award made in an unfair dismissal case goes unpaid. I recognise, and indeed sympathise with, the amendment’s aims, but I am afraid that it would not have the intended effect. When I took over this brief, I was genuinely shocked by the level of employment tribunal awards that are unpaid. The figures for 2009 show that six months after an employment tribunal makes an award as many as 40% of claimants had not received the money they were rightly due, which is clearly unacceptable.
Whatever people’s views on the rights and wrongs of the employment tribunal process and how it could be improved, when an employment tribunal grants an award and the case has been heard properly, the claimant should be able to get their money. Like my predecessor, I am very concerned at the figures for non-payment. When a tribunal finds in favour of a claimant, it cannot be right that they are unable to get the money they are owed.
We are consulting on two changes that I believe might have some effect on the number of awards paid promptly. They include proposals to put a date on a tribunal’s judgment specifying when payment should be made and to charge interest from the date of judgment where an award is unpaid after 14 days. These charges will apply to all cases, not just to unfair dismissal cases. Importantly, in that scenario the interest will be added to the award and paid to the claimant. That consultation closes on 23 November and I encourage the hon. Members who have tabled amendments to take part and feed in their views.
I want to consider what more we can do on this issue. I have already discussed it with my colleague and fellow Minister for Equalities, the Under-Secretary of State for Justice, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant). We are both clear that action is necessary, but we cannot take action without first understanding the underlying problem properly. The previous Government attempted to resolve the problem by introducing a fast-track enforcement process, but it still persists. The process had some success, but not enough people have been accessing it and, even for those who have, it has not been successful in all cases.
I have therefore commissioned research from the Department on the reasons why so many awards go unpaid. Once we have that information, which I anticipate will be early next year, we will be able to take whatever steps we can to ensure that claimants receive the award they are entitled to. Therefore, I ask my hon. Friend not to press the amendment and I commit to taking the proposal away and considering it further to see what we could do in the light of the research findings.
Richard Fuller
I will speak in favour of the two amendments relating to clause 14 that stand in my name. We have heard many legal arguments today. I am not a lawyer by training, so I have listened as intently as I can. My background is in business, and I draw the House’s attention to my continuing interests.
The Minister did an excellent job of portraying the middle path that she is taking with the legislation. I intervened on her to say that many business people feel that Parliament and politicians are out of touch with the realities of their day-to-day business. In some cases, their voice is not heard loudly enough. My amendments deal with one area where there is further that the Minister could go.
Julian Smith
My hon. Friend says that the public feel that this place is sometimes out of touch. From what he has heard from Opposition Members, would he say that Labour is anti-business and completely out of touch with entrepreneurs?
Richard Fuller
My hon. Friend makes an excellent point. All of us are aware that the Labour party has trouble understanding aspiration and even more trouble in rewarding aspiration. I am sure that Opposition Members will reflect deeply on the point that he has made.
Richard Fuller
The shadow Minister does not agree with me, but let me point out to him the way in which the hon. Members for Walthamstow (Stella Creasy) and for Edinburgh South (Ian Murray) have spoken about Mr Beecroft. Somehow, a person becomes a word, which becomes something to be thrown around and handled in the most insulting of ways. There is no understanding of what Adrian Beecroft has done.
John Cryer
Did the hon. Gentleman read the evidence that Mr Beecroft gave to the Public Bill Committee? When he was asked, repeatedly, what the basis of his assertions was on a whole range of subjects, and what evidence he was bringing to bear, he more or less said, “Well, it’s something I’ve just dreamed up.” He did not present any particular evidence that I can pinpoint in the Hansard report.
Richard Fuller
The hon. Gentleman makes a good point, but—[Interruption.] I am serious, and this is a serious point. I do not know much about football, but I understand that the idea is to play the ball, not the man. That is also important in debates, which was why I did not feel it was correct when the Secretary of State dismissed Adrian Beecroft’s proposals out of hand and called them “bonkers” on Second Reading. It is important that we should debate those proposals. If, as the hon. Gentleman says, there is not sufficient evidence for them, let us look forward and move on to other issues.
