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House of Lords

Wednesday, 14 November 2012.

11 am

Prayers—read by the Lord Bishop of Ripon and Leeds.

EU: UK Balance of Trade

Question

11.06 am

Asked By Lord Spicer

To ask Her Majesty’s Government what is their estimate of the United Kingdom’s balance of trade with the European Union, once shipments in transit through the ports of Antwerp and Rotterdam to non-European Union destinations are excluded.

The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi): My Lords, in 2011 the UK’s trade in goods with the EU was in deficit by around £43 billion, while in relation to services UK trade was in surplus by around £16 billion, so the overall deficit was around £28 billion. I am unable to provide data excluding shipments in and out of Antwerp because under international guidelines firms are required only to state the final destinations of the goods they are exporting. Asking businesses to collect the detail of the journeys that goods take en route to their final destinations would significantly increase administrative burdens and hence push up costs.

Lord Spicer: That Answer confirms the fact that this country runs a trade deficit with the continent of Europe. To that extent, our membership of the European Union is of greater value to it than it is to us. Will that not considerably strengthen our bargaining position when we come to renegotiate the treaty of Rome?

Baroness Warsi: My Lords, I think that there are a number of assumptions in my noble friend’s question. I know that he has devoted many years to this subject, but there is an assumption that trade deficits are in themselves bad. We run trade deficits with some countries and trade surpluses with others. Running trade deficits and trade surpluses is the basis of free markets. I am sure that my noble friend would support that. On negotiations, I would say that there are many benefits to being a member of the European Union, so simply to assess the strength of that relationship on the basis of our trade figures is not the correct way forward.

Baroness Falkner of Margravine: My Lords, does my noble friend agree that, irrespective of how you interpret the data, which are contested, according to the Office for National Statistics, since the 1980s the UK’s bilateral trade with EU member states has more than trebled, while according to UKTI and the UN, the UK is the number one destination for inward investment? Those are all things that we should be extremely proud of in terms of our relations with EU member states.

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Baroness Warsi: My noble friend makes an important point and perhaps I may add to her statistics. Membership of the European Union gives us access to a market of more than 500 million consumers and more than 45% of UK exports are to the European Union. The point made about foreign direct investment is an important one. In 2011 the UK attracted a fifth of all foreign direct investment projects in Europe and half of all the European headquarters of non-EU firms are based in the United Kingdom.

The Duke of Montrose: My Lords, I declare an interest as a farmer. Is my noble friend aware that our balance in food trade with the EU in 2011 was a deficit of £13.6 billion?

Baroness Warsi: I was not aware of those specific issues in relation to food trade. However, I go back to the general point. There will be some areas, predominantly in goods, where we run a deficit but there are other areas, in which we are very good, such as services, where we run a surplus.

Lord Dykes: Does my noble friend agree that although the United Kingdom has a physical trade deficit with most advanced countries in the world, we make up for that in considerable financial services?

Baroness Warsi: I do agree. The basis of the free market is that economies focus on those things that they are best at. It would be unusual for us to produce everything if it was not competitive for us to do so. We produce those goods and services in which we are competitive and for which we have a reputation around the world. We must continue to focus on those.

Lord Elton: My Lords, it is a mistake to value or devalue Europe on the grounds of finances alone. Is it not the case that the European Community has the opportunity to have a preponderant voice in international affairs? As the high representative is a Member of this House, would it not be a good thing if occasionally we could hear what positions she takes on behalf of Europe?

Baroness Warsi: The noble Baroness is on a leave of absence, and I think everybody in this House would agree that she does an extremely valuable job. It is true that the relationship extends far beyond just the trade relationship. I am sure my noble friend would agree, as would many noble Lords, that it is a relationship on which we can exert influence, and one that I and many in this House believe needs rebalancing.

Lord Dubs: My Lords, does the Minister agree that although it is very advantageous for us to be a member of the European Union, it is a positive advantage that we are not a member of the euro. Is it not time the Government acknowledged that Gordon Brown deserves a lot of credit for having kept us out of the euro? Credit where credit is due.

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Baroness Warsi: It may well be that the noble Lord’s understanding of history and circumstances is very different from mine. From what I recall—and I am sure many Members of the House would agree—if anybody deserves great credit for fighting the great campaign to keep us out of the euro, it is my current boss, my right honourable friend the Foreign Secretary.

Lord Hamilton of Epsom: My noble friend told the House that 45% of our exports go to the EU. However, if quite a bit of that 45% is going to Antwerp and Rotterdam for onward shipment to countries outside the EU, would she accept that the 45% figure is not accurate?

Baroness Warsi: There is some writing on this as to whether the statistics are accurate because of the “Antwerp effect” where goods are actually for another destination but show that they are passing to Europe. I asked officials specifically about this matter and they informed me that the information they have from BIS is that the ONS does record the final destination. However, I cannot be specific as to how accurate these figures are.

Lord Hunt of Kings Heath: My Lords, I wonder whether the noble Baroness will reflect on her answer to my noble friend Lord Dubs. Was it the last Labour Government who took the decision in relation to the euro?

Baroness Warsi: My Lords, they took the right decision.

Lord Cormack: Will my noble friend, who has given us a bravura performance, put it on record that the man who deserves most credit for keeping us out of the euro is John Major?

Baroness Warsi: My Lords, I agree with that comment as well.

Retail Prices Index

Question

11.14 am

Asked By Lord Naseby

To ask Her Majesty’s Government why the Office for National Statistics is reviewing the methodology of calculating changes in prices for the purposes of the retail prices index.

Lord Gardiner of Kimble: My Lords, the decision to launch a consultation on options, which include amending the way that the RPI is calculated, was taken by the National Statistician after taking evidence on statistical best practice and discussion with the Consumer Prices Advisory Committee, which suggested that the use of one particular formula in the RPI should be reconsidered.

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Lord Naseby: Will my noble friend recognise that the RPI has been with us for 56 years and that millions of investors in gilt-edged securities, index-linked National Savings certificates, pensions and businesses have done their forward planning for years ahead on the basis that RPI will be there? Then along comes the ONS’s quiet-as-a-mouse consultation, rather like the cheque consultation that we managed to expose, and the only beneficiary seems to be the Chancellor. In relation to this long-term planning and the disadvantage that it will impose on millions of people, will my noble friend tell the ONS to put the four options away and just accept option No. 1, which is no change?

Lord Gardiner of Kimble: My Lords, this is a consultation about the statistical properties of the RPI and is being undertaken by the independent Office for National Statistics. The UK Statistics Authority is required by statute to promote and safeguard the quality of official statistics, and that is exactly what the Office for National Statistics is doing. I say to my noble friend that things have evolved since 1956, a time when the RPI included the rabbit and the mangle.

Lord McFall of Alcluith: My Lords, the Government will know that pension funds are major investors in government debt and that any changes to index-linked bonds will have far reaching implications. Two questions arise from that. First, how will the growth agenda, which is non-existent just now, prosper without pension funds, which the Government want to get involved in infrastructure? Secondly, with pensions being lessened even more as a result of being linked to CPI, the question arising from pensioners is, “Why are we disproportionately paying for the Government’s deficit reduction programme?”.

Lord Gardiner of Kimble: My Lords, I should emphasise that this exercise, on which I am endeavouring to answer, is a consultation process and that it is only at a latter stage and under very special circumstances that Ministers would become involved in it. If a recommendation were to be made by the statistics authority, the Bank of England would be consulted on whether any proposal would be a fundamental change to the basic calculation of the RPI that would be materially detrimental to the interests of holders of relevant index-linked gilts. It is only at that stage, if the Bank considered a proposed change to the RPI to be fundamental and materially detrimental, that the agreement of the Chancellor would be required. As I have said, I do not think that any of us should prejudge an independent consultation.

Lord Elton:My Lords, did I gather from my noble friend’s answer that the effect on gilts is the only consideration that the Government would have before they made up their mind on this?

Lord Gardiner of Kimble: It is obviously one of the considerations, but there will clearly be a number of considerations. There are effects in terms both of the liabilities for index-linked gilts as well as the assets.

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However, the point that I wish to make is that there is a process by which all these considerations are made and there are regular reviews of the RPI.

Baroness Sherlock: My Lords, in their first Budget, the Government sneaked through a decision to link future benefit increases to CPI rather than RPI, a move which the IFS said would save about £5.8 billion by 2014-15, taking that money out of the pockets of the poorest. If RPI does change, will the Government revisit that decision?

Lord Gardiner of Kimble: My Lords, again, I return to why we are where we are with this consultation. Among the key indexes that I have learnt about that I did not know much about is the Carli index. This index has now been discontinued by every other large advanced economy. The IMF has concluded that Carli, which is a major part of the RPI, is not an appropriate formula for inflation measures. On the point about pensions, this is a Government who have made the largest ever cash increase to pensions, to £107.45 a week. Of course, the Government’s triple guarantee means that the basic state pension will increase by the highest of growth in average earnings, the CPI or 2.5%.

Baroness Hayter of Kentish Town: My Lords, it is a shame that the noble Lord did not answer the question just put to him. Given that the Government changed from RPI to CPI on a permanent basis, despite the fact that we hope that the deficit is only a short-term one, it will cost people for many years to come. Will that be reviewed? Is this review of RPI really just statistical or is it a way of disguising cost of living increases caused by fuel and VAT?

Lord Gardiner of Kimble: My Lords, I have to return to why this is happening. It is happening because of the National Statistician and under statute. Having looked at previous Questions when the noble Baroness’s party was in office, precisely these things happened then, too: there were these reviews. This was about an independent inquiry. I hope that I tried to answer the last question, which is why I discussed the Carli index—a key part of RPI. In many countries it has been rejected as the sensible way of dealing with things such as cost of living increases.

Lord Naseby: My noble friend positions this as a mechanistic change, which is what the ONS suggests. Nevertheless, is it not true that one of the options is basically looking to a change which will be virtually 1% off RPI? That is hardly mechanistic. In terms of consultation, can we now hope that the ONS will have a full and open consultation and extend the date beyond 30 November so that people can respond?

Lord Gardiner of Kimble: My Lords, my noble friend is right that the consultation closes on 30 November. I actively suggest that, as the Office for National Statistics said, it wishes to hear from as many people as possible as to the opinions on the four options available.

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Energy: Draft Energy Bill

Question

11.21 am

Asked By Baroness Worthington

To ask Her Majesty’s Government how the provisions set out in the draft Energy Bill will deliver reductions in greenhouse gas emissions.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma): My Lords, as the Prime Minister said, we are committed to being the greenest Government ever. We acted quickly to put our own house in order by reducing central government carbon emissions by almost 14% in our first year in office. At Durban last year, we secured a roadmap to negotiate a new, global and legally binding agreement on climate change to be in place no later than 2015. Across the EU, we have led calls to increase the EU emissions reduction target to 30% by 2020. The noble Baroness asked about the forthcoming energy Bill. I could not think of a better example of what this Government are doing to reduce carbon emissions.

Baroness Worthington: My Lords, when I tabled this Question I hoped that we would have an energy Bill. Sadly, that is not the case. We have the Corby shambles and a Government at war with themselves over wind farms. Who is responsible for Government policy on wind farms? Should we take it from the comments made by Minister John Hayes last night that the Government consider that it will soon be “game over” for the British onshore wind industry?

Baroness Verma: My Lords, I expected the noble Baroness to come back with a serious question and I am disappointed that she did not take this opportunity to further reach out to the work that we are doing. I will not comment on remarks made that I cannot attribute, so I will resist the noble Baroness’s call to comment on my honourable friend.

Lord Lawson of Blaby: My Lords, leaving aside all the green waffle, I welcome the inordinate delay in bringing forward the energy Bill, to which the noble Baroness, Lady Worthington, referred. Does my noble friend think it conceivable that this delay is connected with the fact that all the scrutiny that the draft Bill received—including from the group of which the noble Baroness, Lady Worthington, and I were both members, but more importantly from all the leading energy experts in this country—showed the Bill to be a complete nonsense? Among other things, it would give the Secretary of State arbitrary powers without any parliamentary scrutiny, and it would raise energy costs both for business and consumers. Does my noble friend not agree that the only sensible thing is to go completely back to the drawing board and abandon the present form of the energy Bill?

Baroness Verma: Of course, my noble friend does not expect me to agree with anything that he has just said. We very much took on board the recommendations

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and comments made by noble Lords in the Committee led by the noble Lord, Lord Oxburgh, and also by the Energy and Climate Change Committee. However, the Bill will arrive. As with all Bills that need proper scrutiny, we will come to the House with a Bill date when it has reached the stages that it needs to reach.

Lord Foulkes of Cumnock: My Lords, how can the Government be the greenest ever, when the MP running the Tory campaign in Corby has sabotaged the Government’s policy by supporting an anti-wind farm candidate? My spies tell me that yesterday the Minister described her own brief as “all a load of hot air”. With Tories like the Minister and Mr Heaton-Harris undermining the Liberal Democrat Energy Secretary, is this not another coalition shambles?

Baroness Verma: My Lords, the noble Lord has tried very hard to deviate from the Question on the Order Paper. Therefore, it is not worthy of a response.

Lord Teverson: My Lords, I strongly welcome the Government’s recent strategy on energy efficiency, which the Secretary of State hopes will save some 22 power stations. How do the Government intend to bring some of these demand-side issues into the new energy Bill, which we need quickly to establish international investor confidence?

Baroness Verma: I thank my noble friend for bringing the House back to the Question. Of course, I agree wholeheartedly that we need to consider seriously how we reduce electricity demand and that this should complement our work on electricity market reform. I paid tribute to my noble friend Lord Lawson and the work of the committee of which he was a member. We are consulting on potential policy approaches to reducing electricity demand. That must be one of the options open to us, and I am sure that the noble Lord will be part of that consultation.

