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Company Law Reform Bill [Lords]

We have had a good debate. It has been interesting to hear the points of agreement on the Bill and the points of disagreement. I too welcome the Bill because it will reduce the burden on small and medium-sized businesses in Swindon and help to expose irresponsible companies. In particular, it has given us the chance to raise the important issue of corporate social responsibility this afternoon. However, I want reassurances that what we get from the Bill is CSR rather than PR—public relations. I will outline the principles on which my concern is based. Before I do that, the biggest factor in increasing social mobility in Swindon has been the increasing success of small businesses since the late 1990s. We have the best ever business environment under this Government. I come from a family who have run small businesses. My mother started a small businesses and my brother still has a small business, so my background is based on the success of small family businesses. I am delighted that the Bill will make it easier to set up and run a small business. I work closely with the Federation of Small Businesses in Swindon. I have made it clear to the federation that I want to see the regulatory burden on smaller firms lightened and to work with them to identify new ways to simplify and to reduce the demands placed on them by Government. That is why I am pleased that the Bill could save small and medium-sized enterprises £100 million a year. It is right that the Bill changes the approach from looking at the needs of large businesses and large companies first to a ““think small first”” approach. I thoroughly welcome that. I am pleased that there will be benefits from a range of measures for all businesses in my constituency, including greater clarity about directors' duties. The Bill makes it clear that they have not only to act in the interests of shareholders but to pay regard to the longer term, the interests of employees, suppliers, consumers and the environment, as we have heard. More than 30 international companies have their headquarters in Swindon. I heard and understood my right hon. Friend the Secretary of State's comments on the need to continue to attract such companies to incorporate in the United Kingdom but, as someone who has worked in corporate social responsibility for a large corporation, I know that CSR is essential to securing the future of British business, and I say respectfully to my right hon. Friend that strengthening it in the Bill would do us credit and would help companies. My experience comes from three years working, in community relations in particular, for a large international company. That involved liaising with local stakeholders—I will use that term because it is understood by the industry. There is a difference between stakeholders and shareholders. I do not agree with the right hon. Member for Suffolk, Coastal (Mr. Gummer), who is no longer here, about that, because stakeholders means people in the local community who have a stake in a company. They do not necessarily have to have shares in it; they may not even be able to buy shares in it. That was my experience of working in industry: people could not buy shares in a company, but were still directly affected by its work in their community. I had to create a programme to ensure that local stakeholders’ concerns and views in a somewhat controversial area were taken on board. Initially, there was much suspicion within both the company—people working for the company did not understand or see the need to talk to local people, to give their views or to explain why they were doing things—and the local community, which over a period of years had come to distrust the company because of the actions that it had taken in the past. Although I was employed and paid by the company I found myself, as a middle-woman, so to speak, liaising between one group and the other and ensuring that there was dialogue. That is an important aspect of corporate social responsibility, and of working in the local community and with local society. I hope that that explanation goes some way to explaining to the hon. Member for Grantham and Stamford (Mr. Davies) why we should enshrine the idea in law. In the long run, doing that made the company's work at large easier because there was less confrontation with the local community, more joint working and more understanding. It saved the company time and money, particularly with planning applications, which, as any of us who have worked in industry know, are among the most difficult things to get through local communities. Therefore, I commend that to him as an important part of the Bill. Corporate social responsibility reports are often handled by public relations departments. That is wrong and we should change the emphasis to community relations and corporate social responsibility. We need to do that in this country, to ensure that our companies are the best in the world. Our high skills and high level of company intelligence need to be kept up. We need to empower stakeholder engagement in companies, because of the benefits that I have described. The public are demanding more transparency on issues. They have woken up to the fact that those issues are affecting their families. They include the environment and all sorts of other responsibilities that companies have taken on board. It is an issue for nongovernmental organisations, too. When they work with companies, rather than standing outside and throwing brickbats at them, they may find that their views have changed, and things are going differently from how they thought they were going when they stood outside the company and did not engage with it. The CSR reporting framework that we could have had through the Bill would cut many hours of argument and debate in companies, simplify things and save them time and money. I remember discussing at great length what should be in and what should be left out of those reports, which took a huge amount of time. If the framework that we could have used was available in law, it would be much easier and simpler for companies, stakeholders and other people outside companies to understand, and to compare one company with another. It would also lead to a great deal more transparency. We in this country should also recognise that, as MORI and many other polls have proved, NGOs are much more trusted by the public than are Governments, politicians and even businesses. If we can bring NGOs and companies closer together and get them to work together, that would be of mutual benefit to both. Even since the publication of the Bill, public opinion in this area has continued to shift. There has been growing evidence of the impact of irresponsible businesses on the environment, and growing public demand for the exposure of such businesses. The Opposition have been getting further and further out of step with public opinion, despite the comments of the right hon. Member for Suffolk, Coastal. Even though he said that he disagreed with the Trade Justice Movement, his arguments, which reflected many of the movement’s, led me to believe that he may have drafted some of its briefing notes. I have been most disturbed to learn that while the Leader of the Opposition, the right hon. Member for Witney (Mr. Cameron), has been shopping for energy-efficient light bulbs at IKEA, his shadow Ministers in the House of Lords have tabled amendments that would have stripped away any green or ethical clauses in the Bill. While he was trying and failing to get planning permission for a windmill on his roof, Conservative peers in the Lords were trying to roll back company law to remove existing obligations for company directors that have been established in common law since 1862—presumably a century in which Conservative peers feel more at home. In December 2005, the right hon. Member for Witney said that he did not"““go into politics to be the mouthpiece for big business””." However, in March 2006 he said:"““I will always stand up for big business””." That is an example of the confusion and contradiction that exists among Opposition Members, which I hope that they can overcome so that they can work with us to strengthen the Bill. If Opposition parties were serious about corporate accountability, they would join me to push for enforceable rules to ensure that companies act in the best interests of the community.