Lord Parry Mitchell is a member of the Shadow BIS team in the Lords Speech to ENTERPRISE AND REGULATORY REFORM

BILL, Second Reading, 14 November 2012 My Lords. In putting any speech together I have always tried to be logical. Most of all I have always wanted there to be a beginning, a middle and an end to what I have to say. In addition in any speech I give, I try to have a linking theme. But with this speech I am all over the place.

This Enterprise and Regulatory Reform Bill is such a hotch potch without any discernible theme - there is certainly no beginning, no middle and no end - it just feels to me that everything that defies classification elsewhere, has been thrown together and given a fancy name. My Lords - in vain have I searched for the kitchen sink.

I have chosen to speak on three sections of the Bill - the Green Investment Bank, Employment and Directors Remuneration. My Shadow brief is SMEs and where possible I will refer to this very important sector in our economy.

The Green Investment Bank is a good thing and I must compliment the Government for setting up this bank - well trailed as it was by the previous Government.

Choosing winners is a much discredited activity and we as a nation have had our fair share of companies that have been backed by Government and which have subsequently failed. But choosing industries is a different matter. The green sector is one such sector that the UK should actively pursue.

The desire to lessen our dependency on hydro-carbons has always been driven by several factors - the reduction of CO2 emissions being the most prominent. We have only to see the continuing extremes in weather patterns to know that massive forces are changing our climate. Maybe one benefit of Hurricane Sandy will be to drive home to one of the major centres of world finance that these natural phenomena are caused by global warming and the consequences are very painful.

But there have also been geo-political reasons to develop alternative energy. Oil and gas tend to be located in inhospitable locations and often in inhospitable countries. But suddenly things are changing.

I read that the United States is now expected to become the largest producer of oil and gas in the world by 2020. Due to new techniques in extraction such as fracking - America expects to become self sufficient very quickly.

This will have a major change in world politics, but it will also have a major effect on the economics of green energy production. Oil prices could well fall and if they do some of the economic incentive for alternative energies will also fall.

Despite that new companies developing new green technologies are growing at a rapid pace. It is said that in Silicon Valley a third of new investment is being channeled into the green sector. Other countries such as Germany are also pursuing green technologies.

The Green Investment Bank will have an initial equity funding of 3 billion, and we welcome the news that the Government has now obtained State aid approval for this investment, but the Government have failed to set a date for when the Bank will be able to borrow, telling us only that it could be 2015. To be effective we need certainty on this

My Lords certainty is one of the key components of our economic recovery and there is not much of it around at the moment. Just look at the Government's reply to the oral question asked this morning by my noble friend Baroness Worthington. The Government's reply was all over the place and even now I do not know whether they do or do not support onshore wind farms.

My Lords as I say my brief is SMEs - we all know how important they are to our future growth, but also how often they lose out from government initiatives and from public sector purchasing. The GIB could well be another grand project that will by-pass the SME sector. So let me ask the minister will the GIM be given a clear directive to direct a certain proportion of its funding to SMEs?

My Lords a year or so ago a very small charity that I was chairman of found itself in a messy employment situation. Without going into the rights and wrongs of the matter we decided to terminate an employee just over the 12 month period. We found ourselves in a grievance situation.

We were definitely in the wrong in that we had not followed the exacting procedures of employment law to the letter, but we only employed five people and we were like many charities living in a hand to mouth existence. Money was always short and demands were always great.

In common with many small organisations we did not have a human resources department and our personnel policies were rudimentary. I dont think we were much different from many other small enterprises.

I am a businessman and my natural instincts are when faced with a problem to find a solution quickly and get on with it. It will surprise no-one that in this situation this course of action was not open to me.

We went through the charade of a grievance procedure and the game of issuing letters bound by without prejudice headlines. My Lords I found a level of patience within me that I never knew existed.

The worse thing was that in the end we settled with the disgruntled employee by offering him an amount that I had always been willing to pay him right from the start. But we had to go through a convoluted dance to get there. It was a waste of everybody's time and emotional energy. So I am pleased that in this Bill considerable attempts are being made to change employment disputes procedures.

I agree there is an important role for Settlement Agreements in cases where there is an existing dispute. But we have real concerns that a minority of rogue employers will use the extension of settlement agreements as provided for in the bill, as a license to bully employees.

Using ACAS in the initial stages of a dispute must be a good thing and I wish it had been open to my charity when we had our dispute - hopefully it would have been resolved much more quickly.

But my Lords, I worry that Acas will be deluged by a myriad of disputes. Again I must ask the minister what are the Governments plans to direct resources to Acas so that it can be effective in its enhanced role?

I now want to come onto the final part of the bill which is of particular interest to me and that is directors pay. I might add with great relief that at long last I am no longer a director of anything.

I must first of all pay tribute to my noble friend Lord Gavron. The noble Lord has previously tabled a private members bill specifically on this topic. He withdrew it when this Bill was first published because many, but not all, of the clauses in his bill are now incorporated into this Bill.

There is always a built in conflict between shareholders and management and these days it seems that management are in the ascendancy. The management team of many large companies tend be a cohesive unit - the shareholders are often disparate. So management armed with much sensitive information can usually finesse the entitlements of the shareholders.

My world is that of the entrepreneur. And my heroes are people who have built up large companies from nothing.

Until he died Steve Jobs of Apple paid himself $1 per year. Jeff Bozos the founder of Amazon has always been paid an annual salary of $83,000 - less than a member of parliament in this country. Of course such individuals are also paid bonuses, but these are real bonuses where if profits fall so too does the remuneration.

To these types of entrepreneurs the acquisition of personal wealth comes from the capital gain that results from the long term success of the enterprise. Raiding the kitty is not the way to build up a company - it also sets a bad example and creates a precedent that filters throughout the organisation. So I am a great supporter of any move that makes directors remuneration not only transparent but also subject to shareholder control.

Senior management are adept in finding loopholes especially where their own paycheques are concerned. So I support Lord Gavron when he requests that there should be no confusion about management packages, which should include all perks and should be signed off in the annual accounts by the companys auditors. Also that the remuneration committee should present its recommendations every year at the annual general meeting every year and not every three years.

You know my Lords many masters of the industrial and financial universe believe that they are irreplaceable. That only they can do the job and that's why they can make such outlandish pay demands. But it's simply not true.

Nobody has a monopoly on talent and directors should be much more assertive and not be browbeaten by assertive senior managers. Sometimes our captains of industry sound like Premier League footballers. My advice is call their bluff.

In the end my Lords business needs to be made more streamlined. Red tape does need to be reduced, but employees rights need to be protected. Its a difficult balance and I hope that as this Bill proceeds through your Lordships house it will become more acceptable and understandable than it is now. ENDS