Examination of Witnesses (Questions 120
TUESDAY 11 JULY 2006
Q120 Mr Gauke: One could call them
that, yes. What I am putting to you is that if it were left to
market pressures or if it were about getting the best return for
the taxpayer and, indeed, the person to whom services were being
provided, we would make much greater use of outsourcing than we
currently do in the public sector.
Mr Clark: It depends what the
considerations are. If the market was such a good provider, it
would be providing health, it would be providing housing for the
homeless and we would not have to have a welfare state, but the
market does not provide everything that is socially necessary.
Q121 Mr Gauke: I am not disagreeing
with that, but where there are areas where the market cannot provide,
does it still not make sense to you to provide those services
in as efficient a manner as possible? What we have seen in visiting
outsourcing centres in India is very oftennot always but
very oftenthe most efficient way of providing services,
whether they be public or private services, is by making use of
the competitive and comparative advantages which exist in places
Mr Clark: I certainly remain to
be convinced that is demonstrable for an awful lot of the work
that has already been put there, but in terms of a lot of public
service work which relies on contact with individuals, we already
have a problem. For example, a pensioner cannot go and speak to
somebody face-to-face about their pension because everything has
been put to a call centre. Removing that call centre even further,
as Martin Wolfwho is an exponent of the market, he is not
a defender of social provision in a way that we arewould
say, it gets too complex and difficult to manage. If there are
problems already, which there certainly are in areas like the
DWP and the Pensions Service, with job cuts in the UK, meaning
the service cannot be provided to people, they cannot go and see
someone, they have to make a phone call, now you are saying the
phone call will be fielded by somebody on the other side of the
world where the management problems are even greater, where the
political accountability is even less because someone stands somewhere
to make some money out of it, I think the political repercussions
and hostility to that are perfectly justified. I think bringing
more democracy into the operation of the market would be a good
thing rather than less.
Q122 Mr Gauke: Do you think in five
or 10 years, more or less in the public sector will be outsourced
Mr Clark: It depends how successful
we are in campaigning and fighting against it.
Q123 Mr Gauke: How successful do
you think you are going to be?
Mr Clark: We are very optimistic.
Q124 John Thurso: That was fascinating.
I think I am with you if the evidence of my constituents is anything
to go by, where the service has dropped dramatically with the
removal of face-to-face contact. However, what I want to ask about
is resources and raw materials. In your submission, you noted
that you would support energy self-reliance in the UK, perhaps
it is an auspicious day to be asking you about this. Given that
UK-produced energy is said by some to be relatively expensive
compared with that produced by countries that have natural resources,
how do you see that impacting on growth in the UK?
Mr Exell: It would be a mistake
to assume that Britain lacks energy resources. We are built on
coal and surrounded by oil and gas. We have got a tremendous opportunity
in this country in the immediate future. Clean coal is in many
ways the energy of the future. Developing the ability to scrub
the exhausts from coal-fired power stations will not take the
lead-in that nuclear power stations will take. China is building
a coal-fired power station every week and is beginning to be really
concerned about the costs of pollution. Countries that develop
clean coal technologyand we have got the opportunity to
do thatare going to be at the head not only of leading
to a richer, cleaner world but a tremendous commercial opportunity
at the same time. If we invest now in this country in clean coal
technology, we can promote jobs in Britain, reduce global warming
and help developing countries to industrialise in a sustainable
manner. It is a tremendous opportunity for this country.
Q125 Mr Gauke: And continue to develop
our own economies.
Mr Exell: Yes.
Q126 John Thurso: How much do you
think that security of supply is an issue, given that we will
not have the gas very shortly, we will be net importers if we
go down the gas route?
Mr Exell: I think if you were
asking this question in Ukraine, you would get a very clear answer
to that question and certainly there are risks to having a preponderance
of one's own energy coming from abroad. Especially in this country,
when we have got so many opportunities for people developing our
own energy resources, it is something that we should put on the
scales when we are making our judgments.
Q127 John Thurso: Is this one of
those areas where the market is not a particularly good way of
deciding because we have long-term decisions to make, long-term
investments to make, whether they be a baseload of new civil nuclear,
whether they be a much stronger investment in renewal or whether
they be a serious investment in clean coal, these are government
decisions rather than market decisions?
