Lord Mitchell
Member of the House of Lords · Labour · United Kingdom
“In those days, no one quite understood the long-term dangers of radiation, and protection was rudimentary. For him, it was fatal. In 1998, he was diagnosed with acute myeloid leukaemia, which he knew was terminal. He told me, in his usual blunt way, “I know how this story ends and it is not pretty.”
“My Lords, on 9 October 2000, my parents-in-law, Jack and Ruth Lowy, committed joint suicide. He was dying and she had decided to accompany him on this last journey. Jack was born in Bratislava in what was then Czechoslovakia. The family were Jewish and following the events in Munich in 1938, they fled to Philadelphia.”
“My wife in particular sensed that they would carry out their wishes. After all, they were both intelligent people who had carefully thought this through. There was no one to support Jack and no one on hand to help Ruth in what must have been hell for her.”
“I cannot be certain about my mother-in-law’s motivation to join him, but they both knew that his own suicide at home could well run the risk of her being charged with committing a crime as an accomplice. What I do know is that had this Bill been law, she probably would have chosen life.”
“I always felt that the issue of antisemitism on campus did not emanate solely from the students. It also came from the laissez-faire attitude of the faculty.”
“We kept the brief tight, with no references to the Middle East; we judged that there was nothing we could do or say that could make any difference. Where we could definitely make a difference was through reference to our common UK experiences and our heritage. I think we made progress.”
The complete record
Every one of 881 lines we hold for Lord Mitchell, in date order, each linked to its source. Free to read, in full, without an account. Page 10 of 18.
“The second criterion, though, the one that we are paying most attention to today, stipulates that where two merging businesses have an effective market share of over 25%, that becomes a relevant merger situation for the competition bodies to consider. That 25% is an important threshold as to whether some form of monopoly is taking place and therefore, as the noble Viscount said, the value to the consumer is affected prejudicially. At present, it appears that the only effect of Amendment 25 is to exclude the possibility of the CMA looking into a merger if the turnover of the business being taken over was above the £5 million threshold, even if the combined market share were to be more than 25%. Those are scenarios in which we might not wish to tie the CMA’s hands in this fashion.”
“My Lords, I have listened with great interest to the words of the noble Lord, Lord Hunt of Wirral, and the noble Viscount, Lord Eccles. We, too, are always looking for reasonable ways to ensure that SMEs—or SEs, small companies, in this respect—are not subject to too much regulation. Perhaps I am confused on this, but currently in the 2002 Act there are two criteria as to whether competition authorities should take an interest in a merger. The first, which we have spoken about today, is whether the turnover of the business is in excess of £70 million. This is a considerably higher level than what is being proposed today, so it is unlikely that any company with a turnover of £5 million being taken over would be investigated.”
“My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I confess to an error I made, because the date should be 15 June, not 18 June.”
“My Lords, I thank the Minister for that reply. Some interesting things are happening, but maybe we can do even better. The late Lord Denning called the Magna Carta, “the greatest constitutional document of all time—the foundation of the freedom of the individual against the arbitrary authority of the despot”. The great charter is the very essence of what we are as a people. Its octocentenary should be celebrated with all pomp and international ceremony. I have a suggestion for the Government. Why not exhibit all four remaining original documents in one location? It would be the first time that they have come together since they were sealed at Runnymede in 1215. Maybe that location should be here, in Westminster Hall. Why not invite the world to London to celebrate this magnificent anniversary and all it stands for?”
“Mr Mike Cherry, the chairman of national policy at the Federation of Small Businesses said, in front of the House of Commons Committee, “our key message would be that, in very many cases, small businesses are, in fact, no different from consumers.”––[ Official Report , Commons, Enterprise and Regulatory Reform Public Bill Committee, 19/6/2012; Q49.] The Federation of Small Businesses has also said that, while it is not in a position to become super-complainants at this stage, it would welcome the possibility that organisations representing small businesses would be able to apply in future. This amendment therefore seeks to recognise that by changing the definition of consumer to include SMEs, thus opening up the possibility that at some point in future it will be able to register as super-complainants. I beg to move.”
