I will make some progress, so that the hon. Gentleman will have more time to speak later.
Principally, those proposals include: the provision of financial penalties to be paid by employers where there are aggravating features to their wrongdoing; the introduction of a public interest test to whistleblowing—which we have concerns about—to clear up the uncertainties in that area; and changes to the annual increases to the limits to statutory redundancy pay.
I will now deal as quickly as possible with the competition aspects of the Bill. Healthy, competitive markets reward the innovator, the insurgent, 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. I know that that view is not shared by all Government Members. So even when policy frameworks can correct market failures, markets require active stewardship, constant vigilance against unhealthy concentrations of power—News International —and, above all, the deliberate promotion of competition through a strong, robust competition regime.
The Government said in their consultation paper on options for reform published last year:
“The Government acknowledges that it has inherited a competition regime which has been independently assessed as world class.”
In 2010, the Global Competition Review awarded the Competition Commission its highest rating of five stars, and the Office of Fair Trading was awarded four and a half stars, with both bodies appearing in the top five agencies in the world. We Labour Members are rightly proud of the legacy our Labour Government bequeathed to the current Conservative-led Administration.
In principle, we support the Bill’s proposals to improve our competition regime. There is definitely some sense in combining the OFT and the Competition Commission into one body, removing duplication and concentrating
expertise in one place. However, the yardstick against which we will measure these reforms is whether they will improve on the existing regime or not. The OFT estimated that in ensuring a level playing field, our competition regime benefited businesses and consumers to the tune of £700 million last year. As the Financial Times has pointed out, the expected savings of £1.3 million a year from the merger could be smaller than the cost to consumers and businesses if these reforms change our competition regime for the worse.
In addition, the lack of competition is, sadly, nowhere more stark than in the small and medium-sized enterprises lending market where 85% of SME lending is concentrated in the hands of our four biggest banks. This can be contrasted with Germany, where just 14% of business loans come from its biggest banks and 60% come from its smaller local and co-operative banks, which I met when I was in Germany in February. It is a shame that the Government have shown no interest in pursuing the idea that we have been promoting for some time—of having a British investment bank to help address this issue. It is a concept that enjoys the support of the British Chambers of Commerce, among others. We are also concerned about the withdrawal of consumer competences entirely from this new body. Indeed, we have argued that the Queen’s Speech should have delivered a fair deal for consumers with a consumers Bill that would give new powers to the Financial Conduct Authority and the Competition and Markets Authority to stop rip-off surcharges by banks, low-cost airlines and pension firms.
Let me move on to part 5, which deals with the reduction of regulatory burdens. We should seek to reduce regulatory burdens where we can, but—very importantly—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: regulations should be drawn up with the small guy in mind—people who do not have the resources to pay for an army of lawyers, accountants and risk managers to advise on how to ensure compliance. As I said earlier, with that in mind, when in government, we introduced the primary authority scheme so that any business operating in multiple local authorities could, to ease the regulatory burden locally, form a partnership with a single local authority to access advice and support for its regulatory responsibilities. I welcome the fact that the Government seek to extend the scope of the scheme through the Bill.
What are far less welcome in part 5 are the measures touching on the Equality and Human Rights Commission, which the Secretary of State has just referred to as “regulatory tidying-up”. This Bill seeks to amend the Equality Act 2006 by repealing the commission’s general duty to exercise its functions with a view to encouraging and supporting the development of a society in which people’s ability to achieve their potential is not limited by prejudice or discrimination, in which there is respect for and protection of each individual’s human rights and respect for the dignity and worth of each individual, in which each individual has an equal opportunity to participate in society, and in which there is mutual respect between groups based on the understanding and valuing of diversity and on shared respect for equality and human rights.
This Government have an image problem. They are seen as out of touch, and they are seen as implementing policy changes that adversely impact particularly on vulnerable and poor people. Just yesterday, the Prime Minister’s former speech writer said the Government’s latest proposals on immigration policy showed that the Conservatives were a “nasty party” that risked losing votes among ethnic minority communities. In this context, why on earth are this Conservative-led Government seeking to repeal this general duty that seeks to promote fundamental values of humanity and decency in our society? I am at a complete loss to understand why they should seek to do this when that duty enjoyed cross-party support when the Equality Act 2006 progressed through Parliament.
The Government also want to change the commission’s statutory remit, contract out its helpline, stop its grant programme and slash its budget by 60%. This is not regulatory tidying-up; it is undermining the effectiveness and independence of the organisation. If what we are seeing here is the beginning of the end of the commission—and in the light of what I have said, it is entirely reasonable to raise this as a question—for the avoidance of doubt, let me say that this party will fight tooth and nail against any such move.
Finally, I shall deal with part 6, which puts in place additional measures to deal with executive pay. In order to build a more productive and responsible capitalism, it is important to ensure we bring an end to excessive pay and rewards for failure, which are bad for our economy and for our businesses. The Prime Minister and the Chancellor have sought to insinuate that proponents of reform in this area are being “anti-business”, but the recent wave of shareholder revolts has shown just how out of touch they are with business and investor opinion on these issues. Shareholders at Citigroup, Credit Suisse, Barclays, Mann Group, Aviva and other companies have all either been protesting or voting against remuneration packages over this last couple of months. WPP shareholders will be voting on the remuneration of that company’s senior executives later this week.
In fact, the highly respected business leader, Sir Michael Darrington, the former group managing director of Greggs plc, has founded a pressure group—“Pro-Business, Against Greed”. Its aim is to reduce the excessive and growing difference in net pay between the highest paid and the majority, which he says
“is intended to help promote a happier, healthier and fairer society as well as being better for pensioners and investors.”
We congratulate him on that initiative because change and reform must be led by people like Sir Michael, who is also a shareholder in Aviva and Trinity Mirror, with Government backing.
In government—it is a shame that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) is not in his place to hear this—we started to improve corporate governance in this area and to empower shareholders. We introduced advisory shareholder votes on remuneration reports, which are creating so many headlines at present. It is not fair to say that we did nothing about this matter in government.
Currently, there is a prohibition in statute on the remuneration of executives of quoted companies whose pay is contingent on the outcome of a shareholder resolutions. This Bill will remove that prohibition, paving
the way for further reform. It will enable the Government to build on our reforms by, for example, having an annual binding vote on future remuneration policy, increasing the level of support required on votes on future remuneration policy and so forth. I was glad to hear the Secretary of State confirm that he intends to bring those reforms forward as amendments to the Bill as it passes through this House. That is welcome.
On the annual binding shareholder vote in particular, we agree with the suggestion put forward by asset managers Fidelity Worldwide Investment that a 75% majority should be required in respect of a binding vote on future remuneration policy. I would be interested to hear what the Secretary of State thinks of that, as I must say that it was with great disappointment that we read that he is likely to row back not only from that proposal, but from the one to have these votes on an annual basis. That represents quite a watering down of his initial proposals. If he would like to disabuse me of that, I would be happy to give way to him now.