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Company Law Reform Bill [Lords]

I am pleased to be able to use the freedom of the Back Benches to commend the Bill to the House and to congratulate my right hon. Friend the Secretary of State for the manner in which he introduced it. The Bill focuses on modernisation and simplification. As I have said on several occasions, it is long because it is simpler. When I became involved with it in May 2005, it became clear that the time—some seven years or more—since the days of the company law reform group and the time invested by Ministers and interested parties from every sector of business and the third sector had been well spent. That dialogue continued over the past year as clauses were published. I commend the approach as an example of especially good practice, open debate and confidence on the part of Government in discussing the way forward on an important measure. I especially commend the officials whom my right hon. Friend has inherited. A particularly good team has worked on the Bill and that has enabled the discussions in the House of Lords to be well supported. I also commend the people who are described as stakeholders, although I am not sure whether that term does them justice. They come from all sorts of fields, including accountancy, law and investment as well as large and small businesses. In my time at the Department of Trade and Industry, I found the discussions intellectually stimulating and even entertaining. The hon. Member for Rutland and Melton (Mr. Duncan) praised the Bill graciously, although I believe that I detected gritted teeth in some parts of his contribution. On the timetable, I remind him that there have been seven years of discussion before the Bill’s introduction. It has not appeared out of the blue and many people, certainly Labour Members, have taken the opportunity of being involved in the discussions that led to the measure. The hon. Gentleman referred to the dangers of bureaucratic record keeping that could arise from the advice that some lawyers seem impelled to give. That would involve taking an excessively legalistic and bureaucratic approach to the way in which company decisions are taken, and it is somewhat divorced from the real life situations in which decisions are made and business done. We experienced a similar problem with data protection. I well recall making it clear, when I was at the Home Office, that data could be shared between the police and local authorities for the purposes of crime reduction, and the legal experts advised that that was already what the law said. However, even after we had put a clause to make that abundantly clear in the Bill that was to become the Crime and Disorder Act 1998, some people still said, ““If in doubt, don’t share the information.”” That was bad advice. It is bad law, it is inappropriate and it is wrong. Data protection seeks to ensure that people share information appropriately and responsibly. Similarly, this Bill is about helping directors to know where they stand, to take good responsible decisions and to understand how they will be held accountable for their actions by their shareholders. The law will not require the kind of bureaucratic record keeping that the hon. Gentleman suggested is feared by some people. He was also wrong to suggest that there was a danger of increased litigation, although that might have been the case without the amendments that have arisen from the considerable contribution made to the Bill in another place by the Attorney-General. Far from discouraging high-quality people from coming forward to serve as directors, the measures seek to make it clear that only when there is a genuine case to be made and evidence to be considered by the courts can such cases go forward to consideration or even disclosure. It was irresponsible and inaccurate of the hon. Gentleman to suggest that such dangers existed, or that the Bill might discourage high-quality people from acting as directors. Given the more consensual way in which he concluded his speech, I suggest that it would be in the interests of us all to ensure that the Bill does not threaten responsible directors, and that it encourages good practice by the directors of companies. The principle of ““think small first”” is absolutely right, but I would counsel my right hon. Friend the Secretary of State that there will be pitfalls to be avoided when the Bill becomes an Act. Many of us remember occasions on which the House has got the legislation right, only for the detail of its implementation—through regulations and so on—to move away from what was intended either by the Bill’s authors or by the House. The Bill must be about enabling and encouraging business and enterprise to flourish. I was pleased to see today’s visit to No. 10 by the corporate leaders’ group on climate change. The group comprises business leaders who recognise the global challenge to the environment—as well as to trade—as an opportunity and a challenge, rather than as a cause for panic and alarm. They recognise that sustainable development that balances and integrates economic, environmental and social considerations involves a joined-up approach that is good for business as well as for the wider community. That leads to a win-win-win opportunity for us, in regard not only to encouraging business and our competitiveness abroad but to environmental and social issues. There is a lesson here for the CBI, because there is a temptation to argue that attacks on the Government are good and attractive to its membership. I would contrast that argument with the work that has been done on the Bill by representatives of the CBI, including those on its manufacturing council—which makes a massive contribution to the manufacturing forum—and on its small business council. I would also draw the House’s attention to its initiative on information technology security. Those are significant contributions, and they are much more important than the public face of criticism of and confrontation with the Government. Such activities might satisfy some of the CBI’s members, but they are not in their best interests. The kind of co-operation that we have seen on the Bill certainly is, however, and I commend it as best practice.