Lord Hughes of Woodside: My Lords, I understand and sympathise with the Minister for having to appear at the Dispatch Box and answer for government policy. However, the fact is, she does have to answer for government policy. Will she therefore answer the Question? This is very serious: what is the Government’s policy on onshore wind farms?

Baroness Verma: My Lords, as I have stated at this Dispatch Box before, wind farms are part of our energy mix. They need to be part of our renewables energy mix and we continue on that path.

Lord Cormack: My Lords, will my noble friend accept that when Mr Hayes said “enough is enough”, he echoed the feelings of many people throughout this country? We believe that he is a hero and we hope the Minister agrees.

Baroness Verma: My Lords, I reassure my noble friend and noble Lords in this House that our policy remains the same.

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Lord Touhig: My Lords, the noble Lady seems uncharacteristically reluctant to answer some questions today. Could she answer this one: does she wake every morning thanking the Lord that she is not the Minister responsible for wind farms?

Baroness Verma: My Lords, I came to this Dispatch Box to answer Questions. I was hoping that the Question would relate to what was on the Order Paper.

Child Abuse: Waterhouse Inquiry

Question

11.28 am

Asked By Lord Lloyd of Berwick

To ask Her Majesty’s Government, further to the Statement repeated by Lord Taylor of Holbeach on 6 November (HL Deb, col. 893), whether they will reconsider their appointment of a “senior independent figure” to investigate whether “the Waterhouse Inquiry was properly constituted and did its job”.

The Minister of State, Ministry of Justice (Lord McNally): No, my Lords. Mrs Justice Macur’s review will proceed with the terms of reference laid before this House last Thursday.

Lord Lloyd of Berwick: My Lords, does the noble Lord agree that in view of Mr Steve Messham’s withdrawal of any allegation against Lord McNally—

Noble Lords: Oh!

Lord Lloyd of Berwick: I had better start that question again. Does the noble Lord, Lord McNally, agree that in view of Mr Steve Messham’s withdrawal of any allegation against Lord McAlpine, there is no longer any need for another High Court judge to go over the work of Sir Ronald Waterhouse 15 years ago? On the contrary, we should all be grateful for his impeccable conduct of that inquiry and the thoroughness of his report. Will the Minister tell the House what, if any, inquiries the Prime Minister made about Mr Messham’s credibility before announcing another inquiry into the same matters on 5 November?

Lord McNally: My Lords, I sincerely hope that that well known twitterer on the Front Bench opposite has not put my name on to this. I can understand where the noble and learned Lord is coming from. When we ask a senior judge to carry out an inquiry and they do so with the thoroughness with which the Waterhouse inquiry was carried out, there is a certain duty to respect the integrity of that work. I hope that the noble and learned Lord will also accept that the situation that we faced was not just that of a single individual coming forward but of a large amount of accusations being bandied around and a great deal of public concern. The Macur review terms of reference have been more widely drawn. Mrs Justice Macur will look at whether any specific allegations of child abuse

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within the terms of reference of the Waterhouse inquiry were not investigated. Quite frankly, the strength of public feeling justifies us going through with the Macur review.

Lord Mackay of Clashfern: My Lords, what was the basis for concluding that there was any question of whether the Waterhouse inquiry did its job properly when this announcement was made? I knew Sir Ronald Waterhouse as a very distinguished and conscientious judge. I was in touch with him when he was doing this inquiry, and I know the terrific effect it had on him, from the harrowing nature of his work in that connection. I feel very strongly that it is utterly wrong to cast aspersions on that work unless there is some basis for doing so which one can rely upon.

Lord McNally: My Lords, that statement, coming from such a source, reinforces what I said. When we have asked a distinguished judge to carry out an inquiry, we have to be extremely careful as to whether they can be second guessed. I do not think that anything that the Prime Minister or the Government are doing calls into question the integrity of the Waterhouse inquiry. As we always are when distinguished judges take on these difficult tasks, we are in his debt for doing so. However, the review of the Waterhouse inquiry will look at whether any specific allegations of child abuse were not investigated. The serious allegations that have been made merit a further thorough investigation.

Baroness Smith of Basildon: My Lords, I am grateful to the Minister, who has tried to bring some clarity to a question that I asked when the Statement was made. I sought to know what was meant by,

“whether the … inquiry was properly constituted and did its job”.—[

Official Report,

6/11/12; col. 896.]

He will understand the concern that has been raised about that kind of inquiry. Does that beg the wider question of whether all these separate inquiries that are taking place—I think there are 10 in total now—should be constituted into one overarching inquiry, where we can look at the relationship between the different investigations? Getting to a position where we could deal with all the allegations in one overarching inquiry would bring together the kind of issues that will have to be dealt with to stop this kind of abuse happening again.

Lord McNally: It is true that there is now a large number of inquiries. The noble Baroness says 10 and my brief says nine, but I take the point. The Government did not rule out an overarching inquiry, but there is a time to pause on this. Some of the accusations have been put into perspective by rushing to judgment in an overheated way, through Twitter and the new technologies that we live in. Those in authority need to have confidence. We are talking about child abuse; a very serious crime, which people who have evidence of should report to the police. It is not a responsibility of judicial inquiries to find wrongdoers. It is for the police, and if there are people with evidence, they should take it to the police.

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There is public concern about whether Waterhouse missed anything. We have asked a distinguished judge to do a specific task in relation to that: to look at whether any specific allegations of child abuse were missed by that investigation and then to make recommendations to the Secretary of State for Justice and the Secretary of State for Wales. That is the right place to be in.

Baroness Butler-Sloss: My Lords, I read the report. I was a colleague of Sir Ronald Waterhouse. He produced, as both the noble and learned Lords have said, an impeccable report. If the terms of reference were, “Are there allegations that were not put to Sir Ronald that have now arisen?”, they would be acceptable. However, the Government have—and the Minister really should be taking this on board—cast aspersions on the report suggesting that he did not do a good enough job. If the terms of reference are changed, which I would ask the Minister to do, to say that any allegations not made to Sir Ronald Waterhouse should be investigated, I suspect the House would be a great deal happier.

Lord McNally: My Lords, three of our most distinguished judicial Members have spoken out very strongly about Sir Ronald Waterhouse’s integrity. I associate myself completely with them. That was not the situation we faced. We faced growing public concern about whether child abuse allegations had not been investigated. The judge in charge of the new inquiry is taking time to look carefully at what she needs to do the job and will look again to see whether the plethora of allegations that are around need re-examining and whether something was missed in the details of inquiry. I do not accept that that impugns the integrity, processes or findings of the original report. We dealt with a situation of real public concern. I hope the way Mrs Justice Macur now takes it forward will meet that public concern.

I repeat that I associate myself entirely with the comments of senior judicial colleagues about Sir Ronald Waterhouse and his work. It is important to get this on the record. We are indebted to the senior judiciary for so often being willing to take on these very difficult tasks on behalf of society as a whole.

Protection of Freedoms Act 2012 (Disclosure and Barring Service Transfer of Functions) Order 2012

Disabled People’s Right to Control (Pilot Scheme) (England) (Amendment) Regulations 2012

Animals (Scientific Procedures) Act 1986 Amendment Regulations 2012

Motions to Refer to Grand Committee

11.38 am

Moved By Baroness Stowell of Beeston

That the draft order and regulations be referred to a Grand Committee.

Motions agreed.

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Arrangement of Business

Announcement

11.39 am

Lord Newby: My Lords, there are 38 speakers signed up for the Enterprise and Regulatory Reform Bill Second Reading today. If Back-Bench contributions on the Bill are kept to around nine minutes, the House should be able to rise this evening at around the target rising time of 6 pm.

Enterprise and Regulatory Reform Bill

Second Reading

11.40 am

Moved By Lord Marland

That the Bill be read a second time.

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Marland): My Lords, I begin by underlining this Government’s commitment to fostering growth and restoring the UK’s economic prosperity. We recognise that legislation itself cannot generate economic activity, but it can help to set the framework in which enterprise can flourish. The Bill provides a package of measures that will get rid of unnecessary bureaucracy that encumbers business, improve the competition framework to ensure well functioning markets and advance business and consumer confidence alike.

To support enterprise, we are including several initiatives: to legislate for the UK Green Investment Bank; to improve the employment tribunal system and promote resolution of disputes; to give shareholders of UK quoted companies binding votes on directors’ pay; to promote competition through a single Competition and Markets Authority—CMA—and strengthen powers to address anti-competitive behaviour; and to make our copyright laws fit for the modern age.

We intend to simplify regulation and reduce unnecessary red tape by extending the primary authority scheme to more businesses for one-stop advice; by providing clear powers to time-limit new regulations via sunset clauses on new measures introduced; by ensuring regulation, such as on heritage protection, is delivered in an efficient manner while still providing necessary protections; and by repealing other unnecessary regulatory requirements on business.

I will address each of these measures in turn. On the Green Investment Bank, the transition to a low-carbon economy is important for the future, both globally and nationally. Some analysis suggests that more than £200 billion of investment will be needed over the next decade to develop the new technologies and products that will underpin this transition. Yet these are new markets, and the long-term nature of returns on green infrastructure investment may be deterring private-sector investors. That is why we have established the world’s first Green Investment Bank, which is now fully operational and ready to drive the UK towards a green economy.

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Our employment reforms reflect our commitment to tackle employment legislation to help employers manage their workforce more effectively and ensure growing businesses have the confidence to take on new staff. Through the employment law review, we are taking decisive steps to remove the fear of employment tribunals and reduce the legislative burden on employers which stifles growth. This includes measures outside the Bill, such as introducing fees to the employment tribunal system and a fundamental review to streamline the rules on employment tribunals and make sure they operate as efficiently as possible. The Bill will provide business with more certainty about its liabilities and provide clarity on dismissal and tribunal processes, while supporting both parties to resolve their disputes earlier. The changes, such as on early conciliation and settlement agreements, will save time and cost for employers and employees. The Bill will give businesses more confidence and flexibility to deal with workplace issues, thereby providing the platform for growth that employers need.

On directors’ pay, the Government are clear that an effective corporate governance framework is necessary to support long-term sustainable growth. Investors agree that the governance of directors’ pay needs to be strengthened. The growing gap between pay and performance is damaging and unsustainable. Our reforms will require companies to be more transparent and to give shareholders a binding vote on remuneration policy. For the first time, shareholders will be able to agree real limits on what companies can pay. Investors agree that these reforms will help tackle excessive pay while still allowing companies the necessary flexibility to set pay packages that suit their specific circumstances and which reward genuine success.

On competition, a free and open market place is key to a growing economy. Pressure from competitive markets enables efficient and innovative businesses to thrive, which benefits consumers. The Government are setting up the new Competition and Markets Authority, which will provide a single, strong voice on competition. It will have a duty to promote competition to the benefit of consumers. The Bill will also streamline and strengthen competition enforcement powers, meaning that anti-competitive behaviour will be tackled more quickly and effectively, bringing benefits for businesses and consumers alike.

Chattels are a particularly damaging form of anti-competitive behaviour.

Noble Lords: Oh!

Lord Marland: Sorry—I meant cartels. I am glad noble Lords were listening. It is one of those days already; if only I were not dyslexic. I repeat, cartels are a particularly damaging form of anti-competitive behaviour. In this Bill, the removal of the requirement to prove that individual cartelists were acting dishonestly will make prosecutions easy to mount, therefore deterring more cartels. These provisions, which will take out of the cartel offence those arrangements which have been notified to customers or publicised in the prescribed way, will provide a safe harbour for those businessmen engaged in legitimate commercial behaviour. Further comfort will be provided by prosecutorial guidance and by the statutory defences in the Bill.

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I intend to bring forward a new provision in Committee and will first provide your Lordships with the necessary briefing on midata. To further benefit consumers, we will be introducing a power to make it compulsory for suppliers of services and goods to provide to their customers, upon request, their own transaction and consumption data in a portable electronic format. This will help consumers to make better decisions on the products and services that offer them the best value. The power will be targeted on certain sectors—namely, the energy, mobile phone, current account and credit card sectors—but may be extended to other sectors if appropriate.

Turning to copyright, the UK’s copyright regime needs to be brought up-to-date. The measures in this Bill will help to bring the law into the modern age and will be of benefit to creators and users of copyright alike.

The primary authority scheme is a highly effective mechanism which allows firms to get assured advice from one local authority on regulatory issues. This is not about scrapping regulation, but about ensuring that the necessary rules are enforced in an efficient manner. We want to extend eligibility, so that more businesses—especially smaller enterprises—can benefit.

On bankruptcy, this Bill reforms the process by which an individual may apply for their own bankruptcy; it will remove the existing requirement that such individuals petition and attend court, replacing it with a suitably robust and more efficient process under a suitably qualified adjudicator. In these cases, there is no dispute for the court to resolve. This measure will therefore free up judges’ time and court resources.

On sunset and review, the Government have already strengthened the scrutiny of new regulations before they are brought into force. But it is also vital to review new regulations after their introduction to establish whether they are meeting their objectives; whether they are still required and whether burdens can be reduced. Past weaknesses in this area have been highlighted in the excellent work by the merits committee—and I am grateful to the noble Lords, Lord Filkin and Lord Goodlad—most recently in their 2009 report, What Happened Next. The changes that are being made by this Bill will ensure that sunset and review provisions can be included in future secondary legislation. That will support the establishment of a robust and enduring system for tackling obsolete, burdensome or ineffective regulation, and help ensure that regulatory burdens on business are minimised.

