Businesses and SMEs - Motion to Take Note

Part of the debate – in the House of Lords at 1:33 pm on 6th July 2017.

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Photo of Lord Suri Lord Suri Conservative 1:33 pm, 6th July 2017

My Lords, I thank my noble friend Lord Leigh of Hurley for introducing this interesting debate.

In a debate such as this, we cannot lose sight of the overall picture. The economic outlook of the country at the present time is weak. Productivity grows at a far slower pace than in other developed nations, wages remain stagnant and inflation looks set to rise gradually as we leave the European Union. I say this not to depress the mood but to set the stage for the challenges we need to confront going forward.

Watching the news, I have seen a number of commentators and people from the other place talking about how the state needs to fix these issues. They are not wrong, and I have spoken in this place many times on the need for a better technical education and research budget. But, depressingly often, the role of business is forgotten, and its obligations left by the wayside. Quite simply, if the job of the state is to turn out well-suited workers, it is the job of business to properly invest and help those workers specialise.

One serious issue with the EU was that it allowed employers to effectively dip into a large pool of underpaid and cheap reserve labour. Now that we are leaving, I hope that business leaders will see the sense in investing in workers, to create better jobs and have the productivity required for decent wage rises. I think there are plenty of sensible initiatives that have been put in place by Governments of all hues.

I encourage all businesses to get involved in sponsoring academy schools, as Cadbury and JCB do stellar work in helping to skill up youngsters. But there is real and serious anger at the business community across the country, and it is not difficult to see why. The social contract that underpins the free markets we on this side support is coming loose. We promised that all would see improvements in their lives because business could be trusted to be responsible with its cash, invest back in the workforce, and seek to be sustainable in how it acted. Since then, we have seen lower investment than the European average, lower productivity growth, and the general feeling that businesses are not integrated into the communities they operate within. The way to shake this off is to reach out and show all sections of society that business is making an active effort to change.

As my noble friends Lady McGregor-Smith and Lord Shinkwin said earlier, it is indeed praiseworthy that employee-owned businesses are increasingly important to the UK economy and society. The John Lewis Partnership model is a prime example of this. As a general rule, I prefer initiatives to be led by the group in question rather than by the heavy hand of state intervention. So I am pleased to see more companies reporting their gender pay gaps with less prodding from the state—although I will support action when necessary. It would be positive to see more reporting of ethnic pay gaps, which I think are underreported but no less problematic than gender pay gaps. I am sure that the Minister will have something to say on that. The aim should be to utterly stamp out all inequities in wages as soon as possible, and then lock in legislation to stop any slippage.

Many companies also take positive steps to reach out to underprivileged communities, and take on people to act as role models. This is excellent and to be encouraged at all times, and I am aware that the Civil Service has been a real trailblazer with its Early Diversity Internship Programme.