My point is that Opposition Members too often harangue business people or try to portray them in a particular light. I refer particularly to the comments of the hon. Member for Walthamstow, who I believe discussed how Mr Beecroft made his money. I gently urge her to recognise that Mr Beecroft’s boss at the time—they were in the same company, making the same money—was an adviser to the former Prime Minister, and that the Labour party received millions of pounds in donations from that gentleman. If she wishes to make such points about one individual, I look forward to being copied in on her letter to the Leader of the Opposition suggesting that the Labour party should return that money.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
The hon. Gentleman has mentioned some adjectives used about Beecroft that he thinks were less than precise. Surely a simpler way to put it is that the plural of “anecdote” is not “evidence”. Beecroft presented a series of anecdotes about business that he could not back up with any facts. I know the hon. Gentleman well enough to know that he is in the facts business, so surely he will reflect on that when considering Mr Beecroft’s report.
Richard Fuller
The hon. Gentleman, too, makes a good point. I have read the evidence given to the Public Bill Committee, and it was not sufficiently evidentiary to move Mr Beecroft’s point forward. However, the hon. Gentleman will know that developed economies are currently having trouble with how to increase employment as they come out of recession. In the United States and the United Kingdom, it is taking us longer to create jobs as the economy recovers. It is therefore imperative that we look at the evidence, to see whether we wish to promote the Beecroft proposals. That is why we need a deeper and more serious debate than just talking about poor evidence in a Public Bill Committee or anecdotal evidence somewhere else, and one without name-calling.
Mr David Anderson (Blaydon) (Lab)
The hon. Gentleman makes the exact point that we constantly made in the Public Bill Committee. Given what he is saying, surely we should stop this debate and then take a view one way or another when we have got the evidence. At the moment, everything that the Government are doing is based on views that are not evidence-based.
Richard Fuller
I appreciate the hon. Gentleman’s perspective, but the Minister made quite clear her belief that there is sufficient evidence and support for the Government’s measures. Many of us think that they will go quite some way towards providing what businesses and employees would see as a reasonable and fair way to make efficient changes in the procedures for dismissal, dealing with unfair dismissal and tribunals.
I wish to focus on clause 14 and my amendments to it. Amendment 58 would delete the clause entirely, and amendment 59 would apply its principles only to businesses outside the micro-business sector—those that have more than 10 employees. The shadow Minister, the hon. Member for Edinburgh South, has given a number of the justifications for doing that both in Committee and today. First, there is the principle that involving the Government in a dispute between an employer and an employee may complicate the achievement of a settlement between those two parties. It is difficult to understand the a priori reason why a Government should try to achieve a take, because as he made clear, we should be trying to ensure that employers pay the amount for which they are responsible to an employee who has been aggrieved by a dismissal. I listened to the Minister’s comments, but my concern is that the clause will provide additional complexity in the process.
As the Minister indicated, the clause will also create an imbalance between the employee and the employer, and we are not sure how that will play out under the new regime. I hope that if the Minister will not accept my amendments today, she will at least agree to examine how the changes play out, and perhaps consider whether the issue of financial penalties should be reviewed in future.
Julian Smith
It is worth recording that every business representative group in Britain is concerned about the clause, for many of the reasons that my hon. Friend has given.
Julie Hilling (Bolton West) (Lab)
I can understand why businesses do not want to face the reality of their actions, but we know that many businesses flout employment law, whether deliberately or innocently. If anybody breaks the law in any other walk of life, whether through a driving offence, robbing a shop or whatever, there is a penalty to be paid. Clause 14 is not about innocent omissions; it is about employers doing something deliberately. From many years of representing people, I know that employers often deliberately go against what is written in legislation. Surely they should have to pay some penalty for doing that, just as anybody would in any other walk of life. If someone breaks the law, they pay a cost.
Richard Fuller
The hon. Lady makes some good points from her experience, but my view is that we should focus our attention on ensuring that the aggrieved employee is in the best possible position to receive the maximum amount of the settlement that has been made in their favour. As was shown in evidence to the Public Bill Committee, in a large proportion of cases the employee does not get that amount. I do not see how it will help to add an additional burden on top of that, with the Government trying to take money as well. There seems to be a discord between that and our trying to do the best by employees. That is why I would rather the clause be completely removed.
I believe the shadow Minister said in the Public Bill Committee that in 59% of cases, employees do not receive the full settlement, and I would like the Government’s focus to be on reducing that figure. I believe that the clause is unhelpful, and as my hon. Friend the Member for Skipton and Ripon (Julian Smith) said, business representatives also believe that.
Julie Hilling
What, then, do we do with employers who continue to flout the law? I absolutely agree that the claimant should get the compensation to which they are entitled, but some employers continuously flout the law and just pay a small amount. Often, employees get a small award at tribunal anyway, depending on their age, length of service and income. What do we do with those employers?