Overly burdensome and obsolete rules stifle business. That is why we need to get rid of them wherever that is sensible. For example, it is currently the case that, where health and safety regulations impose a strict duty on employers, they can be liable to pay compensation, despite having done all that was reasonable to protect their employees. To address this potential unfairness, the Bill will remove the right of individuals to make civil claims for breach of most statutory health and safety duties, unless it can be proved the employer has been negligent.

The Bill will also exclude from the scope of the Estate Agents Act 1979 some intermediaries, such as private sales portals, that merely enable private sellers to advertise their properties and provide a means for sellers and buyers to communicate with one another.

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This is a limited deregulation that should bring benefits to the consumer and to the industry without reducing consumer protection.

The heritage measures in this Bill deliver on commitments made in the Government’s response to the Penfold review of non-planning consents. In particular, they will reduce burdens on owners, developers and local planning authorities but, importantly, without diminishing protection for key heritage sites and buildings. For example, the measures on Osborne House will enable English Heritage to put an unused wing of the building to productive use and to generate income to cover maintenance costs.

The package of measures on equalities reflects the Government’s clear commitment to equalities and the maintenance of core protection under equalities law, while addressing legal requirements which are not necessary or helpful. We want the Equality and Human Rights Commission to focus on its core functions as an independent equality body and an A-rated national human rights institution. We are therefore repealing vague and unnecessary duties and powers from the Equality Act 2006—the legislation that established the commission.

This Bill also implements two repeals arising from the equalities Red Tape Challenge, as well as delivering on this Government’s commitment to promote equal pay by ensuring that there is proportionate further action for the very few employers who flout equal pay laws.

The measures in this Bill are designed to help in our efforts to restore the United Kingdom economy to health and to pave the way for sustained recovery. I much look forward to the contributions from noble Lords and working with all Peers in the constructive way in which this House operates. I commend the Bill to the House. I beg to move.

11.52 am

Lord Stevenson of Balmacara: My Lords, I thank the Minister for his introduction to the Bill, and for the meetings and briefings which he and the Bill team have provided for us: indeed, I had one at 11 am today on midata proposal, which the Minister has just mentioned. This has made our task that much easier, and has helped us to prepare for today and Committee stage when our Front Bench will be joined by my noble friends Lord Young, Lord Adonis, Lord Mitchell, Lady Thornton, Lady Hayter, Lord McKenzie and Lord Whitty. Noble Lords may wonder why we have so many: it is because this is such an extraordinarily wide-ranging Bill that we need all the talents we are able to bring to bear in order to give it the proper scrutiny that it requires.

When the Enterprise and Regulatory Reform Bill was introduced in the other place, the Secretary of State suggested that the measures in the Bill will help to make Britain one of the most enterprise-friendly countries in the world. This is, however, the same Secretary of State who wrote to the Prime Minister in February 2012 complaining about the Government’s failure to develop a plan for growth. He said:

“I sense … that there is still something important missing: a compelling vision of where the country is heading … and a clear and confident message about how we will earn our living in future”,

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and that there is,

“no connected approach across Government”,

to driving growth. Perhaps the Secretary of State’s most damning criticism of the Government’s actions to date is that they are “frankly, rather piecemeal”.

Therefore, is this so-called flagship BIS Bill the answer to the Secretary of State's concerns? I do not think so. This is a hotchpotch of measures, ranging from banking to employment law; competition policy to copyright; and equalities to health and safety. In six parts, and with no overarching narrative, the Bill provides no discernible overall vision or confident message. If there is one, it certainly was not evident from what the Minister has just said.

The Bill is a missed opportunity. It does nothing to help Britain out of a double-dip recession made in Downing Street. Nor will it assist businesses to enhance their competitiveness or give them what they want in terms of a long-term industrial strategy. Business leaders are already unimpressed with the Government’s business policy and this Bill will not change their views. It contains inadequate measures to boost business confidence, nothing to enhance the UK’s international competitiveness and no measures to increase competition in consumer markets or to protect consumers from powerful vested interests. The Bill also fails to live up to the rhetoric of shareholder activism, which featured large in government statements only a few months ago, as it fails to empower shareholders to bring to an end the culture of excessive rewards for corporate failure. At the same time the Bill sets out to undermine equalities policies and to dilute long-established rights of people at work. The four copyright clauses have aroused concern and worry among one of our most important areas of potential growth—the creative industries.

Much of the employment changes are inspired by the recent Beecroft report commissioned by the Prime Minister, which the author admitted in evidence to the Public Bill Committee was not based on statistically valid research or evidence. Many of the most controversial issues were introduced after the Commons Committee stages and were therefore not subject to proper scrutiny in the other place.

Many of the later sections of the Bill seem to be minor issues that were perhaps omitted from earlier legislation. Some seem to have been put together in haste and without impact assessments or proper consultation. I do not believe that this Bill as it stands meets the standards required of Parliament.

It is not hard to be struck by the difference in approach taken by this Bill and that taken by the Prime Minister’s other adviser, the noble Lord, Lord Heseltine. In his report, published a few weeks ago and circulated widely round your Lordships’ House, the noble Lord, Lord Heseltine, called on the Government to produce a radical growth strategy if Britain is to win what he calls the relentless economic war. This is not it.

I turn to the Bill itself. Part 1 will set up the Green Investment Bank. There is, and will continue to be, a growing demand for green technology, so we need to have an active industrial strategy to support the low-carbon economy. A critical component of that is the Green

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Investment Bank, which is why the previous Government set up the Green Investment Bank commission in 2009, and why we committed to establishing such a bank in our 2010 manifesto. We will therefore not oppose the provisions of the Bill although we have some issues which we will wish to explore in Committee, including whether this institution is, indeed, a bank capable of borrowing in support of its investments or is merely a fund. The Minister did not cover the vexed question of when the Green Investment Bank would be allowed to borrow although we understand that this will not happen unless and until public sector net debt falls as a percentage of GDP in 2015. That means that the earliest it is likely to be able to borrow is therefore 2016—some four years from now. We will certainly want to probe in Committee how we can ensure that the Green Investment Bank is able to borrow from the capital markets as soon as possible while, of course, being mindful of the need for rigour and discipline in the public finances.

However, we also believe that the Green Investment Bank must not be a bank of last resort that simply takes the projects that no one else is prepared to take. Surely the main point about the Green Investment Bank is that it can provide policy certainty for investors in the green economy—the certainty that so far the Government have not been able to provide. There is a huge and pressing need to promote the growth of small and medium-sized UK based enterprises in the supply chain and to ensure that we can realise the great potential of the green economy from within the UK and thereby support manufacturing in the UK and the ability of our home-grown businesses to provide apprenticeships, jobs, growth and exports.

Part 2 of the Bill relates to employment law and seems to be based on Adrian Beecroft’s report to the Prime Minister. Contrary to the thrust of his report, we do not take the view that watering down employee rights will boost demand. We think that it is highly likely to do the opposite—increase job insecurity and damage growth and consumer confidence rather than increase them. I would like to highlight three or four areas. Surely the essential components of an employment relationship are trust and confidence between the parties. The employment tribunal system exists to resolve the minority of disputes between workers and their employers that cannot be resolved within the workplace. However, the system has a second equally important role. For the great majority of low-paid workers who are not unionised and who have no opportunity to join a union, it provides almost the only defence against the small but significant minority of rogue employers who believe that they can obtain a competitive advantage through deliberate mistreatment or exploitation of their workforce. There is no evidence to support the contention that the current very small number of employment tribunal claims is a significant barrier to economic growth. That is not to say that more cannot be done to help workers and employers resolve workplace disputes. Of course, a commitment to strengthen the management of all our businesses would be a good place to start, but the Bill is silent on that matter. However, we welcome and support, subject to adequate

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resourcing of ACAS, the Bill’s provision for ACAS to offer early conciliation before any ET claim fully enters the ET system.

The Bill amends the Employment Rights Act 1996 with a view to encouraging greater use of compromise agreements, which are to be renamed settlement agreements. To our mind, this looks like a further erosion of the legal protection against unfair dismissal which, it must always be remembered, does not prevent employers dismissing workers for poor performance but simply requires them to follow a fair procedure when doing so. This proposal needs to be considered against other changes in this area: the qualifying period for such legal protection against unfair dismissal has been increased from 12 months to two years and we are told that from some date, yet to be defined, in summer 2013 workers will have to pay issue and hearing fees totalling some £1,200 to pursue an unfair dismissal claim.

We have significant concerns about the changes being proposed for the introduction of a public interest test to whistleblowing which we think is disproportionate as it will, for example, limit the protection for workers who want to raise concerns about health and safety issues in the workplace.

Healthy competitive markets reward the innovator, the new entrant and the risk-taker. They keep incumbents on their toes, benefiting consumers, and they create the disciplines at home that drive success abroad. That does not happen by itself, however, because markets are not always efficient. Even when policy frameworks can correct market failures, markets require active stewardship, constant vigilance against unhealthy concentrations of power and cartels and, above all, the deliberate promotion of competition through a strong, robust competition regime. In principle, we support the Bill’s proposal to improve the competition regime established under the previous Government. Following the transfer of certain OFT powers to the FCA there is definitely some sense in combining the rest of the OFT and the Competition Commission into one body, removing duplication and concentrating expertise in one place. However, we will be seeking to ensure that both the governance and objectives of the new CMA have due regard to the long-term interests of consumers, the very people for whom we seek to make markets work.

In this part of the Bill we would also like to probe the issue raised by the noble Lord, Lord Heseltine, about how the existing national interest provisions could be strengthened in cases of mergers. We will also be probing the new clauses on cartels. We welcome the proposed change to drop the need to prove dishonesty, but we worry about the reliance on transparency.

Part 5 ostensibly deals with the reduction of regulatory burdens. In fact, very few of the clauses in this part of the Bill do that and some may actually increase the regulatory burden. We should seek to reduce the regulatory burdens when we can but not by compromising the rights of employees or the health and safety of employees and customers. This is an issue not just of the quantity of regulation but of its quality too. We welcome the proposals to extend the primary authority scheme so

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that any business operating in multiple local authorities could ease its regulatory burden locally and form a partnership with a single local authority.

Far less welcome in Part 5 are the measures undermining the Equality and Human Rights Commission. Why are the Government seeking to repeal the general duty on the EHRC which seeks to promote fundamental values of humanity and decency in our society? After all, the commission’s statutory remit was the product of cross-party agreement when the Equality Act 2010 was passed. The EHRC is currently taking forward plans to change the way it works, responding to the changing economic, financial, demographic and social context but also, and particularly, the significantly reduced resources allocated to it by the Government. It recently published a new, three-year strategy and is implementing a new organisational design and operating model to deliver its work more effectively. We therefore agree with the commission when it argues that, if the Government wish to legislate further in this area, they should use the opportunity to strengthen the commission’s accountability to Parliament thereby making it better able to fulfil its mandate as Britain’s equality regulator and better ensure its continuation—which I gather is in doubt—as a national human rights institution in accordance with the Paris principles.

The Government’s proposal to end civil liability in health and safety is a major change in the existing law and was added to the Bill on Report in another place. It needs to be scrutinised very carefully. Is it really the Government’s intention that a worker injured due to an employer’s breach of a statutory duty within the health and safety at work regulations—such as failing to guard a machine—will be required to prove that the employer knew, or ought to have known, of such a failure in order to gain redress for the injury sustained?

The requirement to prove foreseeability is a very high bar of proof for an individual injured or killed through no fault of their own. Do the Government really think that by proposing this change they are sending the right message to employers about the importance of health and safety? There has been no public consultation on this proposal and what is being proposed goes further than the recommendations made in this area by Professor Lofstedt, in his recent report.

We are all, I think, seized by the growing disconnect between executive pay and average earnings, and between executive remuneration and the performance of the companies they lead. Between 1980 and 2010, the ratio of the median pay of the highest paid directors in FTSE 100 companies and median wages had risen from 11:1 to 116:1. We support the thrust of the proposals in this area, which build on work done by the previous Government. However, we believe that the Bill should go further and be bolder. Shareholder activism should be supported and not left out in the cold. Representatives of the company’s employees should be active and full members of the company’s remuneration committee. Directors’ compensation should be agreed by requiring an annual binding vote on pay policy at the AGM.

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The proposal to repeal the provisions in the Equality Act 2010 relating to employer’s liability for third- party harassment of employees was another key recommendation of Mr Adrian Beecroft. Relatively few third-party harassment tribunal claims are made, and it is therefore not easy to see how the current provisions constitute an unjustifiable burden on business.

The Government’s copyright proposals have raised a storm of representations, and some of the clauses were amended late in the day in another place. However, as we may have to spend some time on this area in Committee, let me briefly outline where we are coming from. Clause 65 has been widely welcomed by designers because it redresses a clear anomaly, but others have not been so welcoming. There was no impact assessment for this clause, and there has been no consultation.

Clause 66 continues to excite a great deal of interest. The amendments made on Report are welcome because they help to clarify that the Government cannot use the clause more widely than permitted under the European Communities Act, except as regards criminal penalties. However, what is the clause actually going to be used for? All major previous copyright changes were enacted by primary legislation, and there is a strong case for this to be the rule for all future legislation.

Clauses 67 and 68 deal with orphan works, and the major question here is why we are going further than the recent EU orphan works directive, which EU countries have to implement within two years. We may need to be convinced about the intention to extend this from purely cultural to commercial purposes.

The proposal to introduce extended collective licensing has raised concerns. It may well be that the UK’s existing rights clearance system is complex, but it is not entirely clear to us that an ECL is a “tool for simplification”. There may well be other solutions to the perceived problem here, through the exciting plans for a copyright hub or by extending existing licensing arrangements, particularly in the moving image area.

The Bill is a missed opportunity to provide a strategy for economic growth. It contains inadequate measures to improve business confidence, investment and competitiveness. We want enterprise to flourish, but we also want a society where people’s rights are respected. We want to see our economy grow, but growth cannot be at the expense of the basic protections that people enjoy in this country.

