Industrial Strategy
Debate between Richard Fuller and Iain Wright(7 years, 7 months ago)
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Mr Iain Wright (Hartlepool) (Lab)
Thank you for that guidance, Mr Deputy Speaker—I need to have a productivity improvement of about 20% immediately.
It is a real honour to follow the hon. Member for Warwick and Leamington (Chris White). I think we have exactly the same principles, motivations and objectives when it comes to having an industrial policy. He is a fantastic member of the Business, Energy and Industrial Strategy Committee. I thank him, other members of the Committee, and the Backbench Business Committee for allowing this important topic to be debated today.
I welcome the Prime Minister’s rhetoric about having a “proper” industrial strategy. We on the Committee have embarked on an inquiry into industrial strategy to assist with the development of policy. A number of fundamental questions need to be addressed to ensure that we have a modern, competitive, productive, sustainable and profitable business base in this country. What is the correct and optimum level of state intervention in economic and business policy? It would be ludicrous and naive to suggest that the Government do not intervene every single day through legislation and regulation that affect the prospects of hundreds of thousands of businesses.
How can that intervention be done in as strategic and co-ordinated a manner as possible? The primary consideration for business in any industrial strategy, or indeed any Government policy, is long-term certainty—something the hon. Gentleman has already mentioned. How can we ensure that the broad sweep of industrial policy transcends Parliaments and can withstand changes of Government? We have to acknowledge that there is a mismatch between the long-term requirements of business and short-term political pressures. Ministers of all Governments and of all persuasions are prone to the temptation of announcements, initiatives and reviews. Governments are keen to give the impression of action and activity, even if that is not often matched in reality. How better to give an impression of zeal and purpose than to announce a review of something?
Richard Fuller (Bedford) (Con)
The hon. Gentleman talks about the importance of the long term as he yet again stumbles into the same mistake that politicians make generation after generation—believing that they know what industrial strategy is but do not bother to ask their colleague for whom it might be something different. My experience of business has been in technology. The only long-term thing in technology was the knowledge that tomorrow will be different from today. How on earth are the Government, with their lumbering, slow way of manoeuvring, supposed to keep up with the entrepreneurs who have created so much progress in society?
Mr Wright
We can have many debates on industrial policy—we have and we will.
The hon. Gentleman touches on the second big theme of my speech, which is: What do we mean by picking winners? Let me go back to the notion of long-term business considerations and wishes for policy stability at the expense of short-term political culture. We have seen this already with the new Government. The new Prime Minister has announced that we need to have
“a proper industrial strategy”.
In doing so, she seems to have jettisoned much of what has gone before. In a letter to me this week, the Secretary of State said that there needs to be
“a much stronger relationship between Government and business. For that reason, now is not the time for the Government to set out its approach in detail”.
Although that provides clear blue water between the current Government and what went before when David Cameron was Prime Minister, it hardly provides the reassurance of certainty for business. At a time when the process of Brexit is leaving business with unprecedented uncertainty and giving pause to future inward investment into this country, greater detail should have been provided. It is a cause for concern that over three months after the new Department was formed, the Secretary of State is still insisting that he cannot set out the Government’s industrial strategy in any kind of detail. Equally, important steps on large strategic matters such as airport expansion and new energy generation are taking far too long, especially when Britain needs to demonstrate to the world that we remain open for business.
Another key principle of what we need for a successful industrial strategy is effective cross-Government co-ordination. Industrial strategy will be a failure if it merely resides in No. 1 Victoria Street. As previous Administrations have demonstrated, unless the relevant Department—the Business Department, the DTI, or whatever it is called—is headed by a big beast, whether a Heseltine or a Mandelson, the notion of effective co-ordination across Whitehall turns into dust. Early signs from the new Administration are encouraging. Most importantly, the new Cabinet Committee on Economy and Industrial Strategy is chaired by the Prime Minister herself. This should ensure co-ordination and effective leverage from No. 10 and demonstrate to other Departments that the Prime Minister is very interested in this issue and will be pushing to bang heads together if they do not demonstrate due respect to an industrial strategy.