Richard Fuller
That is an interesting question. My amateur response is that there are better ways to solve the problem than the method in clause 14. Imposing an additional burden in the form of money going to a different party, the Government, is not the optimum path to reach the resolution and outcome that both the hon. Lady and I would like to see when an employer has acted inappropriately and is not paying the bill that he or she should to the aggrieved employee. In general, as I have said a number of times, I would rather have the law presume that the employer is doing the right thing and will make the right payments. If he or she does not, there should be other measures, which perhaps the Minister can mention in her response.
As we have heard from my hon. Friend the Member for Skipton and Ripon, both the Federation of Small Businesses and the Institute of Directors have made representations to the Government that it would be better to remove the penalty on businesses imposed by clause 14. I have mentioned some of the representations made to the Government by the Law Society—that the benefits of imposing financial penalties on employers are not convincing—and, perhaps for slightly different reasons, from Opposition Members we have heard why the clause may not be good. I would rather leave those comments for the Minister to reflect on than push the amendments to a vote. I appreciate the hearing from the House.
Richard Fuller
The hon. Gentleman is arguing for things he would like to see, but as he is well aware, it is already within the purview of corporations to put an employee on their boards, and shareholder votes can already be held on compensation and can influence that compensation even if they fall short of the 50% hurdle. What compels him to want to make it a legal requirement, rather than to use the market to make these decisions itself?
Mr Wright
It is because, as I tried to explain in my opening remarks, over the past 30 years we have seen market failure and a huge disconnect in the level of remuneration paid to top executives, but that has not ensured commensurate performance among the companies they lead, which is what we need. I think that the Government are onside on this. The shareholder spring and activism that we have seen, including at Trinity Mirror, has largely been the result of initiatives put in place by the previous Labour Government on annual advisory votes on directors’ pay and so on. I know that the hon. Gentleman is very familiar with these issues and will support us in ensuring that shareholders—the people who own these companies—have a proper say.
Richard Fuller
I appreciate the shadow Minister’s point, but unfortunately, as is often the case, the Opposition are like the ambulance that turns up two days too late and to the wrong address. The market is already responding to these issues, and measures are being taken to change how compensation is made, as he said. The Opposition always rush to legislate restrictive control and put a hand down on aspiration, when the market itself will solve, and is solving, these problems. I fully accept that there is an issue about employee representation in companies and about the historical lack of alignment between compensation on boards, but he is going the wrong way about resolving it.
Mr Wright
The purpose of the amendments, which have buy-in from Mr Rossi, Fidelity and elsewhere, is not to seek the death of aspiration, but to encourage, incentivise and try to ensure that companies achieve as much consensus as possible on directors’ pay policy—that was also the position of the Secretary of State earlier in the year—ensuring that companies start early in the process and avoid the use of what is a somewhat blunt and brittle tool, whereby the issue is discussed only at the annual general meeting or what-have-you, which can cause tension. Getting in early and talking to shareholders means that the owners and managers of a business can reach some sort of consensus. That is the purpose that amendments 95 and 96 seek to achieve. I quoted Mr Rossi in Committee, and I will do so again:
“Companies have nothing to fear if what they propose is fair and reasonable and clearly aligned to what is good for long-term shareholders.”
The hon. Member for Bedford (Richard Fuller) is a strong and experienced Member of this House and a good champion of businesses. I disagree with what he says about regulation and employment legislation, but he will recognise that getting good consensus on directors’ pay and ensuring that shareholders have the tools at their disposal to hold managers to account is in all our interests.
Amendment 86 would have the effect of creating an annual binding vote on pay policy, an issue that, again, was much deliberated in Committee. I still firmly believe that an annual vote is hardly disproportionately onerous or somehow unduly bureaucratic. Shareholders are used to, and expect, annual corporate reporting on matters such as the annual accounts—whether they are a true and fair view—and the reappointment of auditors. I reiterate the point that I mentioned in Committee and throughout the passage of the Bill: I fail to see how such a proposal can be seen as onerous. In Committee I had a well-thumbed Financial Times editorial from June 2012, which said that
“the business secretary has missed a trick in not going for annual pay votes…His worthy hope is that this might encourage more medium-term thinking about pay. But an obvious worry is that such votes may degenerate into another exercise in box-ticking, with shareholders voting on boilerplate policies rather than specific deals.”
It went on:
“Executives will restrain their demands only when they perceive a real risk in flouting social norms on pay. Fund managers, who naturally shy from conflict with companies, still need to be encouraged to challenge bosses more—especially on this sensitive topic. Annual votes would at least put them firmly on the spot. Mr Cable’s triennial polls, however well-meaning and thoughtful, may not.”