We would like the Bill to be amended in ways that better support business, including measures to ensure that the Green Investment Bank can be a strong and transparent catalyst for green growth, to improve the competition framework, to preserve employment rights and obligations, and better to empower shareholders in relation to directors’ remuneration. We support in principle a number of measures in the Bill, but there are certain red lines that it crosses which we do not wish to be implemented.

More than 2.5 million people in this country are out of work. Long-term unemployment has risen and the number of young people out of work and claiming benefits for more than a year has gone up yet again, and yet we are still searching for the green shoots of a sustainable recovery. That situation will not be resolved

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by taking away people’s fundamental rights. It will be resolved by getting demand back into the economy. That is what creates jobs, and that should have been the sole focus of an enterprise Bill. Instead, we find ourselves back where we started: in a big black hole when it comes to helping businesses to create enterprise, generate wealth and grow. The sad fact is that there is no compelling vision here, no confident message about how we are to pay our way in the world, and no connected approach across government to drive growth.

12.08 pm

Lord Razzall: My Lords, because this is a Bill that emanates from a department with a Liberal Democrat Secretary of State, noble Lords would not expect me to agree with the noble Lord’s remarks, and certainly not their tone. It is clear that the Bill must be looked at in the context of government economic policy since the creation of the coalition Government in 2010, which my party signed up to—first, coming primarily from the Treasury, a credible fiscal policy with the aim of restoring the economy to be an improvement on where the previous Government left it; and secondly, coming from the Minister’s department, a growth agenda attempting to improve demand and increase business investment.

Inevitably, this is a mixed bag of a Bill, although it is not the ragbag or hotchpotch referred to by the Opposition, both in another place and here. Although generally we on these Benches support it, I think that a review of the Bill in your Lordships’ House must look at each measure against the question whether a particular measure improves demand and/or increases business investment.

Like the noble Lord, Lord Stevenson, as we go through Committee stage I shall be joined by a number of colleagues, although not quite as many as him. I shall be joined by my noble friends Lord Teverson, Lady Brinton, Lord Clement-Jones, Lord Lester and Lady Bonham-Carter. In Committee, my colleagues and I will exercise our constitutional responsibility—many noble Lords regard it as their constitutional obligation—to review the Bill and amend it as we see fit. My colleagues will elaborate on many of these amendments as we go through Second Reading, but I would like to summarise a number of questions on which we want to be satisfied.

Let us take the UK Green Investment Bank, which was hugely welcomed from these Benches. The Liberal Democrats have been advocating an institution like this for a number of years, and I welcome the fact that this is in the Bill. I think I am right in saying that there was no obligation to put it in legislation, as the bank could have been established without any legislative framework, but it is important to have it on the statute book. I am slightly disappointed, as I expect the Secretary of State is, that the Treasury has authorised an initial investment of only £3 billion, but at least that is a start. I shall not attempt to muzzle the concerns of my noble friend Lord Teverson, but I am concerned that we need a proper explanation from the Minister about the policy regarding borrowing. The noble Lord, Lord Stevenson, touched on that. I am not sure that the current statement that there has to be a net reduction in borrowing before that can happen is

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sufficiently adequate with regard to something as important as this. At some stage of this Bill, the Minister needs to reassure us on that. I know it is Treasury policy, not his; nevertheless, I am sure that he will be able to come up with something that can satisfy us. As this part of the Bill passes through your Lordships’ House, the second area on which we need to be clear concerns exactly where we are on transparency and accountability.

On the unemployment proposals, to which the noble Lord referred, I think he was slightly churlish in not referring to the confirmation given by the Secretary of State in another place that the heavily criticised proposals by Mr Beecroft regarding no-fault dismissal will not be proceeded with. That is a significant development, which has been put into Hansard in another place. I do not wish to second guess what my noble friend Lady Brinton will say, but there are four issues where it is clear to me that your Lordships need to be satisfied. First, we need to be satisfied that the fears expressed by Citizens Advice and the TUC are groundless, that the new provisions will wrap up employees in legally challengeable unintended consequences. Secondly, there is a significant shift to put more obligations on ACAS in these proposals, and I think we need some undertakings that ACAS will be properly funded. Thirdly, we need assurances that, whatever the consultation on the cap on unfair dismissal payments comes up with, there will be no cap attempted on compensation for racial or sexual discrimination, or sexual oppression by an employer. Fourthly, there is the issue that is still out there about whether there should be an improvement in the enforcement of tribunal decisions, which is not touched on in the Bill. It would be useful to have a statement from the Minister about where the Government are on that issue.

The changes to competition law and the creation of the Competition and Markets Authority will be dealt with by me in Committee. Noble Lords will be aware that KPMG said that the UK’s competition structure was unique in its technical competence, its independence from political process, its transparency, access to decision makers, accountability and robustness. There is also significant evidence that, although we may have the best regime in the world, we also have the slowest. I support the creation of the new authority, but we must make absolutely certain that the five characteristics that KPMG listed are enshrined in its development. We must be satisfied that the proposals streamline and improve the efficiency of the competition regime.

The noble Lord touched on the issue of directors’ remuneration. It is a huge achievement of the Secretary of State to have arrived at balanced proposals that both the TUC and CBI, across the political divide, seem to accept. It is worth putting the issues into context. Many of the largest UK companies listed in the FTSE 100 have the majority of their employees and shareholders resident outside the United Kingdom. The noble Lord spoke of a policy applying to them that would go further, but it would be quite difficult to enforce.

I come finally to the two most difficult issues for our Benches. The first is the Equality Act amendment, which will be dealt with by my noble friend Lord Lester, who will be recognised by the House as the

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UK’s, if not the world’s, great expert on this topic. I understand that my noble friend cannot support Clauses 57 or 58, so I suggest that we watch him light the blue touch paper and stand back.

The final issue concerns copyright proposals. I often think that on this issue we have an irresistible force meeting an immovable object. Virtually everybody under 30 believes that everything should be free, but the creative industries want to ensure that proper value is given to their products and services. I am glad that I will not have to find the right balance on this. On these Benches it will be left to the noble Lord, Lord Clement-Jones. As the noble Lord, Lord Stevenson, indicated, we have seen significant lobbying on the issue.

In conclusion, noble Lords ought to recognise that we cannot create growth by legislation. All we can do is pass legislation that provides a modest degree of help. This Bill does that and I welcome it.

12.18 pm

Lord Smith of Kelvin: My Lords, I declare two interests. First, I am chairman of Scottish and Southern Energy, which is the biggest generator of renewable energy in the UK. Secondly, I chair the Green Investment Bank, which has just been mentioned. I can confirm the statement of the noble Lord, Lord Marland, that we are up and running. We have state aid approval. We have been charged with five priority areas: offshore wind, waste, waste to energy, non-domestic energy efficiency and the Green Deal, which is effectively domestic energy efficiency. We are very new. We had our first full board meeting at our headquarters in Edinburgh just one week ago. However, we have appointed a chief executive and most of the senior management team, and we have inherited a pipeline of possible investments from an outfit called UK Green Investments, which has been operating inside the Department for Business, Innovation and Skills.

Conditions in capital markets and in clean energy markets are difficult. In capital markets, UK banks are unwilling to lend beyond seven or eight years, and many of these projects need finance for up to 20 years. However, sovereign wealth funds, pension funds and foreign banks have been in touch with us to indicate that they are interested in investing in the UK. In the clean energy space, we need good policy and clarity on electricity market reform to remove the uncertainty that is deterring developers and lenders.

I want to talk about three areas included in the Bill which may help your Lordships—green issues, borrowing and independence. We know that we are going to be held to very high standards on green issues in both the investments and our own operations. We welcome the requirement to report on carbon emissions and the positive impact that our investments should have on reducing UK emissions. We will go further than the requirements of quoted companies by reporting in detail on our portfolio. We will also take the long-term view and have regard to the work of the Committee on Climate Change.

I ask noble Lords for support for the Government’s broad definition of “green purposes”. Waste and recycling —for example, anaerobic digestion—can have a positive

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impact, and it would make the Green Investment Bank’s task more difficult if there were changes in our mandate by a narrowing of the green definition.

On borrowing, under the terms of state aid approval, we have to prove that all investments are commercial. In showing that we can make commercial investments, we will attract in private capital alongside us. Incidentally, we will definitely not be the lender of last resort. Is £3 billion enough when most commentators are saying we need £200 billion invested in this area over the next 10 years? My answer to that is that businesses have to be built on solid foundations if they are to endure, and we will need this institution to endure because we will be making investment in green infrastructure long beyond 2015. We need to show government and private capital markets that we are a well run organisation with a good track record worthy of the injection of more capital or, indeed, borrowing money in capital markets.

I can promise noble Lords that if we feel we need to borrow we will approach the shareholder well before 2015. As a public limited company, we have the power to borrow, but we have to ask the shareholder, and the shareholder is the Government. As our team has only recently been assembled and projects such as the ones we are looking at can take quite a long time in planning and construction, I think that the original budget of investing the first £775 million over the next five months will be difficult to achieve. However, I am confident that we can commit £3 billion wisely by 2015 and crowd in an awful lot of private capital from around the world alongside that.

I fully take on board the comments of the noble Lord, Lord Stevenson, on having a UK supply chain and looking after small and medium-sized enterprises. That has already been pointed out to me by the noble Baroness, Lady Worthington.

In closing, I would ask noble Lords for their patience, for support for the Government’s broad green definition and for help in dispelling uncertainty over electricity market reform. I can assure noble Lords that the Green Investment Bank is already acting independently of Government, but, of course, prudently, as befits working in the public sector.

12.23 pm

Lord Tugendhat: My Lords, this is a wide-ranging, detailed and innovative Bill but I will concentrate on one aspect of it, as the noble Lord who has just spoken did, and that aspect is directors’ remuneration.

I congratulate the Government on tackling this issue. They have not done as much as I would have liked or as some other people would have liked, but they have created a precedent and a platform on which investors, remuneration committees, directors, the media and public opinion can all build in future. This is not an area in which everything has to be done by government or by statute. The Government have established that there is a public interest involved in this matter—that is very important—and they have established minimum standards. Others can build on these and I will make suggestions on how that might be done.

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Let me make it clear that I approach this issue from the standpoint of a strong supporter of capitalism. I believe that capitalism has demonstrated that it is the best way of creating a prosperous society and enhancing the life chances of the great majority of people. That is not in itself a sufficient condition for a society to be fair, free and just, but it is a necessary one.

However, pace Gordon Brown, capitalism does go through periods of bust as well as boom and it develops warts and faults that need to be corrected. We are in just such a situation at present—and not just in this country, as the debate in the United States on these issues shows. Economic growth is slow and unemployment, especially for the young, is high. Uncertainty is rife and living standards for many of our fellow citizens are being painfully squeezed. That has now been the case for some years, yet during those years, and continuing now, the total compensation of those who run our largest companies has increased at a phenomenal rate. In 1998, according to the Financial Times, FTSE 100 CEOs’ pay in all its various forms was 47 times that of average employees. In 2010, it was 120 times higher. There are a number of other measures that have different bases, but basically they all convey pretty much the same impression: those who run our largest companies have enjoyed a bonanza in terms of pay that is quite out of line with any other segment of society.

What this has led to was made starkly clear by two news stories, one above the other, that happened to appear on page 6 of the Financial Times on 6 November. One reported that in addition to the increases I have just mentioned, the median pay of FTSE 100 directors rose by 10% last year, or more than six times the increase in overall average earnings. The other was headlined:

“Business chiefs warn against compulsion on living wage”.

Of course I realise that these are complex matters, that circumstances differ from company to company, and that generalisations are dangerous. I have chaired two FTSE 100 companies in my time and I have sat on the boards and remuneration committees of several others. I know that the CEOs and other senior executives who manage these companies are entitled to high rewards. Those who create wealth for others deserve to be generously rewarded. But I also know that the state of our society and of our capitalism, as revealed by the juxtaposition of these two stories, is deeply troubling and unsustainable.

The country needs its business leaders to speak out in the interests of their companies and of business in general, but when their pay and pay increases so far outrun those of the people who work for them, they lose moral authority, their words will be discounted and the business case on important economic and social matters will go by default. The Government are right to act and investors, remuneration committees and directors themselves would be wise to build on what has been done. The long-term health of our society and of our capitalist system demands that.

I will conclude with a short list of practical suggestions that can be introduced voluntarily, or as the result of investor or public pressure, to build on the Government’s minimum standards. First, the three-year gap between

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AGMs for approving a board’s remuneration policy is too long; it should be voted on annually. Secondly, a simple majority is not sufficient; two-thirds would be more appropriate. Thirdly, there is too much deliberate opacity and obfuscation in too many top-of-the-line remuneration packages. What is at stake and what is required to achieve it needs to be clearly comprehensible. One way of achieving that would be for the auditors to be required to provide a detailed explanation. Fourthly, an axe must be taken to bonuses and rewards that are linked to short-term share price movements. These are too open to manipulation, they tend to distort the judgment of executives, and they have exacerbated the tendency towards short-termism in British industry. I am not saying that there should be none, but I am saying that great care needs to be taken to avoid prejudicing a company’s overall long-term future in order for executives to be able to pocket substantial short-term rewards.

Finally, the activities of those Father Christmas figures, the remuneration consultants, must be curbed. At the very least, they should be hired by the non-executive remuneration committee, with no input from the executives, and they should on no account be permitted to carry out, at the same time, any other services for the company in question.

As I say, I do not think statutes are required to achieve all the objectives that I have set out. However, I do think that some further legislation to build on the Government’s admirable start would be helpful. I much look forward to the Private Member’s Bill of the noble Lord, Lord Gavron, which will be introduced in the not too distant future.

