This snapshot taken on 05/03/2008, shows web content selected for preservation by The National Archives. External links, forms and search boxes may not work in archived websites.
The Rt. Hon. Patricia HewittBusiness And Society - Roles and Responsibilities |
 |
|
| (Click picture for biography) | |
I am delighted to be speaking here today. Today I'd like to put the issue of corporate social responsibility into a broader context and give you an overview of how I see the Government's relationship with business and the ideology underlying that. In recent years Labour's approach to the business community has been transformed. Instead of being in conflict, the Labour Party and the business community are now increasingly effective partners. It is a source of real pride to me that I have been involved in that journey, which started under Neil Kinnock, and was continued through John Smith's leadership, and now Tony Blair. The old politics was about the choice between creating a fairer society and promoting a dynamic economy. The old left and the new right chose different sides, but both were agreed that the choice had to be made. But in today's knowledge-driven economy, we don't have to make that choice. Because the policies we need for social justice - creating opportunities for all - are precisely the same policies that we need to create a successful modern economy. Human capital is now the prime source of wealth creation. So investment in human capital, in children and our people, is an economic necessity, not a social cost. Once a stable economic framework is secured, the way to grow the economy is to grow the labour force - literally, by drawing more and more people into employment; metaphorically, by expanding the capacity and productivity of each person employed. So this Government is unashamedly pro-business. After all, it is business that creates wealth and jobs and sustains our quality of life. But that doesn't mean - as some critics claim - that we have given in to globalisation. That there is no difference between Labour and the Conservatives, that we're all in thrall to big business and have left people to the mercy of multinationals. Yes, we support business - good businesses. Competitive, productive businesses. Profitable businesses - profitable precisely because they are focused on their customers, create great products, get the best from their staff, respect their environment and their community. Businesses like Web Dynamics in Bolton, which I visited a few weeks ago. They manufacture high-performance fabrics for a variety of uses including replacing the old tarmac on roofs. Environmentally friendly, high performance fabrics which are world leaders in their sector. They only started commercial production 3 years ago - now they're employing 50 people and are world leaders in their market. The staff are also owners, with 25% of the company's ordinary shares held in a trust for all employees. But some businesses aren't good enough. They don't treat their staff well; they exploit developing countries; they pollute the environment. Businesses like the electronics company in the west of Scotland which was paying a group of Thai immigrant workers 96 pence an hour - until national minimum wage enforcement officers stepped in. We're not going to put up with businesses like that - and nor should people have to put up with conditions like that. We all know that our best friends are the people who can tell us uncomfortable truths. We expect business to tell us when we get things wrong in government - just as we'll tell them when we think they're not getting it right. So being a friend of business does not mean that in Government we give in to everything the business community wants. It means creating the conditions in which good businesses can flourish. A stable macro economy. High levels of education and skills. A world-class science and technology base. Twenty-first century infrastructure. Strong regional economies. And a framework of tough, pro-competition laws and intelligent regulation. That is how we can achieve our goal of promoting enterprise for all and closing the productivity gap - our goal of highly productive people in highly productive businesses. Intelligent regulation Let me say a bit more about regulation - a regular source of disagreement between government and business. It's tempting for business-people - and their pressure groups - to say ' get rid of red tape', 'sweep away all those regulations', 'set business free'. That would be a pretty stupid thing to do. When 180,000 people were injured and 160 killed last year in workplace accidents, we're not going to get rid of health and safety laws or health and safety inspectors. When around 30,000 consumers were harmed by dodgy products last year, we're not going to sweep away product standards. Of course we must regulate to guarantee decent minimum standards. But if we are intelligent about the way we regulate, we can give business effective incentives to increase their productivity, instead of distracting them with more bureaucracy. In the Social Justice report, we called it intelligent regulation; the Industrial Society calls it 'smart' regulation. We haven't always got it right. Our first go at the Working Time Regulations was a mess. But we listened to business and learnt from those mistakes. But business hasn't always got it right either. I remember campaigning for a Sex Discrimination law in the 1970s. Many businesses opposed it. They said it would increase their costs, reduce their competitiveness, make them unwilling to employ women. In reality, women are now nearly half the workforce - although the Cabinet has far more women in it than the boards of most FTSE 500 companies. Today most businesses now realise that they damage their competitive position if they are only recruiting or promoting from half the talent pool. Equally, many business leaders opposed the minimum wage. But we built a consensus with business and unions - and employment is up by around half a million since April 1999 when the national minimum wage was introduced. And in March this year Industrial Relations Services, reported that "almost 8 in 10 firms...back the principle of a statutory wage floor. Just 4% oppose the idea". Now we are moving forward on a new Enterprise Bill, tough competition laws, and