That point was echoed by the head of the High Pay Commission, Deborah Hargreaves, who stated in evidence to the Committee:
“If you vote every three years on pay policy, it is important that that policy is detailed enough for you to have an effect. The danger is that it could turn into a box-ticking exercise, where you vote on general boilerplate policy recommendations, rather than nitty-gritty details and figures. I felt that an annual vote would include more figures and more detail, and give shareholders more power to make informed decisions about what is going on in relation to pay at the company. If it happened every three years, the fear is that they may be voting on something vaguer and more bland.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 137, Q294.]
Again, I cannot see how our proposal would be onerous, and I think Ministers should think again.
The final amendment in this group is new clause 27, the purpose of which is to improve transparency in the disclosure of information relating to remuneration consultants and the manner in which they are paid by companies. Evidence suggests that remuneration consultants have played a key part in hiking up directors’ pay. Work undertaken by Professor Martin Conyon found a direct correlation between higher-than-average directors’ remuneration and the use of remuneration consultants. Further studies have shown that, on average, pay for chief executive officers is 26% higher in companies that use remuneration consultants. As I mentioned in Committee, across the Atlantic the Congress inquiry led by chairman Henry Waxman concluded that remuneration consultants to Fortune 250 companies were paid almost 11 times as much for providing other services to those companies.
Richard Fuller
The shadow Minister is making some good points. Does he believe that the Government should provide guidelines to remuneration committees on how they should set directors’ pay, and on how they should ensure that the correlation with average earnings and with shareholder value growth is maintained?
Mr Wright
That is a fair point. There are already guidelines in place, including discretionary guidance from the industry. We also have the combined code on corporate governance, which provides a degree of guidance. We need to determine whether the issue is sufficiently serious that it requires legislation to provide firm guidance. I shall be interested to hear the Minister’s view on that, given that there is agreement across the House on the disconnect between pay and performance, and the link—which acts almost as a catalyst—between remuneration consultants.
Speaking as a chartered accountant who used to work for a “big four” accounting firm, I see a close correlation between these problems and the crisis in the auditing profession a decade ago. That led to the disclosure of fees and to greater transparency on the audit services and non-audit services provided by the accounting firms. The perception was that in corporate scandals involving firms such as Enron, the thoroughness and accuracy of the auditors’ opinion was called into question when audit firms secured additional, often more lucrative, work away from the statutory audit.
New clause 27 would therefore increase disclosure of information relating to payments to remuneration consultants, ensuring that the Secretary of State should make a provision by regulation of notes to a company’s accounts about payments made to the consultants, including information specifying fees that have been paid as a proportion of the total remuneration package of a director. My concern is that, if a contract is so designed, a consultant has an inherent desire to inflate the package to secure a larger fee. If that is the case, shareholders should be made fully aware of it via a disclosure in the annual accounts. As I have said, we applaud the Government’s general direction of travel, but we believe that they could go further, and I will be interested to hear what the Minister has to say about this.
Matthew Hancock
Amendments 21 and 22 are technical amendments, the effect of which I hope will be straightforward and non-controversial. The changes proposed in Clause 50 will support the implementation of the Government’s policy on reducing the burden of regulation by allowing a sunset and review provision to be included in any future secondary legislation. They will enable the Government to put in place a robust and enduring system for tackling obsolete, burdensome or ineffective regulation, in line with the principles set out in the sunsetting guidance first published in March 2011.
I am pleased to say that those principles and the proposed change in the clause are widely supported and received detailed scrutiny in Committee before the summer. The changes proposed in clause 50 are permissive, broad in scope—intentionally so—and apply to powers to make subordinate legislation falling within the scope of the Interpretation Act 1978. Without qualification, this would include powers in a UK Act of Parliament exercisable by Scottish Ministers, whether in relation to matters devolved to the Scottish Parliament or in relation to matters reserved to Westminster.
Following earlier consultation with Scottish Ministers, however, agreement was reached to exclude powers exercised by Scottish Ministers from the effect of the changes. Among other things, that is consistent with the convention, under the present devolution settlement, which has cross-party support, that the Westminster Parliament will not normally legislate on matters devolved to the Scottish Parliament, without the consent of the Scottish Parliament. That seems reasonable to me.