That said, the Cabinet Committee still has to combat a silo-based and defensive approach from Departments. I think that the Secretary of State recognises that. As he said in his letter to me,
“to be successful, the industrial strategy will need to deliver an upgrade to our infrastructure”,
and yet the Treasury will not relinquish control over infrastructure spend. He also stated that a successful industrial strategy will need to
“improve our education and training system to provide the skilled workforce that will be needed in the future”,
and yet the Department has lost control over skills policy. Lord Heseltine, giving evidence to our Committee last week, said that
“industrial strategy starts in primary schools”,
and yet when we met the Permanent Secretary this week and asked, “To what extent does BEIS have influence over the design of primary school policy in order to link it with industrial policy?”, he conceded that the Department had no such influence. I am yet to be convinced, based on experience of successive Governments, and having had the privilege of serving as a Minister myself, that Whitehall Departments will have as a primary objective the effective implementation of an industrial strategy. I hope that the Minister can demonstrate otherwise.
A further key way in which effective Government co-ordination can be demonstrated is through smart procurement. There may often be a tension between Departments in securing goods and services at the cheapest cost, and in considering the use of British-based and British-made products, which may sometimes be more expensive. I would contend, however, that it is often a false economy to buy off the shelf from overseas at the long-term expense of an effective British manufacturing sector. This month’s announcement that the hulls of the replacement Trident submarines are to be built with French steel, at a time when the British steel industry has been pushed to the brink of extinction, shows vividly an acute failure of industrial policy. I am not for one moment endorsing the idea of protectionism. That approach insulates domestic companies from the harsh realities of having to compete in the global economy on cost, innovation and quality, and it ultimately dooms them to obsolescence. However, given the great success story of many parts of British manufacturing, why is not every single public organisation’s fleet using Nissan cars built in Sunderland or Vauxhall vans built in Luton? How is the procurement process nurturing British industry, and how will a proper industrial strategy ensure that that becomes the case?
Richard Fuller
I am grateful to the hon. Gentleman for giving way a second time. He said that he was not talking about protectionism, but then he outlined, chapter and verse, a protectionist position that we should buy British products. How is that not protectionism?
Mr Wright
I think that smart procurement can engineer proper prosperity, but I warn the hon. Gentleman that what I have to say next will give him spasms. It relates to the link between a proper industrial strategy and foreign takeovers, and how the state can intervene to perhaps limit the range of foreign takeovers.
In her speech launching her campaign to be Conservative party leader in July, the Prime Minister said:
“A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain.”
I welcome that approach. One of Britain’s virtues is its openness and the fact that that openness lends itself to dynamism and a willingness to consider new ideas and innovate new products. That ultimately leads to better competitiveness, yet there is a risk that this country will sell off the crown jewels, which would be detrimental to the long-term success of British business. We are at the heart of a dynamic and connected global economy, but we are at greater risk of investment in capital allocation decisions that affect British industry being made far away from these shores by parent boards headquartered overseas.
Indeed, within days of the Prime Minister entering No. 10, it was announced that SoftBank was buying Cambridge-based Arm Holdings for £24 billion. That was not an old-fashioned, obsolete, loss-making businesses, and it did not require a bail-out from the state. It was a successful British company in the growing global tech revolution. If the tests for stepping in to defend a sector that is important for Britain were not at work in that instance, it is difficult to see when they would be applied. Indeed, what would those tests be? For every instance of a welcome takeover, such as Tata’s purchase of Jaguar Land Rover, there are numerous examples of takeovers where industrial capacity was moved offshore, such as Kraft’s takeover of Cadbury. What are the criteria for stepping in and intervening?
Enterprise Bill [Lords]
Debate between Richard Fuller and Iain Wright(8 years, 4 months ago)
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Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to follow the hon. Member for Warwick and Leamington (Chris White), my colleague on the Business, Innovation and Skills Committee.
In the main, notwithstanding the concerning revelations about future unknown clauses relating to Sunday trading, this is not a bad Bill. There is a bold and lofty ambition to the rhetoric accompanying the Bill, which is, I would suggest, somewhat at odds with reality. I think even the Minister would have to accept that the impact of the Bill will be very marginal in promoting a step change to improve the productivity, profitability and competitiveness of firms.