reform of company law, where we will be publishing the report of the Review Group later this month. Changing cultures So regulation is inevitable and it needs to be intelligent. But we all know that rules and regulations are a pretty blunt instrument when it comes to achieving cultural change in organisations. So we will work with companies, with unions and others to release the potential of our people and to move businesses up the value chain. That calls for real partnership. Take the pioneering project at ALSTOM in Lincoln, where the AEEU has worked with the company and local partners to establish an Engineering Training Centre. A progressive business and a modernising union working hand-in-hand to deliver high performance business by investing in people. In the past, the Labour party and the trade unions have too easily assumed that if there's a problem at the workplace, the law must be the answer. But real change within the workplace means changing values and changing the culture. And we need as a government to develop a much more sophisticated idea of how we can promote lasting change within organisations - using soft tools of kite-marks, codes of practice and best practice exemplars as well as the 'hard tools' of regulation. Corporate social responsibility is above all a matter of the values, culture and leadership of business. It is therefore far more suited to this soft approach. The best companies take their social responsibility seriously. So part of Government's role in encouraging high performance businesses involves encouraging business to develop corporate social responsibility - and to make the most of corporate social opportunity. Not because it is a 'good thing'. But because it makes good business sense. Increasingly businesses depend on the trust, acceptance and enthusiasm of their staff and consumers. Social responsibility is crucial to winning that trust and thereby keeping good people and winning more business. We can help in Government by helping to create opportunities and incentives for corporate social responsibility. In my own constituency, the Education Action Zone has recruited local businesses as partners for local schools. One company asked its staff to volunteer to refurbish a school playground. It was a contribution in kind - but it was also a team-building exercise. The school was delighted. The company's staff had a wonderful time -and some of them have stayed involved as volunteer mentors. And the company achieved both its goals - a contribution to the local community, and personal development for their staff. Consumer pressure can also force business to change their ways. We've seen that with Nike and GAP, who were both hit by fly-on-the wall exposes of working conditions in Cambodia, in factories run by some of their subcontractors. They have learnt from this experience, which damaged customer allegiance, and now both companies sponsor an independent NGO, the Global Workers Alliance", to review their operations. WTO Finally, let me touch on the issue of business responsibility and the role of government at the global level. The treatment of desperately poor people and environmental devastation - the plundering of rain-forests, for example - is one reason why the anti-globalisation movement is able to win much public support. I understand why so many good people are appalled by what they see some businesses doing to vulnerable communities and fragile ecologies. But we will not help the poorest people in the poorest countries of the world by cutting them from world trade. Look at South Korea. In 1970, their economy was hidden behind protectionist walls. They were poorer than Ghana. Today, South Korea is richer than Portugal - and the opening up of the country to world trade is one of the reasons why. The reality is that anti-globalisation protestors are opposing the very organisations that can provide an international framework for fair trade. They are cutting poor countries off from the pathway out of poverty. It is only through institutions like the WTO and the ILO that we can guarantee labour standards, environmental goals and a rules-based trade system that protects developing countries. I would not be doing this job if I didn't think we could use global institutions like the WTO and ILO to bring forward real change. The question is not whether we should be for or against globalisation, but - in the words of Kofi Annan - "how to ensure that globalisation becomes a positive force for all the worlds people, instead of leaving billions of them behind in squalor." So at a global level too Governments and business have a responsibility. Our aim is to launch a new round of trade negotiations in the WTO later this year. A Round that can - that must - deliver economic gains to developing and developed countries alike. It is not just developed countries who will benefit. In fact, proportionately, developing countries have just as much, if not more interest. Estimated benefits to developing country income are at least three times the value of aid budgets. We know the poorest countries haven't always benefited from the trading system. It is important to ensure they do so this time. A Round offers opportunity to look at extending rules to areas of benefit to developing countries. We can look again at implementation of agreements which are causing developing countries problems. And at emerging issues such as developing country access to medicines. Conclusion Globalisation is as disruptive and frightening today as industrialisation was 200 years ago. But just as industrialisation created new opportunities, so the global knowledge economy also creates new opportunities to widen prosperity and promote social justice. We need to create the conditions for responsible business - both nationally and globally. Both Government and business need to engage more - not less - with the public in this new world. We need to understand people's concerns and work to address them. Above all that calls for a partnership - between Government, business, unions, NGOs - to work together to increase opportunities for everyone, here and overseas, to reach their full potential. To ensure economic dynamism and social justice go hand in hand. |
|
|
|
|
Other speeches by The Rt. Hon. Patricia Hewitt
(the following are available from the archive) |
|
