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Company Law Reform Bill [HL]

I have grouped the stand part debates on Clauses 393 to 395, 442 and 484, which deal with the OFR, for the Committee to be able to review the position of the OFR. The Minister was quite vague about that on Second Reading, which is why I have done that. The announcement that was made in December about withdrawing the OFR said that the regulations would be withdrawn, which they have been, and that amendments would be tabled to the Bill to remove the OFR, which they have not been. I was rather hoping that the Minister would add his name to this, as that would at least provide clarity on the position. The Minister should be aware that the business community is very confused about what is supposed to be happening on the OFR. It has not been made any easier by the announcement—which the Minister referred to earlier—by Mr Alun Michael on 1 February, which said that the Government were consulting on Chapter 6, namely the OFR provisions, which seems to suggest that abolition of the OFR may not be on the cards after all. While there is confusion, there is also widespread scepticism about this consultation process. Accountancy Age, in its edition following that announcement, reported that the latest consultation period is a ““farce””. One of the big four accountancy partners was quoted as saying that the DTI is,"““simply extending the period in which they will not listen to what we say””." This is an opportunity for the Minister to say with some clarity what will happen to the OFR; whether the Government are considering putting some part of the OFR back in, or retaining some part of the Bill in relation to the OFR, or whether they intend to focus their changes now on the business review requirements going forward. I hope that the Minister will acknowledge that he will consider the costs that have been re-imposed. As I referred to earlier this afternoon, the DTI, in its deregulatory statement in December, claimed deregulatory credit for £33 million of savings, largely in relation to the audit saving on the OFR. I hope that the Government will think carefully about what costs will be imposed on British business by the re-imposition of any requirements. I hope that they will recognise what they have not yet acknowledged—that they have imposed costs on business so far; not only the costs for business in preparing for OFRs, but for organisations such as the Accounting Standards Board and the Financial Reporting Review Panel, both of which have had to gear up for something that is now apparently not happening. I shall put my cards on the table and say that I have never been a fan of the statutory OFR. I am completely in favour of improved corporate reporting, but I have always felt that a non-statutory mechanism would be a better way to develop. However, whatever my personal views, it seems to me essential that business is given a clear understanding of what is expected of it. As the noble Lord, Lord Sharman, said, many companies are already extending their reporting in this round. The companies with which I am involved are certainly extending their reporting significantly. They are not necessarily going as far as the full OFR, because some companies had reservations about some aspects of that reporting, mainly about forward-looking statements in respect of KPIs and similar matters. The most important thing is that business has clarity about what is needed so that it can move forward with confidence. I reiterate what I said earlier about safe harbour provisions. If there is any extension of reporting, whether via the OFR or via the business review, that increases the need for a safe harbour to go alongside it.