It is excellent news that the number of UK business births has increased to 351,000—the highest number since comparable records began in 2000—and I am particularly pleased that the north-east has the highest proportion of new business starts, albeit from a smaller business base. The increase in the number of start-ups is a commendable achievement, and it would be churlish not to acknowledge the Government’s positive role in helping to bring it about.
The Government hope that the Bill will continue that trend, stating that it
“will cement the UK’s position as the best place in Europe to start and grow a business”.
I support that ambition, but I doubt it will be achieved. Although they have been successful in encouraging business start-ups, they have been less so in facilitating business survival and growth. It is difficult to see how the Bill will change that. In the same period as we saw a record number of business births, we also saw a marked increase in the number of business failures: the number of business deaths increased to 246,000, which was three times the rate of business births.
That could be seen as the natural churn of a dynamic economy—it is a function of a market that businesses are born and naturally die—but business survival rates are worrying. The UK does well on firms that survive their first year in business—the average of 93% is well above the EU average of 83%—but the more sustained survival rate for British enterprises is poor. Less than 40% of UK companies last more than five years. Only Latvia, Slovenia, Portugal and Lithuania fare worse. A failure to last for any length of time limits British companies’ ability to scale up and become more resilient, innovative and outward-looking, thereby taking market share, winning export orders and employing more people.
Sherry Coutu’s report on scale-ups showed that a 1% growth in firms scaling up in Britain would create an additional 238,000 jobs and add £38 billion in gross value added to the UK economy. Similarly, the recent report by Octopus Investments on high-growth small businesses showed that a tiny number of firms—22,740, or just 0.43% of the business stock in the UK—accounted for an unbelievable one in three new jobs in 2014 and 20% of all growth in the UK economy. These firms have the potential to do so much more, yet one in four finds it difficult to get the funding it needs and three quarters say that lack of access to funding is a significant barrier to growth. The problem of access to finance remains a pertinent issue for firms, which is why the Select Committee has launched an inquiry into it. If the Bill’s purpose is to make the UK the best place in Europe to grow a business, why does it not tackle access to finance? If the Government are serious about ensuring growth, why does the Bill not put in place measures to facilitate an expansion of scale-ups to power employment and economic growth?
A recent report by the RSA said that the complexities of the UK tax system, a lack of bank lending and the cost of running a business were the top reasons for failure and early corporate death. That being the case, why do the Government consider tax changes to be out of the scope of the Bill’s deregulatory activities? Given that complexity in the tax system is seen as a drag on economic and business growth, to the point of often fatally overwhelming firms, why is tax not considered part of the business impact targets? The Government propose to make small businesses file their tax returns on a quarterly basis. That will have an enormous impact on small firms and place a regulatory burden on business. Should that sort of thing not be within the scope of the Bill?
Richard Fuller
I thank the hon. Gentleman, a fellow member of the Select Committee, for giving way. His Front-Bench team talked about the Bill being more ambitious, and he is talking about cutting taxes and looking at ways to create more innovative financing. May I urge him to table his own amendments, from his own experience, so that the Government can come up with an even better Bill?
Mr Wright
I thank my colleague from the BIS Committee for his intervention. We share the same view about freeing businesses from unnecessary regulatory burdens. I want the Bill to be more ambitious and to bring about a step change. I mentioned the business impact target in clause 14. Is the Minister aware that, as drafted, the Bill imposes an additional cost on businesses? The accompanying impact assessment states that the best estimate of the cost of the business impact target is £10.5 million a year, with “no monetised benefits identified”. How can she justify that for a Bill that is intended to free up small businesses?
On taxation, small and medium-sized firms believe that the rules are applied rigidly against them, and that the larger and more powerful a company becomes, the more the payment of UK tax becomes almost an option—something like a casual thing to consider. That bullying and intimidation also applies to payment of suppliers by large companies. In that regard, the introduction in part 1 of the small business commissioner to handle complaints by small businesses about payment matters is a welcome step. I am pleased that the Government are establishing that.
