House of Commons
Wednesday 18 October 2006
The House met at half-past Eleven o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Before I answer my hon. Friend’s question, I am sure that the House will join me in remembering the 144 people, including 116 children, who lost their lives in the horrific Aberfan disaster 40 years ago this Saturday. Our thoughts will be with the relatives, the survivors, and indeed the whole community on this difficult occasion.
We take the problem of antisocial behaviour more seriously than any previous Government. The tough measures that we have introduced are stamping out this blight on our communities.
Antisocial behaviour has reduced in my constituency, but there are problems with local authorities not using the powers we have given them. The police have powers, but will my right hon. Friend use his influence to ensure that local authorities in Wales use the powers we have given them—for example, the provision of alley gates—to reduce antisocial behaviour,?
I agree that the antisocial behaviour legislation is not being applied with the vigour that we expect right across Wales, and it should be, both by the police, but particularly by local authorities, as my hon. Friend says. I saw a very good example of it being applied when I visited Llandudno Junction the other Friday, where a crack house has been closed down. While it was operating it was causing absolute devastation, blight and misery to neighbours in the area, many of whom were thinking of leaving their homes because they could not go out at night, their cars were being vandalised and their children were being threatened. That sort of thing must stop and we expect everybody to clamp down on it, as North Wales police and local councillors did so successfully there.
The Secretary of State will be aware of the success of community support officers as the visible sign of authority in some communities. Will he make representations to the Home Office and to the Assembly to ensure that there is a roll out of community support officers, who have been so successful in Llandrindod Wells in tackling this terrible problem but do not yet operate in Ystradgynlais, from where I receive a continuous stream of complaints about the quality of life being disrupted by antisocial behaviour?
I very much agree with the hon. Gentleman on the importance of community support officers. That is why we have recruited 271 in Wales alone over the past few years, rising to 740 by next April and to 1,100 the year after, so a tremendous stream of important community support is becoming available. I hope that the Liberal Democrats will not only back the Government on the issue, but support us on antisocial behaviour measures, which they have voted against every time they have been brought before the House. They say a different thing locally, but we are used to that with the Liberal Democrats, are we not?
Does my right hon. Friend agree that one of the best ways of countering antisocial behaviour is to celebrate the achievements of young people? Yesterday, I was at the Royal Albert hall where three of my young constituents, Leah Young, James Taylor and Anthony Llewellyn of Glanafan comprehensive school, were finalists in the Young Brits at Art awards. Will my right hon. Friend join me in congratulating them and their excellent school on this achievement, and the Commission for Racial Equality on this fine initiative, which will help to build social cohesion and citizenship in our communities?
I join my hon. Friend in congratulating Glanafan school, which is indeed a fine school, among many others across Wales under our Labour Government, and the Commission for Racial Equality on this important initiative. Antisocial behaviour involves a tiny minority of young people. They are incredibly disruptive and they have to be dealt with, but the great majority of young people in Wales make us proud.
As you can see, Mr. Speaker, I am here in the absence of my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan), who unfortunately is ill and in hospital. However, I am glad to say that I have spoken to her today; she is on the mend and she hopes to be here this time next month.
The Secretary of State will be aware that the probation service is one of the many agencies involved in dealing with antisocial behaviour and its associated crimes. Does he agree that since such offences are of an inherently localised nature, it is important that the probation service in Wales should continue to be organised on a localised basis? Will he resist proposals that might result in the administration of the service being organised from across the English border?
I welcome the hon. Gentleman to the Dispatch Box and express my sympathy for the hon. Lady. I phoned her yesterday to speak to her in hospital, and I, along with all hon. Members, wish her all the best.
On probation officers, we must ensure that we get the changes right, and we will do so. On antisocial behaviour, which is the subject of the question, the Conservatives voted against our policies to crack down on disorderly drinking and to introduce new powers for local authorities.
Aid to Africa
My right hon. Friend the Secretary of State and I are pleased to have regular discussions with ministerial colleagues on a range of issues, including co-operation with the Welsh Assembly Government.
My hon. Friend is well aware of the strong links between Wales and Africa, particularly among schools, hospitals and voluntary bodies. In my constituency, there are links between Cathays high school and Lesotho and Whitchurch high school and South Africa. Does my hon. Friend agree that such links contribute greatly to the professional development of teachers, broaden children’s horizons and benefit everybody involved?
Yes, I do. The Welsh Assembly Government launched their international sustainable development framework two weeks ago, and the launch was attended by my right hon. Friend the Secretary of State for International Development, who said that UK aid now helps to lift more than 5,000 people a day out of poverty. My right hon. Friend also welcomed the Welsh Assembly Government’s announcement that they are strengthening their contribution to reducing poverty in Africa by providing support in humanitarian emergencies and by encouraging the exchange of skills between hospitals and schools, to which my hon. Friend has referred, in Wales and Africa—an initiative that makes a real difference to the lives of poor families. It is worth noting that by next year the UK aid budget will have tripled. We have led the campaign across the world on debt relief and debt cancellation, and this is part of that package. That contrasts greatly with the cuts made by the Conservative Government in their 18 years in power, when they effectively halved the aid budget in real terms.
Despite the fact that manufacturing in Wales, as elsewhere, continues to face huge competitive threats from low-cost countries, it accounts for some 20 per cent. of total Welsh economic output, and we continue to attract high-level investment.
Given this Government’s appallingly dismal record on defending the Welsh manufacturing sector, including the loss of another 3,000 jobs in the past six months alone, is the Secretary of State concerned to read the report by Morgan Stanley that Tata Steel, which yesterday announced its bid for Corus, plans to shift the production of steel slab from Port Talbot to India with the potential loss of thousands of jobs in south Wales?
I am astonished that the hon. Gentleman describes our record on the Welsh economy as “dismal”, when there are record numbers of jobs and when Welsh manufacturing is doing better than manufacturing elsewhere in the United Kingdom. New companies are coming in—for example, G24 Innovations has announced that it will create 300 jobs in Cardiff through its £60 million investment—and more jobs are being created in high-tech manufacturing all the time. Yes, low-cost manufacturing is disappearing to low-cost countries. Tata Steel is a huge Indian conglomerate, and the implications of its bid are not clear. I understand that it wants to invest in steel in the United Kingdom and to take advantage of the enormous growth in India by producing steel, including in Wales.
May I draw my right hon. Friend’s attention to early-day motion 2775, which has been signed by many Labour Members and which acknowledges the importance of Airbus to the UK economy? Airbus provides high quality employment in Wales: will my right hon. Friend work with Department of Trade and Industry Ministers to ensure that the next generation of composite wings are designed and built in the UK and not in Germany or Spain?
We will work tirelessly with my hon. Friend to ensure that that is achieved. I am sure that the whole House will join me in paying tribute to his continued work and effort on behalf of Airbus, which is an excellent company that has a site at Broughton in his constituency. There are now 20,000 highly skilled jobs in the aerospace industry in Wales. They contribute £1 billion to the Welsh economy, the great bulk of which comes from Airbus at Broughton. The Prime Minister has visited Broughton, and we will continue to support Airbus.
Does the Secretary of State agree that Wales could lead the world in environmentally sustainable manufacturing jobs through technologies such as geothermal, wind, tidal, hydrogen and solar power? Does he join me in applauding firms such as Dulas in Machynlleth and G24 Innovations, which he mentioned, in Cardiff, which will lead the way in clean energy for homes and businesses? Will he agree to meet a cross-sector delegation to hear manufacturers’ proposals for an eco-strategy to make Wales a global leader in green and renewable technologies?
I, or my hon. Friend the Under-Secretary, will certainly be pleased to receive a delegation, because this is a vital subject. My hon. Friend visited Dulas and was hugely impressed with the company. I completely agree with the hon. Gentleman, as does Andrew Davies, the Minister with responsibility for economic development. Wales is a centre of clean, green energy production, as well as use.
I very much welcome the creation of 300 jobs near Cardiff in a very exciting new solar energy product, but what discussions has the Secretary of State had with colleagues in the Welsh Assembly Government about the use of initiatives such as Technium in Llanelli to ensure that investment in quality jobs reaches west Wales?
It is imperative that the enormous growth and prosperity that has been generated in south-east Wales, especially in Cardiff and Newport, spreads westward, including to Neath, but not least to Llanelli. There have been big examples of that happening recently. The Technium innovation is hugely successful in Swansea, and it will be in Llanelli, too, with the Government’s support.
The Secretary of State says that we should be happy about the fact that there is a higher percentage of manufacturing jobs in Wales than in the rest of the UK, yet that has always been the case, although the percentage was a lot higher nine years ago than it is today. How many more manufacturing jobs are going to be lost in Wales before the Government finally get a strategy to protect them?
The fact that high-tech manufacturing jobs are coming in, and the fact that companies I have visited such as Sharp in Wrexham and International Rectifier in Newport are investing more and have high-quality, long-term jobs, shows that there is an enormous strength in manufacturing. It is a bit rich for the hon. Gentleman to complain about changes in manufacturing jobs given that 100,000 of them were murdered under the Conservative Government whom he supported.
It goes without saying that a strong, modern manufacturing industry in Wales requires a high-quality skills base. What progress is my right hon. Friend making in bringing the defence training academy—a skills training academy—to St. Athan in the Vale of Glamorgan?
The Secretary of State will be aware that last July his colleague, the Secretary of State for Trade and Industry, said that on the sale of BAE Systems’ interest in Airbus the Government would be given a guarantee that Britain would have a role in future aircraft development. Given that last Friday BAE disposed of its interest in Airbus, can the Secretary of State confirm that under the terms of that guarantee Britain’s place in the future of Airbus and the 6,000 jobs at Broughton are secure?
In fact, there are more high-quality jobs at Broughton. The Broughton centre is the biggest and most successful manufacturing centre anywhere in the European Union, let alone in the United Kingdom. We believe that its future will be secure under a Labour Government—who knows what it will be under a Tory Government?
EU Structural Funds
I am sure that the Secretary of State agrees that the objective 1 programme for west Wales and the valleys has been successful, drawing praise from the European Commission and others. However, does he also agree that, when we look to the future and the convergence programme, we need a strategic approach to the allocation of funds to have the greatest possible effect?
I agree. Wales’s objective 1 programme has been rated the best in Europe and we need to ensure that it continues to have that effect. It is interesting that increases in earnings and jobs since its operation in west Wales and the valleys are greater than the Welsh and English averages. That is an incredible achievement for areas that suffered such blight and were devastated under the Tories. Objective 1 funding has brought growth, prosperity and hope to west Wales and the valleys.
May I press the Secretary of State a little more on the timetable for the new round of convergence funding? He knows that the Welsh European Funding Office is currently giving advice to prospective applicants, but cannot give a precise date,
“as this is subject to the negotiation process with the EU Commission in late 2006, which may run into early 2007.”
Does he agree that there is a healthy impatience to get the matter resolved, not least because many projects are waiting in the pipeline? They include the development of renewable energies and energy efficiency, which fulfil some of the Lisbon criteria, and many small-scale community projects that do not. None the less, they all need the green light and cannot wait indefinitely.
We shall continue to take that forward as effectively as possible. We have shown in the past that we always deliver under objective 1, despite whingeing and sniping by Opposition Members. The Labour Government have delivered in Cardiff and Westminster. The proof is that, whereas the gross value added per head in west Wales and the valleys was falling before 2000 and the objective 1 programme, it now consistently keeps pace with the UK average. That is a genuine tribute to the effectiveness of our policies.
Will EU structural funds be used to protect jobs in the Rhondda? Two weeks ago, Burberry announced that it intends to close its factory in Treorchy just after Christmas. Yet only last week, it announced a record increase in retail sales of 27 per cent. in the past few months. Does the Secretary of State worry that British brands, which trade on their Britishness, undermine that brand by outsourcing to other countries and stopping their production in Britain?
