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Companies Bill [Lords]

New clause 1, which I tabled, has been signed by 51 other hon. Members. That significant body of opinion indicates the strength of feeling about the subjects with which the measure deals. One of the historical roles of the House has always been to attempt to protect the general social interest against specific actions of private interests. The Bill is an attempt to do that, but with a light touch. It is clear that corporations have become increasingly important actors both inside the United Kingdom and on a global scale. Many of the world’s largest companies are absolutely enormous. The fact that Wal-Mart, the world’s biggest corporation, is larger than 150 nation states shows the size of the private interests that are emerging. It is for nation states and national Parliaments to reflect on private power and its consequences and to attempt, albeit in a way that is not too burdensome, to protect the social interest. I noted that the hon. Member for Huntingdon (Mr. Djanogly) claimed in the House yesterday that corporate social responsibility, which is the name that we give to the attempt to encourage companies to behave more responsibly, is now taken more or less seriously by all the larger companies based in this country. That was a sweeping and—some might say—complacent statement, given that there are companies whose actions still cause problems both in the United Kingdom and abroad. For example, I draw the House’s attention to the UK-based mining giant, Anglo American. A recent report indicated that poor communities in Ghana were seriously afflicted by environmental pollution that was a by-product of the company’s operations. The water supply was poisoned and the farming land was degraded, so the local people could not carry out their traditional pursuits of fishing and farming. I do not want to give the impression that I am vilifying the whole of the UK corporate sector, but we must be honest in the House about the fact that, unfortunately, there are widespread examples of such actions. For example, it is said that Shell is in breach of statutes in the Niger delta by flaring off the by-products of its activities, which produces carbon dioxide and other greenhouse gases that damage the environment. It is suggested that Shell is producing as much pollution through its activities in the Niger delta as the rest of west Africa. It is also said that Tesco is using unfortunate techniques in relation to female workers in South Africa. The list goes on, so I do not need to strengthen my point. We should simply reflect on the fact that private power cannot be left totally unaccountable in this modern world, and that is the context of our debate. The Conservative party has been seen to represent the narrow class base of shareholder interest, but the right hon. Member for Witney (Mr. Cameron), at least, has realised that the party needs to break with that narrow sectional interest. He placed an advert in the newspapers in which he said that it was his business not to stand up for big business,"““but to stand up to big business when it’s in the interest of Britain and the world.””" There was an understanding that a form of regulation for misbehaving companies was needed, and I began to think that the Conservative party might become part of a progressive consensus on corporate regulation. I was thus disappointed to read several of the speeches made, and amendments tabled, by Conservative Members. The right hon. Member for Witney said in a speech on 9 May:"““I’ve never believed that we can leave everything to market forces””." He was quoted in The Sunday Times on 7 May 2005 as saying that the regulation of companies"““clearly has an important role in ensuring competition and setting minimum acceptable standards””." It was therefore assumed that the Conservatives would join in a consensus on light-touch regulation of business. That is precisely the type of regulatory framework that the Bill—the largest piece of legislation ever to have come before the House—would incorporate into law. At the centre of the Bill is the concept of enlightened shareholder value. Again, I should have thought that there would be a consensus across the House that if the aim is to ensure that the corporate sector operates in a socially responsible fashion, enlightened shareholder value could be at the core of any legislative framework that we introduce. I should have thought that it would be apparent to everyone that if shareholders are to have the capacity to act in an enlightened way, information, particularly information on the way in which the company is being managed by its directors, is key. That brings us to the heart of the provisions: the business review. The Bill as a whole is intellectually coherent. It proposes the concept of enlightened shareholder value, and an instrument—the business review—that will enable shareholders to act in ways that secure the best interests of the company, applying a definition that goes beyond narrow financial considerations, and encompasses the environment, both social and ecological, in which the company operates. I would argue that the business review is the core of the Bill’s intellectual underpinning. The Bill is a good piece of legislation, containing much that is to be welcomed. However, it seems to me—this is why I proposed new clause 1—that some of the detailed provisions on the business review could be extended. I note that the Government have been persuaded to table an amendment to new clause 1, to which I shall refer shortly. The business review requirement might be extended in relation to those categories of company that will be required to produce a review. There must always be boundaries around any piece of legislation, and it is for the House to define where those boundaries fall. The Bill therefore states which classes of company should produce business reviews. The Government have drawn the boundary around larger companies—by definition, those that are listed on the stock exchange. That will cover about 1,300 companies, which are among the largest in the UK. It is welcome that the Government have done that, but there are 4 million companies in the UK, and many are larger and have a greater impact on life in the UK and in the rest of the world than the companies that fall within that category. In new clause 1, I propose a modest—I might even say timid—extension to the category of companies that will be required to produce a business review.