Following further consultation with interested parties, it has become apparent that a further change is required to address the related issue of the powers of non-ministerial Scottish bodies and other persons under UK legislation. For example, the Registration of Births, Deaths and Marriages (Scotland) Act 1965 provides the registrar with various powers to make subordinate legislation in areas of devolved competence. Equally, the Court of Session has powers under successive UK Acts, most recently the Court of Session Act 1988. Because these are powers to make subordinate legislation within the meaning of the Interpretation Act 1978, they would also be in the scope of the changes proposed in clause 50. The effect of the Government’s amendments is to ensure that the powers exercised by non-ministerial Scottish bodies and other persons that fall within areas of devolved competence are excluded.
Richard Fuller
I appreciate the Minister’s giving way. I am enthralled to learn about births, deaths and marriages in Scotland—all things Scottish are important at the moment—but for businesses in my constituency of Bedford, the key question on the sunset provisions is why the Government have proposed only a “may” rather than a “must”. What business leaders in my constituency want to see is a clear indication from the Government that they intend to seek a requirement to sunset all new legislation, rather than this “maybe, maybe not.” In the remaining time, will the Minister please address the question of why he has chosen “may” rather than “must”?
Matthew Hancock
One reason is that it would be unreasonable to include a requirement to sunset all legislation, including primary legislation, when some of it is intended to set a long-term framework. For instance, when we set the structures in which our energy market operates, it is important to show clarity and long-term decision making, and we can deliver that, especially where there is cross-party consent. Therefore, although we want to ensure that sunsetting is the norm, especially in secondary legislation, there is a purpose in not doing so for primary legislation where businesses want the certainty of a long-term legislative proposal, rather than having a requirement that all legislation of this House—including, for instance, constitutional legislation—be sunsetted after a period of time. Notwithstanding the fact that income tax remains sunsetted every year, requiring a Finance Bill, it would not be appropriate to have a sunset on every single piece of legislation.
Richard Fuller
I appreciate the Minister’s giving way again. I know that in his solid free-market hands businesses should have no fears about the way in which legislation will be imposed further upon them, but he will know, just as I do, that eventually, in the long-distant future, there may be a change of Government—[Hon. Members: “Hear, hear.”]—although maybe not in my lifetime. Does he not agree that, just as night follows day, so sunsets should be applied to all clauses?
Matthew Hancock
I think that businesses would hope that legislation put in place for the long term will remain for the long term. The sunsetting in this Bill—as amended by the technical amendments that we are debating—is a major step forward, and the way in which it will be implemented is the right way forward. We are taking an ambitious and strong approach to secondary legislation that will ensure that Ministers and the Government have to check that legislation is working in the way it ought to. Therefore, I would resist the Opposition and non-Government amendments in the group, and I hope we have cross-party support for amendments 21 and 22.
Richard Fuller
Enterprise and regulatory reform, part of the title of the Bill, are words to bring succour to those who work in the engine room of the British economy—words that can take a thousand ideas for a new business, which have been discussed over a pint or sketched out on paper, and transform them into job-making, wealth-creating vehicles of growth.
The anticipation for the Bill is almost tangible, but I fear that it will fall short of fulfilling the hopeful expectations. Where is the rolling back of the myriad fees and charges that are blithely imposed on businesses; where is the relief for shopkeepers from the sky-high rateable values set at the peak of Labour’s boom-cum-bust; and where is the implementation of our policy to roll back job-destroying EU regulation?
The Bill’s proceedings should have started with a rallying call to our businesses that this Government are unambiguously on their side; a statement cherishing the principles of the free market as the most liberating force for social good; a determination to embrace, defend and expand the global free market that has lifted hundreds of millions of people from poverty, to which too many were consigned by the misguided socialist policies of the past; a rebuttal of the insidious assumption, which too often underlies Government intervention, that, left to their own devices, people who run their own business cannot be trusted. That assumption should be replaced by a presumption of trust that in starting and growing businesses, people are doing the essential work of a grateful nation, burdened by its debts and seeking the wealth to maintain its cherished public services.
Capitalism delivers by its results what all rival systems can only promise on paper. That is a truth that the Bill should have heralded as clearly and unequivocally as President Obama did just last night:
“I believe the free enterprise system is the greatest engine of prosperity the world has ever known.”
We need to spread access to capital for people to start their own businesses, so that it is as available in Bradford, Burnley, Bath and Bedford as it is in London, Oxford, Cambridge and Edinburgh. We need to create a front-foot nation, a nation of entrepreneurs. It must be as much a part of our culture for people to want to own their own business as to want to own their own home. We need a people with the willingness to start, the ambition to grow and the courage to try again. We need a local community spirit that expects, encourages and supports those endeavours.