I acknowledge the valiant fight that my hon. Friend, along with Leighton Andrews, Assembly Member for Rhondda, has put up on behalf of the Burberry workers. We shall continue to support their efforts to try to ensure that there is a future for the factory. However, competition and management decisions have clearly affected that. It is therefore important to continue to work together to ascertain what can be done.
I have regular meetings with the Assembly Minister for Health and Social Services covering a range of issues.
The Under-Secretary knows that the maternity wards at Llanidloes, Machynlleth, Tywyn, Newtown and Dolgellau are currently mothballed. Does he know that, at Bronglais district general hospital in Aberystwyth, there are moves not to provide 24/7 paediatric consultant cover? If that goes ahead, it means that Welsh babies will be born in Shrewsbury—we need Welsh babas to be born in Wales. Will the Under-Secretary therefore give me, the people of mid-Wales and visitors from Lichfield to mid-Wales an assurance that Bronglais will continue with 24/7 cover?
As a grandfather for the first time a year and a day ago, I understand the hon. Gentleman’s point and appreciate the need for specialist baby care units that are consultant led. A review is taking place and no decisions have yet been made. Indeed, a member of the review team has said that people should not assume that the consultant-led obstetric department will be removed from Bronglais hospital. I hope that that gives the hon. Gentleman and other hon. Members some assurance.
I hear what the Minister says about the presumption that the consultant-led service will not, after all, be moved from Aberystwyth. Does he realise, however, how vital that service is to the whole of mid-Wales? Tywyn hospital, for example, utterly depends on that outreach consultancy service. Will the Minister redouble his efforts, together with his colleagues in Cardiff, to ensure that the service continues, in the interest of the whole of mid-Wales, including south Meirionnydd?
I appreciate the hon. Gentleman’s point that the service covers an area far wider than just Aberystwyth. I recognise personally the importance of having consultant-led specialist baby care units to cover rural areas. We all recognise how difficult it is to provide such services, but the consultant-led service in Aberystwyth covers a very large rural area. I shall make the views of hon. Members on this matter known to Dr. Brian Gibbons.
We have recruited 1,000 extra police officers in Wales under our Labour Government; there were cuts in real terms to police resources in Wales when the Conservatives were last in power. It was right that we tried to identify the gap in protective services in Wales and elsewhere in order to fight terrorism, serious organised crime and drug dealing, and I had a very productive meeting with the Welsh police authorities only the other week in north Wales to try to take things further.
Community policing in Wrexham has improved markedly as a result of neighbourhood wardens, community support officers and police officers working together. Will my hon. Friend therefore please explain what on earth possessed the Lib Dem-led council in Wrexham to propose the scrapping of neighbourhood wardens? That proposal is being vehemently opposed by my constituents.
I never know what possesses Lib Dem councils anywhere, including Wrexham. They often cut services, including vital ones such as neighbourhood wardens, and thereby lose the respect that local people might otherwise have had for them. That is why we need a Labour council back in Wrexham as soon as possible.
My right hon. Friend and I have regular discussions with ministerial colleagues on all matters that affect Wales, and last week I had a meeting with my hon. Friend the Minister with responsibility for prisons.
I thank the Minister for that answer. Before the Welsh Affairs Committee’s investigation takes place, will he look into the question of custody for 17 and 18-year-olds—given that there are only 36 places for them in Wales, none of which is in mid-Wales or north Wales—so that he will be able to respond properly to the Committee’s investigation later in the Session?
I had some difficulty hearing what the hon. Gentleman was saying, but I understand that he was expressing concern about young people in prison. That is an issue that needs to be addressed, and I am sure that my right hon. Friend the Home Secretary was listening to his question. I know that the hon. Gentleman has raised the issue of the prison estate before and asked whether it would be possible to establish a prison in north Wales. Following my discussions with the Minister with responsibility for prisons, I can tell the hon. Gentleman that, if a suitable site can be identified in north Wales, the Home Office will give the matter very serious consideration. Perhaps he would like to contact the Minister directly if he has any sites to promote.
Will the Minister join me in congratulating the Parc Supporting Family Forum, which works with prisoners in Parc prison in my constituency to roll out programmes to prevent reoffending and to ensure that family links with prisoners are maintained? Will he also urge Bridgend county borough council—
I congratulate the organisation that is working so hard in my hon. Friend’s constituency. It is accepted that we need to maintain family links for prisoners, so that they improve their opportunities for rehabilitation and we prevent reoffending when they are discharged.
As the Minister is aware, all female Welsh prisoners are housed outside Wales. I have had a case recently of a female prisoner being held at Drake Hall—a great distance from her three children and her terminally ill husband. Given the importance of sustaining family relationships both to the successful reintegration of ex-offenders into our communities and to ensuring that children do not develop offending behaviour, what discussions has he had with the Home Office to improve the situation for female prisoners?
The Prime Minister was asked—
My local health staff have ensured that all cancer patients are seen within two weeks, and 97 per cent. are treated within the target 62 days. Will the Prime Minister therefore guarantee that those health staff receive the training, pay and pensions they deserve, unlike the Conservative party, which attacked the pay—
First, I would like to congratulate the staff in my hon. Friend’s constituency on having met the target. Of course, when we came to office, only about 60 per cent. of cancer patients were seen by a specialist within two weeks. That figure is now 99.9 per cent. for the whole country. Now, for the whole country, 97 per cent. of cancer patients are then treated within the 62 days—100 per cent. in her own area.
That is why it is important that we keep those national standards and targets for things such as cancer and cardiac care so that we ensure that we continue with the record that, in cancer alone, has saved more than 50,000 lives since 1997. For all those targets, there is a patient who has been helped to get care in circumstances where, a few years ago, they were not getting that care.
Last week, the Chief of the General Staff said on Iraq that
“the original intention was that we put in place a liberal democracy... I don’t think we are going to do that. I think we should aim for a lower ambition”.
The Prime Minister has never said that, so is it now Government policy?
No, our policy remains to ensure that Iraq continues as a democracy. We have a democracy in Iraq for the first time in that country’s history, and 70 per cent. of the people came out and voted in the election, which is an extraordinary achievement, despite all the terrorism and intimidation. What is more, they voted for a non-sectarian Government in which the Sunni, the Shi’a and the Kurds all work together. I believe that the maintenance of democracy is absolutely essential for us, in Iraq and in Afghanistan. I know it is difficult, but our task is to stand with the moderates in those countries against the extremists.
We all support the elected Government of Iraq and we all want to get the job done, but when the Prime Minister says we are going to get the job done, we need to know what he means. It is no use having him say one thing and the Chief of the General Staff another. Let us look at something else the Chief of the General Staff said on the “Today” programme:
“The point that I am trying to make is that the mere fact we are in some places, our presence there, exacerbates violence”.
Again, this is something the Prime Minister has never said. Is that now his view?
It is our policy to withdraw progressively from Iraq as the Iraqi forces are capable of taking on the security task. That is why it is important, when we are able to hand over to them, that we do so; otherwise we are a provocation rather than a help to them. That is why, earlier this year, we ceded control of al-Muthanna province, as there are now 5,000 Iraqi forces there doing that job. We are just withdrawing, or the Italians are, almost 3,000 forces from Dhi Qar province, where the Iraqis again will come in and do the job. We have already reduced our forces significantly over the past few years but, for example, we are working with the Iraqi forces to go through Basra part by part, making sure that we clean out the militia, put in place proper Iraqi security forces and undertake reconstruction. That is vital work, and I do not want to dismay our allies or hearten our enemies by suggesting that we will do anything other than stay until the job is done. I believe that it is a strength that there has been a bipartisan policy on this, and I hope that that is maintained.
My party supports what the troops are doing in Iraq—[Interruption.] Yes. We have never backed a premature timetable for withdrawal, but we want the Prime Minister to give frank, candid answers about the situation in Iraq. The problem is that the situation on the ground is difficult and unstable, but the message given to the British people is quite different. Will the Prime Minister give a guarantee that our objectives in Iraq, our troop numbers there and the progress that we are making—[Interruption.]
We will have to get used to the Chancellor’s boot boys shouting in Prime Minister’s questions.
When it comes to our objectives and troop numbers in Iraq, as well as the progress that we are making, will the Prime Minister give a guarantee of frank, candid and honest answers from the Dispatch Box in the House of Commons?
I hope that I have just explained very clearly what our strategy is. It is to withdraw progressively as the Iraqi forces build up their capability. For example, in the south of Iraq for the first time, there are 10,000 Iraqi troops who are trained to the fullest extent. They are very capable, and are doing an excellent job under the command of the Iraqi Army—[Interruption.] Yes, of course it is. As we are able to cede control, we do so, but to withdraw prematurely before the job is done would be disastrous.
There is a sense, because of the discussion in the past few days, that we have been sitting in government saying that there is no way in which we are going to withdraw and that we are going to stay there for ever. That has never been the case. May I quote to the right hon. Gentleman what I told the Liaison Committee just a few months ago? I said:
“I suspect over the next 18 months there will obviously be opportunities to draw down significant numbers of British troops because the capacity of the Iraqi forces will build up.”
I said it then, and I say it now. General Casey, who is in charge of the whole multinational force in Iraq, said back in August:
“I don’t have a date, but I can see over the next 12-18 months the Iraqi security forces progressing to a point where they can take on the security responsibilities for the country”.
That is the policy of ourselves and our allies—not just America, but the other 20 or so countries that are there. It is important that we send a signal to those people who are trying to wreck the chances of Iraqi democracy by killing innocent people. It is the self-same extremism that threatens our troops and Afghan civilians. There is terrorism in countries around the world, and the message that should go out from us and from this country is not just that we have enormous pride in our troops—we should have such pride in them—but that the policy of standing up and fighting those extremists abroad and at home is the right one, and there will be no quarter given to those who oppose us.
Recently, the British Nuclear Group was fined £500,000 after pleading guilty to the leak of 80,000 litres of spent nuclear fuel at Sellafield. Some 25 per cent. of British Energy’s share price was wiped out after it admitted to cracks in the boilers at Hunterston B and Hinkley Point, as well as underground leaks at Hartlepool. Will my right hon. Friend confirm that if, after all that, someone comes forward with a plan for a new fleet of nuclear power stations, the Government’s policy remains that there will be no further subsidy from the taxpayer?
Our policy remains exactly as is, and it is important that it does so. My hon. Friend’s point, however, is a perfectly good one. There are all those issues to do with replacing the existing generation of nuclear power stations. The reason the issue is on the agenda, as we can tell clearly from the launch earlier in the week of the Norwegian-British pipeline, is that, over the next few years, this country will go from being 80 to 90 per cent. self-sufficient in oil and gas to importing 80 to 90 per cent. Obviously, those are fossil fuels, and there is a danger that we will become increasingly dependent on imported supplies of energy. It is therefore right that we replace existing nuclear power stations. But of course all the points that my hon. Friend raises must be taken into consideration.
I cannot help making the observation that complaints about the Government’s policy over Iraq would be more acceptable from those who had opposed the policy in the first place. The Prime Minister’s answers, however, give an impression that is not borne out by events on the ground. The United Nations calculates that 3,000 Iraqi civilians are being killed every month. In those circumstances, how can the Prime Minister maintain that our presence is not, as General Dannatt told us, exacerbating the security situation?
It is correct that innocent civilians are dying in Iraq. But they are not being killed by British soldiers. They are being killed by terrorists and those from the outside who are supporting them, in defiance of the United Nations resolution that says the future of Iraq should be determined democratically by the Iraqi people. Whatever disagreement people have with the original decision on Iraq, I would have thought that we should all now support the United Nations and Iraqi Government position that we should stand up against the extremists and in favour of the democrats.