12.31 pm

Baroness Warwick of Undercliffe: My Lords, there is a huge number of issues in the Bill. For example, along with others, I am very concerned about the proposal to exclude the use of lay members in the Employment Appeal Tribunal. In my experience, the judges at the EAT value the industrial relations and management skills of employer and worker representatives and I hope to return to that at Second Reading.

However, today, I want to concentrate my brief remarks on Part 6, which relates to copyright. I support Clause 68 in particular, which will create a new power for the Government to license so-called orphan works and also open the way to extended collective licensing. Both of these measures are badly needed. As the Hargreaves review pointed out in 2011, a system to allow people to access, preserve and use works where no author can be traced has the potential to open up what he called a “treasure trove” of material. This is of particular interest to universities, libraries and museums. The British Library has drawn attention to the fact that, where it cannot trace the author of a work that may be in copyright, it is currently prevented from doing anything to preserve that work. It cannot digitise it or make it available other than in its original physical form. The British Library has said that this applies to a staggering 43% of the works it holds from between 1870 and 2010. This means that there is material of potentially huge historical, cultural and scientific interest that will literally lie buried away.

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Universities also have very large and important collections in their libraries and museums and so face similar difficulties—and I should declare an interest as a member of the council of the University of College London. They have the added frustration of being prevented from using such material for the purposes of teaching and research publications. Of course, some activities are covered by exemptions for teaching and non-commercial research, but those exemptions do not include any form of digital representation such as displaying material on a PowerPoint slide; nor do they include publication, for example in a journal, website or institutional repository, for which a licence would be needed. If you cannot trace the author of a work or secure a licence to use it, you simply cannot reproduce it in this way.

Universities UK has given two examples. The first is of a researcher finding material in an archive that is potentially in copyright. She is unable to identify who the copyright holder could be and so cannot get permission to use the material, say in a research paper. She has no choice but either to not publish the material or to risk court action should the copyright holder later be identified.

The second example is of a lecturer wishing to use photographs on PowerPoint slides as part of a series of lectures. Because such usage does not currently fall within the exceptions granted for the purposes of education, he would have to seek permission in order to do so. If the copyright holders of those images cannot be identified or located, he risks court action were he to use the photographs in this way.

Professor Hargreaves argued in his recommendations for reform of the copyright licensing system that making it easier to secure a licence to use orphan works was a measure that had “no economic downside”. Not only could it place in use a vast range of forgotten material but it will create an incentive for researchers to look for authors. Currently, if you suspect that a work may be an orphan, the time and cost involved in establishing whether that is the case, and the likelihood that you will not be able to use the material at the end of the process anyway, means that in many cases researchers will decide not to bother pursuing it. Under the provisions of the Bill, once you have conducted a diligent search but still cannot trace the author, you may be able to get a licence to use that material. You will pay a fee that will be held for the author should they eventually emerge, which, in my view, makes it more likely that authors will benefit from the reuse of works that are currently abandoned.

The Bill also establishes provisions for extended collective licensing, which is an important counterpart to the measures on orphan works and will make it easier to clear rights to use or digitise large volumes of work. I congratulate the Government on bringing forward these measures and urge colleagues to support them. In Committee, there will be plenty of time for necessary debate about the safeguards attached to these measures. In particular, I shall be interested in the regulation of collecting societies. Universities UK, and others, have argued that collecting societies should

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operate in a more transparent way and should increase the extent to which they ensure that rights holders and users are represented.

There are also some concerns within the academic community about provisions in Clause 65 extending the copyright period for industrial designs. I understand that there has been inadequate consultation about the effects of these measures and will certainly look to probe the Government on this at a later stage.

12.36 pm

Lord Lester of Herne Hill: My Lords, I will focus only on the equality provisions. I welcome Clause 74, which adds a new and significant power enabling employment tribunals to require defaulting employers to provide equal pay audits. I also support the removal by Clause 56 of some provisions relating to the Equality and Human Rights Commission that were included in the Equality Act 2006. At the time, we on these Benches supported the previous Government in their inclusion, but experience has shown that these vague and aspirational provisions have blurred the commission’s focus. Their removal will not impair the commission’s core functions or jeopardise its well deserved “A” status at the UN, but should enhance its effectiveness.

I cannot support Clause 57, which would abolish the existing liability for third party harassment of employees and applicants, and I cannot support Clause 58, which would abolish the procedure for obtaining information for proceedings. These changes are regressive and damaging to the rights of vulnerable minorities. They impair access to justice and efforts to avoid unnecessary litigation, and undermine the very essence of the principle of equality before the law and the equal protection of the law. They were introduced by the Government in the Commons too late to receive adequate scrutiny.

As regards Clause 74 and equal pay audits, the continuing problem of sex discrimination against women in the unequal pay they receive for doing equal work with men has been well documented again and again, decade after decade, as has the tortuous complexity of the law on this subject. We were unable to persuade the previous Government to introduce effective measures to secure equal pay for men and women, including provisions on the lines of my own Equality Bill for workforce reviews and pay equity plans by designated employers.

Clause 74 enables a Minister to make regulations requiring employment tribunals to order employers to carry out equal pay audits where they have found them to have breached equal pay law or to have discriminated because of sex in non-contractual pay, such as discretionary bonuses. Regulations made under this power will rightly be subject to the affirmative resolution procedure. The exercise of the power should not, I submit, be dependent on a finding of unlawful conduct. Equal pay audits should be regarded as essential elements in good employment practices rather than as punitive sanctions on defaulting employers. The public sector equality duty may result in encouraging effective voluntary measures to tackle sex discrimination in pay. I hope the Minister will be able to confirm that

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this is the Government’s understanding of the position. I should be grateful if the Government would also consider whether Clause 74 should be widened to apply not only to employment tribunals but to the courts, since they, too, have jurisdiction in equal pay cases.

Clause 56 repeals Section 3 of the Equality Act 2006, which sets out the commission’s general duty. It repeals Section 10, which imposes a duty on the commission to promote good relations between members of different groups. It repeals Section 27, which enables the commission to arrange to provide conciliation in non-employment disputes, and it amends Section 12 by reducing the frequency with which the commission has to publish a report from three to five years. The commission’s briefing of September 2012 explained:

“The Commission concludes that these changes are unlikely to have a significant adverse impact on its work”.

I agree with that assessment and should explain the reasons why.

The commission will continue to have all functions relating to equality and diversity, as well as promoting understanding or the importance of human rights, encouraging good practice in relation to human rights, promoting awareness, understanding and protection of human rights and encouraging public authorities to comply with Section 6 of the Human Rights Act. The commission will remain obliged to have particular regard to the importance of exercising the powers conferred in relation to the convention rights. It will monitor the effectiveness of the equality and human rights enactments. It will publish information, undertake research and training, give advice and guidance, issue codes of practice, conduct inquiries and investigations, issue unlawful act notices, require the preparation of action plans, give legal assistance, and have the capacity to institute or to intervene in legal proceedings, whether for judicial review or otherwise. It will still assess compliance with public sector duties and be able to issue compliance notices.

None of these powers and duties will be affected by Clause 56, and the commission will be stronger and more effective as a result, led by its excellent new chair, the noble Baroness, Lady O’Neill, and professionally managed under a new chief executive, Mark Hammond, who has been in post since July 2011, and his board. The statutory guarantees of the commission’s independence from unnecessary government interference will remain, notably the obligation for the Secretary of State to have regard to the desirability of ensuring that the commission is under as few constraints as reasonably possible in determining its activities, its timetables and its priorities. There is the obligation also for the Government to pay to the commission such sums as appear to the Secretary of State,

“reasonably sufficient for the purpose of enabling the Commission to perform its functions”.

Apart from the lamentable state of the law on equal pay, British equality legislation is the finest anywhere. It is essential that the commission should be a strong and effective public authority rather than a poorly managed and politicised NGO, a commission carrying out its demanding public functions with a clear strategy and skilled professional staff. It has underperformed

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since it was set up, and the Joint Committee on Human Rights on which I serve has been critical of its record. By removing vague and unnecessary duties and powers, the Bill will focus the commission’s legislative mandate on its core equality and human rights functions. The commission needs a board with strong business and corporate governance skills to provide strategic leadership. It needs to work more in partnership with others so that it is greater than the sum of its parts. The JCHR may wish to take on a greater role in scrutinising the commission’s business plan. This was suggested by the noble Baroness, Lady O’Neill, in her pre-appointment hearing with the JCHR and would have the virtue of increasing the profile and transparency of the commission’s work for Parliament.

The commission has a well deserved UN “A”-rated status as a national human rights institution. The UN High Commissioner for Human Rights and the chair of the International Coordinating Committee have expressed concern about, among other things, the cuts made to the commission’s budget. As part of the 2010 spending review, the coalition Government announced plans to reduce the commission’s budget from a baseline of £55 million to £26.8 million by 2014-15. The Government announced a comprehensive review of the commission’s budget in May 2012 to examine the level of funding that is reasonably sufficient for the commission to perform effectively its core functions as a national expert on equality and human rights issues, a strategic enforcer of the law and a guardian of human rights.

The commission is not alone. The JCHR and devolved institutions also play a vital role, as do Parliament and the independent judiciary.

We look forward to the outcome of the review of the commission’s budget. The commission’s independence is well protected by the statutory scheme, but it is also important that it is accountable to the Government and Parliament for the way in which it uses taxpayers’ money. I hope that the JCHR and other bodies with human rights functions will have a greater opportunity to understand, challenge and scrutinise how that money is put to best use. I emphasise that nothing in the Bill or the current review should jeopardise the Commission's “A” status; on the contrary, it should go from strength to strength.

I turn finally to the two provisions with which I disagree: the abolition of the questionnaire procedure and the removal of liability for third-party harassment. The questionnaire procedure has been in place since the 1970s, when it was included in the Sex Discrimination and Race Relations Acts, and later in legislation to combat disability, religious, sexual-orientation and age discrimination. It was introduced to enable would-be claimants, lacking legal assistance, to decide whether to pursue their claims through costly and time-consuming legal proceedings or by means of a simple statutory procedure. It was designed to help the individual who considers that she or he may have been unlawfully discriminated against to decide whether to institute proceedings and, if so, to present the case in the most effective manner. It has worked well in practice and no

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independent equality expert has ever criticised its operation. Its abolition would impair access to justice and result in unnecessary litigation.

At a time when senior judges, including the Lord Chief Justice, as well as leading academics and lawyers are warning that the growth of DIY litigants is clogging up the civil justice system, it is wholly misconceived and without common sense or good political judgment to abolish a useful way of helping many vulnerable people—women, the disabled, ethnic and religious minorities, gays and lesbians, and the elderly—to be protected against discrimination and to decide whether to have recourse to our courts and employment tribunals to seek remedies. Clause 58 is not based on evidence. I hope that it will be removed during the Bill’s passage.

Section 40 of the Equality Act 2010 made it unlawful for an employer to harass employees and people applying for employment. It also made the employer liable for the harassment of its employees by third parties, such as customers or clients, over whom the employer does not have direct control. Liability arises only when harassment has occurred on at least two previous occasions, and where the employer is aware that it has taken place and has not taken reasonable steps to prevent it happening again.

Section 40 was designed to replicate the effect of provisions in the Sex Discrimination Act 1975 as regards harassment by employers, and to extend to the other protected characteristics—apart from marriage and civil partnership, and pregnancy and maternity—the position in relation to employer liability for sexual harassment under the Sex Discrimination Act. The Explanatory Notes on Section 40 gave the example where a shop assistant with a strong Nigerian accent tells her manager that she is upset and humiliated by a customer who regularly uses the shop and each time makes derogatory remarks about Africans in her hearing. If her manager did nothing to prevent it happening again, he would be liable for racial harassment.

I should be grateful if the Minister would explain whether he agrees that this is a fair, balanced and proportionate provision, and, if he disagrees, in what respects it is any way oppressive or unfair. The consultation paper stated that the introduction of Section 40 had given rise to concern that businesses, especially small businesses, would find it difficult to comply with. But it gave no evidence to support this concern and, had that been the problem, the Government could have introduced, and could still introduce, an exemption for small businesses. It also stated that it had no evidence to suggest that the third-party harassment provisions were serving a practical purpose or were an appropriate or proportionate way of dealing with this kind of misconduct. The previous Government considered that there was sufficient evidence and carefully confined Section 40 to really flagrant cases. The official Opposition did not then oppose Section 40, or suggest that there was insufficient evidence to justify its inclusion. The Equality Act has been in force for only a short time.

Presumably the coalition Government accept, as did the Labour Government, that harassment because of gender, sexuality, disability or age is a serious social evil that needs to be tackled effectively. That requires third-party harassment to be unlawful.

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As the Discrimination Law Association noted in responding to the consultation, the other possible remedies suggested by the Government do not offer the same protection to employees vulnerable to third-party harassment including women, ethnic minorities, disabled people, members of minority religions, gay men and lesbians, transsexuals and older workers. I hope that the House will agree to remove Clauses 57 and 58. The Equality Act 2010 is a great British statute of which we should be proud. We should protect it in the interests of everyone, including employers and their workers.

12.51 pm

Baroness Buscombe: My Lords, the Bill has much to commend it and I welcome it to your Lordships’ House. I found the speech of the noble Lord, Lord Stevenson, from the Dispatch Box opposite a little surprising given the previous Government’s lamentable track record in this area. I well recall, as it was so close to Christmas, standing in the same place almost alone on 21 December 2000. I spoke on behalf of Her Majesty’s Opposition at Second Reading of the then Regulatory Reform Bill. We were promised so much. I remember that we talked a lot about better regulation but, following the introduction of that legislation, we had to endure more and more ineffectual regulation, often leading to unhelpful, unintended consequences and the stifling of enterprise. This Bill will help to address that. Yes, it covers a number of different measures. The noble Lord, Lord Stevenson, said that it was piecemeal; I say that it is focused. There is a lot to do to deal with the last Government’s mismanagement and approach to enterprise, which stifled business and made it incredibly hard for enterprises, particularly small and medium-sized ones.