Mr Exell: Yes, and also talking
about "the market" is not always the best way of thinking
about things. Markets vary from one another according to the circumstances
in which they are established and the rules by which they are
run. The Government, in turn, in energy can make a huge difference,
so there would still be a market but the outcomes of it will vary
tremendously. Markets are never neutral any more than governments
Q128 John Thurso: What business wants,
I always find, is security and stability, and if they have got
that, the rest is rather peripheral.
Mr Exell: Exactly.
Q129 John Thurso: Martin Wolf was
arguing that in theory environmental taxation does not lead to
pollution-intensive output moving abroad.
Mr Exell: He did say providing
that was done on a concerted basis. That is an important proviso.
Q130 John Thurso: Can I ask for your
views on that, because there is tremendous pressure growing, I
think, for political consensus to see more regulation, more greening.
Mr Exell: I think my colleagues
have done quite a bit of thinking on this.
Mr Clark: There are a lot of arguments
about how you are most effective in dealing with things like emissions
and pollution, but certainly currently governments are moving
in the wrong direction in reducing enforcement and regulation.
I think, certainly from our point of view, the consequences of
the push towards less regulation and inspection are already showing
up in health and safety and it is the same with the environment.
In terms of energy, issues like carbon taxation and so on are
tinkering at the edges; there needs to be a shift in policy. If,
for example, renewables got a tenth of the subsidy that are being
deployed to nuclear, we would see a huge increase in the quality
and reduction in the cost of investment in renewable energy. Certainly
I would echo Richard's points about clean coal technology. Unfortunately,
our energy policy has not been driven by economics. We did move
to gas from coal because gas was cheaper but because gas did not
have the miners.
Q131 John Thurso: Amicus, I assume,
would quite like to see some new civil nuclear.
Mr Dubbins: We certainly have
been arguing that there needs to be a balanced energy policy.
We have members in the nuclear industry, yes, and they obviously
argue that there should be a clear political lead on the nuclear
question, but we have also stressed the balanced policy and it
comes back to what you were saying about security of supply being
very important. I think the other issue just mentioned there,
coal seems to be coming back as an energy supply of the future
and we would certainly support that as well. It is a shame that
we went so far closing it down in the first place, so we are in
a difficult situation to use that again in the future, but that
is the situation we are in. Certainly, we have said a balanced
policy in which nuclear and renewables have a part to play. I
think the broader question about security of supply has obviously
got to be looked at in terms of global politics as well and what
is going on in that particular arena.
Q132 Ms Keeble: You have talked quite
a lot about what you would like to see happen in other countries
in terms of regulation and so on. What you have not made absolutely
clear is whether you regard it as partly a CSR obligation, which
would be imposed by UK companies by this country's government,
or how far you also see it as being a matter of the kind of work
that goes on to get developing countries to improve governance
of their countries and deal with some of the public service issues
and regulation and how far you also see it as making some of the
international machinery work effectively. Just a brief thing on
that because CSR by UK companies is a drop in the ocean.
Mr Dubbins: CSR is unfortunately
very poorly developed. The biggest problem there as well has been
the lack of a proper leading enforceable framework. I understand
in India for listed companies they are at the point of imposing
that with proper social auditing. When it was discussed at the
European level, we were very much in favour of there being a legal
framework for CSR which included the social partners and proper
three-line auditing, which included the social aspects. Unfortunately,
that was opposed lock, stock and barrel by certain governments.
In a broader context, we have been arguing for a level playing
field particularly within the European Union on social and labour
rights, and the UK is usually vastly inferior compared with some
of our continental colleagues, and that should be then the platform
through which and within which we push for better standards globally.
That includes within the ILO, within the broader machinery of
the UN and it would endorse entirely moves towards better governance
in developing countries, but I think if we are being honest about
this, we really have to ask ourselves why is there a governance
problem in some of these developing countries. I do not think
the IMF and some G8 countries are absolutely innocent of the situation
that exists there. For example, in Tanzania where we were involved
with encouraging water privatisation which then led to quite serious
incidents of unrest in that country, they have now moved back
towards public ownership. I fail to see how that sort of agenda
fits into the picture of proper governance and development.
Q133 Ms Keeble: When I say "governance",
I mean in terms of regulation of labour. I was thinking of China
in particular and some of the labour conditions there, for example
in the boot and shoe industry. It was meant to be a small question.