But surely we are entitled to question the strategy to which the Government are committed. Is it not clear that the opinions expressed by General Dannatt, Brigadier Butler, Senator John Warner and now James Baker lead to only one conclusion—that the Government’s strategy has failed? In those circumstances, the choice is stark: change the strategy or else get out.
I suspect that the right hon. and learned Gentleman believes that we should simply leave Iraq. That would be a mistake. Let me explain to him again that it is important to understand that if we desert the Iraqi Government now, when they are building up the Iraqi forces to take over security, it would be a gross dereliction of our duty to them. Incidentally, our mission in Basra, where, as we speak, British soldiers working alongside Iraqi forces have already gone through four of the 16 areas that are part of the process, is vital in restoring proper law and order to that city. If we got out now, when the job was not done, and simply deserted the situation, what good would that do, other than to ensure that those who support the extremists around the world gained heart from it? Of course, we should all debate the strategy, but the strategy is clear: progressively to withdraw as the Iraqi capability is put in place, and not to desert the democrats but to support them.
Does my right hon. Friend recall the days when Dover was suffering great difficulties coping with large numbers of illegal immigrants and asylum seekers? Does he recall the setting up of an induction centre and a detention centre in the town, and does he recall writing to my constituents:
“I am well aware of the strain that has been put on Dover…and how well the town has dealt with this. I also accept that Dover has suffered an unfair burden”?
With the Home Office now threatening to burden us with an open prison, in the most inappropriate site in the land, can he understand why Dover feels dumped on, and will he meet me to talk about my grave concerns?
I recall my hon. Friend representing so strongly the issues in relation to migration in Dover, and we were able to deal with that problem. I am happy to meet him and to try to deal with the problem that he now has. I entirely understand that local feelings are strong. I know that he has already met the Home Secretary, and I would also be happy to meet him to discuss the matter.
I think I can give that commitment. We have already committed some £38 million to victims’ groups since 1998, and spending currently stands at £5 million a year. I am aware of the excellent work being done by Bertha McDougall as victims commissioner, and I look forward to her final report. We will look positively at her recommendations for future funding and her suggestions for spending the money more effectively.
I also thank the hon. Gentleman and his colleagues for the constructive role that they played in the talks at St Andrews last week. I hope very much that the shared future of which I spoke from the Dispatch Box last week is somewhat further advanced now. I also hope that we can all continue to work closely to ensure that the institutions in Northern Ireland are up and running again, and that Northern Ireland’s future is secure.
First, let me praise my right hon. Friend for his work in raising awareness of the issue. I have not seen the game myself, but I know that both my hon. Friend the Minister responsible for creative industries, and my hon. Friend who is responsible for the video industry, would be happy to meet my right hon. Friend to discuss the issue. It is obviously important, and I know that there is a lot of concern about it.
I think it can be said that the video games industry, or at least a substantial section of it, has made significant advances over the past few years, but as my right hon. Friend says, it is important for that progress to be maintained.
Today thousands of postmasters and postmistresses are coming to London. Will the Prime Minister explain why we were promised a one-stop shop for Government services that was never introduced, why we were promised a Post Office card account which was introduced but is now under threat, and why the option of letting sub-post offices compete in new areas was never seriously considered? Will the Prime Minister guarantee that all those matters will be examined properly and urgently in the Government’s review?
We can certainly examine all the options. We should and we will. I hope, however, that the right hon. Gentleman will not tell post offices that he will spend even more money on Government subsidy than we are spending.
I might just point out that when we came to office nothing was really being done to support rural post offices. We have spent—[Interruption.] Let me give the facts; then I will explain what the difficulty is.
We have spent about £2 billion, and we are currently subsidising post offices to the tune of £150 million a year. I entirely understand why the issue is of concern to people—of course it is—but the reason there is a problem is that more and more people are using bank accounts rather than the post office. It is important to realise that there is a process of change that any Government would have to handle. Of course we will consider all the options, but what we will not be able to do is say that even more subsidy is available than the money that we are already putting in.
But the fact is that if decisions are not made urgently, there will be no post office network left to protect. Will the Prime Minister accept that 4 million people have card accounts, that they value those card accounts, and that those card accounts are a vital income stream for the Post Office? Does he not understand that scrapping them could be the last and a fatal blow to the post office network? Will he review the policy and keep the Post Office card account?
We are debating and considering the card account, but I must tell the right hon. Gentleman that some 98 per cent. of pensioners, and people who are becoming pensioners, choose payment into a bank account. The desire for the Post Office card account is actually declining. I am afraid that, on any basis, there is a limit to the amount of money that we can put in. That is particularly so on a day when, apparently, the shadow Chancellor is about to promise £4.7 billion worth of cuts in stamp duty on share dealing. He cannot promise to spend more money on the health service, more money on defence, more money on post offices and more money on rural services, and then promise tax cuts that simply cannot be affordable.
My hon. Friend makes a very important point about the DNA database. The police are now matching about 3,000 offences a month and literally hundreds of murders, manslaughters, rapes and other serious offences have been solved as a result of that database. The Conservative party was opposed to it on the basis that it transgressed people’s civil liberties, but it is important to build up the DNA database, which provides a vital way of fighting crime in the modern world. If people are serious about fighting crime, they cannot allege that we are not doing enough and then oppose the very measures necessary to do it.
I am certainly happy to facilitate a meeting with the Minister with responsibility for air ambulances and I pay tribute, of course, to the work that they do. For the last four years or so, the NHS has reduced the burden on all air ambulance charities by meeting the cost of the paramedics who staff the ambulances. I have to say that I am not aware of any bar to the air ambulance services applying for funding and I am happy for the issue to be discussed. The lottery has awarded some £300,000 to mountain rescue and other services in previous years. I totally understand what the hon. Gentleman is saying and it is important to do our best for air ambulance services. If he has a meeting with the Minister, I will look carefully at its outcome myself.
Strangely enough, I am aware of the results in Grimethorpe and they are indeed excellent results. I congratulate all the schools in my hon. Friend’s constituency and the local authority in Barnsley that has done such a superb job. That achievement has been repeated throughout the country, as we have seen the best ever school results. We have moved from a position in which many authorities had a 30 per cent. or lower average of five good GCSEs to one in which we are now ensuring that they are all above 40 per cent. Real improvements are happening in schools up and down the country. It is a wonderful tribute to teachers, staff, pupils and parents, and also to the record investment and reform that the Government have provided.
When the servicemen and women of other nations are exposed to injury, they are given the best possible medical treatment, often in military hospitals, whereas ours are handed over to the national health service. Does the Prime Minister recognise that moving Defence Medical Services to Birmingham has not worked and will not work in future? Will he yield to overwhelming pressure indicating that our only military hospital, the Haslar hospital in Gosport, should be retained?
I simply do not agree with the hon. Gentleman at all. First, I pay tribute to the work that is done by Defence Medical Services and to the work that the NHS is doing in looking after those soldiers who are injured.
As there has been a lot of discussion about Selly Oak hospital in the news in the past few days, I should at least give it the chance to respond. It has issued a statement that has not been particularly well covered, but I would like to quote from two parts of it. It says:
“In the main, the articles”—
in the media—
“ are inaccurate, unbalanced, ill-informed and unsubstantiated.”
That is not exactly surprising, but it goes on to say:
“On no occasion has the Trust been approached to comment on any of the allegations. There have been reports of an alleged Muslim visitor verbally abusing a paratrooper at Selly Oak Hospital. Neither the Trust, nor the Ministry of Defence, has any formal or anecdotal reports or evidence that this alleged incident took place.”
The statement adds that patients are getting an excellent standard of care and there are no complaints either from the patients themselves or from those who are charged with looking after them.
I have said—I believe it is right—that it is important that our soldiers, particularly those who are wounded in battle, are looked after to the best possible extent. The use that is made of NHS specialist services is important in that. Those soldiers should be in an environment in which they feel comfortable, and we will look to make sure that that is the case. But I think that it would be quite wrong of people to criticise the national health service for the way in which it has looked after these people, because I know that the staff are doing their level best in difficult circumstances.
My hon. Friend is absolutely right to say that the latest figures show that £85 billion worth of direct foreign investment came into Britain last year, making it the most popular destination in the world ahead of both the United States and China. We have had the strongest economic growth, low inflation, high employment and low unemployment. The Organisation for Economic Co-operation and Development has said:
“over the last decade has been a paragon of stability.”
That is a Labour Government delivering a strong economy after the years of boom and bust and depression under the Tories.
The Prime Minister will be aware of the case of the Leeds man, Mirza Tahir Hussein, who is to be executed in Pakistan on 1 November following a legal process that can only be described as deeply flawed. The Prime Minister will also be aware of the proposed royal visit of Prince Charles and the Duchess of Cornwall, who will be in Pakistan at the same time. Does the Prime Minister agree that the royal visit should not go ahead if the Pakistani authorities intend to carry out this gross miscarriage of justice? Will he also tell the House what he intends to do before that time to persuade President Musharraf to use the powers he has to overturn and resolve this difficult situation?
If the hon. Gentleman will forgive me, I will not comment on the royal visit. However, I will say that we have raised this case constantly with the Pakistani authorities and I raised it personally with President Musharraf when he was here a couple of weeks ago. I hope, even at this stage, that there is an intervention to ensure that this does not take place; it would be very serious if it did. There is a limit to what the President can do, but I hope that he can use his powers, and we will continue to make representations right up until the last moment. I can assure the hon. Gentleman of that, because we have raised the case on many occasions for all the reasons that are well known.
The point that my hon. Friend makes is absolutely right, and we will look at those recommendations—we are looking at them very carefully—and, obviously, we will want to implement them. Citizenship is relatively new; it has come on to the curriculum only over the past few years. But my hon. Friend is right to stress its importance, and in view of the debates that are happening at present about how people better integrate into our society and how people become more responsible citizens, citizenship is an absolutely central part of teaching in school. It is important that we improve the quality of it, and that we make sure that, where classes are inadequate, they are substantially improved.
Now that the National Audit Office has laid bare the chaos of the Rural Payments Agency, and given the potential fine of £141 million by the European Union because of the inaccuracies, plus the fact that the then Secretary of State was warned in June 2005 that the project was off course and yet did nothing, what sort of Government do we have that keep the then chief executive on full pay six months after he was sacked, and promote the responsible Minister to Foreign Secretary?
First, as we have said on many occasions, we are sorry for the delays that there have been. Now, 97 per cent. of farmers have received full or partial payments. The Rural Payments Agency is in contact with the remaining high-value cases, and it is working to pay the remaining claims as soon as possible.
I totally understand the point that my hon. Friend makes, but it is just worth pointing out that we have substantially increased investment in social housing; not all of it is provided in the traditional way, but we will continue to do that. It is only as a result of this Government actually putting the money into social housing when we came to office that, for example, many elderly people—[Interruption.] Well, there was no support for elderly people in social housing before this Government came to power. We are now spending about £2 billion on that. That is investment that this Government put into social housing, and the Conservatives voted against.
Liability for Suicide
I beg to move,
That leave be given to bring in a Bill to make provision about liability for suicide; and for connected purposes.
May I say how pleased I am to see that the Leader of the Opposition, my right hon. Friend the Member for Witney (Mr. Cameron), is in his place to listen to my argument? I know how strongly he feels about this subject.
I wonder how many Members realise the extent of domestic abuse in this country. Let me give some figures. One in four women in Britain are abused in some form or another. More particularly, one in nine suffer physical abuse on a regular basis, and, worse, every week two women are killed as a result of such abuse.