Today, I focus my contribution on the creative industries. This is an incredibly valuable area and sector which we must do all in our power to support. Ten years ago, I introduced a debate in your Lordships’ House on the importance of intellectual property. I am sad to say that no one felt moved to speak in it. Now we have a very different situation. We have a much better appreciation of what we have in this country and therefore what is at risk in a digital world. The Minister made it clear that we want to make our copyright laws fit for the modern age but I urge him to ensure that our laws support creators.

Clauses 65 to 69 and Schedule 21 introduce measures relating to copyright which fail to meet the Government’s intention, stated in verbal assurances in another place. The Intellectual Property Office consulted on the implementation of the Hargreaves review of intellectual property, with many of the 471 responses disputing the financial evidence of the review and consultation. Impact assessments for proposals that would shift the balance towards free use of original content were well wide of the mark, often claiming inflated growth forecasts or incorrectly stating that there would be no negative impact on rights holders. For instance, one impact assessment drafted by the Intellectual Property Office stated that an exception for free usage of copyright content for use in parody would lead to no monetary impact on the content creators. I am sure that television

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companies that license clips of footage every week to the likes of “Have I Got News For You”, “Russell Howard’s Good News” or “10 O’Clock Live” would dispute that.

Despite this disquiet, there has not been an adequate response from the Intellectual Property Office to this consultation, just a publication of responses. There was understandable and widespread shock among the companies that invest in original content and therefore rely on copyright protection when some of Hargreaves’s most contentious proposals about exceptions to copyright and extended collective licensing appeared in this Bill. In short, we fear that these provisions will threaten the success of British creative businesses large and small, reduce their ability to make a living from their work and thereby put into question the UK’s proud position as the world’s leading home for the creative industries. But the provisions are free-standing and losing them from the Bill would not impact on the other parts.

I want to focus a bit more today on extended collective licensing. At present, the UK operates collective licensing systems in markets that fail to have independent licensing or where the dynamics lend themselves to one body representing a number of others, such as music where the Performing Rights Society—PRS—does a fantastic job representing the rights of artists. However, many sectors have taken great strides to make content accessible to those who want to license it. This has been done through digitising content so that it can be viewed, purchased and downloaded online, while others will set commercial terms for another company to license its content. This commercial model for optional collective licensing already exists but we fear it would be pulled apart by this measure as companies spring up in what I might dare call a “copyright Wild West” to appropriate and license other companies’ content.

The proposals here for extended collective licensing will mean all rights can be taken from rights holders. Bodies will spring up to license copyright material on behalf of content creators without their consent. These bodies will set financial and commercial terms for that content. The system is being called voluntary, but I fear that that is disingenuous. This is the nub: it is an opt-out system and there is little or no detail as yet to explain important factors such as which companies will be set up to conduct extended collective licensing for a particular sector, how a rights holder can find out which companies have been created to license copyright material from their sector so that the rights holder can opt out and whether the rights holder can opt out all content in perpetuity or whether they have to opt out each piece. For companies such as ITN, Reuters, Associated Press and Getty, this would be vital as they make thousands of pieces of content every day. There are also big questions over how such a scheme would be policed and regulated, with just £10,000 per annum being earmarked to administer it. Of course there is also the question of whether extended collective licensing bodies could license content for the internet, meaning that in fact extended collective licensing would spill well beyond these shores.

The Government suggest that such a scheme is successful abroad but only one very limited example exists as far as I know—in the Nordic countries.

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This is no model on which to change our very different copyright market. Any new system should be opt in only—if the Government have confidence in this, why not make it opt in?—or limited to a specific remit such as extended collective licensing for non-commercial use of orphan works.

The industry concerns and economic ramifications being raised are that content will be licensed by ill-regulated bodies that can undercut prices, be ignorant of any exclusive licensing agreements or license sensitive material for usage that the creator would not otherwise grant. The Intellectual Property Office has stated that extended collective licensing will bring no economic benefit to the UK, but industry tells us that it will do great damage to burgeoning creative industry sectors and that the aim of making licensing simpler is being achieved by industry innovation to make content available online. I fear that we tinker with this at our peril.

In conclusion, as I said at the outset, there is much to commend in the Bill. I suggest that we use this opportunity to do what we always do well in your Lordships’ House: work to make it an even better Bill that, when enacted, will genuinely support UK enterprise in our global economy.

12.59 pm

Lord Gavron: My Lords, like the noble Lord, Lord Tugendhat, I address Clause 70(4) and proposed new Section 439A on directors’ pay. I am advised by colleagues in the House that I should state my qualifications for speaking on this subject. In 1964, I started my own firm and I retired from it, when it was a public company, after 29 years as chief executive and chairman. I also served as a non-executive director on three other plcs. I now manage investments, both private and charitable, as well as a publishing company which exports two-thirds of its turnover. I first raised the problem of directors’ pay with the last Government almost 15 years ago.

In my long business career I have made many mistakes. You could say that I am something of a connoisseur of mistakes. I believe the Government are about to make a mistake regarding directors’ pay in the Bill we are discussing today. They are not going in the wrong direction, but they are not going far enough in the right direction. Fifty years ago, High Court judges, Permanent Secretaries, generals, admirals, air marshals and the heads of our leading public companies were all paid, broadly speaking, about the same. Outstandingly able people were all fairly and properly rewarded. Today, while the others have remained roughly in line with each other, the directors of our public companies have soared ahead to the extent that they are paid up to 50 times as much as their former peers, some even more than that. Have they suddenly become 50 times more intelligent or 50 times more effective? No. The reasons they get so much more is that they are the only members of the above grouping who can, in terms of rewards, help themselves.

When Clive of India was criticised for the size of the fortune he had extracted from our then colony, he replied:

“I stand astonished at my own moderation”.

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The directors of our public companies have not exercised moderation. They have helped themselves beyond all reason, beyond the bounds of fair play. There are about 4,000 people who are executive and non-executive directors of our largest public companies. They sit on each other’s remuneration committees and they are responsible for each other’s compensation packages. Unsurprisingly, they are not known for recommending decreases in earnings. There are exceptions. There are directors, both executive and non-executive, who try to exercise restraint. They have a difficult time. Most members of remuneration committees are non-executives who owe loyalty to those who appointed them to their well salaried positions and on whose earnings they are adjudicating. This is a structure which can lead to excess and, my goodness, it does.

The earnings packages are often complex and composed of many items. In the interest of transparency, we should require the auditors to give full and complete valuations in the annual report of all directors’ reward packages. I am delighted to know that the Minister intends to make that compulsory. When remuneration committees—I shall call them remcos—are criticised for their generosity to directors there is much talk of the international market for good people. That is largely fiction. Over the last decade the number of our chief executives who have been lured abroad amount to fewer than 1%. The Government deserve credit for trying to tackle the subject, albeit not fiercely enough. The Minister has consulted widely on this subject and has substantial business experience himself. He has written to me confirming his intentions to implement more of the policy that I and others would like to see in this Bill. He has sought advice from public company shareholders. The trouble is that these days shareholders are, or are represented by, large institutions, insurance companies and the like. Many of their directors are part of the problem.

We could describe the ultimate shareholder as the widow in Eastbourne, Hastings, Balham or Hebden Bridge. Her pension and her insurance premiums and a great deal more of her incomings and outgoings are affected by the decisions of these remcos. Before anyone challenges this on the basis that the aggregate of bonuses, and so on, is too small to affect the outcome to shareholders, let me remind noble Lords that Barclays Bank last year paid £700 million in dividends. However, they spent £2.2 billion on bonuses for their already very well paid directors and senior managers—more than three times as much. The ultimate beneficiary, our Eastbourne widow, was the loser. Together with noble Lords from other parties, including the noble Lord, Lord Tugendhat, I am preparing a Private Member’s Bill on directors’ pay. The Minister has indicated the Government’s interest in this proposed Bill, but that is for another day.

If your Lordships agree with me that the heads of our Armed Forces, our judges, our Permanent Secretaries and so on are in no way inferior to our company directors, you might subscribe to the view that directors should not be paid 50 times more. If your Lordships are of this mind then—like my noble friend Lord Stevenson as well as the noble Lord, Lord Tugendhat—I ask for your support for a stronger restraint in the proposed new Section 439A in the Enterprise and

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Regulatory Reform Bill in the form of a compulsory annual binding vote from the shareholders in the AGM or, if necessary an EGM, before any increases recommended by the remco can be put into effect. This vote on pay would replace the Bill’s requirement of a shareholders’ vote on policy. The change that we are asking for would be only a small step towards preventing the already great inequality in one part of our society from growing further. It is not enough but it is worth doing.

According to last Saturday’s Financial Times,

“a number of academic studies—covering companies in both the US and Europe—suggest that a big gap between what directors are paid and what other staff receive affects motivation negatively, and that there is a strong correlation between narrower pay dispersion within an organisation and improved performance.”

These research findings are themselves good enough reason for our Government to strengthen any legislation that will reduce the excessive disparity between the highest and lowest paid in our companies. This would strengthen not only our society, but also our economy. I urge your Lordships to support any effort to do so.

1.08 pm

Baroness Campbell of Surbiton: My Lords, I am delighted to return to the Chamber today after a long period of illness. I am even more delighted to be accompanied by my assistant. She is a new, stronger voice who will enable me to continue contributing to debates in your Lordships’ House. I thank your Lordships for your understanding and agreeing to this new and unique arrangement. This is equality in action; and it is how we achieve equality that I wish to address in this debate. I am, however, daunted by having listened to the noble Lord, Lord Lester. I admire him above all other legal experts in the field of equality and human rights. Imagine how especially daunted I am, as I am not convinced that the repeal of the general duty will enhance the Equality Act and the work of the Equality and Human Rights Commission. I first declare an interest as a founder and former commissioner of the Equality and Human Rights Commission.

This summer, the opening ceremonies of the Olympic and Paralympic Games provided us with spectacular and moving accounts of the values and ideals that have shaped and continue to shape Britain: that every individual should be able to achieve his or her full potential, uninhibited by prejudice or discrimination; respect for human rights and for the dignity and worth of each individual; and equality of opportunity and mutual respect. It is because we in Britain treasure these values so highly that, in 2006, we passed legislation to establish an institution to be their advocate and guardian—the commission for equality and human rights. These values are those incorporated into the commission’s general duty, which the Government intend to repeal by Clause 56.

The general duty offers not only a statement of values and mission; it also distinguishes the commission from those disinterested regulatory bodies whose purpose is confined only to promoting and enforcing compliance with legislation. Parliament invested in the EHRC the task of working towards the vision set out in its

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general duty by drawing on, but not being confined to, existing equality and human rights law and standards. It requires the commission to promote the values which the legislation represents, not just the legislation itself. Through doing so, Parliament also made clear the precise character and scope of the commission’s purpose and role. It was to be an agent of change, encouraging and supporting the development of a society in which these values are upheld. Parliament endowed the commission with a broad suite of hard and soft powers. Without the general duty, the EHRC would be left simply to address equality and human rights in the here and now, with no mandated direction as to what it should work towards.

Section 3 also underpins the commission’s independence. This continued independence is required if Britain is to continue to benefit from a national equality body recognised by the European Union, a national human rights institution recognised by the United Nations and an independent mechanism under the United Nations Convention on the Rights of Persons with Disabilities. If Section 3 is repealed, the character and scope of the commission will be fundamentally diminished and its independence placed at risk. Britain will lose a statutory champion of values which underpin modern democracy. Is that really what this House wants to endorse? Indeed, is such a fundamental change really understood by all in government? I cannot believe that this is really what our modern democracy wants from the EHRC.

The decision on whether to repeal Section 3 is, I believe, of utmost significance. For me, it is a choice between a strong independent body, committed to promoting and safeguarding British values irrespective of the Government of the day, and a much diminished and far less independent body, confined to promoting the enforcement of law. At this time of economic hardship, the British people need to take comfort from the values that bind us as a mutually supportive nation. It therefore deeply saddens and concerns me that the Government have chosen, on the occasion of a Bill designed largely to reduce red tape for business, to seek to erase fundamental values from British law. I urge the Government to reconsider this potentially harmful proposed reform and I ask your Lordships to safeguard Section 3 by keeping it where it belongs.

1.16 pm

Baroness Andrews: My Lords, I am sure that noble Lords would want me to say how splendid it is to see the noble Baroness back in the Chamber and to congratulate her on a very powerful speech. I am afraid I will not be able to follow what she said because I have to talk about the clauses that reflect heritage protection. I hope that she will forgive me. I therefore turn to Part 5 of the Bill, which deals with the way in which we manage our heritage in England. As chair of English Heritage, I must obviously declare an interest.

It is a great responsibility to live in an old country and, by and large, we live up to that responsibility to a global standard of excellence. However, there are risks and difficulties facing our heritage now. In our recent annual report on heritage at risk, our list included

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nearly 6,000 listed buildings and archaeological and other sites that are threatened one way or another—and that excludes almost all grade 2 buildings, which are the ordinary fabric of our towns and cities. We have to find better ways of incentivising owners and guardians to take better care of our heritage, and ways of simplifying processes. I am delighted to say that this Bill does some of that and, for the most part, I welcome it.