“That change to the definition of consumer would mean that organisations representing SMEs can apply for super-complainant status. Currently, the OFT has to publish a response to any complaint from a super-complainant in 90 days or refer it to the Competition Commission for further investigation. The CMA will now have those responsibilities. The competition issues that SMEs face, such as those previously concerning the concentrated banking sector and any other problems, could then be quickly highlighted. There is often very little difference between a consumer and a small business.”
“It is a very exciting area, involving companies such as Funding Circle, Zopa, Boost Capital and Credit Asset Management, which I doubt that any of your Lordships have heard of—and to be frank, neither had I. However, it is a fast-growing area of new funding for small businesses. To summarise this part of the amendment, a unit within the CMA that looks to address this problem on an ongoing basis would be of great benefit to initiating and sustaining economic recovery. Amendment 25G deals with super-complainants. I am going to say barely anything on it, except that we want groups to be super-complainants, if they want to be, and represent SMEs and want to apply for the status. That leads into Amendment 26E, which would mean that “consumers” includes small businesses with up to 50 employees.”
“Because they, by culture, have a long-term investment in their clients, they are able to defer and assess credit risks to a much greater extent than we do with our banking organisations, which seem to assess any lending possibility on a computer model that comes out with a yes or no. There is a real opportunity for new types of financing banks in this country that would help growth. There is a new business bank called Aldermore. Yesterday, much to the Government’s credit, they announced a £100 million facility for peer-to-peer lending. That is a very interesting new development whereby individuals can lend to businesses. It works on a bidding basis, almost like the reverse of eBay.”
“The Federation of Small Businesses has persistently pointed to this as preventing growth in SMEs, which collectively produce more than half of Britain’s GDP. We think that there should be research on this by the CMA on an ongoing basis, which will be dealt with by my noble friend Lady Hayter in a later group. A couple of weeks ago, a few Members from the Houses of Parliament went to Germany to see the Sparkasse in Berlin. We have all heard about these organisations, but they really were very impressive. They are small savings banks that are responsible for 40% of German lending, just to the SMEs sector.”
“I hear so many stories of the proprietors of an SME or its directors going in to see a bank when they need to finance a good project. The bank manager says “no”, and they walk out as if that is the end of the matter. To many it is the end of the matter, but it should not be. There are many other sources of finance out there, and it would be great to me if the banks had less dominance and influence. I also feel in my heart of hearts that the high street banking sector is not particularly interested in SMEs. They have had their heads turned and, no matter what happens in the other directions that they have gone into, such as investment banking, I cannot see them ever returning to supporting SMEs as they used to.”
“Noble Lords will probably have heard me speak on this issue on several occasions but it is something that concerns me all the time. At the moment, many government financing plans are being announced but most of them are not working and, frankly, I do not understand most of them myself. I wonder how people in small businesses who are not involved with them on a day-to-day basis get to grips with some of these programmes. My constant mantra is that businesses will not grow unless there is a strategy for growth. What business needs is confidence, certainty and clarity. Not surprisingly, 85% of SMEs bank with the big four high-street banks, but this increases the cost of lending and decreases its availability. That hampers growth because SMEs collectively produce more than half of Britain’s GDP. SMEs are too dependent on the banks.”
“The first part of the amendment suggests that there is a need to dedicate a unit to matters relating to competition affecting SMEs. Small firms are often faced with problems that big firms also face but, of course, small firms do not have the resources, facilities or expertise to deal with them, and recruiting or hiring a legal team is prohibitively expensive. They do not have the time to read the regulatory judgments; it is just a fact of life. Therefore, we feel that such a unit could be one way of helping small firms to grow. The first part of the amendment would provide SMEs with a specific and direct point of contact within the CMA. The second part of the amendment proposes that the unit in the CMA will focus particularly on the availability of finance for SMEs.”