When I first discovered those figures, I was absolutely horrified. That happened as a result of my involvement with the Centre for Social Justice. I had discussions with Sandra Horley of Refuge, who explained the full extent of such abuse to me. I pay tribute to Refuge for the remarkable work that it does in helping those who have been, or are being, abused, and in particular to Sandra Horley, the chief executive, whose energy and commitment is phenomenal.
I urge the Government to think positively about including an offence of liability for suicide in any new legislation, and also carefully to consider expanding the definition of diminished responsibility so that it includes a proper recognition of psychological injury. That would allow the courts properly to take account of a broader range of psychological impacts on victims of abuse.
Research undertaken in the UK and abroad demonstrates that there is a causal link between attempted or completed suicide and concurrent experience of domestic violence. In 2000, UK statistics showed that between 30 and 40 per cent. of female suicides were committed by those who had been subjected to domestic violence. In the United States, research has shown that there is a temporal connection between suicide attempts and hospital treatment for injuries resulting from domestic violence. Importantly, this research went on to show that, of the victims of domestic violence who had attempted suicide, nearly 70 per cent. had done so within six months of hospital treatment, and, staggeringly, that nearly 40 per cent. had done so on the same day, after discharge.
Let me illustrate all this by outlining the recent case of Mrs. Gurjit Dhaliwal, who hanged herself at the family home in Southall, west London, on 22 February 2005. Mrs. Dhaliwal’s brother, Nav Jagpal—I understand that he is here today—said that he and his family had watched helplessly while his sister had suffered abuse over a sustained period, going back to 1979. Mrs. Dhaliwal had temporarily left her husband on a number of occasions because of the abuse; however, each time she returned. When the police found her after the suicide, they noticed that she had fresh cuts to her forehead, and they also discovered on searching the house a journal that she had kept over the last five months of her life, in which she harrowingly alleged physical and emotional abuse by her husband. In fact, Mr. Dhaliwal even admitted on questioning that he had hit her on the evening that she died. Because of that admission, the Crown Prosecution Service decided to proceed against Mr. Dhaliwal on a charge of manslaughter, on the basis that this behaviour caused his wife to kill herself.
It might assist the House if I try to explain some of the incredible twists and turns necessary under existing English law in trying to prosecute this case. There are various routes to achieving a verdict of manslaughter. In this case, the CPS tried to prove that the defendant had done something “unlawful” and “dangerous” that had caused Mrs Dhaliwal’s death. However, as a foundation for such a charge of an unlawful act in English law, a prosecution has ultimately to prove that the act or those acts caused, or contributed significantly to causing, the death of the deceased.
To do that, the prosecution had to use a definition established in an Act of Parliament passed in 1861, together with more recent case law equating “psychiatric injury” with bodily harm, the proposition being that Mrs. Dhaliwal had suffered psychiatric injury as a result of this pattern of domestic violence, and that that amounted to bodily harm in the meaning of the legislation—a complicated scenario. Interestingly, on the evidence of a number of experts, who disagreed throughout the case, the court had to rule that Mrs. Dhaliwal had suffered psychological injury, but because that fell short of “psychiatric injury”, it did not amount to the bodily harm definition necessary according to the law.
Let me quote what the Court of Appeal judge, Judge Roberts QC, said in summing up:
“It is very hard not to see some connection between the incident of violence which appears to have taken place shortly before and her death.”
However, it was ruled that under the Offences Against the Person Act 1861, it was not possible to stretch the definition of psychological injury so that it could count as bodily harm. Recognising the problem, the Court of Appeal said that it would be more satisfactory if the law provided a less convoluted route in a manslaughter conviction in cases of this kind. The following is the most apposite quote from the judge:
“I would have thought there was some force in the argument that the ‘last straw’ played a significant part in causing her death”.
I would add that in fact, that is common sense. Surely there is hardly anybody in this Chamber or among the general public who has not long believed that there are often connections between suicide and things that have gone on before.
Refuge’s recent experience of supporting Mr. Nav Jagpal in the case of his sister, Mrs. Dhaliwal, and of other cases, has led it to believe that the law as it stands offers little or no justice to such women, or to the families whom they leave behind.
I know what the House will say. Many will say that hard cases make bad laws, but I am not trying to persuade the House or the Government to change the law simply because of one case. It is not an isolated case. I offer up this case because it is such a high-profile example of what Refuge and many other campaigners believe is a failure of natural justice. It is absurd to have to rely on an Act that was passed in 1861, before psychiatry was even born and before the link between physical and mental trauma was fully appreciated. That position is supported by a number of national newspapers, including The Sun and The Times, which featured articles on this matter.
Surely the law should recognise that there are some assaults that, taken in isolation, may not appear to be life threatening, but which, when combined with a pattern of behaviour over a period of time, could result directly in the victim taking their own life. Abuse is not just about the physical effect. Someone who is regularly attacked suffers psychological problems, and that psychological damage can ultimately be more harmful than the individual and often isolated instances of physical abuse.
I know that it is tempting for someone listening to this speech to say that they do not understand what the problem is, and that someone being abused should just leave. I suppose that in a simplistic and perfect world that would be the case every time, but I am afraid that the world is not that simple, and the situation is much more complex than that. Far too many victims of abuse make qualified decisions to stay with their abuser because they cannot leave. Perhaps the fear of leaving their children behind is part of that, or the fear of having no one to turn to and no place to go, or the absence of any money. Perhaps most of all, there is the fear that should they fail to get away cleanly, the abuse that they will suffer on their return will be much greater.
Domestic violence is a major problem—in some cases, possibly because of changes to the way in which people live today, with more single women bringing up children on their own. However, domestic abuse is also found in what appear to be some of the most stable households. The key point that we should all admit and accept is that we must never make any excuse for the abuser. Abusers have no excuse. Their abuse is their responsibility, and they should face the consequences of that abuse. That is why I ask the Government to help us and the House genuinely to consider this motion for a new law of liability for suicide. We should not have to watch as any further cases collapse because the abuser’s victim is dead and thus unable to testify. After all, even in financial terms, domestic violence is estimated to cost the country at least £23 billion a year.
I will leave the House not with my words, but with those of Mrs. Dhaliwal’s brother, Nav Jagpal, who has campaigned strongly on this matter. After the failed attempt to prosecute, he said:
“it is unbelievable that we are allowing this kind of thing to happen all over the country.”
He concluded, movingly:
“I could not save Gurjit but I will not let her death be in vain.”
Question put and agreed to.
Bill ordered to be brought in by Mr. Iain Duncan Smith, Mrs. Claire Curtis-Thomas, Mrs. Nadine Dorries, Dr. Liam Fox, Mrs. Louise Ellman, Lembit Öpik, Justine Greening, Mr. Edward Vaizey and Jim Dobbin.
Liability for suicide
Mr. Iain Duncan Smith accordingly presented a Bill to make provision about liability for suicide; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 20 October, and to be printed [Bill 229].
Orders of the Day
Companies Bill [Lords]
[2nd Allotted Day]
[Relevant document: The Twenty-eighth Report from the Joint Committee on Human Rights, Session 2005-06, Legislative Scrutiny: Fourteenth Progress Report, HC 1626.]
As amended in the Standing Committee, further considered.
New Clause 1
Contents of directors’ report: business review (No. 2)
‘(1) Unless the company is subject to the small companies’ regime, the directors’ report must contain a business review.
(2) The purposes of the business review are to inform members of the company, help them assess how the directors have performed their duty under section 173 (duty to promote the success of the company), and assist potential investors to decide whether to invest in the company.
(3) The business review must contain—
(a) a fair review of the company’s business, and
(b) a description of the principal risks and uncertainties facing the company.
(4) The review required is a balanced and comprehensive analysis of—
(a) the development and performance of the company’s business during the financial year, and
(b) the position of the company’s business at the end of that year,
consistent with the size and complexity of the business.
(5) The business review must, in a manner consistent with the size and complexity of the company, include—
(a) the main trends and factors likely to affect the future development, performance and position of the company’s business, and
(b) information about—
(i) environmental matters (including the impact of the company’s business on the environment),
(ii) the company’s employees,
(iii) social and community issues, and
(iv) persons with whom the company has contractual or other arrangements which are essential to the business of the company,
including information about any policies of the company in relation to those matters and the effectiveness of those policies.
If the review does not contain information of each kind mentioned in paragraph (b)(i), (ii), (iii) and (iv), it must state which of those kinds of information it does not contain.
(6) The review must, in a manner consistent with the size and complexity of the company, include—
(a) analysis using financial key performance indicators, and
(b) where appropriate, analysis using other key performance indicators, including information relating to environmental matters, employee matters, supplier matters and social and community issues.
“Key performance indicators” means factors by reference to which the development, performance or position of the company’s business can be measured effectively.
(7) The review must, where appropriate, include references to, and additional explanations of, amounts included in the company’s annual accounts.
(8) In relation to a group directors’ report this section has effect as if the references to the company were references to the company and its subsidiary undertakings included in the consolidation.
(9) Nothing in this section requires the disclosure of information about impending developments or matters in the course of negotiation if the disclosure would, in the opinion of the directors, be seriously prejudicial to the interests of the company.’.—[Jon Trickett.]
Brought up, and read the First time.
With this it will be convenient to discuss the following:
Amendment (a) to the proposed new clause, at end of subsection (2), insert
‘and potential customers to decide whether to purchase the company’s goods or services.’.
New clause 2—Reporting standards—
‘(1) A business review must—
(a) state whether it has been prepared in accordance with relevant reporting standards, and
(b) contain particulars of, and reasons for, any departure from such standards.
(2) In this section, “reporting standards” means statements of standard reporting practice which the Secretary of State shall ensure are issued and which—
(a) relate to business reviews, and
(b) shall be issued by a body or bodies specified in an order made by the Secretary of State.
(3) References in this section to relevant reporting standards, in relation to a company’s business review, are to such standards as are, in accordance with their terms, applicable to the company’s circumstances and to the review.
(4) Where or the extent that the directors of a company have complied with a reporting standard, they are presumed (unless the contrary is proved) to have complied with the corresponding requirements of this Part relating to the contents of a business review.’.
New clause 75—Requirement for audit of business review—
‘The auditors must state in their report—
(a) whether in their opinion the information given in the business review for the financial year for which the annual accounts are prepared is consistent with those accounts; and
(b) whether any matters have come to their attention, in the performance of their functions as auditors of the company, which in their opinion are inconsistent with the information given in the business review.’.
Amendment No. 1, page 196, line 30, leave out clause 423.
Amendment No. 760, in clause 423, page 197, line 2, leave out
‘In the case of a quoted company’.
Government amendments Nos. 821 and 822.
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 proposal 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 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 measure, 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 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.
In the course of his compelling speech, my hon. Friend has mentioned Tesco, which is a quoted company and would therefore be covered by the business review requirement, as would Sainsbury. Asda, however, as a subsidiary of Wal-Mart, is not quoted on the stock exchange and is not covered by that requirement. New clause 1 is an attempt to correct that.
My hon. Friend is right. Asda is part of the Wal-Mart group, which, it is alleged, employs teams based at its headquarters in the United States to break trade unions. Such activities cannot be justified. We have seen little of that in the United Kingdom, but it is part of Wal-Mart’s corporate strategy. Even more worrying is the allegation that the Wal-Mart group of companies receives supplies from thousands of factories in the People’s Republic of China that pay workers 13 cents an hour, when the minimum wage in China is 31 cents an hour. It is probable that many of those commodities are entering the United Kingdom via Asda. It has been put to me that, as part of an American corporation, Asda cannot be covered by the legislation, but I have checked and found that Asda’s corporate headquarters remain registered in the United Kingdom. I suggest to the Minister that Asda may well be covered by UK legislation.
