---

Companies Bill [HL]

My Lords, this point has been fully debated at all stages in your Lordships’ House, so I shall not retrace the whole argument. I will, however, make just three points. First, the concern of the noble Baroness, Lady Noakes, is to protect the integrity of the people at the coalface—the men and women who sit on audit committees. The noble Lord, Lord Lee of Trafford, made a similar point. That might seem to be a persuasive one until one takes into account the fact that all audit committees are in exactly the same boat. As things stand, the content of any report produced by the Audit Inspection Unit cannot be accessed by any audit committee. It follows that no audit committee could reasonably be criticised for failing to take account of what the Audit Inspection Unit did or did not say about the qualities of one or other of the audit firms. This state of affairs could not conceivably give rise to a justifiable concern on the part of individual audit committees that they will be attacked or criticised for not having done a proper job. Secondly, I very much doubt whether the form of any report produced by the AIU will be much use to any audit committee. A report tailor-made to the circumstances with which the audit committee is confronted might be more valuable, but there is no reason to suppose that reports take or will take any such form. Thirdly, it is worth thinking through the consequences of the independent supervisor being designated under Section 5 of the Freedom of Information Act 2000, which would be the effect of the amendment. Sections 36(2)(b) and (c) of that Act exempt information if its disclosure, "““would, or would be likely to, inhibit … the free and frank provision of advice, or … the free and frank exchange of views for the purposes of deliberation, or … would otherwise prejudice, or would be likely otherwise to prejudice, the effective conduct of public affairs””." Section 43(2) also provides an exemption if disclosure of information, "““would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it)””." The obvious implication of these provisions is that, for one reason or another, the requested information would simply not be forthcoming in any event, so there would be no practical purpose in making the designation. There is some danger that crossing the wires between the regulatory structure that we are trying to put in place in these provisions and the possibility of aggressive requests made under the Freedom of Information Act may give some satisfaction to the legal profession but may not do much for the public interest or for better auditing standards with which we should be concerned. Apart from anything else, I fear that we will end up with anodyne reporting in an area that demands forthright honesty and absolute frankness. I respectfully urge the noble Baroness not to press her amendment to a vote.