My Lords, I move Amendment 108 and speak to Amendments 109, 110 and 122, which, collectively, take us into a fresh policy area. I thank the noble Lord, Lord Knight of Weymouth, and the noble Baroness, Lady Bowles of Berkhamsted, for their support. Support is always welcome and cross-party support is doubly so when, as I say, we enter a new policy area.
I draw the attention of the Committee to my entry in the register of interests, which shows that I am the chairman of the Founder Circle of the Institute for the Future of Work. It is the research that I have seen undertaken by the IFOW that provides much of the background to and reasons for my tabling these amendments.
It is widely argued that there is a high and perhaps growing level of dissatisfaction with how our system of government operates—or perhaps some would say how it fails to deliver a fair distribution of economic and other advances. The result has been a series of what one might call “uprisings” against what is seen by many as the conventional establishment view; the Brexit vote in the UK and the election of President Trump in the US are but two examples. Although both those events are behind us, there will surely be aftershocks that will shape our society over the next decade or so.
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Members of your Lordships’ House and this Committee will all have their individual views on the relative importance of the different causes of this general dissatisfaction, but it is becoming clear that the nature of modern employment, too often disembodied and with employees treated primarily as factors of production, is an important factor. The Government have rightly emphasised their success in job creation and are to be congratulated on their efforts, but it is important at the same time to remember that the definition of employment by the Office for National Statistics is one hour or more of paid employment a week—just one hour. So if you are a young person on a zero-hours contract or a member of a minority community locked into a low-pay, low-prospect job, or if you are aged over 50 and finding it difficult to get any job at all, it is perhaps not surprising that you do not have unbridled enthusiasm for the present system.
In addition, many argue that the world stands at an important juncture. It is not just a question of what permanent changes to our working lives will have been caused by the pandemic; it is, no less importantly, about the impact on employment of the fourth industrial revolution, artificial intelligence and robotics, leading to the phenomenal increase in computing power that brings previously unbelievable developments, such as driverless cars, within reach.
Industrial psychologists tell us that people go to work for three broad reasons. The first is money, and we should not be precious about that—but it is not just about money, although, disappointingly, many
appear to think that that is all that matters. Indeed, the debate in the House of Commons in Committee on this Bill, at column 163 on 24 November last year, focused essentially only on this one aspect. But a second important strand is what is known as self-actualisation: “Am I in a job that enables me to develop to my full potential? Do I have access to career development and opportunities for training?” That theme is about “me” as a person. The third reason why we go to work is about “we”: “Do I work in a pleasant atmosphere with fellow human beings to whom I relate? Am I proud of where I work? Does the job I do perform a useful service for our society?” It is to move the discussion on from the important but too often narrow and rather predictable debate about remuneration levels to discuss the “me” and “we” factors of employment that I have tabled these amendments.
The pandemic has sharply reminded us of the value and impact of work on society—that many of the people in our society with the highest levels of insecurity, often suffering poor pay and with poor-quality work, are those most responsible for its functioning. They have kept society and the economy going during the pandemic. The pandemic has also reminded us of the role of companies as social institutions. Government support has changed the pact between corporation and society, which may call for a higher level of responsibility and scrutiny. Research, including The Good Work Monitor report from the Institute for the Future of Work, has made it clear that the availability of good work is an important determinant of health and social outcomes; it is even a determinant of diseases, depression and suicide. Further, good work builds resilience, prosperity and personal well-being.
Some Members of the Committee may be asking why these amendments, worthy though they may be in themselves, should form part of a Financial Services Bill. Where good work is not made available, it places an increased strain on government finances. The externalities of bad work include higher social security payments, a greater burden on the NHS, restrictions on social mobility, and the perpetuation of inequalities. The financial services sector is a strategically important part of the UK economy, responsible for the employment of up to 2.2 million people. It will, therefore, play a critical role in financing the country’s recovery from the Covid crisis.
As my noble friend the Minister has repeatedly reminded us, this Bill is the first part of a wholesale rethink of financial regulation, and an opportunity for the Government to employ strategic regulation to steer the sector towards greater consideration of the importance of good work. If regulators are required to consider good work, those offering financial services will also need to, and ultimately there will be a trickle-down effect to society as a whole. Put simply, it is in every investor’s interest to ensure that we address any underlying dissatisfactions about modern employment, since failure to do so will result in a society increasingly at unease with itself, with all the consequent impacts on economic performance, and so on our prosperity.
Broadly speaking, there are currently few legal instruments for encouraging or protecting good work through the investment process, beyond the provisions about the minimum wage and modern slavery. So, just
as Mark Carney has suggested that the most effective way to tackle the challenges of climate change is through the investment process, I argue that the same is true of the creation of good work. By anchoring good work principles in our financial regulatory structure, the country has the opportunity, with our post-Brexit freedoms, to become a world leader in a policy area that will surely assume ever-increasing importance in the years ahead.
I turn briefly to my four amendments. Amendment 108 has three purposes: first to require the FCA to take into account the impact of sustainable work as a consequence of the provision of financial services, and to do so by reference not only to gains in employment but to the quality and conditions of the work, as well as opportunities for reskilling and retraining. Secondly, it requires the FCA to do this in a way that builds the international reputation of the UK for encouraging economic growth in line with the United Nations sustainable development goals. Thirdly, the FCA should provide guidance to the financial sector on how to fulfil these requirements.
Amendment 109 imposes a duty on regulated organisations to explain how they have complied with the guidance issued by the FCA, and to do so within 12 months of such guidance being published. Amendment 110 proposes that there should be a member of the governing body of the FCA with responsibility for promoting good work. Without such an appointment, there must be a danger that this policy area will be overlooked. Finally, Amendment 122 requires the regulator to take into account the impact of employee share schemes. This aspect is of a piece with the plan to foster good work generally. Indeed, the FCA’s chief executive himself has endorsed research which shows the link between share schemes and the fostering of a sense of ownership and involvement.
To conclude, this will be a long journey, but one which we need to set out on without delay, and all those who believe that our present system, for all its inadequacies and imperfections, provides the best hope for our society as a whole, should be joining in. I beg to move.