As my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) has illustrated, many companies that have a huge impact on our social and ecological environment will be excluded from the Bill. This morning, I obtained a list of the top 10 private companies. John Lewis Partnership is owned by its employees. It is a model company that reports regularly on its social impact, but although it employs 63,000 people in the UK and has a turnover of £5 billion, the company will not be required to report under the Bill if new clause 1 is not added. If I was in charge of Tesco or another retailer and I was told that my company, because it is listed, will have to report, but my competitors—John Lewis Partnership or Asda—will not, because they are private companies or wholly owned subsidiaries, I would say that the playing field is not level.
No logical intellectual case can be made for excluding larger private companies or subsidiaries that are registered in the UK. Littlewoods, which has 29,000 employees, will be excluded, as will another private company, John Swire and Sons, which has 76,000 employees. The case for requiring those companies to produce a business review is overwhelming. I understand that the Government had to draw a boundary somewhere, but I believe that we could extend the requirement beyond the 1,300 listed companies. The new clause would do that.
In new clause 1, I suggest that medium-sized companies should also be included. Why should such companies be excluded? A medium-sized company is, by definition, quite a large operation: it may have a turnover of tens of millions of pounds and 250 or more employees. Such companies are significant players. I would like to hear the Minister’s explanation of why the boundary was drawn where it was. If the Government accept new clause 1, the number of companies covered by the requirement to produce business reviews will increase from 1,300 to 36,000. That is a modest extension, given the fact that there are 4 million companies in the UK.
The new clause would also correct some of the anomalies that will be thrown up by the Bill. We have discussed the retail sector and the anomaly that some retailers will have to produce business reviews but other, perhaps larger, companies will not. It is anomalous that Virgin will not have to produce a business review. The company claims to be environmentally sound—that is what Richard Branson regularly tells us and it is part of the image that he projects for his company, and I have no reason to doubt it. However, Virgin will not have to produce a business review, whereas British Airways will. How can it be right to have such an uneven playing field for the two companies, simply because of the definition set out in the Bill? Another excluded group of companies consists of those listed on the alternative investment market. Many companies with an AIM listing have a significant impact on our society and on the environment. It cannot be right that companies listed on the London stock exchange will have to produce a business review, but those on AIM will not.
The second proposal in new clause 1 deals with supplier issues. There will probably be further debate about that, because the Minister has tabled her own amendment. I notice the expressions of what I regard as phoney outrage by the CBI in this morning’s newspapers. That is unfortunate because the proposal is modest. If a corporation is to produce a business review that comments on those aspects of its activities that have an impact on the rest of society and on the environment, to exclude the supply chain would vastly diminish the amount of reporting required of the company. We are strongly in favour of the supply chain being included.
It is often said that some of the supermarkets operating in the UK, which are increasingly dominant on the high street and elsewhere, use methods that have an oppressive effect on the agricultural sector in the UK and beyond. It is regularly argued that workers are being brought in from eastern Europe to produce agricultural products—strawberries, potatoes and so on—under the most appalling conditions. They are employed not by Asda, Tesco or other supermarkets directly, but by suppliers. If the supply chain were brought within the remit of the Bill, it is arguable that horrific arrangements such as that of the cockle pickers and the gangmasters would be exposed at a much earlier stage, rather than in the tragic way in which that situation emerged. Supply issues are important, and it is good to see that the Government have reflected on the matter.
I strongly support any effort to ensure that supplier relationships are incorporated in the Bill. Can the hon. Gentleman expand on the challenges that that presents? Suppliers are complaining, anonymously of course, that there are overriders, lack of written contracts, many short-term changes and return of goods on rather questionable bases. Many of those suppliers fear the consequences of having such matters too publicly and transparently debated. Will the hon. Gentleman explain how suppliers would be protected by the measure?
I thank the hon. Gentleman for raising that important point. The dominant market position that certain companies secure in their own sector could be used to the disadvantage of those further down the supply chain, often smaller companies living hand to mouth. Anyone who, like me, seems unable to sleep the night through and listens to “Farming Today”, an excellent programme at 5.45 am on the BBC, will regularly hear farmers speaking anonymously. I never thought I would be an advocate for the farming community, but it is interesting to hear people further down the supply chain objecting to the techniques being used by the retail sector—by the large supermarkets—to drive down the conditions in which their suppliers are working.
We know that many companies are moving their production overseas. Several clothing factories have closed in my constituency. The company that owned the factory remains and continues to supply retailers, but the production has moved overseas, largely to take advantage of what the company would regard as favourable labour conditions overseas, which probably means poverty wages and extremely poor contractual standards in respect of employment law.
If we were to secure a more balanced relationship in the supply chain, with longer-term relationships and more balanced ones too, that would benefit not only the rest of society and the work force, but the larger companies, which would reveal the suppliers of materials to them. In the long term business should operate through secure relationships down the supply chain. That would obviously create a good business environment.
I said earlier that the cries of outrage in many of the newspapers this morning sounded somewhat phoney. I notice that the much lamented operating and financial review, which some months ago got lost somewhere along the line, included supply chain issues. Many companies that belong to the CBI and are part of the corporate world had already begun to include supply chain issues—stronger issues than my right hon. Friend the Minister is proposing. The CBI should not be expressing outrage at such a modest proposal. Many in the corporate sector had already adapted to it, and it would create more harmonious economic relationships down the supply chain.
There is a third issue in the new clause—materiality, which I shall try to explain. The business review requires directors to report to shareholders on matters that are directly material to the company’s narrow financial health. It is accepted that companies seek to maximise the return to their shareholders, and that that is how the system works. However, it is possible to take a slightly longer-term view than the return of profit in the here and now. A company’s actions in the medium to longer term could be damaging to the company itself.
An example is oil production in the Niger delta, which I mentioned a few moments ago. In the end, if the company continues to break Nigerian law, damage the local environment and exploit local people, it will not be in the company’s interests. Eventually, Nigeria will turn against the company. New clause 1 suggests a more relaxed version of materiality—what is material to the company’s operation—than the version in the Bill. It will be interesting to hear the Government’s arguments for suggesting such a narrow definition, rather than a slightly wider one.
I have tried to provide a philosophical explanation of the current position and the Bill, which I warmly welcome, and to suggest how, without changing the world fundamentally, the Government might move the business review forward. Shareholders are unable to judge what is in the interests of the company if the business review is not made available to them. I would argue for a wider definition of that group.
I began my comments by referring to the right hon. Member for Witney and quoting some of his comments, which I found amusing. I shall conclude with his remarks to The Sunday Times on 7 May. He said:
“I’m not prepared to turn a blind eye if the system sometimes leaves casualties in its wake.”
He went on to say:
“Unless shortcomings are addressed, the entire system risks falling into disrepute.”
I rather think he is speaking about capitalism. It is not a word or a concept that we often use in this place. For the moment at least, we are not challenging the entire capitalist system.
That is a debate for later—in the bar, probably.
I simply say that it is clear that if the corporate sector fails to move with the times, if private power insists on remaining secretive and lacking in transparency, when danger occurs, individual companies, and perhaps even the entire system, will fall into disrepute.
It is a great pleasure to be at the Dispatch Box for the first time, although, I have to accept, after today, possibly the last. I am pleased to speak for the Opposition on this part of the Bill, although it is not exactly as I had expected. My understanding was that an Opposition spokesman generally moves amendments to improve and change Government Bills, whereas I have no amendments to move because we are happy with the business review as it appears in the Bill. Instead, it is the Government and their Back Benchers who are trying to change their legislation. The situation is perverse, but I have no doubt that we will soldier on and have an interesting debate. I should say, however, that the Government have been particularly late in tabling their amendments.
There was I thinking that we had seen the end of Punch and Judy politics for the sake of it. We are an Opposition that have for some time now said that, when we are happy with legislation, we will not oppose it just for the sake of it. We saw no reason to change that with the business review, because we support increasing and enhancing the corporate social responsibility framework in this country.
We are well aware that the business review started life as the operating and financial review many years ago. Eight years ago, children now in university were in primary school when the operating and financial review was first developed and work on the Bill started, but we have finally reached the stage where we have a business review in the Bill, which Conservative Members support.
We recognise the importance of the role of businesses in creating jobs and prosperity, but we also recognise the broader impact of businesses not only on the environment but on the local and international communities in which they operate. There is no inherent contradiction between companies striving for long-term financial success and demonstrating strong corporate responsibility. In fact, the Minister herself correctly described those two issues as being interlinked and interwoven.
At the heart of any successful company is an in-depth understanding of what its customers want and value. Perhaps more than at any time in the past, customers place a value not just on what they are purchasing from companies, but on the way in which companies have carried out their business in order to provide those products or services. Companies can therefore be at the forefront of the push to tackle environmental and ethical issues. They do not have to be at the back of that argument.
The business review as set out in the Bill will be an important part of that developing corporate social responsibility agenda. As we approach the Queen’s Speech, which Conservative Members very much hope will contain a climate change Bill, it is possible to see the emergence of a real corporate social responsibility reporting framework in the UK. The business review could play a vital role in that, and we certainly hope that it does, but new business legislation often involves additional costs and burdens on those businesses that it affects.
The Opposition recognise the importance of establishing for the first time a formal narrative of a company’s development risks and uncertainties and the wider impact of its relationship with the environment, its employees and the community. However, those of us who have worked in business—I should declare that I am a chartered accountant—also know how careful Government need to be before adding any unnecessary burden on business. As the Minister said on Second Reading, we should ensure that the new law is as clear, simple and modern as possible, that it is fit for today’s business purposes, and that it does the maximum possible to get rid of any unnecessary burdens of regulation.
My hon. Friend makes an excellent point, but the point made by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) was wrong. Thames Water and other companies may be foreign-owned, but they have nothing to do with the Bill. He has just demonstrated one of the weaknesses of using the Bill to advance corporate social responsibility.
Throughout the Bill, the Government have been clear about what the business review is intended to do, and it is to be a narrative for the members of the company. I am sure that the Minister will want to deal with whether the Bill should have a much wider application to any company that is operating within UK jurisdiction. We need to strike the right balance with this legislation. That has been difficult to achieve and later we will debate whether we have achieved it. That has obviously partly been because it fits so clearly into a broader and important debate on the environment, but also because company law is necessarily limited in the extent to which it can be used as a vehicle to address such concerns.
I fully recognise the concerns that the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) raised, but the question is what is the best way to address them. I agree with Lord Sainsbury and many others both from the Lords and in this place, including Ministers and Opposition Members, that company law is one way to pursue the need for companies to review more carefully the effect of their operations on the environment, but it is not the only route by which that can take place, so we need to be careful.
As the Minister said, company law is not the best vehicle for addressing wider social and environmental concerns. We can address those objectives, as some Government Members have said, through domestic legislation, health and safety measures and environmental protection, on which progress has been made.
I am following the logic of what the hon. Lady describes. Bearing it in mind that Conservatives appear to support the Government on this issue with not quite the same enthusiasm as they supported military action in Iraq, but just a little less than that, which aspects of the relationship between supermarkets and suppliers does she feel will be best served by elements within the Bill? Given that she wants to avoid unnecessary burdens on businesses, does she accept that one of the biggest burdens on the many suppliers in the supply chain, particularly to supermarkets, is their relationship with the supermarket, and that it is that burden that they need to have lifted and made more transparent?
We will come to that, but I was not aware that this was a Bill solely structured to deal with supermarkets. We need a Bill that will work for the whole of our business environment, not just one sector in it. There is a wealth of difference between measuring directors’ effectiveness in performing their duties, which is what the narrative is there to do, and taking steps to change company culture.
