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Companies Bill [Lords]

Indeed, British companies have to obey British law. The provision would put the obligation at the centre of company law, where it would be firmly on the agenda. It would also apply to the behaviour of British companies in their overseas operations, as British statute law does not. I want to touch on the criticism that the new clause would lead to conflict between the different duties. That is certainly not the intention of the proposal, nor would that be its effect. The primary duty remains clear; were there any conflict the directors have the means to resolve it in the normal way, as at present. There is no change in the current situation or as it is envisaged in the Bill, so I do not agree with the criticism. It has been suggested that the new clause represents a pluralist approach to corporate social responsibility. That is absolutely not the case. A pluralist approach would allow the interests of all the company’s stakeholders—its employees, the wider community, local residents and consumers—to be given the same priority as the interests of shareholders. It is true that such a situation is a desired long-term objective of CORE—the Corporate Responsibility Coalition—and others but I accept entirely that the framework advanced by the Government through the Bill is one of enlightened shareholder value. The Bill is not about a pluralist approach, nor is the new clause. It is firmly under the umbrella of enlightened shareholder value, which means that the primary duty of directors is to promote the success of the company. If there is to be suing for loss, only losses to the company will count. Before I conclude, I want to make some observations about the position of the official Opposition. In the other place, in May, Conservative peers sought to remove all matters pertaining to enlightened shareholder value—an attempt to turn back the clock on the progress that is being made in company law. The word ““reactionary”” may be appropriate. Their position flies in the face of the new support for corporate social responsibility and compassionate Conservatism offered by the new leader of their party, the right hon. Member for Witney (Mr. Cameron), who has made some welcome and strong comments in support of the enlightened shareholder value perspective, so different positions are on display. In Committee, we saw clear evidence of the conflict and difficulties in the Conservative party—Conservatives did not know where to stand or which way to face. Although the hon. Member for Huntingdon did not try to repeat the tactics of his friends in another place, he none the less—courteously and good-naturedly, as always—tried to weaken the Government’s approach, never mind mine. It would seem from the amendments that have been tabled today that he and his colleagues are trying to do the same again. The hon. Gentleman has described the road to enlightened shareholder value as one of good intention but meaningless platitude, and the six secondary duties listed in what is now clause 173 and in new clause 4 as a statement of fashion. Let me explain what that statement apparently applies to. Is it fashionable to"““have regard…to""(a) the likely consequences of any decision in the long term,""(b) the interests of the company’s employees,""(c) the need to foster the company’s business relationships with suppliers, customers and others,""(d) the impact of the company’s operations on the community and the environment,""(e) the desirability of the company maintaining a reputation for high standards of business""conduct, and""(f) the need to act fairly as between members of the company””?" To describe those issues as the mere trivia of fashion is wrong, although I am happy to allow the hon. Gentleman a chance to explain himself.