“However, what is not out of date, as I am sure everyone will agree, is that this business sector—let us call it the SMEs—is very keen to lead the economic recovery of our country. All sorts of reports, including one carried out by GE Capital in conjunction with the Warwick Business School, have come to the conclusion that growth, employment and exports are going to come from this sector and that this is going to be the propellant for any recovery. Indeed, the noble Lord, Lord Heseltine, in his magnificent tome, No Stone Unturned , which I thought was very good and very refreshing, said that if one in 10 of the firms that are sole traders hired their first employee or an extra employee, that would increase employment by 480,000. Therefore, recovery comes from even a small business of three people taking on one extra person.”
“Sometimes I feel that medium-sized companies have more in common with large companies than they do with small companies. One definition of a small company is that it has up to 50 employees, a turnover of up to £6.5 million and a balance sheet of up to £3.25 million. For medium-sized companies, the figures are between 50 and 250 employees, a turnover of up to £26 million and a balance sheet of up to £13 million. There are several companies with a turnover well in excess of £26 million but I have never considered them as being large companies; in fact, I have always thought of them as being at the lower end of medium-sized companies. Therefore, I am afraid that some of these definitions are probably very out of date.”
“My Lords, despite the prompting of my noble friend Lady Hayter, this will not be a quake-making day. We are much more concerned with doing some serious probing and finding out where the Government stand on certain issues. One thing that came out of the payday loans amendments, to which my noble friend Lady Hayter referred, was that that issue was not highlighted and made clear in that Bill. The subject that I should like to deal with today is SMEs and how they are addressed in this Bill. We are concerned to make sure that SMEs get prominence and that they are not lost in the fine print of the legislation. I always have a problem with the expression “SME”. I do not know what it means. A small company can be a one-man band. Then there are medium-sized companies and large companies.”
“I thank the Minister for his comprehensive reply. There is a need for a dedicated unit; small and medium-sized enterprises need a particular focus point to which they can refer. Our amendments are a “may”, not a “must”. The Minister gave an example of banking and the OFT. That may be, but here we are today, with high street banks still dominating and other types of banking organisations only just coming through. In summary, we are trying to set up a mechanism that will enable the CMA as it progresses to take actions in favour of the SME sector—to enable it specifically in that area. I ask the Minister to think about what I have said. We will think about what we have said, and with that, I beg leave to withdraw the amendment.”
“This amendment is simple, symbolic and now stands alone. This industry is going to be controlled. For many people out there, the world is now a slightly better place.”
“I had two questions to ask about consumer detriment and time and duration but the Minister has addressed them in his speech. He said that there was no silver bullet for this and I absolutely agree. As we go forward perhaps we should look at what is happening in other countries. I spoke at Report about the experience in Florida, which has had an amazing result. I repeat that anyone who takes out a payday loan in that state has to register it as a charge. They have to pay for it and it goes on to a database. It is known that they have a payday loan. That absolutely prevents any individual having more than one payday loan on any one occasion. That is something that we should look at for the future. This provision will go forward and become a new law but I believe that it will also become a statement of intent.”
“I thank them from the bottom of my heart. I also thank all noble Lords who contributed to the debate. The media also took up this cause with a vengeance. Every article and television programme that I read or saw seemed to back our position. They were against the payday lending companies. Indeed, I am sure that the man in the street in this country was also in favour of regulation. Everybody seemed to be in favour of it except for the payday loan companies themselves—and I was nobbled in the most unlikely of locations by them or their representatives telling me how wrong we were. However, the Government conceded because the political and moral arguments were absolutely against them. They did concede and I am grateful to them for the positive way in which they have dealt with this issue.”
“I would not be human if I did not savour the moment just a jot. It probably will not happen again, but it is good that it has happened today. I have been asked why the Government conceded and no doubt at some stage, over a gin and tonic, I will find out. However, I feel that it was due to two reasons —the political argument, and the moral argument. As for the political basis, the Government knew that they would be defeated last Wednesday on Report. It had been a bad couple of weeks for the Government and another defeat was something that they could do without. The moral argument, however, was more important. I was fortunate because the noble Baronesses, Lady Howe of Idlicote and Lady Grey-Thompson, and the right reverend Prelate the Bishop of Durham added a non-political independent gravitas to what we were trying to do.”