As has already been said in the debate, the commissioner’s powers are rather narrow. Part 1 grants the SBC the power to provide only “advice and information” to small firms, rather than enforcement powers. The commissioner has the capacity to consider in the region of only 500 cases a year. I question whether that is appropriate, given the huge, often endemic and structural problems certain sectors face with late payment. As the hon. Member for Huntingdon (Mr Djanogly) mentioned in a good speech, the commissioner could be too limited in scope; something akin to the Small Business Administration in the US may be more appropriate. For over 60 years, the SBA has been a consistent part of the small business support ecosystem, providing funding, access to public procurement and mentoring to small businesses. Have the Government considered something similar here?
I shall finish with some comments about clause 21 and what can be defined as an apprenticeship. As the hon. Member for Warwick and Leamington, who sits on the Select Committee, said, this is a welcome step. Yesterday, we published our report on the Government’s productivity plan, and we welcome that part of Government policy, although we are slightly more critical of other parts. However, there is a risk. The Minister will want to do all he can to ensure that the 3 million apprenticeships target will be met by 2020. In that context, there may be a temptation to double-count or rebadge apprentice numbers. Is that still possible under the Bill? Subsection (2) of new section A11 in clause 21 states where employers do not commit an offence if they describe a non-statutory apprenticeship as an apprenticeship. Will the Minister reassure me that only statutory apprenticeships will be included in the 3 million target?
In the main, this is not a bad Bill. It will help in some ways around the edges, but it will not provide the step change that small businesses need to scale up.
Steel Industry
Debate between Richard Fuller and Iain Wright(8 years, 7 months ago)
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Mr Iain Wright (Hartlepool) (Lab)
Like the hon. Member for Halesowen and Rowley Regis (James Morris), I have a Caparo steel factory in my constituency. The 200 workers there are obviously facing troubled times, and it is vital that, as part of the wider steel strategy, we look into the issues affecting them.
Yesterday, we on the Business, Innovation and Skills Select Committee held an evidence session on the state of the steel industry. I am grateful to all the expert witnesses who came along and gave their fantastic evidence. Let me start with the positives. It was welcome to hear the Minister for Small Business, Industry and Enterprise, the right hon. Member for Broxtowe (Anna Soubry) tell the Committee that she considered the UK steel industry to be of strategic importance and enormous value to British manufacturing. Her predecessors in that post would not have said that. I fear, however, that others in Government, including the Prime Minister, the Chancellor and the Business Secretary, do not necessarily feel the same way. Therein lies the problem. We need that strategic priority in the light of the challenges facing the industry.
The UK steel industry is in grave crisis. All the expert witnesses yesterday said that they could not recall a more serious time for the survival of their industry. Since the summer, a fifth of the workforce in the UK steel industry have either lost their jobs or are at risk of doing so. The tragedy of job losses for the individual steelworkers, their families and their communities is immense, but the loss of the skills, the capability and the competitiveness in such a strategic industry will affect British manufacturing for decades. Gareth Stace, director of UK Steel, gave us a vivid description of the situation yesterday. He told us that the industry was like
“a patient on the operating table. We are bleeding very quickly and unless it’s stopped very soon we are likely to die”.
Richard Fuller (Bedford) (Con)
On that point, has the hon. Gentleman been struck by the relative slowness of the European Union’s response to Chinese dumping, compared with the speed of the response of the United States?
Mr Wright
I thank the hon. Gentleman for his comment, and I will come to that in a moment. He is a fantastic member of the BIS Select Committee, and he was incredibly supportive yesterday.
This is not necessarily a question of the Government waving a magic wand. Global forces are affecting the steel industry. I am not suggesting that the UK Government have a disproportionate influence over what is happening in the global steel industry, but there are things that they can do. The Minister rightly said that she saw steel as a strategic industry because it acts as a foundation for many other parts of the manufacturing value chain. I agree with her on that. A modern steel industry is at the heart of a dynamic and innovative economy.
I would suggest that the role of the Government is to level the playing field for British-based steel makers and ensure that they do not face costs and pressures that our competitors do not face. The role of the Government is also to go out and bat for the British steel industry on the European and world stage. Alas, it emerged clearly from our Select Committee inquiry yesterday that, despite their warm words, the Government have been slow and reactive and that, despite their protestations, they have not prioritised the steel industry in a way that its strategic importance requires.