I start specifically by welcoming Clause 54, which the Minister has already referred to. It refers to Osborne House; many noble Lords will know Osborne House and its collections very well. English Heritage has invested considerably in recent years in the house, the private beach that belonged to Queen Victoria and, indeed, her bathing machine. Unfortunately, that is not available for public use but it is very beautiful. Clause 54 repeals those parts of the Osborne Estate Act that restrict the use of the site and is very welcome. In this context, when we are discussing ways to promote growth in this country, it is absolutely vital that our historic sites and buildings can play their full part in generating economic, social and environmental benefits and regeneration. This clause will allow English Heritage to manage the site with a bit more freedom while protecting and enhancing it, so that even more people can enjoy Queen Victoria’s extraordinary domestic and national legacy.

I was also extremely pleased that the Bill has picked up four of the provisions that were in the draft heritage protection Bill, which was regrettably dropped at the last moment from the last legislative programme of the previous Government. Clauses 52 and 55 and Schedule 17 cover these provisions, and these changes will bring a simpler, speedier and more constructive consent system for heritage protection. I want to mention four of these reforms briefly today. The first change is the replacement of the requirement to apply for conservation area consent with a requirement for planning permission in the same circumstances. That is a modest but sensible efficiency because, at the moment, conservation area consent applications are often accompanied by planning applications that cover the redevelopment of the site. This change means that one application rather than two will have to be made.

The second change will allow the description of the extent of a listed building and the nature of the special interest in it to be more precise. Essentially, it means that we can ensure that people are not left wondering whether the charmless 1970s office extension to a beautiful, characterful Victorian office needs protecting. That is an extremely important development because, at a time of dwindling resources and the catastrophic loss of expertise in this field, it will help those involved in managing change to listed buildings to focus on what really matters. We have to make the best use of declining resources.

The third change will allow an owner of an unlisted building to apply at any time for a certificate of immunity from listing. At the moment these can be applied for only when a planning application has been made, at a time when the owner has already made a substantial investment in the future of the site. Again, this is a good change which will allow owners and

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developers to resolve any constraints that the listing system may place on the development potential of a site at the earliest opportunity.

The final change, drawn from the heritage protection Bill, is the new scheme of heritage partnership agreements. These are voluntary agreements between an owner and a local planning authority. They will cover how a listed building should be managed and in so doing may grant listed building consent for certain works. This is a significant step forward, particularly in relation to large sites. The agreements have the potential to save a considerable amount of time and paperwork and will do away with the raft of minor applications that tend to swamp the desks of conservation officers.

However, I have a very important caveat for the Minister. As presently drafted, I am concerned that the Bill does not replicate the legal requirement for the local authority to consider the desirability of preserving the listed building, as currently applies to all listed building and relevant planning applications. This, by definition, is the core requirement in primary legislation. It is the raison d’être for the listed building regulation. I recognise that the regulating powers given to the Secretary of State will allow for this core decision-making principle to be reintroduced in secondary legislation. However, I believe that it is so fundamental to the purpose of the listed building regime that it ought to be back in primary legislation. Indeed, I think we are looking at some inconsistent drafting here because I note that for local listed building consent orders—which I will come on to in a moment—this statutory requirement to consider the conservation objective has been replicated. I can certainly write to the Minister to clarify that.

I am sure that the Government will be able to confirm that there is no intention to reduce heritage protection levels—the Minister said as much in his opening remarks—and that the provisions of Section 16(2) of the 1990 Act will effectively be reintroduced for heritage partnership agreements through regulations. I suggest that something so fundamental must be in primary legislation. With that one proviso, I very warmly welcome the proposals as I think they are good for owners and users.

I now turn briefly to the other changes that have arisen from Adrian Penfold’s review. More than 400 organisations and people responded to some very controversial proposals. However, I was very reassured to see that the Government have listened very carefully to their views and I can support in principle what has been incorporated into the Bill, although there are a few points we need clarified.

I support the idea of a system of local listed building consent orders which would allow local authorities to set aside the need for listed building consent for certain types of work. They will find that very useful where they are confident that works of a common type are appropriate. However, I do not think that there is a need for an annual report. The Secretary of State should give the power to set an appropriate period for reporting. I suggest that five years might be better.

The Bill also empowers the Secretary of State to grant national class consents—that is for a group of assets that cross local authority boundaries. It potentially

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covers the whole of England. This is rather controversial and has been seen as so by the heritage community. I can see some benefit in specific circumstances, such as for organisations with widely dispersed historic infrastructure where works of a type to buildings of a type have been assessed. For example, you can imagine the newly formed Canal and River Trust benefiting from such an arrangement in relation to locks. The problem is the breadth of discretion that this gives the Secretary of State, particularly in relation to listed buildings which are so different and so refined, which, of course, is why they are listed. There is concern that a general national class consent order, saying something about the works that could be done to listed buildings without consent, could not conceivably be so sensitive that it did not have some perverse or damaging consequences.

I know that the solution has been borrowed from the planning system. It does not work when it is transferred like this. I hope that the Government may be clear on the intended use of the national class consent power and will undertake only to use it to allow a specific organisation, such as an infrastructure owner, to carry out specific works to specific buildings or a class of building.

Finally, while I very much support the introduction of certificates of lawfulness of proposed works to listed buildings, I do not think that Clause 53 will achieve its objectives. The proposed certificates are simple mechanisms but they do not offer, for example, the owner of the listed building sufficient certainty for long enough that the works are going to be lawful because you have to specify what is special about the building. I will write to the Minister setting out our concerns about that and similarly our concerns that the certificates will potentially last for ever, which again introduces a rigidity to the system that we would not want to see. That is a problem as well.

There is a great deal in regulation and it is notable how much of the processes for heritage partnership agreements, and so on, have been left to secondary legislation. We do not have those regulations yet. I hope we will have them before we get to the Committee stage. I would welcome confirmation from the Minister that the regulations will essentially reflect those in place for listed building consent, as far as appropriate, and maintain current levels of protection.

These are welcome changes. They will liberate parts of our national assets to play a greater role in creating wealth, which is exactly what we want to see. Heritage is part of the solution to the economic challenges we are facing. I look forward to the Bill’s Committee stage.

1.26 pm

Lord Lucas: My Lords, I am very comforted that the noble Baroness, Lady Andrews, feels comfortable about her bits of the Bill, given what a superb job her organisation has done on Wrest Park in Bedfordshire, in which I have a strong interest, and the good work it is doing generally. It is on song at the moment. I very much hope the Minister will pay attention to its views.

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I welcome this Bill. I do not share the view that it is a pity that it is such a miscellaneous Bill. It is great that we are not making any radical changes but are instead making much needed changes in small ways. Change works better in that fashion.

I will be concerned with only two parts of the Bill. The first is copyright. I thoroughly approve of what the Government are doing. They have got the balance pretty well right. However, there are arguments against, and I will listen to them carefully. I look forward to enjoying the Committee stage and to seeing if there is anything that needs to be done to improve the Bill. Doubtless we will find the opportunity to discuss things such as fair use and other aspects of copyright that do not appear in this Bill but might perhaps appear in a future Bill.

The other aspect is going to be competition. I want to be sure that the new arrangements have sharp enough teeth and enough ability to act on their own decision to deal with that tax-avoiding, morality-free monopsony that is Amazon. It is a very good place to shop, but it is a very oppressive business. It has extraordinary contracts with its suppliers. Its arrangements with its Marketplace sellers must breach something, but I have, in the past six months, been unable to find a single major UK publisher who was willing to have tea in the Lords to tell me what they think of Amazon. It has got the whole business frightened. I want the organisation we create to have enough confidence and oomph to tackle things such as this on its accord rather than waiting for some frightened Penguin to complain.

1.28 pm

Lord Borrie: My Lords, that was a short and sweet speech, which I am sure we all welcome.

A noble Lord: Do not complain.

Lord Borrie: I would not dream of complaining. I am afraid I shall take a little longer than the previous speaker. I want to concentrate entirely this afternoon on Part 4 which concerns competition and reform. I will not make the usual remarks about reform. From 2010—I think it was the Public Bodies Bill that drew my attention to it—the Government first seemed to propose the amalgamation of the Office of Fair Trading and the Competition Commission into one new Competition and Markets Authority. I had doubts then, and I have had doubts since, about the desirability of this change. Partly, I admit that it is, of course, a matter of nostalgia because I had been director general of fair trading for some 16 years and had come to value the independence and degree of separation of the Office of Fair Trading on the one hand and the Competition Commission on the other. For nearly 40 years, from the Fair Trading Act 1973 to today, it has been the job of the OFT to investigate whether there is a prima facie case for saying that some business practice, takeover bid or merger is anti-competitive and to the detriment of the consumer. If the OFT has found a prima facie case of that sort, it can send the matter to the Competition Commission for judgment. I use that word deliberately because I want to emphasise that the OFT phase of the proceedings that go on

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today and have done for so many years could properly adopt a more aggressive stance, rather like a prosecutor; whereas the Competition Commission must, of course, be much more balanced and is more quasi-judicial.

The Government admit in the papers leading up to the Bill that there has long been international commendation of the UK’s method of administration of competition law. Of course, I see the disadvantages of the existing separation of the OFT and the Competition Commission, including the need for any particular business or company to have to present their case twice: first to the one body, then to the other. There is a certain amount of duplication of effort. However—and this has not been mentioned today, even by the Minister—the Government intend that the new arrangements will maintain the separation of phase 1 and phase 2 decision-making in mergers and market cases. The various provisions in the Bill to ensure that phase 1 and phase 2 are conducted independently of one another make it difficult to see how the key objective of the creation of the new authority, which is to remove the duplication and inefficiencies caused by the division of responsibility between the OFT and the Competition Commission, can really be achieved. The answer might be that the same officials in the authority, the same staff—whether they are generalists, lawyers, economists, accountants or whatever—should examine the case at both phase 1 and phase 2 of the new arrangements. If that is so, it then becomes difficult to see how phase 2 can be the fresh, in-depth investigation which it is claimed it will be.

I certainly welcome the Government’s intention to retain as final decision-makers in the Competition and Markets Authority the panels of independent people who spend their normal work day as accountants, businessmen, lawyers and whatever. Their immediate and continuing relationship with the outside world is a great benefit to the Competition Commission at the moment and would be of great benefit to the new authority.

I am glad that in the other place the Government emphasised that the objective of promoting competition in the interests of the consumer is not just for the short-term interest but for the long-term interest of the consumer. I am glad that the Government have also emphasised in the other place the value to the consumer of the deterrent effect of the work of the competition authorities. Recent OFT figures show that for every cartel case which is pursued, 28 breaches of cartel law are deterred. The OFT has also said that for every abuse of monopoly pursued, 12 others have been deterred. This is important because, as and when the new authority comes to condemn a particular industry’s anti-competitive practice, we can appreciate that this can have a beneficial effect well beyond the particular businesses involved in a particular case.

It was a significant factor of the OFT structure from its creation in 1973 that it had both competition powers to combat anti-competitive practices in mergers and so on, but also had a general power in consumer protection. This seems appropriate. We can all recognise that you can have competition in a particular industry but not necessarily completely happy consumers. If you look at the second-hand car industry, there is

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plenty of competition, but is the consumer never harshly or unfairly dealt with? In this House, on more than one recent occasion, attention has been drawn by Members to the credit industry. Here, again, there is plenty of competition between people offering this and that kind of credit, but are consumers not still harshly and unfairly dealt with? The answer, I am afraid, is that they are.

The Government have said—I quote from the Minister in the other place—that the Competition and Markets Authority,

“will continue to operate the combined OFT and Competition Commission’s markets regime, to ensure that markets work well for consumers”,

and will,

“have power to enforce unfair contract terms legislation”.

The OFT has long had good, close relations with citizens advice bureaux and the trading standards departments of local authorities. I would like reassurance from the Government that Citizens Advice, now that it is to have the main role in terms of consumer advice and education, will have adequate resources to do that. As for trading standards departments, which are in the front line of enforcing consumer protection legislation, they are of value; I am glad that the Minister mentioned this in his opening speech. I am glad to hear about the creation of the new national trading standards board. It is a logical development of the primary authority scheme which was introduced by the 2008 Act, whereby a business that operates across several local authorities can form a partnership with one local authority whose advice and enforcement powers will prevail over those of other local authorities.

I have a little query at the back of my mind which I have not heard the Minister or others explain. What happens to the power and influence of elected members of local authorities? The new body, I understand, has officials from local authorities on it. What happens to the existing authority of the councillors who are members of the authorities?

Finally, I am pleased that dishonesty is no longer required to be proved before a covert cartel can be successfully prosecuted. During my time as director general of fair trading, anti-cartel legislation did not even include a criminal offence at all. The 2002 Act brought it in so that price-fixing, market-sharing and other agreements between apparently competing companies could now be attacked in the criminal courts. Unfortunately, the requirement to establish dishonesty was found to be too high a hurdle. I am glad to learn that the Government have every intention of resisting CBI blandishments on this matter.

1.39 pm

Lord Low of Dalston: My Lords, this is not a Bill to set the pulse racing. I find it difficult to summon up much enthusiasm for it. Like most Bills of this sort, it consists of a random miscellany—I hesitate to say “hotchpotch”—of provisions. Like Winston Churchill’s pudding, it lacks a theme, but the Government have sought to give it one by describing its purpose in the 2012 Queen’s Speech as being to,

“create the right conditions for economic recovery by strengthening the business environment, reducing regulatory burdens and improving business and consumer confidence”.

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In a recent series of exchanges on the economy at Question Time, I was heartened when the noble Lord, Lord Forsyth, warned against a purely one-club approach. He stressed the need for supply-side measures, which I took to mean monetary policy. When I shared this with an economist friend, however, he replied, “I’m afraid not. He means cutting red tape and labour market flexibility—by which I understand slashing employment and equalities rights and cutting wages”. This Bill would seem to be the proof that he was smack on the button.