“We tried hard to find the location of those points—and no doubt they are buried somewhere. However, with an issue like this one, which is so important, it is dangerous to have implied rules which have to be inferred. Many of these payday loan companies have very successful lawyers and access to some of the best brains in the country in this area. The provision would have been a complete dog's breakfast, to be honest. We tried again at Report, and I admit that I came in here today ready for battle. However, I was astonished and delighted at the complete turnaround that the noble Lord, Lord Sassoon, has offered. He promised us a better amendment and that is what we have been given. The new amendment is stronger, tighter and more effective, and most of all, it offers complete clarity.”
“My Lords, never in my wildest dreams did I ever expect that I would be standing here at the opposition Dispatch Box with my name on an amendment alongside a government Treasury Minister. It is some achievement and could occur only in your Lordships' House and not in the other place. I thank the noble Lords, Lord Sassoon and Lord Newby, for the very constructive way in which they responded to the amendment we put forward. They listened to what we had to say, took our comments away and came back with an amendment that is entirely acceptable to us. However, I would not like them to think that this is a complete love fest—normal service will resume at some other time. It is worth recounting that the Government told us in Committee that the points which we wanted were already in the Bill.”
“We should ensure from the outset that the GIB has a responsibility to help SMEs be part of the new green economy. This amendment encourages the Green Investment Bank to support investments that offer clear opportunities for British SMEs to be awarded contracts. Does the Minister share our support for the promotion of SMEs? I beg to move.”
“As we have discussed many times, SMEs are struggling for investment in the current climate, with negative net lending to such companies since the second quarter of 2011. While demand is down due to the depressed economy, there is clearly a problem with SMEs not getting access to credit. A particular bugbear of mine is that perhaps the Green Investment Bank could insist that everyone it deals with and everyone it invests with has a clear mandate for prompt payment of invoices. Nothing is better for an SME than knowing that it will get its money. Last year’s Lords Science and Technology Committee report on public procurement as a tool to stimulate innovation also made it clear that SMEs still face difficulties when government contracts are put out to tender.”
“Time and time again, it is made clear that support for SMEs is key. We would like to see the Green Investment Bank have SMEs in forefront all the way through. More investment in SMEs could lead to a significant saving in capital investment costs. In the case of offshore wind, recent research suggests that capital expenditure costs could fall by more than a third during the course of the next decade if more of the components were made in the UK. SMEs face considerable start-up costs, but an active Government, working with the private sector, could remedy that. The Green Investment Bank has the potential to enhance green supply chain possibilities, opportunities and capabilities.”
“However, the importance of SMEs to economic growth cannot be underestimated. According to the European Commission, 85% of net new jobs in the EU, for example, between 2002 and 2010, were created by SMEs, with 23 million SMEs accounting for 75 million jobs in the EU. The Bank of England has recently released figures on funding for lending and today there are a few quotes in the Financial Times , one of which came from Mark Swift who is a spokesman for EEF, the manufacturer's trade body. He said, “The challenge remains for UK lenders to re-engage with SMEs and support them with their investment plans in challenging economic times”. John Walker, chairman of the Federation of Small Businesses has said, “What is needed is more competition and choice for small businesses to access finance”.”
“I shall come back to that a little later but it is really important that SMEs—not just large companies—are helped in this. In addition to its green obligations, it is important that there are investment obligations that are vital to its work. A key part of its remit is boosting growth and creating jobs in the UK economy. Time will rightly be spent talking about the policy and the fact that large companies need to make investments in our transition to a large green economy. That was evidenced by the letter from seven of the world’s largest energy and engineering firms to the Prime Minister, the Chancellor and the Secretary of State for Energy and Climate Change, a couple of months ago—companies such as Siemens, Alstom UK, Mitsubishi Power Systems, Areva, Doosan, Gamesa and Vestas.”