Whether in the other place, in this Chamber, in Committee or even outside the House, the problem of where to strike the balance has been keenly debated. In fact, it has had eight years of debate, with much money being wasted by companies on the operating and financial review preparation, which was subsequently dumped by the Government. The Opposition believe that balance has been achieved, which is why we support the business review in the Bill.
I must declare an interest, because I work with the Chartered Institute of Marketing. The Bill does not explicitly require the reports to cover the marketing performance of a company. The Chartered Institute of Marketing feels that that is an omission and that shareholders should have the right to know the strategic and tactical operations of the marketing conducted by companies.
We are in danger of making the business review far too prescriptive, particularly given that we know that more environmental legislation is likely to be enacted. What is needed is a narrative that has a good enough framework for the outcomes that we want, which includes information for members on environmental issues and the impact on people, employees and communities. However, it should not be so prescriptive that it closes down the debate and potentially gives directors the chance not to disclose something, because it is not on the list that they have been given. I have no doubt that companies that care about corporate social responsibility reporting will want to give a full and useful report in the business narrative, which will allow members to see which companies take that responsibility seriously. We feel that the Government have got the balance right, which is why it is so perplexing that they seem unhappy with the business review.
I will discuss new clause 1 shortly, but first I shall touch on amendments Nos. 821 and 822. I was surprised when the Minister tabled those amendments at such a late stage, because on Second Reading she said:
“The provisions on directors’ duties, together with the provisions on narrative reporting, will give a huge boost to our corporate social responsibility agenda. If we went further, we would damage our success in attracting companies to incorporate in Britain, along with the economic growth and jobs that that brings. In a global economic environment with global markets, companies can choose where they wish to incorporate their business, so company law must focus on its core purpose to create the right environment for business success.”—[Official Report, 6 June 2006; Vol. 447, c. 216.]
Earlier this week, the Minister lost sight of that core purpose. Yesterday, the debate involved the point that directors have an overall duty to promote the success of their company. Do DTI Ministers not have the same duty to promote the success of British business? I am amazed that I am having to remind the Minister of the core purpose of her job.
When did the Minister decide to table amendments Nos. 821 and 822? They appeared after the main body of amendments was published, so they were presumably tabled this week, but when did she take the decision and why has she tabled them? I have no doubt that we will receive an explanation, but perhaps she will cover who or what changed her mind on the business review, which the Government have supported since they ditched the operating and financial review. The Government have had the whole summer since the Bill was in Committee, so why were the amendments tabled so late? Why could the amendments not have been tabled last week?
What steps did the Minister take to consult business on the impact of the amendments before taking her decision and was the advice from business given to Ministers? My understanding from the CBI is that the Minister conducted no consultation with business whatsoever. The CBI has said that the amendments will place an extra burden on businesses due to the costs of compliance and legal advice. The Institute of Directors has also expressed its concern about amendments Nos. 821 and 822, saying:
“it is unacceptable for the government to table amendments that make significant policy changes at such a late stage and without any consultation.”
I welcome the hon. Lady to her Front-Bench position and wish her well. The issues that she has raised are entirely procedural.
Yes, procedural. How I did it and when I did it are procedural issues, but I want to hear the hon. Lady’s comments on the substance of the amendments. Does she agree with the right hon. Member for Witney (Mr. Cameron) that she should stand up for not only the interests of business, but for the interests of Britain?
I am interested to hear the Minister’s comments. I shall discuss the substance of the amendments, but the way in which the Government tabled them at such a late stage is disgraceful. It is not acceptable for her to say that I cannot question how the amendments were tabled. I am trying to stand up for the British economy and the jobs that depend on its success, and it worries me that a DTI Minister takes that matter so glibly.
On Second Reading, the Minister said:
“If we went further, we would damage our success in attracting companies to incorporate in Britain”.—[Official Report, 6 June 2006; Vol. 447, c. 216.]
That is why I am asking whether the Government have assessed whether the amendments will damage British competitiveness.
I had hoped that Ministers would have addressed that question themselves before tabling amendments. If the Minister for Industry and the Regions has not consulted business, will she agree today to meet all the key stakeholders who will be affected by the amendments? [Interruption.] Ministers are still quizzical about how the amendments will affect British business, which is deeply concerning and justifies my raising the following issues.
Whether or not consultation was carried out, there has clearly been no assessment of the impact of the amendments on Britain’s economic competitiveness. How will the amendments affect our flagship companies? Will the Minister assess the number of jobs that she believes will be affected by companies not relocating here or by companies that are already here relocating elsewhere? On Second Reading, she said that to go further would cost jobs. Which is it?
It is obviously difficult being in this position, as I have asked lots of questions about the amendment and had only one answered. That is why I had to make my best guess at working out which one the word, “none”, related to.
Perhaps I may continue with my list of questions. What specific information does the Minister hope to elucidate from directors regarding corporate social responsibility that she did not believe would be disclosed in the business review as it stands? Whatever that information, how has she reached the conclusion that the value of that information outweighs the impact on our economy? The Minister seems to have made this decision with all too little understanding of its real costs and benefits. The best decisions are generally taken with facts and data, but this one was taken so late in the day that there cannot possibly have been a robust assessment of the reasonableness of the amendment or the impact of the decision on our economy and its businesses. If the Minister will not consult business about the impact of the amendment, I can assure her that we will. In betraying the sensible arguments made to support the business review made not only by herself previously but by Lord Sainsbury and by her boss, the Secretary of State, she has done British business, and all those who work for it, a true disservice.
Let me turn to the detail of amendment No. 821, which is a blunt instrument that largely replicates part of new clause 1. It asks directors to provide in the business review
“information about persons with whom the company has contractual or other arrangements which are essential to the business of the company.”
Most companies will believe that all aspects of their operations are essential; otherwise, they would not waste money and resources carrying them out. A whole host of arrangements could be deemed essential—from suppliers to utility, IT and telephony providers, from leasing arrangements for buildings to agreements with local authorities. Do the Government intend that the amendment be so widely couched? Presumably, it would even include financing from banks or arrangements with auditors or the Inland Revenue that are vital for the company’s operation. The term, “contractual arrangements”, requires clarification. It could even be considered to cover customers. For example, Homebase has its “Spend and Save” scheme, with 4 million cardholders collectively accounting for 40 per cent. of its sales. That arrangement is clearly essential to Homebase, so would it need to be disclosed in the business review? If so, I do not see how that would further the aim of the business review, which I understood was intended to put in place, for the first time, a robust corporate social responsibility framework.
Will the Minister provide some guidance on the type of information that the Government are trying to bring to the surface? Is it names and addresses? Is it length of contracts, assuming that it is the supplier relationship that the Government are driving at? What is intended to be disclosed by directors? How will members judge whether enough has been disclosed? If it is largely environmental information that is required by members so that they can assess whether the company in which they hold shares has behaved ethically, would not that be part of the existing “environmental matters” narrative?
Based on what was reported in the papers today and yesterday, it seems that the amendment is aimed at the supplier side of the business, but that is not how it is phrased. That is worrying for business, and for us. Surely important supplier relationships that had an effect on the company’s environmental impact, or an effect in relation to the local community, would be included in the “environmental matters” or “social and community issues” aspect of the report, so why introduce the amendment at this late stage? The business review as structured already provides a mechanism for catching such important aspects of business operations, but the Government, in tabling the amendment, are casting doubt on that. As a result, they are, at the very last moment, managing to snatch defeat from the jaws of victory.
The amendment will add costs to companies in terms of compliance and related legal advice and guidance. That is not my assessment, but that of the CBI.
We cannot support new clause 2, because it would relegate the business review to a tick-box exercise, with the unacceptably high risk that it would be of poor quality.
Worst of all, the amendment could put some companies at risk, because the information that they are required to disclose, while having no relevance whatsoever to corporate social responsibility reporting, may give out vital commercial information. I am surprised about that, given the example of Huntingdon Life Sciences. Companies working with or supplying that company, and its customers, have been targeted through no fault of their own having carried out perfectly legal operations. Other companies will be worried by the danger in which the amendment puts them. That potentially negative impact cannot be in the interests of the members of the company for whom the report is ultimately intended, nor in the interests of the company’s employees. Surely that is not what the Government intend. Leaving aside the atrocious way in which they have introduced the amendment, even worse is how it weakens the business review by detracting from its focus on corporate social responsibility and its main function as a report to the members of the company so that it becomes a much broader report for a much broader audience. Until now, the Minister had always said that that was a dangerous road to take.
Let me turn to the issues raised by the hon. Member for Hemsworth (Jon Trickett). I fully appreciate what hon. Members are trying to achieve in new clauses 1, 2 and 75, but I have some concerns. Widening the purpose of the business review to expand its remit so that it is not only for existing members but for potential investors and customers would weaken, not strengthen, it. The review is designed to be a core narrative on the company, which may include a warts and all assessment by directors in which they consider difficult challenges that lie ahead. Many companies are in industries which, by their nature, have a big impact on the environment—for example, aircraft operators. Surely the most valuable business review for members will be one in which directors can set out not only their successes but their failures and future challenges regarding corporate social responsibility. It is vital to cover aspects where things are not going well if we are to see an overall improvement in this field.
The danger of widening the business review’s purpose from being a narrative for members to one for potential investors and customers is that it will stop being a narrative and start to become a sales brochure in which, like it or not, positives will be accentuated and negatives may risk being downplayed. Directors may ultimately face a conflict of interest between producing the best business review for their members and the best business review for a broader audience. The review exists to enable members to hold directors to account. It is a powerful tool and we should not weaken it, which amendment No.821 and the new clause risk doing.
I remind the hon. Lady that every British company that is listed on the American stock exchanges must, according to American legal requirements, produce a 20F statement, in which it sets out all the legal, regulatory and statutory challenges that it faces. Would not it be reasonable for us to require that of British companies?
If such a requirement does not help to achieve the Bill’s objective—I do not believe that it does—we should not include it. As someone who was involved in the audit profession, I know that, in the US, a tick-box mentality prevails and has led to a proscriptive audit approach, whereas the UK’s audit approach continues to be based on the substance of transactions, and auditors judging what is true and fair. The latter is a much stronger framework and I believe that we can be satisfied with the UK corporate environment and corporate governance when compared with the position in which US corporate governance has sometimes found itself in recent years.
Defining who would constitute a potential investor or customer in practical terms is such a broad concept as to be impossible to tie down meaningfully. In the case of a highly diversified company or a company that sells a wide product range, potential investors could have a variety of priorities that they wanted to highlight in a business review, and a vastly differing range of understanding of the company. Companies with a huge product range could have so many products that almost anyone could be classed as a potential customer. That is unworkable in the context of the business review.
Perhaps one of the most fundamental changes that the new clause proposes is the requirement for medium-sized companies to complete a full business review. Conservative Members believe that that would be excessively onerous, especially taken with new clause 2 and new clause 75, which deals with reporting standards and auditing the business review.
The Government estimated that the operating and financial review audit would cost business £33 million. I am concerned that formalising reporting standards, as new clause 2 proposes, and requiring an audit of the business review, as new clause 75 proposes, would risk transforming the business review exercise into nothing more than a tick-box approach, whereby the quality of the substance of the business review took second place to ticking all the boxes of a reporting standard.
Clause 510 provides that auditors must review whether the directors’ report is consistent with the accounts as a whole. The Bill therefore already contains a safeguard to ensure overall consistency. I am sure that hon. Members know that the Accounting Standards Board had prepared a robust reporting standard to use alongside the OFR. Once the OFR was amended and downgraded to a business review, the ASB similarly downgraded the reporting standard to a reporting statement. Nevertheless, it still provides clear best practice guidance to directors and their auditors on the expected content and quality of the report and can therefore provide some quality assurance in the business review narrative.