The Government have been exposed as having been left baffled and battered by the forces affecting global steel. That is perhaps inevitable, given the scale and gravity of the challenge, but it is a challenge that the industry has been raising with Ministers for some time. Plant closures and the loss of jobs, steelmaking skills and capacity could have been lessened had the Government been more on the front foot and responded more swiftly.
I have enormous respect for the Minister, but she sounded like Elvis Presley in the Committee yesterday when she told us that she wanted a little less conversation and a little more action, please. Her words were welcome, but it became abundantly clear that, in the main, words are all we have. Words are not going to save the British steel industry.
At the steel summit on 16 October, we were provided with an excellent analysis of the state of the industry from its representatives. We were provided with a clear and achievable five-point plan on factors such as energy costs, business rates and local content in procurement projects. However, that analysis was nothing new. It has been known about for weeks and months, if not years. The Government were familiar with the asks from industry long before 16 October, so why was urgent action not taken sooner in such a strategic industry?
The Minister’s insistence on a change in policy on voting in Europe on dumping is welcome, but why did industry tell us yesterday that we in the UK were out on a limb in Europe in not acting in a co-ordinated way on cheap Chinese imports? In response to the hon. Member for Bedford (Richard Fuller), he will recall that the Select Committee was told yesterday that an astonishing 94% of all the cheap Chinese steel coming to Europe comes to Britain, at a time when our domestic industry is dying. We have put up the white flag for our steel industry in response to the Chinese red flag. That is not appropriate.
We have been left in no doubt about the gravity of the situation. We may not even have reached the bottom of the job losses and plant closures. It is not too melodramatic to measure the survival of the British steel industry in weeks rather than decades. We do not have time to reflect or reassess; the Government have to move from warm words to action, and they have to do it now.
Courts and Tribunal Services (England and Wales)
Debate between Richard Fuller and Iain Wright(8 years, 8 months ago)
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Mr Iain Wright (Hartlepool) (Lab)
I congratulate the hon. Member for Bath (Ben Howlett) on his 100% record in securing Backbench Business Committee debates.
I want to focus my remarks on the proposed closure of Hartlepool magistrates court and county court, as I have a number of serious reservations about that. The first is that there is nothing lacking or missing from the magistrates facilities in Hartlepool. I understand that magistrates courts in other parts of England or Wales are earmarked for closure in part because they fail to comply with the Equality Act 2010 or are lacking in security. Hartlepool has a prison video link, separate waiting facilities for prosecution and defence witnesses, and interview rooms for confidential consultation. By contrast, the consultation itself concedes that if the proposed closure of Hartlepool’s courts goes ahead, a reconfiguration of the hearing space at Teesside magistrates courts will be required to accommodate a further waiting room and create a disabled access door. No figures are provided as to the costs of this work.
That brings me on to an additional point: the costs saved by the proposal. I understand that, as the hon. Gentleman has said, this consultation is being driven by a desire to reduce costs. The Minister has said that the courts estate costs about half a billion pounds a year. I would question how much will be saved if Hartlepool magistrates court is closed. There is a lack of transparency as to what will be saved. I understand that the court in Hartlepool has operating costs of about £345,000 a year. Does the Minister expect to save all or part of that figure? If it is the latter, how much does he expect to save?
I suspect that a large proportion of those operating costs will be staff expenditure. Eight members of staff work at the magistrates court and seven full-time members work at Hartlepool county court. Will they be made redundant as a result of the proposed closure? Unfortunately, Hartlepool still has a high unemployment problem, like the rest of the north-east. At double the national average, our level is the 40th highest among all constituencies.
Any redundancy in Hartlepool, especially that initiated by the state, does not help that unemployment problem, but if staff are not being made redundant will they be transferred to Middlesbrough, and how much does that save?
The building from which the magistrates and county courts operate is not freehold, so the Government will not be able to realise any value by selling it. According to the consultation, the Government’s wishes are:
“To maximise the capital receipts from surplus estate for reinvestment in HM Courts & Tribunals Service.”