“My Lords, I stand here in some trepidation, having heard the comments that the noble Lord, Lord Marland, made to my noble friend. I dread to think what he will say about me. Even before I had the position of shadow Business Minister, I have spoken consistently on the subject of SMEs, on how important they are to this country and on how they require certainty, clarity and consistency. That is very important as regards their ability, in the future, to make a contribution to the growth of this country. By way of a statistic, the UK has slipped from third position to seventh in world green technologies and I hope, with the introduction of the Green Investment Bank, if it is properly constructed, that we will be able to do better in this vital industry. The Green Investment Bank should be an opportunity to help SMEs explicitly.”
“Secondly, of course we cannot tie the Government’s hands too much, but a definitive statement in the Bill on the need to invest in SMEs is important. I beg leave to withdraw the amendment.”
“I thank the noble Lord for his statement and, indeed, I thank all noble Lords for their contributions to this debate. I take it as being broadly supportive of what we are trying to do. That will come out in further stages of the Bill, but I take great heart from what is being said. I want to make two quick points. First, I cannot emphasise enough the importance of certainty, not just for SMEs but in the whole business environment. Certainty must be there. People are making decisions and, in the green area, these decisions are for longer periods than normal, particularly as regards the payback period and the intensity of those decisions. We must be clear on this, and I will address that issue later when I talk about borrowing powers for the bank.”
“Probably the most important issue before this Committee today is its borrowing powers. Without the capacity to borrow from the capital markets for investment, the bank is no more than a government fund. In fact, Transform UK has said: “A bank that is not allowed to borrow cannot be described as a Bank, and investors will notice this”. However, the amendment represents a compromise and takes into account the strain on public sector funding, and we would not therefore support reckless and irresponsible levels of borrowing.”
“My Lords, we have had some very good contributions. In fact, my Amendment 9 just leads on from what the noble Lord, Lord Teverson, said, and we have a few additional points to make about it. First, I refer to what my noble friend Lady Ford has said on this subject; she has a lot of experience in this area and we should listen to her. We should also listen to the noble Lord, Lord Oxburgh. He has shown a lot of passion for green technology in this country and has said how important it is that we stop sitting around and get on with it. I hope that that is taken on board by this Government. I suppose that what we are saying more particularly is that this Green Investment Bank has to be a real bank and not a sham. I do not think that it is going to be a sham, but it has to be a real bank with all the attributes of a real bank.”
“If you borrow £100 from Wonga for seven days, the simple interest that you pay will be 1.82% per day. If you borrow £100 for a month, the simple interest will be 1.21% per day. For its maximum of 43 days, it will be 1.16% per day. The game it is playing is that this is calculated on the basis of simple interest, but interest is seldom calculated on a simple basis. The accepted measure is of course compound interest. A loan that costs just 1% per day becomes 4,000% per annum when aggregated in compound interest terms, which is exactly what APR is all about.”
“That is exactly what the finance industry does every day. If one bank borrows £100 million from the money market on an overnight basis, the charge is quoted as an annualised interest rate. Stating that APR is the wrong measure is simply disingenuous. APR is there for an express purpose and in my opinion it should be included in all advertising, but that is a debate for another time. Last Sunday, we saw an interesting development. In an article in the Sunday Telegraph , Wonga was reported as saying that its rate of interest is equal to 1% per day. This is a big change from a company which has previously refused to admit that its repayments should be quoted as a rate of interest. What it says is true—it does charge 1% per day, or thereabouts—but it is playing games.”
“Any lender is bound by law to display the annual percentage rate—the APR—that it is charging. In many cases, payday lenders are charging an APR in excess of 4,000%. These lenders avoid the use of the term APR whenever they can; they say it is not appropriate for a short-term loan. I have heard them say to me that quoting APR on a payday loan is as relevant as quoting APR if you hire a car for a week or stay in a hotel for a similar period. We must not buy this argument and we must not let them get off the hook. Hiring a car or staying in a hotel is a rental of an asset and its associated services. It incurs no repayment of principal and is not a loan. Payday lenders say that quoting APR on a short-term loan is inappropriate—how can you use the word “annualised” to measure something that lasts just a few weeks?”