Mr Exell: One of the arguments
that we frequently hear is that it is somehow imperialistic or
chauvinistic for us to insist on core labour standards across
the world. The people who have made the opposite point to us most
strongly are trades unions in developing countries which are very
often in an analogous position to us, with their governments and
their employers. They say they are continuously getting employers
saying to them, "If you negotiate for better pay for your
members, we are not going to be able to compete with China",
and governments saying that if they legislate for basic health
and safety at work, "We will not get the investment that
will go to China". Core labour standards would be good for
British workers but they would be even better for workers in developing
Q134 Mr Love: A short question. I
wanted to go into this whole taxation issue. You probably heard
Martin Wolf's comments in relation to corporate taxes. I wonder
what your view is in relation to that? There is also a lot of
discussion which we are having that inequality is increasing partly
as a result of globalisation. How should we respond to the increasing
inequality in society? Is there a way in which new forms of taxation
could address some of these issues?
Mr Clark: We have got some old
forms of taxation which could address the issue, quite honestly.
There is a real problem with the general consensus that there
is an actual cap on income tax at 40% for the highest paid which
is bizarre as far as I can see, particularly since National Insurance
does not extend beyond a certain level, 41% is the maximum rate,
that is low. It is very interesting to hear Martin Wolf say that
he does not regard corporate tax as crucial as the lobbyists do.
In terms of decision making, of course any company worth their
salt is going to pay a lobbyist to say, "We should pay less
tax", and one of the arguments they are going to use is,
"We will not come to you". I think it is probably right
that it is a much less significant decider of where to locate.
I think there is also some scope for leadership in saying the
downward trend in corporate taxation is not particularly good
for social cohesion but nor is the ceiling on income tax.
Q135 Mr Newmark: Although there is
evidence that the lower the tax goes, the more the tax take seems
to increase, but I will not get into a philosophical debate with
you on that. Simon, I agree with your point on coal, but the problem
was when the price of oil went down to 10 bucks a share, it made
it uneconomic to produce the deep-mined coal we had in this country,
but now that it is over $50 a gallon, I am curious from Richard's
standpointand I agree with you, we need to encourage
carbon sequestration for 200 years of coalwhat do you think
the Government should be doing to encourage us to harness that
technology or should the Government be doing nothing?
Mr Exell: My understanding is
that the industry is saying that what is needed at the moment
is some technical changes on regulation of the industry, which
I am not expert enough to go into, plus some pump-priming, especially
support for research and development, and the same planning relaxation
that is being proposed for the nuclear industry also for other
forms of energy. I am not an energy specialist, those headlines
are the limits of my knowledge.
Mr Newmark: I know of your enthusiasm
for it, so I wondered if you had any thoughts.
Q136 Chairman: Martin Wolf has had
a few good articles in the Financial Times, one today,
and they are pretty good in terms of energy and the issue of consumption.
Maybe a last question from me. Are trades unions and workers too
sceptical about the benefits of globalisation, and how do your
organisations attempt to educate people around the opportunities?
Mr Exell: The first thing about
trades unions is that our first job is to protect our members
against threats. We are temperamentally more inclined to recognise
Q137 Chairman: So the glass is half
empty all the time?
Mr Exell: To some extent. We would
not be doing our job if we did not notice when the glass is half
empty, but we are also keen to make sure that we never throw out
the baby with the bathwater, to use another cliché, because
at the same time as protecting members from threats from globalisation
it is also important to protect the interests of the members who
benefit from it. As I said right at the start, there are hundreds
of thousands of jobs that depend on global trade investment, so
we must never put them at risk because of concerns about people
who might lose their jobs or see their terms and conditions worsen.
Mr Clark: In educational terms,
the problem with the £5 steam iron is it may be made by slave
labour in China and that is not in our interests as workers here
or, indeed, trade union workers anywhere in the world to tolerate
that, there are points where you say, "Actually, it is not
all about cost".
Q138 Chairman: Simon, do you want
a final word?
Mr Dubbins: I think it has been
touched on there. It is very difficult, particularly when Amicus
has got large manufacturing sectors, to look at globalisation
in a particularly positive light. Having said that, we are not
of the view that we are opposing it lock, stock and barrel. What
we have consistently argued about is having some sort of social
dimension to globalisation and that globalisation can help lift
developing countries and people out of poverty, but it is essential
it is done with that key element of being socially regulated and
controlled in a manner that brings benefits to the bulk of the
Chairman: Your evidence has been very
helpful to us. It is good to get that dimension, there are a few
barriers to go yet, but building on Martin Wolf and yourself,
we will take a break over the summer and then come back to you
on it. Thanks very much.