I do not intend to speak at any great length and keep people from their autumn break any longer than necessary, but I simply want to put down a few markers for Committee. First, I should like to ask the Minister for an assurance. Clause 66 would give the Government power to change copyright exemptions. As he will know, the Copyright (Visually Impaired Persons) Act 2002 exercises a power of containment in the copyright directive to introduce an exemption to copyright law which permits the making of accessible copies for the benefit of visually impaired people. The scope of these exemptions has been hotly contested within the World Intellectual Property Organization, where visually impaired people’s organisations have been arguing for a treaty which would permit the exchange of accessible copies for the benefit of print-disabled people across national boundaries. The UK Government have been very helpful. I just want to be sure that there is no intention to use the powers in Clause 66 to restrict the exemption in favour of copies for the benefit of visually impaired people in this country. I should be most grateful if the Minister could give me that assurance.

Next, I turn to the provisions relating to whistleblowing in Clause 15, which—unless I am much mistaken—have not featured very much in the debate so far. The effect of these would be to limit the definition of a protected disclosure in whistleblowing cases and create an additional hurdle for those speaking out against wrong-doing to clear. We will want to debate the legal niceties of the provisions in Committee, but in the light of recent scandals—the Jimmy Savile affair, the system of care homes in North Wales, the rigging of LIBOR, price-fixing in the energy industry, Hillsborough, the Mid-Staffordshire NHS Foundation Trust, phone-hacking at the News of the World;the list goes on—one has to ask whether it is really wise to be narrowing the protection given to whistleblowers.

I will touch only on the changes proposed in Part 5 to equality law, the remit of the EHRC and the procedures available in equality cases, as these have already been dealt with very fully by the noble Lord, Lord Lester, and my noble friend Lady Campbell. As someone who was heavily involved in debates on the Equality Bill, which led to an Act commanding widespread support in your Lordships’ House less than three years ago, it pains me to see such an assault on a piece of legislation—which embodies so many of the values of a liberal society with broad, cross-party support—so soon after its enactment.

As the noble Lord, Lord Lester, has reminded us, Clause 56 repeals Section 3 of the Equality Act 2006, which sets out the commission’s general duty. It repeals Section 10, which imposes a duty on the commission

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to promote good relations between members of different groups. It repeals Section 27, which enables the commission to arrange to provide conciliation in non-employment disputes and it amends Section 12 by reducing the frequency with which the commission has to publish a report from every three years to every five years. The EHRC’s general council has described this as the abolition of the EHRC by stealth. As the noble Lord, Lord Lester, has indicated, there are different views about just how much impact this will have; but removing the general duty of the commission to promote human rights and a society free from discrimination and prejudice, and abolishing the commission’s duty to promote good relations between different groups in society, feels to me like a pretty fundamental alteration to the remit of the EHRC.

Whatever differences there may be about the remit of the commission, the noble Lord, Lord Lester, was particularly critical of the proposals to abolish liability for third-party harassment and the questionnaire procedure, which enables potential claimants to ascertain the facts by means of a simple statutory procedure and helps them to decide whether to pursue the claim and to present it most effectively if they decide to go ahead. Given the noble Lord’s unrivalled expertise and authority in this area, the Government would do well to heed his warning.

A number of measures which put the clock back and chip away at workers’ rights, which have been hard-won over the last hundred years, will inevitably be the subject of close scrutiny. In many cases, the evidence base for change is open to question. The proposal to end strict liability in health and safety cases will fundamentally change the balance of power between employer and employee and will place the burden of proof on vulnerable employees. Indeed, one is tempted to feel some sympathy with Iain Wright, the shadow Minister in another place, when he said that if reasonable practicability became the sole test, it,

“risks taking us back to a 19th century mill owner’s view of health and safety”.—[

Official Report

, Commons, 16/10/12; col. 198.]

I have only touched on a few clauses of this wide-ranging measure; I hope they will be the subject of lively debate. There is a lot more in this Bill, however, which probably means that we will be slugging it out for some considerable time during the protracted Committee stage.

1.47 pm

Baroness Ford: My Lords, I begin by drawing attention to my interests in the register—in particular, that I chair one plc remuneration committee and serve on three others. I greatly welcome the provisions contained in Clauses 70 to 74 of the Bill. These provisions mirror what the more responsible companies are already doing and I could not possibly take any exception to them. This probably confirms, as the noble Lords, Lord Tugendhat and Lord Gavron, already said, that the Government have not gone far enough. I absolutely echo the comments made by those noble Lords and encourage the Minister and the Government in going further in these provisions for executive remuneration, as they would find support from right across the House.

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I also welcome the provisions about cartels, about which I hope to say more in Committee, and the simplified bankruptcy procedures which will be, sadly, enormously valuable to small businesses that find themselves in that position. It is really the position of small businesses that I would like to talk about today, because, before coming to your Lordships’ House, I spent most of my executive career in business, specifically in creating and growing successful businesses in property, businesses services and, finally, publishing. I therefore have first-hand experience of what it actually takes to create and build a successful business: to take a thought out of your head and go the whole way to that happy day when you send out your first invoices. I understand what that takes and, by implication, how to achieve growth in the economy because it is from the small business sector that any growth will come.

I agree with the noble Lord, Lord Low, that—sadly—there is virtually nothing in this Bill that will help the vast majority of new and growing businesses. In terms of the signals we are sending to that sector of the economy, can we really say that our biggest priority in the current environment, however worthy, is the creation of a new competition authority? Perhaps we should not be surprised by this set of priorities from the Government. Over the past couple of months we have seen some genuinely bizarre signals. The idea floated by the Chancellor that individuals should trade their employment rights for shares in their company is simply ludicrous. The concept that individuals can participate in approved share schemes is, of course, eminently sensible and most decent businesses do that as long as these are fair and liquid. But to link this with the removal of employment rights is just plain wrong. I cannot think of a single small business which would want to do this or would want to be associated with it as an idea.

However, that is what seems to pass for enterprise policy from this coalition Government. The Government seem to have missed the basic point about most British businesses; namely, that they are owned and run by decent, fair-minded people who have absolutely no wish to remove employment rights but who each day work extremely hard to create good conditions for their workforce and strive to have harmonious relations, especially in smaller companies where—I can tell noble Lords from my own experience—the difference between success and failure is frequently that your staff will go the extra mile for you and with you.

That is not to say that some changes to employment law are not desirable and sensible. I sat on employment tribunals for many years in the 1980s and 1990s. When you do that job, you realise quite quickly that there is rarely, if ever, only one side to a story. It was frequently clear to me that had there been an opportunity for conciliation earlier in the process, a huge amount of time, emotion and cost could have been saved. When we come to those clauses in the Bill, I will be interested to see how the Government propose to balance sensible changes with maintaining important rights for employees. I think that we will have some lively debates during our discussions of those clauses.

If the Government see fit to create a green investment bank, which I completely support, why do they not also see fit to do something really practical for the

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thousands of small businesses which, despite massive government backing for the high street banks, still cannot access debt or debt at reasonable terms? When I set up my own businesses, the support of my local bank each time was absolutely critical. Often, that meant the implicit support also of the Government. The small firms loan guarantee scheme, which was in place at that time, enabled banks to loan a sensible amount of money to new businesses, typically up to £250,000. In the event of a default, the Government guaranteed 90% of the amount back to the banks. That did not mean that the banks lent willy-nilly or without any proper diligence but it did mean that they had confidence to lend to new businesses, in particular those which did not have a track record. In my experience, that is completely absent at the moment from the lending regime of the high street banks.

That scheme was responsible for thousands of successful businesses getting up and running in the 1980s and 1990s, and made the difference between success and failure in that first, always fragile, year of trading. By all means let us have a green investment bank but why can we not also deliver funding for small businesses as well, which we know are the backbone of the UK economy and without which we will not achieve the growth we so desperately need?

I am sure that owners and managers of businesses are not preoccupied, sadly, with the measures in this Bill. They are preoccupied with interest rates, accessing finance at the right cost, cashflow, chasing bad debts and slow payers, recruiting and keeping good staff, and with having the right supply chain and the right routes to market. I have never enjoyed myself as much as when I set up my own businesses. But I never got up in the morning wondering how to get around the health and safety regime, wishing that employment law was weak, looking to dilute people’s human rights, or thinking that all my Christmases would come if only the competition authorities were reorganised. I do not believe for one minute I was unusual in that. Do the Government really think that this Bill will make one iota of difference to the small business economy?

We owe it to the decent hard-working businesses in this country to do very much better. The Government really need to get a grip of their enterprise policy. Indeed, it would be good to find that they have discovered an enterprise policy that will deliver the changes that are really needed today. Sadly, this Bill, which I look forward to debating in detail and improving, in my opinion wastes a golden opportunity.

1.54 pm

Lord Bates: My Lords, when I previously have participated in debates with the noble Baroness, Lady Ford, it has often been about the Olympics and I have always paid tribute to the tremendous work that she did in her role. But, on this issue, I could not be more opposed to her assessment of the Government and whether they have an enterprise policy. Yes, they do have an enterprise policy; namely, cutting taxes, freezing business rates, cutting taxes on jobs, cutting regulation and encouraging start-up businesses. By every name, that is an enterprise strategy. The noble Baroness

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slightly protests but let us look at some of the numbers. It is quite interesting that, if we look at the past year, the UK has created 250,000 new businesses. That was the fastest rate of growth in new business establishment that we have ever known in our history. There are now 4.8 million private businesses in the UK, which employ 23.9 million people. The Government need—in a sense, it is what this Bill seeks to do—to signal whose side they are on.

The message which seems to be coming through this legislation is, “Listen, we are on the side of the wealth creators, the creative minds, the people who take a risk and those who create a job more than going out to get a job”. Why are we on the side of those people? We are not in the slightest hard-hearted, harsh people. We care for the 2.5 million people who do not have a job. What about their employment rights to get into work, to have a future and to have a job? We need to state absolutely that we are on their side.

There has been a view that successive legislation has paid far too little attention, particularly, to small businesses. In this Second Reading, I want to focus on small businesses, which are the only type I know. I wish that they had been big businesses but it turns out that I have spent my life in small businesses and I know how important they are. In conversations with officials, development agencies and people like that, they all seem to roll off the tongue that a small business is something like 100 employees to 500 employees. I say to that: get a life. Most small businesses are one person, or a husband and wife, selling things in the shop during the day, and going upstairs and filling in the books at night. They might have one or two part-time employees. These people are the backbone of this country and its economy. We depend on their success to pay off our debts and to fund the public services that we all value. Therefore, we need to treasure these people in a way in which all good employers would treasure their employees because, in a sense, they are part and parcel of the overall success.

The fact that we are focusing on how to free up those businesses is very important. I know that the Minister is acutely aware of this point, a point to which I will return in Committee. There is an impact assessment that I want to hear repeated time and again. I do not want to hear, “What does this mean for the big FTSE companies which can employ government relations firms, PR firms and pummel Members of your Lordships’ House with lots of good, legal briefings on what should be happening?”. What about people who do not even know that this legislation is going through the House but who will feel its effects through enforcement? What will be the impact on those people? How can we make sure that this will demonstrate that the Government are not on their back but on their side? That is very important. What does it mean for the businesses with fewer than two or three people?

When we come to the relevant sections of the Bill, such as employment provision and unfair dismissal, that is important because if you happen to be a major corporation or a major business, you probably have an HR team. You hire your firm of executive search and selection consultants, which produce a shortlist and do all sorts of psychometric testing et cetera. People are

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brought in. They go on all sorts of training schemes and visit different offices around the world and what have you. Yet, still, with all that, big companies make some very big mistakes in employing the wrong people.

What happens if you are a one- or two-person band and you are taking on another person? You have never been trained in a human resources department and you do not have that expertise to call on, yet you are effectively going to share your income with this person and you have to make sure that they deliver to the required standards. If it is possible for big companies to make mistakes, of course it is possible for smaller companies to do so.

At the moment, if an employee feels that his or her case is being dealt with unfairly, they can go to the employer tribunal. The Bill suggests that people ought to go to arbitration first as that is less costly. I was persuaded by some points in the briefing note that we received which showed that in many cases people were effectively doing a trade-off. When you have a small business and you have to keep the office open during office hours and you are summoned to appear at an employment tribunal, that is an additional cost that you will have to bear that a larger company does not because they can simply dispatch someone to go to the tribunal or dispatch a lawyer to it to act on their behalf. Therefore, it seems to me that we ought to treat big and small businesses differently. The trade-off suggestion was that people would effectively be advised to say, “Listen, if you contest this in an employment tribunal, it will cost you around £8,500. However, if you just agree to it, the average pay-off is £5,400. So, on average, you will be better off if you just settle rather than go through the process”. That does not seem right. Of course, it is right that everybody’s rights ought to be protected. There ought to be conciliation, but the fact that at present only one in five people go to the arbitration and conciliation service first and 80% go directly to the employment tribunal seems wrong. It is like people who are having marital difficulties rushing off to the divorce court rather than trying to settle their difficulties through Relate. This is an important issue and those changes would be helpful.

The primary authority function is very important. Dealing with local authorities is often frustrating. It is often said that if you want help from local authorities they send somebody on a bicycle in a couple of weeks’ time, but if it is a health and safety or trading standards matter they come galloping along in a coach. There is a huge disproportion in what local authorities believe their role is. We need to look carefully at local authorities and ask what they are doing to help businesses. They seem to have many more people employed in the policing functions of their organisations than in those areas that assist business, and that reflects badly on their priorities.

The Bill is welcome. I look forward to the Committee stage. As I say, we need to focus on what it means for small businesses in this country which are the backbone of our economy.