I am amazed. There is a touch of irony to a Liberal Democrat saying that I want to have it both ways. In the House of Lords, the Liberal Democrats were happy with the business review, as we discussed in Committee, but by the time the Bill reached the House of Commons—a matter of weeks—they were resolutely claiming that we needed the OFR back. We want an efficient, effective minimum regulation approach to the business review that will enable companies to get on with good quality corporate social responsibility reporting. We do not want to force them down routes that they may not find valuable.
Surely providing some flexibility is a better approach, especially given that we may debate a climate change Bill shortly, than tying the review down so tightly to lists of requirements for inclusion that there is no flexibility to adapt as the agenda changes and grows.
Conservative Members want a climate change Bill to be included in the Queen’s Speech. We are disappointed that, at this late stage, the Government have changed their mind on a business review about which all key stakeholders had largely agreed. That is representative of a Government who are weak minded, badly organised and listless. We will oppose the Government amendments and new clause 1. We look forward to working with environmental groups and business in the coming months and years on the important matter of corporate social responsibility to ensure that the business review proves successful in establishing a robust corporate social responsibility framework in the UK.
Many other hon. Members want to participate, so I shall end my remarks.
I commend the hon. Member for Putney (Justine Greening) on her opening speech from the Conservative Front Bench. Her initial remarks led me to believe that she would be consensual—I was looking forward to more such speeches—but her later remarks made me doubt it. However, we look forward to hearing her arguments in future.
I support new clauses 1 and 2, which my hon. Friend the Member for Hemsworth (Jon Trickett) moved so eloquently and persuasively. They require companies to produce a business review, which examines the impact of company policies on not only the environment but employees, the local community and suppliers.
There is a long history to the proposals. It has long been understood that the best way to get industry fully to understand and tackle its social and environmental impacts is to require companies to measure and report on them. One cannot manage what one cannot measure. The Government therefore rightly initially drafted legislation in the form of an operating and financial review—or OFR as everyone fondly knows it—and required the leading 1,000 companies to produce one. A dispute then occurred about whether it was right to require those companies to report on their impacts unconditionally or only those that were material to the interests of the company.
The Government went to extreme lengths to resolve the matter. They set up an external committee to advise them on the definition of “materiality”. I believe that they did that to get agreement and, after due discussion and considerable delay, agreement was reached and a consensus achieved between the Department of Trade and Industry, the Department for Environment, Food and Rural Affairs—I know that because I was there—and the business and investment community. However, last December, the Chancellor suddenly announced at a CBI dinner that he was shelving the OFR legislation. There was no consultation about the abrupt U-turn and the reasons that were given at the time to justify it do not bear examination.
It was argued that the statutory OFR was a prime example of gold-plating—the normal argument that Whitehall and the CBI use—EU legislation. The Chancellor said that it went beyond the requirements of the 2003 accounts modernisation directive. However, the OFR proposals predated the EU legislation by several years. Indeed, the OFR package was amended in 2004, but that was simply to ensure that it complied with the EU directive, not to enable it to go beyond it. Nor was the sudden shelving of the OFR legislation universally welcomed by industry. One had only to look at the Financial Times during that period to see a letter of protest from the Institute of Directors, no less.
It is highly relevant that, more recently, top executives from among the 14 largest FTSE companies—the list reads like a roll-call of the senior ranks of British industry—headed a delegation to the Prime Minister to demand that the Government regulate against climate change. I was delighted—if slightly surprised—by that. It showed, in contrast to the rather curmudgeonly remarks of the hon. Member for Putney about the attitude of British business, that those attitudes are beginning to change—and not before time.
I suspect that that is the reason the Government are now—in another excellent development—considering producing a climate change Bill in the next Session. I very much welcome that, as someone who—along with the right hon. Member for Suffolk, Coastal (Mr. Gummer) and the hon. Member for Lewes (Norman Baker)—is sponsoring a climate change Bill before Parliament that will require an annual 3 per cent. cut in greenhouse gas emissions in order to achieve what the scientists say is necessary to stabilise climate change, namely a 60 per cent. reduction in those emissions by 2050.
For the purposes of this debate, the key point—which we recognise in our Bill and I hope that the Government will recognise in their climate change Bill if it is forthcoming—is that, in order to meet the unquestionably demanding targets, it is necessary to make regular measurements, sector by sector. That includes transportation, industry and the domestic sector. The measurements must also be made on a company-by-company basis. They must ascertain whether the targets are being met and, if they are not, determine what remedial action needs to be taken to get back on track. That is why the business review, as it is set out in the new clauses as a replacement for the lamented OFR, is absolutely essential.
My right hon. Friend rightly drew our attention to the excellent points that the Corporate Leaders Group made to the Prime Minister. The Minister has also received a letter from the Aldersgate Group, of which I am a member. The group includes leading businesses that want to promote sustainable development, and to see the establishment of reporting in relation to carbon allowances. Would the Minister for Industry and the Regions like to touch on that letter when she responds to the debate, and tell the House how those reports can be incorporated? That matter certainly seems to be addressed in new clause 1.
I am sure that my right hon. Friend the Minister will respond to my hon. Friend’s request. The members of the Aldersgate Group, like others in the senior ranks of British industry, realise that that is the direction in which the international economy is going, and that, if we are to be smart, we need to be in there at an early stage, because, unquestionably, there will be a requirement to produce such a review in due course. This is not only a matter of environmental sensitivity but a good business move in relation to the bottom line.
The method adopted by the EU emissions trading system under the Kyoto protocol, which is highly relevant to the debate, is the national allocation plan. This requires each industry to reduce its emissions to a fixed lower level within a given time scale. The relevance of that is that the new clauses provide the framework by which those reductions can be achieved in two important ways. I am at one with my hon. Friend the Member for Hemsworth in strongly requesting the Government to reconsider their position on this. First, the national allocation plan, to which we have signed up, applies to all large and medium-sized public and private companies—some 36,000 in all. That is still fewer than 1 per cent. of all companies, but it is significantly more than the 1,300 publicly listed companies covered by the Bill as it is drafted. The Aldersgate Group and the 14 key representatives of the big companies who went to see the Prime Minister are all concerned about the need for a level playing field. They do not want to be disadvantaged, and they therefore expect there to be a general requirement for the whole of business, including large private equity firms and foreign-owned private subsidiaries. The new clauses cover such businesses, but the Bill does not.
Secondly, the new clauses would introduce a mandatory reporting standard. I strongly suggest that that is absolutely essential, because we have repeatedly tried to make voluntary codes of practice work. As a former Minister for the Environment, I speak with some anguish about this. We introduced a number of voluntary codes, but they were honoured more in the breach than in the observance. Voluntary codes of practice will never be observed, other than by a relatively small number of scrupulous and conscientious companies. They will certainly not be universally observed. If we want to establish a level playing field, the code of practice must be mandatory and universal.
There is also the question of placing burdens on business. We have only to open the papers today to see the CBI repeating its usual mantra. Even the hon. Member for Putney could not resist buzzing around it. Of course there is an initial outlay involved in meeting the proposals. The truth is, however, that having spent that relatively small sum, companies will start to measure their energy efficiency, their transport impacts, their waste generation, their water consumption and their greenhouse gas emissions. They will then find, perhaps to their surprise, that once they have measured the waste and inefficiency that they were inadvertently generating, they will be able to make disproportionately larger savings. That is the key point: they will get a far bigger return for their initial outlay if they are required to assess the environmental impact of their work.
Proof of that can be seen in the fact that mandatory social and environmental reporting is already being pursued in various forms in other successful competitor countries to our own, including the United States, Canada, France, the Netherlands, Norway, Sweden and Denmark. I must underline strongly that sustainability is the friend of competitiveness. It is not a burden on it. For all those reasons, I hope that the Government will reconsider their position and accept new clauses 1 and 2. This would result in a win-win situation, not only for the environment—important though that is—but for the bottom line.
It is a great pleasure to follow the right hon. Member for Oldham, West and Royton (Mr. Meacher), who speaks with great authority on these matters. Perhaps I should say to the hon. Member for Putney (Justine Greening) that this is the stage at which the real Opposition get to have their say.
The right hon. Member for Oldham, West and Royton related quite accurately the history of how the operating and financial review was abandoned. It is alleged that the Chancellor decided to announce, without much consultation with anyone, that the OFR was to be suppressed because he wanted to make a symbolic gesture to show that the Government were willing to deregulate in matters that affected big business. That move was so surprising because, first, it was not clear that big business wanted that gesture to be made and, secondly, because we are talking about serious matters, not just symbols.
Of course not, because the Government are giving way on a point that we are urging them to give way on. We are therefore very glad that they are doing so, and it would be perverse of us to oppose them. We are going to support that proposal. I accept that there are concerns about how it has been introduced: this is a surprisingly late concession, but late concessions are better than none at all.
In addition, it is not surprising that a concession has been made, because this matter was included in the original OFR. Furthermore, there was a clear argument that the drafting of the original clause—it talked about all the matters that were material to the company’s position—by implication included supply chain matters. There is a problem over late concessions, but it is a rather lesser one than would normally apply.
With respect to the hon. Gentleman’s claim that he speaks for the real Opposition, perhaps he would like to explain to the House why, in Committee, his party either abstained or, on several occasions, voted with the Government when the official Opposition voted against them.
As I remember it, at that stage the official Opposition opposed even the business review, although they appear to have changed their position, presumably due to the election of the right hon. Member for Witney (Mr. Cameron). The inconsistency of the Opposition’s position needs to be explained.
The hon. Gentleman’s question, asked from a sedentary position, shows that it is a big issue in the House as to which party is the real Opposition. [Interruption.] I want to make progress.
The question is whether the business review that emerged from the row that blew up after the Chancellor removed Government approval for the original OFR goes far enough. That is what new clauses 1, 2 and 75, as well as our amendment (a) to new clause 1, are about. The business review is too narrow in a variety of ways, and the right hon. Member for Oldham, West and Royton mentioned them all. In particular, it covers too few companies for the purposes for which we think it should be created. It does not cover the supply chain issue, although the Government have rightly introduced a proposal to correct that position.
Most important for us is the fact that the new business review fails to have proper audit requirements. There is a general requirement of audit, as the hon. Member for Putney mentioned, but what is not contained in the business review, which was contained in the original OFR, is a requirement for auditors to report on matters that come to their attention that are inconsistent with what is in the business review. The wording that we have used in new clause 75 is precisely that which was in the original OFR regulations.
I suppose that it is fair to say that our starting point, and our reason for supporting new clauses 1, 2 and 75, is perhaps rather different from that of the Government and the Conservative party. We are interested not just in the risks that the company faces, from loss of reputation through to introducing policies that are environmentally unfriendly or socially irresponsible, and unwelcome—from its point of view—regulatory activity, but in helping to create a market for ethical investment and ethical consumption. That precise point is where we differ from the other parties, because that is our first concern as to what the business review should contain and how it should work.
Yes, I was coming to the size of the market. Ethical investment has probably got much further than ethical consumption, but even ethical investment is still not fully developed. Last year, ethical investment went through the £10 billion barrier for the first time. That sounds like a lot of money, especially compared with gross household savings, which are about £40 billion. However, a lot of the funds moving into ethical investment are moving from existing investment funds, so the percentage of new investment—new saving going into ethical investment—is rather less than the quarter it appears to be.
On the ethical consumption side, matters are far less well developed than that. A report by Co-operative Financial Services found that a third of UK consumers claim to be concerned about ethical consumption, yet only about 3 per cent. of the UK market for goods and services is clearly ethical in its production methods and aims.
We believe that ethical investment and ethical consumption have great power. They have the potential to change the world. The hon. Member for Hemsworth (Jon Trickett) talked about ending capitalism. We on the Liberal Democrat Benches take the traditional Keynesian view that our job is to make capitalism work for better ends. As Keynes said, eventually he knew which side of the barricades he would be on, but nevertheless capitalism has to be reformed if it is to be worth continuing.