That aim will not be met by closing Hartlepool magistrates courts, a leasehold property on a 99-year lease that currently has 60 years left to run. The building is owned by Hartlepool borough council. How much will it cost to break the lease? If the Minister is considering whole of Government efficiencies rather than a narrow, silo-based approach to achieving cuts for his own Department, what impact does that have? Does he realise that, by closing Hartlepool magistrates court, he is not saving the taxpayer anything, but is merely moving financial pressures to the local authority, which has already had cuts totalling 40% to its budget in recent years.
The criteria by which the courts will be closed seem opaque. I have asked a series of parliamentary questions on this matter. Like my hon. Friend the Member for Stockport (Ann Coffey), I asked about the cost per case across magistrates courts in England and Wales. That seemed to be a reasonable dashboard metric to evaluate relative efficiencies across different operating units. It is what business does all the time. However, the answer I received from the Under-Secretary of State for Justice, the hon. Member for North West Cambridgeshire (Mr Vara), who is a genuinely lovely and decent man and whom I am proud to call my friend, stated:
“The information is not available centrally and can only be provided at disproportionate cost.”
If this metric is not being used, what is? How can relative performance and effectiveness across the estate be evaluated consistently?
I understand that one of the central considerations of this proposed closure is the utilisation of the estate. Those 91 courts are used, on average, a third of the time. What is the magic utilisation figure that makes some courts safe and others not? I have seen the Minister quoted as saying that a third of all courts and tribunals were empty for more than 50% of the time.
Hartlepool has a utilisation rate of 49%. In an answer to a parliamentary question that I received this morning, the Minister revealed that Hartlepool’s utilisation rate is actually higher than the England and Wales average. With the exception of Wakefield, Hartlepool has the highest utilisation of any court proposed for closure in the whole north-east. Will the Minister take that context into consideration when deciding which courts to close, or should Hartlepool resign itself to closure simply because it has missed, by 1 percentage point, the magic 50% utilisation rate?
Richard Fuller (Bedford) (Con)
The hon. Gentleman cites the lack of information. My hon. Friend the Member for High Peak (Andrew Bingham) says that the Department has provided inaccurate information. Given that we are talking about unavailable information, inaccurate information and consultations where things are ignored, does he think that this is an example of the Ministry of Justice going rogue?
Mr Wright
The hon. Gentleman makes an important point. Given what is coming out in this debate, the Ministry of Justice needs to scrap this consultation and start again on the basis of meaningful and accurate information.
I have mentioned costs and utilisation rates, but my central concern is access to local justice for my constituents.
Deregulation Bill
Debate between Richard Fuller and Iain Wright(10 years, 4 months ago)
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Mr Wright
I will come to the precise benefits for business in a moment, but I want first to refer to the hon. Member for Witham (Priti Patel), whom I cannot see in her place at the moment. She used her knowledge from the Joint Committee and her experience in business. I have to disagree with a lot of what she said. I respect her experience in business, but she says that Government just have to get out of the way of business. I do not think that is necessarily the case in a modern, innovative economy. What we need is a Government who will work with business on a long-term vision and an industrial strategy that will enable us to pay our way in the world.
I agree with everything that the hon. Lady said about business start-ups and the need to enhance our competitiveness, but there is nothing in the Bill—no single clause or schedule—that would facilitate start-ups: if only there were such provisions. One of the things that worry us most is the fact that the United Kingdom is slipping down in the world rankings for start-ups. According to figures from the OECD, it has fallen from 18th in the world last year to 28th this year. When it comes to obtaining electricity for a business, our ranking has slipped from 64th to 74th. Surely we should be doing something about that. The Bill could have helped us to do so, but unfortunately it does not.
Several Members mentioned the Bill’s impact on business. One could be forgiven for thinking that it would facilitate an enormous start-up of entrepreneurial activity, but its provisions are so insubstantial and so insignificant to British business that they are almost meaningless. As was pointed out by my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) in her excellent opening speech, the statement of impact for the draft Bill estimated that it would save businesses £10 million over 10 years: £1 million a year.
Richard Fuller
Amen to the hon. Gentleman’s apparent call for the Government to take further action to deregulate and to reduce the burdens on business. He has told us several times how small the changes are. Will he, on behalf of the Opposition, table further deregulatory measures in Committee that will reduce the burden of regulation on business?
