Second Reading

Part of Companies' Remuneration Reports Bill [HL] – in the House of Lords at 12:13 pm on 24th April 2009.

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Photo of Lord Renton of Mount Harry Lord Renton of Mount Harry Conservative 12:13 pm, 24th April 2009

My Lords, I join others in congratulating the noble Lords, Lord Gavron and Lord Taverne, and my noble friend Lord Tugendhat on bringing this Bill forward. The one difference between those noble Lords and me is that I do not regard this as a very modest Bill. I think that it is a pretty bold Bill. I very much wonder what will happen next because this is only a step in a certain direction. As the noble Lord, Lord Gavron, said, it seems a modest step. However, how will it be taken forward when young people going to university are suddenly faced with the fact that reading economics in order to earn £1 million before they are 25 and £2 million before they are 30 is not the end of the world and that there are other, much better, things to work towards? The spirit of all that has been said today—I want to look forward rather than backwards—reminds me of the words of Omar Khayyam's Rubaiyat, which says:

"Indeed the idols I have loved so long have done my credit in men's eye much wrongHave drown'd my honour in a shallow cup and sold my reputation for a song".

The difference is that the reputation was sold not for a song but for a great deal. But are we not now looking at what happens next? What will young people going to university be inclined to do? If we replace making a lot of money with something else, what will their motive be? How do we locate ourselves when earning several million pounds a year by the time we are 30 is no longer the be all and end all? This subject will require a great deal of thought and examination over the years ahead, and I hope that it will be debated in the Committee stage, which I very much hope that we will have in the weeks ahead.

For some years I have been lucky enough to be on the council of Sussex University. I was on it for nine years and moved off it last July. Sussex University was founded in 1964 and aims to have 50 per cent of its students studying the sciences and 50 per cent the arts. Asa Briggs was the first important vice-chancellor there. He was very strong in the arts and a very good friend of mine. However, in the nine years during which I served on the council, I noticed that fewer and fewer students wanted to study science. They wanted to study the arts, which cover a large number of subjects including economics, because they thought that that would enable them to get a very good job, paying a lot of money, soon after leaving university. Indeed, some noble Lords may remember that about two or three years ago Sussex University had to merge its chemistry and biology departments into one, which caused a great deal of trouble, simply because we were not getting a sufficient number of students who wanted to study the sciences.

The other day I was talking to our new vice-chancellor, Professor Michael Farthing. He told me that he is already seeing a change at the university and that the interest shown by potential students in applying for some of the very high-level scientific degrees, which are well beyond my understanding, is much greater than it has been for many years. I strongly welcome that. En passant, I give the Government credit for, and applaud, the measures in the Budget which will help wind energy schemes. I also applaud the very strict carbon targets that they are setting: a 22 per cent cut in emissions by 2012 and a 34 per cent cut by 2020. Those will be very hard targets to meet. But if the next generation, or the next two generations, are to change their attitude towards money and are no longer to consider it everything, they must still deal with climate change to stop our planet disappearing. Surely that is a marvellous target for the next generation to be considering and working on rather than going into banks or insurance companies.

I should very much like to see the following two detailed points being taken up in Committee. I very much hope that the noble Lord, Lord Gavron, will come to the conclusion that if the top salary is a certain multiple—say, 50 times—of the low salary, there should be an extraordinary general meeting of shareholders. It seems to me that that should be the right next step—that it is not only in the annual report or the chairman's report, but it is actually thought about by the shareholders in an extraordinary general meeting.

That brings up the question that has already been touched on. Most of the shareholders represent pension trusts; pension trusts hold the majority of the shares; and the directors of the pension trust, non-executive or executive, have often got the same interest in being highly rewarded as the chief executive whom they are examining. That is another problem that must be examined and thought through. To give more power to shareholders when the multiple between the lowest and the highest gets up to a high figure is at the heart of what should happen next. The Bill is a first, challenging step. It should not just be a figurative act. It should lead to very definite further action in the matter that is being discussed today.