“Both have long records of standing up for the vulnerable and I await their speeches with anticipation. I want to make one point very clear. This amendment does not seek to ban payday lending; it seeks to give the FCA the power to cap interest rates when they are causing consumer detriment. It is a “may”, not a “must”. It puts the responsibility squarely into the hands of the FCA. I will go further: we need payday lenders; they fulfil a vital role. There are many people who cannot get credit from traditional sources, and without legalised payday lenders, their alternative is the backstreet loan sharks whose penalty for non-payment is often pretty brutal. Payday lenders fill a vital gap, but they need to be controlled. Interest rates charged by many payday lenders go well beyond the obscene.”
“Sub-prime was off everybody’s radar screen until it hit the US and world economy like a hurricane. It was the initial cause of the financial crash of 2007 and few saw it coming. If Her Majesty’s Treasury does not buy into the moral repugnance that most of us feel about the dangers of payday lending, at least it should be on its guard about the economic consequences of this ticking bomb. However, it is the moral argument that concerns us this afternoon. I am delighted that the right reverend Prelate the Bishop of Durham has added his name to this amendment. He has spoken previously on this subject and I am sure he will be making his views very clear. I am pleased that the noble Baronesses, Lady Howe of Idlicote and Lady Grey-Thompson, have also added their names to this amendment.”
“I do not understand why this Government—who are determined to reduce personal indebtedness at the macro level—are at the same time allowing this sector to grow unchecked. I would have thought that both parties opposite would be encouraging me on this amendment, rather than opposing this very important piece of legislation. Perhaps the Minister will have some good news for me when he replies. Payday loan customers, by their very nature, are people with very low credit ratings, who have no other options open to them. They borrow money on an unsecured basis at extortionate rates of interest. Does this not strike a familiar chord? Uncontrolled lending to people who are barely able to meet their repayments in a marketplace that is expanding at a massive rate: does that not sound like what happened in the United States with sub-prime lending?”
“As I said in Committee, I went on to one of the most successful websites and what struck me was the slickness of the process: just some cursory information to fill in and the money would have been in my bank in 15 minutes. It is simply too easy. A straitened economy and the ease of usage of online lending have combined to create this booming business sector. One online company—Wonga—is projected to be making more than £70 million profit this year, probably valuing the company well in excess of £1 billion if it were to go public. The annual size of the payday lending industry is at least £2 billion; it is growing at a fast clip and in time will become a major source of consumer credit in this country.”
“The fact is that legalised loan-sharking, or payday lending—call it what you will—has gone viral. It is out of control, dangerous and is causing great distress to many vulnerable people. Two developments have come together to cause the rapid growth of this lending industry. The first is the dreadful state of the economy. People are desperate for money and they will take it from whatever source they can, whatever the price. Take a walk down any high street, particularly in deprived areas—payday loan shops are abundant. Recently, I went to Walthamstow with my honourable friend Stella Creasy MP and my right honourable friend Ed Miliband. There, on the high street, we saw more than 15 money shops of one form or another. Business was brisk. The second development has been the astronomic growth of online lending.”
“My Lords, yesterday I had tea with a dear friend here in your Lordships’ House. Unsurprisingly, the subject of payday loans came into the conversation. He told me about his son, who has mild attention deficit disorder, is frequently unemployed and had taken out two payday loans. The loans were for £800. His son could not pay them back and, to cover his embarrassment, rolled them over several times. In a few months, the amount due to be repaid had escalated to £5,000. My friend reluctantly had to settle the bill. That is the essence of the amendment that I put down at Committee stage, and which I have put down today. It is this that we are seeking to control. Ten years ago, this amendment probably would not have been tabled, but today it is very much of the hour.”
“I must mention my honourable friend Stella Creasy MP, who has been relentless in her pursuit of justice. The other most welcome winners are those who live in the hellhole of grinding debt. Their lives will become a little easier. The losers are clearly the loan sharks and the payday lending companies. They have tried every trick in the book to keep this legislation from being approved and they have failed. Their failure is our victory. On the basis of the Government’s assurances, I beg leave to withdraw the amendment.”