Mr Wright
When I speak to businesses, which I do every day, they tell me that the main factor affecting their long-term growth perspective is access to finance. Nothing in the Bill enables us to take a long-term view when it comes to where businesses can obtain the finance they need to grow.
It takes four fifths of a second for the British economy—for the hard work and effort of millions of people and enterprises—to generate that potential saving of £1 million a year. I say this to Ministers, and to other Members who have spoken today: do not insult the intelligence of Britain by describing the Bill as a substantial piece of reforming legislation. It will not really help businesses; it will certainly not give them as much help as they need. For the purposes of businesses that want extra orders or secure access to finance, or want the Government to be on their side, this Bill is sadly lacking.
Families are experiencing a cost of living crisis, and have lost £1,600 a year since the general election. Just a few days ago, the Office for National Statistics confirmed that since the Government took office in 2010, Britain has faced the largest continuous fall in real wages since records began half a century ago. However, there is absolutely nothing in the Bill to deal with that situation. The hon. Member for Carmarthen East and Dinefwr mentioned a 4% drop in wages in his community in Wales. One would think that the Government would want to do something about that in a deregulation Bill whose aim was to free up the inspiring innovation of businesses and individuals, but not a bit of it. The net benefits to individuals as a result of the Bill will amount to 0.18p for every single man, woman or child in this country. I really do think that the Government should do better than that.
The hon. Member for Brighton, Pavilion (Caroline Lucas) made a characteristically intelligent speech. She observed that some regulation could be good. She also mentioned clause 21, about which I am particularly concerned. The clause reduces the eligibility criteria relating to the purchase of social housing, which will have an adverse impact on the supply of such housing. Any local authority that wants to plan for the long term will need to spend capital, and will need to borrow as a result. The reduction of the qualifying period from five years to three will make it much more difficult for authorities to borrow on the back of a sustained rental stream. We need only look at the evidence that we have already seen: in the last year 10,600 council houses have been sold, but only 1,600 starts have been made.
Let me return to the hon. Member for Macclesfield and his Churchillian “action this day” rhetoric. What Macmillan did as Churchill’s housing Minister, and what Churchill did in the Housing Repairs and Rents Act 1954, was truly inspiring. It is what the present Government should be doing, but unfortunately they are not.
My hon. Friend the Member for Stoke-on-Trent North (Joan Walley) conveyed the powerful message that regulation is an essential part of a functioning market economy, ensuring that we are sufficiently competitive. She also said that the Bill paid insufficient regard to the Government’s supposed goal to be the greenest Government ever. There is no environmental concern and no environmental impact, and in fact there is an attack on sustainable development here. This is where the Government have got it wrong. It is not mutually exclusive to think about green and growth, although Ministers often think it is. Actually, if we think about how we are going to pay our way in the world in the 21st century, we realise that the real emphasis should be on the industries of the future—those of the green economy. As the CBI and others have said, this is what the modern face of British industry should look like.
Unfortunately I cannot see the hon. Member for Stroud (Neil Carmichael) in the Chamber. I consider him to be part of the sensible wing of the Tory party, but his speech tonight disabused me of that idea. He served on the Enterprise and Regulatory Reform Bill Committee with me. I do not want to rehash the arguments we had in that Committee, but there was no evidence whatever for some of the stuff that was coming through in respect of Beecroft. What was said was, “I’ve met a bloke down the pub and he said ‘wouldn’t this be a good idea?’” That was the empirical evidence the Government brought forward on that Bill.
The hon. Gentleman will recall that in that legislation the Government abolished the Agricultural Wages Board without a single discussion of it on the Floor of the House or in Committee. It was brought in at such a late stage. What businesses want is certainty. Having uncertainty in terms of feed-in tariffs and other things is anti-business.
My hon. Friend the Member for Hayes and Harlington (John McDonnell) mentioned a lack of clarity with regard to clause 23. He also mentioned individual term time dates for schools in respect of clause 37 and here I declare an interest. My youngest son attends a primary school in Hartlepool and my daughter attends a secondary school in Hartlepool. If those schools do not co-ordinate and instead have different term times, it will cause enormous hassle and pressure for our family and millions like us.
