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Companies Bill [Lords]

I had the privilege of sitting through the entire Committee stage, and, as a non-legal person, I now know more than I ever really wanted to know about company law. Only yesterday, we were treated to a fascinating discussion on corporate sole. Some Conservatives made extremely negative remarks yesterday about the Minister’s unhelpfulness in terms of accommodating input from other Members. Although in my view the amount of time allocated to Report could and should have been greater, some shameful remarks were made by Conservative Members who had not had the benefit of experiencing the Committee stage. I find myself in the unusual position of defending a Minister by seeking to put the record straight. The Minister did consult, and she did accommodate helpful suggestions and proposals from Liberal Democrats, Labour Members and those in other parties. Even the Minister, however, has been unable to accommodate the wish of both Labour and Opposition Members to retain the operating and financial review. It was certainly not her fault that her boss-to-be, the Chancellor of the Exchequer—in a moment of madness, and apparently without consultation with any of his parliamentary colleagues—made a rash promise last November which he thought would appease big business. I refer to his promise to scrap the OFR. The Chancellor thought that he would please business. In fact, he has angered many first-class businesses that had already begun to incorporate the requirements of the OFR in their business reporting. A report in today’s Times estimates that just under 50 per cent. of top UK companies have done so. I cannot agree with the hon. Member for Putney (Justine Greening) that the OFR is a waste of time, and apparently those companies do not agree with her either. Meanwhile, we are left with the somewhat weakened imitation that is the business review. New clauses 1 and 75 seek to stiffen the requirements of the review and make it more effective. The hon. Member for Hemsworth (Jon Trickett) made many of the relevant points very eloquently, and I shall not elaborate on them, because we are short of time. I am grateful to the Government for giving way on the issue of the supply chain. Any company can purport to be acting ethically, but if a company employs child labour or pollutes the environment, ethical investors and many others will wish to know about it. Our amendment to new clause 1 is designed to widen the scope of the review to accommodate ethical investors—that growing band of individuals who base their investment decisions at least partially on the ethical behaviour of the company. That is hugely important. Clearly, that type of investor cannot make informed decisions if the information is not there; they cannot make them based on pious words or spin. New clause 75 gives auditors the power to check the accuracy of the report and provides for a duty to report any anomalies, specifically with regard to the contents of the business review. That requirement will provide two things of great value to companies. First, it will create a level playing field for all companies of the same size. Those that behave in a way that is inconsistent with the spin in the business review will hopefully be found out. Secondly, ethically behaved companies will attract investors who demand reassurance that their profits have not been created at the expense of others, or of the environment. What of the cost? When the Chancellor made his fateful statement, wiping the operating and financial review from the expectant statute books, he was clearly seeking to ingratiate himself with business by appearing to be a man keen to reduce regulation and reduce costs. He should know about costs, Mr. Deputy Speaker. British Chambers of Commerce has estimated the cumulative cost to business of implementing new Government regulations since this Government came to power at £50 billion. The cost of implementing these proposals, over and above the existing regulatory impact assessment, is only an additional £30 million. If the Government were to approve an extension to all large private companies, the cost would be an additional £144 million. I am sure hon. Members would agree that that amount pales into insignificance in comparison with the huge burden already imposed by the Government.