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Company Law Reform Bill [Lords]

The hon. Gentleman is exactly right, although he has given a clear indication to the House of how the Conservatives keep changing their position. The Labour party does that too, whereas we Liberal Democrats have been consistent throughout in our support for OFRs. Despite the amendments in the other place, the business review proposals remain unsatisfactory. My hon. Friend the Member for Cheltenham (Martin Horwood) mentioned reporting standards, and noted that they had already been worked up by the ASB, but the Bill contains no mandatory requirement that they should be adopted. If they were adopted, compliance would be easier, as would comparability, with the result that narrative reporting would be of greater use in meeting the objectives set out in the Bill. Moreover, the Government’s amendments in the other place also fell far short in respect of applicability. The business review proposals will not apply to large, non-quoted firms or medium-sized enterprises, and the audit requirements applicable to narrative accounting are nowhere near stringent enough. One would expect auditors to have to check that narrative reporting is accurate and ensure that it is consistent with the facts, but the Bill does not require them to do either. Another problem has to do with coverage. I believe that about 1,009 large quoted firms will have to compile business reviews, but they will not have to detail their relationship with suppliers. That may seem a minor point but, in some countries, British companies subcontract much of their work. There is evidence that they subcontract some of their social and environmental obligations to people who are less well known and who are not covered by the business review requirement. That alarms many people concerned about the proposed changes. The Government have made themselves look shambolic over OFRs and I hope that they will change their proposals between now and Third Reading. My final major point concerns director duties, which are at the heart of the Bill. Clause 158 has already been discussed. Liberal Democrats agree with the Government. We think that Ministers have struck a good compromise. We are astonished by the position now advocated by the Conservative Front Bench, which seems to go against previous Conservative legislation. The hon. Member for Rutland and Melton did not seem to appreciate that section 309 of the Companies Act 1985 says:"““The matters to which the directors of a company are to have regard in the performance of their functions include the interests of the company’s employees in general, as well as the interests of its members.””" That was in 1985 under Lady Thatcher.