My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) gave a knowledgeable speech and my hon. Friend the Member for Wansbeck made a key point: the Bill is very wide-ranging—the mishmash that he mentioned—and that variety will potentially create problems. I agree.
There is nothing really troubling about this Bill, although there are individual clauses, such as clauses 1 and 2 on the tribunal powers to make recommendations, that are concerning and we would certainly like to see clause 2 deleted in Committee. The actions in this Bill do not match the rhetoric, however. We do not want to obstruct the Bill’s progress tonight, but we do have concerns on specific issues and we will need to look closely at them in Committee. When businesses are crying out for certainty and greater access to finance in order for us to be more competitive in the world, the Government’s ambitions could have been better with regard to the Deregulation Bill.
Budget Resolutions and Economic Situation
Debate between Richard Fuller and Iain Wright(11 years, 2 months ago)
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Richard Fuller (Bedford) (Con)
It is always a pleasure to follow the hon. Member for Foyle (Mark Durkan), who represents a very different part of the United Kingdom from the one I represent. It is always informative to listen to his contributions, and I always learn something from them.
There are some very good points in the Budget for the people of Bedford and Kempston. The cuts in national insurance rates—Labour’s job tax—are a welcome change, meaning that the people of Bedford are more likely to have a job. When they travel to work in their cars, they can look at the petrol pump and see that fuel duty has been frozen. When they arrive at work, they will know that at the end of the day, thanks to the increase in the personal allowance, they will keep more of the money they have earned. When they get home in the evening and go out to the pub with their mates, they can raise a pint to the Chancellor and say, “Thank you very much for scrapping that other iniquity of our tax system left by the last Labour Government—the beer duty escalator.” Those are all very welcome measures. On fuel duty, it is particularly important for everyone to realise that when they fill up their tank and look up at the price per litre, 13p of that is Labour’s price on fuel, which applies every time we fill up our cars.
Let me draw your attention, Mr Deputy Speaker, and that of Members to page 12 of the Red Book, which features an interesting chart—I see Members avidly reaching for it—showing the growth of debt in this country from the mid-1990s until 2010. It shows that the last Labour Government left this country as the most indebted nation on earth. They grew our debt—this does not include Government debt, which has to be added on top—from two times to five times the size of the economy. That is a massive debt that must be paid for by our children and grandchildren. I wonder whether the Economic Secretary would consider adding the Government debt to this chart and requiring to be displayed on a poster in every single school, so that our children know what they are going to have to pay back owing to the policies pursued by the last Labour Government. Their policies were an abject failure of economic management.
In the private sector, when companies have poorly performing management, we fire them and bring in other people. In the Labour party, they promote them.
Richard Fuller
The Leader of the Opposition and the shadow Chancellor were promoted, yet their fingers are all over this increase in debt. I must say that the hon. Member for Hartlepool (Mr Wright) has it right. Those two are acting as bed blockers for more talented people on the Opposition Front Bench. Let us hope there will be a change in that regard some day.
Let me say more broadly, if I may—I sometimes get a little controversial—that the debates I have heard in this place since becoming a Member of Parliament have reinforced my view that the political class has let down the people of this country, regardless of political party. The debt is not just the fault of the last Labour Government but of the country as a whole, which had got itself into terrible levels of debt.
There are two ways of looking at the problem. The Government are borrowing £1 billion every three days, the interest on which amounts to £15 million. So, every three days, £15 million has to be taken out of the budget for our schools and our hospitals. That is a very considerable burden that places pressure on the Government, and I say to the Economic Secretary that I am not sure the Government have done enough to bring public expenditure under control. We have to go further. We need to look at the Heseltine review of the way the Government spend their money—not as an end-point, but as a starting-point for a much more radical reform of how we provide our cherished public services, so that we can deliver on the promise of providing more for less money.
In my remaining time, let me mention the Help to Buy mortgage guarantee scheme. I have read the scheme outline and there are some interesting charts in it, but an important chart is missing—that for the loan-to-value ratio over time.
Enterprise and Regulatory Reform Bill
Debate between Richard Fuller and Iain Wright(11 years, 7 months ago)
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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.
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.