“My Lords, I thank all noble Lords who took part in this discussion, particularly those who are co-signees of the amendment. It has been a powerful and focused debate and I hope that the payday lending companies are listening. My guess is that they are glued to their screens. The Minister has made a welcome statement of intent and to be honest that is as much as we could have hoped for. With the Government’s cast-iron acceptance of the principle of my amendments, as well as the effective force of veto that the three other signatories to the amendment will have over the revised amendment at Third Reading, this issue is now where it should be: beyond party politics. The winners are those who have tirelessly campaigned for this change in the law.”
“My Lords, after two and a half years and half a Parliament, it is about time that this Government started taking responsibility for their actions and stop blaming others for the consequences of their own shambles. However, when will this Government understand that announcing convoluted schemes every few weeks is not the primary way to help SMEs to recover? What will help businesses recover is creating an atmosphere of confidence. That will be created by increasing demand, and demand will be increased by moving from a policy of ever-tightening austerity into one of strategic economic growth.”
“Sometimes our captains of industry sound like Premier League footballers. My advice is: call their bluff. In the end, business needs to be made more streamlined; red tape needs to be reduced but employees’ rights need to be protected. It is a difficult balance and I hope that, as this Bill proceeds through your Lordships’ House, it will become more acceptable and better understood than it is now.”
“Senior managers are adept at finding loopholes, especially where there own paycheques are concerned. I therefore support my noble friend Lord Gavron when he requests that there should be no confusion about management packages: they should include all perks and be signed off in the annual accounts by the company’s auditors. The remuneration committee should present its recommendations every year at the annual general meeting and not every three years. Many of these masters of the universe believe that they are irreplaceable, that only they can do the job and that that is why they can make such outlandish pay demands. However, it is simply not true: nobody has a monopoly on talent; directors should be much more assertive and not be browbeaten by aggressive senior managers.”
“Until he died, Steve Jobs of Apple paid himself $1 per year. Jeff Bezos the founder of Amazon has always paid himself an annual salary of $83,000, less than a Member of Parliament receives in this country. Of course, such individuals are also paid bonuses, but these are real bonuses where, if profits fall, so, too, does the remuneration. To these types of entrepreneurs, the acquisition of personal wealth comes from the capital gain that results from the long-term success of the enterprise; raiding the kitty is not the way to build up a company. It also sets a bad example and creates a precedent that filters through across the organisation. I am a great supporter of any move that makes directors’ remuneration not only transparent, but also subject to shareholders’ control.”
“I might add, with huge relief, that at long last I am no longer a director of anything. I first pay tribute to my noble friend Lord Gavron. He has previously tabled a Private Member’s Bill specifically on this topic. He withdrew it when this Bill was first published because many, although not all, of the clauses in his Bill are now incorporated into this one. There is always a built-in conflict between shareholders and management and, these days, it seems that management is clearly in the ascendancy. The management team of many large companies tends be a cohesive unit; the shareholders are often disparate. So management, armed with sensitive information, can usually finesse the entitlements of the shareholders. My world is that of the entrepreneur, and my heroes are people who have built up large companies from nothing.”
“I agree there is an important role for settlement agreements in cases where there is an existing dispute, but we have real concerns that a minority of rogue employers will use the extension of settlement agreements as provided for in this Bill, as a licence to bully employees. Using ACAS in the initial stages of a dispute must be a good thing and I wish it had been open to my charity when we had our dispute; hopefully it would have been resolved much more quickly. However, I worry that ACAS will be deluged by myriad disputes. Again, I ask the Minister what are the Government’s plans to direct resources into ACAS so that it can be effective in its enhanced role? I now want to come on to the final part of the Bill which is of particular interest to me: directors’ pay.”
“It will surprise no one that, in this situation, this course of action was not open to me. We went through the charade of a grievance procedure and the game of issuing letters bound by “Without prejudice” headlines. I found a level of patience within me that I never knew existed. The worst thing was that in the end we settled with the disgruntled employee by offering him an amount that I had always been willing to pay him right from the start. But we had to go through this convoluted dance to get there. It was a waste of everybody’s time and emotional energy. So I am pleased that, in this Bill, considerable attempts are being made to change employment-dispute procedures.”