To ask Her Majesty’s Government whether their plan for growth includes steps to encourage shared ethical values and long-term stewardship in United Kingdom businesses.
My Lords, the Chancellor's Autumn Statement reinforced the Government's commitment to deficit reduction and fairness, to rebalancing the economy away from one built on debt towards long-term sustainable growth for the safety and happiness of our people.
My Lords, last month the financial services sector was in trouble for mis-selling insurance to pensioners. Yesterday, your Lordships debated the excessive charges for payday loans. These are but the latest in a long list of ethical and moral failings of an industry that the Prime Minister says must be protected at the expense of Britain’s wider industrial interests. In view of this, will the Minister now insist that the governance and management of these financial businesses be linked to the values of the rest of us—for instance, by adopting the City Values Forum?
I have had exchanges with the noble Lord on a couple of the issues that he has referred to today, so I know how fresh this is in his mind. The Prime Minister has spoken about a new understanding between business and government, with Governments committing to pro-enterprise and business-friendly practices. But more than anything, he believes that Britain’s most successful businesses are those that invest in their people, communities and environment.
Every Business Commits is a new initiative taking place under our Government, to see whether we can get businesses to make a significant impact by improving skills and jobs, supporting communities and small and medium-sized enterprises and improving the quality of life and well-being for our people.
My Lords, economic growth must be for some people an end in itself but for many others it is actually a means to an end: a larger end of human happiness, the quality of life and a fairer society. How does the Minister propose that the Government will try to co-ordinate an approach to economic growth, which is important, that also contributes to a richer, more holistic goal of human and social well-being?
Of course I agree with the right reverend Prelate the Bishop of Oxford that growth is not an intrinsic goal but a pursuit in order to achieve other ends. In November a year ago, the Prime Minister asked the Office for National Statistics to devise a new way of measuring well-being in Britain. His goal, he said, was to start measuring our progress as a country, not just by how our economy is growing but by how our lives were improving; not just by our standard of living but by our quality of life. The well-being factors that it identified were: jobs, health and well-being and the environment. They mirror closely our priorities under Every Business Commits, the new initiative which I hope that the right reverend Prelate will follow carefully and advise me, if he thinks necessary, along the way.
My Lords, given that highly complex, voluminous regulation is meat and drink to City lawyers and accountants—for example, some of our largest public companies pay a trivial amount of tax by avoidance schemes of the utmost artificiality—might the time not have come to consider in principle legislation rather more like our common law principles, which are more difficult to evade?
In response to my noble friend Lord Phillips of Sudbury, the Government agree that principles-based regulation will be an appropriate approach in many cases. There are existing examples of principles-based regulation in a variety of areas, as I am sure he well knows, such as the UK Corporate Governance Code, which contains broad principles against which listed companies are required to report. However, we will continue to monitor this and I will continue to talk to him about it.
My Lords, does the Minister agree that the high executive pay which the public at large find so objectionable is only one symptom of the real illness, which is the broken relationship between shareholders and managers? How are the Government going to repair this so that the values of shareholders are reflected in the decisions of management, including perhaps having an employee representative on remuneration committees?
The independent Kay review will be looking at these things, which we have previously discussed and debated. I do not think any of us like to see the distance between remunerations growing wider and wider. There is no doubt that the Government are following this up.
My Lords, David Hume argued that greed, which he defined as an avidity to acquire possessions, belongings, property and money, was a force destructive of modern society. Could he possibly be right and, if so, what shall we do about it?
Well, my Lords, greed was of course only one of the seven deadly sins. If I reflect on some of the others, I can see that they can be just as contagious and nasty. However, I shall reflect on the fact that one of my favourite poets, Kipling, wrote a wonderful poem called Norman and Saxon in which he describes how the people of this land will put up with pretty well anything at all, but they will not put up with the fear of unfair dealing. If we look for fair dealing in the relationship between the Government, their people and our business community, we should get somewhere.
My Lords, does my noble friend not agree that the best way of asserting the rights of the owners of a business, as opposed to the hired help—men like “Fred the Shred”—would be if some of them were put on trial for falsifying the accounts of the businesses which they ran? They either knew or ought to have known that the accounts and the balance sheets that they brought forward were false.
We know that the shareholders hold the power in this country’s large corporations, and if they will, please, use it to call the people in those companies to account, we should see some movement. That is what we are encouraging.