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Lord Warner: My Lords, I thank my noble friend Lady Uddin for her remarks. The Government published a document in March called Inside Outside: Improving Mental Health Services for Black and Minority Ethnic Communities in England. That report signals an important step forward to support the reform of mental health services for people from black and minority ethnic communities in this country. Again, there is a large heritage of change and problems to be tackled. We are trying to engage with these areas of difficulty, and we recognise that the black and minority ethnic communities have much ground to make up in terms of their access to mental health services.

Baroness Noakes: My Lords, I, too, welcome the noble Lord, Lord Warner, to the Front Bench with responsibility for health matters. I am sure that he, like me, is eagerly awaiting the Health and Social Care Bill from another place. I promise him interesting times this summer and autumn. Is the Minister aware of the Royal College of Psychiatrists' estimate that one in three consultants intend to retire early? What will the Government do to deal with that imminent crisis in the NHS?

Lord Warner: My Lords, I thank the noble Baroness, Lady Noakes, for her remarks. I am not sure whether her promise was a promise—or, indeed, a

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threat—but I shall take it in the spirit in which it was offered. I am aware of the shortage of psychiatrists and of the prospect of further retirements that she mentioned. I am not fully up to steam on everything going on in this particular area, so I can only speak with all the authority on this subject that 24 hours in the job justifies. However, I shall look into the matter and will be in touch with the noble Baroness, Lady Noakes.

Baroness Howarth of Breckland: My Lords, we also welcome the noble Lord, Lord Warner. We are sorry to lose him so quickly from these Benches. Having heard about all that will happen in the statutory sector, how does the noble Lord see the role of the voluntary organisations working in this area of supporting mentally ill people? Much of the work is carried out by organisations such as Saneline, MIND and YoungMinds, many of which are struggling. What support will the Government give in addition to that given to the statutory sector?

Lord Warner: My Lords, I thank the noble Baroness for her remarks. She will know that my noble friend Lord Filkin, in his previous incarnation, worked with the voluntary sector through initiatives like the futurebuilders fund to improve capacity in the voluntary sector.

The Government take this area seriously. We want to see the voluntary sector make a full contribution to the development of these kinds of services, which are valued by the public. They often have a unique capacity to make provision with a particular added value. Mental health is an area that will be open to the voluntary sector to use the kind of capacity-building strengths that the Government are introducing to help to develop services.

Lord Pilkington of Oxenford: My Lords, in view of mental health, and other, problems with prisoners— 67 per cent of whom are illiterate—is the Minister happy that only one in 20 of them can get to education programmes at Brixton? Is that the policy of Her Majesty's Government? Can the Government help people in this way?

Lord Warner: My Lords, the noble Lord's queries do not have much to do with the Question. I leave him to pursue his inquiries with the Minister responsible.

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Directors' Remuneration

2.50 p.m.

Lord Clinton-Davis asked Her Majesty's Government:

    What additional steps they propose to empower shareholders to act when they consider that pay packages proposed for executives are too generous.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, in August 2002, the Government introduced the Directors' Remuneration Report Regulations 2002, which give shareholders of quoted companies a vote on the directors' remuneration report. These regulations need to be given time to demonstrate their full effect; we will be reviewing their operation.

On 3rd June 2003, my right honourable friend the Secretary of State for Trade and Industry published a consultation document entitled "Rewards for Failure": Directors' Remuneration—Contracts, Performance and Severance. Any further government action on this issue will be considered in the light of responses to this consultation.

Lord Clinton-Davis: My Lords, is there not a case immediately for cutting out anomalies that arise wherever necessary? Does the Minister agree that severance pay ought to be linked to corporate performance? Is there not a case for ensuring that fund managers are held responsible for the decisions that they make on pay and corporate strategy?

Lord Sainsbury of Turville: My Lords, I totally agree that the absolute key issue here is that there should be an effective linkage between pay and performance. The main people responsible for making this happen are the shareholders, and that is why we brought in the Directors' Remuneration Report Regulations 2002. Those regulations only came into force for companies producing reports after 31st December 2002. It is encouraging how many cases we have already seen where shareholders have made it clear that they were dissatisfied with the remuneration report of companies. We would like to see that continue.

Lord Razzall: My Lords, does the Minister accept that this is probably the tenth time that this Question, or an equivalent Question, has been asked from his side of the House over the past 12 months, all of which he has answered in similar terms? This is obviously a major issue that the Minister must deal with. Noble Lords will realise that the answer that the Minister gives has always had the merit of consistency on the past 10 occasions that he has given it.

Will he give a date by which the Government will make up their mind whether the voluntary system works? It would also be helpful if he could indicate

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whether that date is within the time frame to put legislation, if necessary, in the Companies Bill when it comes forward?

Lord Sainsbury of Turville: My Lords, I agree that I have answered this Question many times in recent years, but I have not been consistent with the Answer. There has been a changing situation. The noble Lord should take on board that we have introduced a major change, and, as I pointed out, this major change is already having a substantial effect.

In the first six months of this year, we have seen major votes: the 51 per cent vote at the GlaxoSmithKline annual general meeting and substantial votes against the remuneration report at the Royal and SunAlliance and at HSBC and at the AGMs of Reuters, BP, Shell and Boots.

It is clear that the action the Government have taken is having real effect, and it therefore seems to me to be eminently sensible to wait and see what effect that has. I am not under any illusions that I will not continuously be asked this Question over the next six months or year.

Lord Marsh: My Lords, does the Minister agree that another way of helping the process along and giving practical advice might be to suggest to shareholders who were dissatisfied with the performance of a company in which they were investing in any way that they should sell the shares and invest elsewhere? I know of people who have done that.

Lord Sainsbury of Turville: My Lords, that is good advice. Companies will take heed of that, as they will of votes at the AGMs, where they do not like it at all, if a substantial number of shareholders vote against the remuneration report.

Baroness Miller of Hendon: My Lords, can the Minister tell the House whether he believes that there could ever be a satisfactory statutory definition of the words "too generous" used in the Question? How can we ensure, on the one hand, that there are no huge remuneration packages for failure while, on the other hand, ensuring that packages are large enough to entice the best brains to come into companies in our country?

Lord Sainsbury of Turville: My Lords, I do not think that Ministers ever have personal beliefs. In this context, they always speak for the Government.

We have a clear view that the Government cannot try to determine exactly what the remuneration of directors should be. It is simply not possible. However, that is not a reason for not trying to give shareholders an opportunity to make their views known to the board. We will see boards taking that very seriously.

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Lord Brookman: My Lords, when one thinks of shareholders, one thinks of individual employees, but that is not necessarily the case. When we talk about shareholders, we talk about institutions. My experience is that, when decisions are taken on remuneration—even if the decision is that people should not have such remuneration—they are taken by the big institutions, and the small investors are ignored. Will the Government bear that in mind in any forthcoming legislation?

Lord Sainsbury of Turville: My Lords, I agree with the noble Lord. It is true that most shares are held by fund managers. However, in the revolts against pay packages at AGMs, we have seen small shareholders and fund managers joining forces to make their views known.

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