One problem, as we see it, is ethical consumers and ethical investors finding out whether the information out there about the behaviour of particular companies is believable, accurate and true. We believe that an expanded business review, especially with an audit requirement, would help those customers and investors to find out where their ethical pounds would be best placed. In that process, audit is crucial. That, again, is where we differ very strongly from the hon. Member for Putney.
Our view is that, without proper audit, the business review will turn into a marketing tool. Already, a large number of companies give the impression that they are environmentally and socially responsible, but not all their claims can be taken absolutely at face value. All too often, companies already do precisely what the hon. Lady said they would do if the audit requirement was introduced. They highlight isolated examples of good practice, but fail to mention the full picture.
Our view is that there is a threat in current unaudited practice to the whole ethical investment and consumption market. It would be a great shame—even a disaster—if corporate attempts to “greenwash” operations led to public distrust and cynicism about the process of ethical investment and consumption. The auditing of claims made in business review reports would help to concentrate the minds of those who write them and increase the trustworthiness of the information that they give.
As the right hon. Member for Oldham, West and Royton said, the better companies would welcome that, because they would then receive the advantage they deserve over the companies that are interested merely in public relations, not in thoroughgoing ethical behaviour.
If the opportunity arises, we would like to press new clause 75 to a vote. It is independent of the success of new clauses 1 and 2. Even if those new clauses are not accepted today, although we hope they are, it will remain true that the audit requirement in the original OFR should be put back in place in the business review that the Government, at this stage, want to establish.
I wish to speak to new clause 2, which completes the circle and complements new clause 1, which was moved by my hon. Friend the Member for Hemsworth (Jon Trickett). Our new clauses combined have the backing of more than 50 Labour Members and I think that I am correct in saying that they have sizeable support among Liberal Democrat and nationalist Members. More importantly, they have the support of the Trade Justice Movement and the Corporate Responsibility Coalition, which, I am told, together represent more than 130 civil society organisations. I pay great tribute to those organisations for the campaign that they conducted across the country. I do not wish to sound pompous, but I hope that most right-minded members of the British public support the new clauses, too.
New clause 2 is rather like me and my politics: it is modest, thoughtful and rational. It is linked to this timely Bill, which is the biggest in parliamentary history—it has more than 1,200 clauses and was eight years in the making. The Bill goes a long way towards setting reasonable standards on corporate social responsibility, which the country, the environment and the world desperately need. I sincerely congratulate the Government on their efforts to produce forward-thinking legislation. Some Members, and perhaps some exhausted Clerks and Officers of the House, may question the necessity for further amendments or new clauses to a colossal Bill, so I shall explain why we introduced our new clauses. I always try to keep my contributions brief and incisive, and I shall endeavour to do so today.
The right hon. Member for Witney (Mr. Cameron) and the hon. Member for Huntingdon (Mr. Djanogly), who spoke on behalf of the Opposition in Standing Committee, have both praised BP’s environmental record, so the company provides a relevant case study. BP was praised for taking corporate social responsibility very seriously, but that is qualified by the fact that the company spends a significant amount of money on selling its CSR reputation. That is part of a much wider problem. All too often, companies spend vast sums of money projecting a positive image of themselves as green or ethical organisations—it is obviously not only political parties that do so—and do not spend enough money or time on the real issues that we aim to deal with under the Bill. Those are issues of shaping, guiding and ultimately changing the behaviour of the transnational companies whose activities have an extremely serious impact on our environment, climate and communities.
Hon. Members on both sides of the House regularly—and rightly—voice concerns about climate change and our environment, and several Members have already alluded to the subject. For many people, that is the central challenge of our times, and that belief is shared by the wider public. To refer to my case study, in the past financial year, only 5 per cent. of BP’s investment went into alternative energy. By comparison, 72 per cent. went into fossil fuels. That puts it only slightly ahead of competitors such as Shell. As one of Shell’s shareholders, and as a representative of a party that is going green, the hon. Member for Huntingdon may wish to raise that with BP’s directors at an appropriate time.
Regrettably, BP has been associated with a range of what can only be classed as negative environmental impacts and human rights abuses, from the Baku-Ceyhan pipeline to the Alaskan oil spill. This summer in Texas, the Rev. Jesse Jackson led protests against BP over price-fixing, employment discrimination and health and safety violations, following the Texas City explosion. In fact, BP has one of the worst records for health and safety in the US oil refinery sector. Moving down the continent, in July it settled a court case with a group of Colombian farmers who were forced off their land by paramilitaries so that BP could build a pipeline.
By way of comparison—I want to be even-handed—Shell’s corporate social responsibility record causes equal consternation. Shell, too, is a big spender on the generation of positive PR, but it is less energetic in making attempts to moderate the negative impact of its commercial activities in the countries and communities in which it operates. For instance, the exposure of Shell workers to toxic pesticides in Brazil has resulted in severe medical problems for the work force. Shell has been forced to take steps to protect workers, but it still will not guarantee treatment for conditions that have developed as a result of that toxic exposure. Its joint venture in Port Arthur emits massive quantities of toxins known to damage human cardiovascular and respiratory systems. Some 80 per cent. of Port Arthur’s residents suffer from heart conditions and respiratory problems, whereas the regional rate is 30 per cent. among people who do not live near an oil refinery.
Those are negative examples from just two companies. They have been sourced and exposed through local legal challenges to the companies in question, and thanks to the endeavours of environmental NGOs. Of course, we cannot make meaningful, objective comparisons between companies such as BP and Shell because neither is forced to report on their activities in a manner that conforms to a level, comprehensive standard that can be easily understood by everyone. That is the crux of my argument. The examples that I have given show how irresponsible behaviour can damage the long-term interests of the company, its customers and shareholders. Companies must understand those factors if they, in turn, are to understand their position and its risks.
A central plank of the Bill is that, through reporting obligations, shareholders and investors can vote with their wallets and choose not to invest in unethical or environmentally irresponsible companies. Self-evidently, that is worth while only if companies are forced to publish things that they do not want to publish. At present, I understand that there are up to six sets of voluntary reporting guidelines that companies can consult for an indication of what non-financial information to include in their reports. That is exactly why we need a common, mandatory and auditable standard of environmental and social reporting, so that we can cut through the spin and make a judgment on the substance.
To some extent, what the Bill overlooks—and what Her Majesty’s Opposition fundamentally misunderstand when they talk about CSR being a unique selling point—is that CSR is what companies do, not what they represent, report or claim to have done. It is not about what they say, but about what they do. New clause 2 would allow customers and shareholders to judge the situation objectively. If it was accepted, it would require reporting standards in business reviews to be set by a relevant body, and compliance with those standards would mean compliance with the requirements of the Bill.
The lack of a reporting standard is perhaps the most glaring gap in the Bill. The original operating and financial review regulations were accompanied by such a standard, issued by the Accounting Standards Board, to provide companies with guidance on what information they should include. The standard was intended to be a clear template, setting out the types of key performance indicator that could be used by companies to ensure that they complied with the law. The new clause would introduce similar mandatory standards for the business review. That is an issue of major importance for the Corporate Responsibility Coalition, the Trade Justice Movement and the many Labour Members who believe that mandatory guidance is essential to ensure that the information in business reviews is meaningful and comparable across companies, down the years.
Standards help to reduce businesses’ compliance costs, and they have been called for by a number of other stakeholders in the debate, including the Chartered Institute of Management Accountants. Without such a provision, it will be the responsibility of the directors of each company to determine the content of the business review and what indicators to use. That would make it impossible to compare one company with another, or the same company’s performance year on year. Shareholders would not be able to assess how their company is performing compared with its competitors, or whether its performance is improving over time—I would have thought that that was self-evident. Without being able to do so, it will be difficult to judge how directors have performed their duties. The absence of reporting standards thus undermines the whole concept of enlightened shareholder value as enshrined in the heart of the Bill.
It would also be useful for directors to have a clear benchmark and a model to follow, so that they can be confident that they are compliant with the law rather than competing models, which can result in confusion. The new clause, tabled by me and about 50 other Members, allows reasonable latitude in framing the reporting standard, which should address concerns that too strict a reporting standard will place too heavy a burden on businesses and could deter business growth—an argument we hear a great deal. As we have seen with other European nations, such as Sweden and Denmark, that is patently not the case. Allowing complete freedom to directors to decide how they report goes too far in a direction that, in my view, is wrong, and undermines the entire concept of reporting and its role in delivering enlightened shareholder value.
This is an historic opportunity to make a decent Bill better, at a time when the ramifications of its details have never been more important in Britain and, I would argue, throughout the world. I especially commend the new Government amendments on business-supplier relations, which improve the Bill—the fact that the Conservatives oppose them means that we must have got something right. I ask my right hon. Friend to re-examine how we might seize the opportunity to consider mandatory standards to the benefit of all interested parties, including the business community. Will she seriously consider, mindful of the Bill as it currently stands, how companies could be encouraged to comply with the suggested voluntary guidance? Statutory standards would, of course, present consequences to companies who fail to adhere to them. Is not a voluntary code by definition rather toothless, unless there is at least some level of supported implementation? Does she actively recommend to companies full compliance with any voluntary guidance? How robust does she expect her outstanding powers of persuasion to be? Furthermore, if, within a set period, companies were seen not to be complying with the voluntary code, would my right hon. Friend set a time frame to reconsider the option of mandatory standards if the law proves to be impotent, in consultation with business and the various NGOs?
As the excellent little pamphlet from the Trade Justice Moment and Corporate Responsibility Coalition states:
“The Bill provides Parliament with an unmissable opportunity to put in place a legal framework, which ensures that UK companies are fit for the 21st century, combining successful enterprise with ethical and responsible corporate behaviour. But to achieve this, the Bill must be amended further and a bolder approach is needed.”
I wait on the words of the Minister.
It is a privilege to follow my hon. Friend—for the purposes of this debate—the Member for Elmet (Colin Burgon) and to support new clauses 1 and 2. I pay tribute to him and his hon. Friend the Member for Hemsworth (Jon Trickett) for giving voice in the House to the hundreds of thousands of citizens who have led one of the biggest letter-writing campaigns that I have seen while I have been in the House.
Given that enormous campaign, it seems clear that the introduction of statutory standards for environmental and social reporting is an idea whose time has come. When we consider that the joint stock corporation, as it used to be called, or limited liability company has been around for 200 years, this Bill and these amendments make a small, modest step towards restoring the balance of power with regard to the rights and responsibilities—to use the well-worn new Labour phrase—of corporations. For too long, companies have operated in a privileged twilight world beyond the reach of accountability. We have heard a lot of debate about veils recently. This Bill and the amendments are about lifting the corporate veil and providing not just shareholders, but for society as a whole—employees, communities and campaign groups—with reliable, up-to-date, accessible information about corporate responsibility and the impact of companies on society.
During the 200 years in which corporations have existed, their power has waxed and, unfortunately, democratic power has waned. In terms of the broader context of the Bill and these amendments, it is therefore essential that we hold companies that have such an impact on our society and the world as a whole to account for their actions. After all, many of the ills faced by society today, whether environmental degradation or social injustice and inequality, do not stem from governmental action or inaction but from corporate irresponsibility. Therefore, the Bill and these amendments—I welcome the Government’s concessions—represent an important step in the right direction.
I would go much further. The whole issue of limited liability is problematical. I am in good company here, because Adam Smith was against the whole notion of providing shareholders with a get-out clause. In this case, therefore, the hon. Member for Hemsworth is, unfortunately, to the right of Adam Smith, for the time being. The problem was captured famously by Edward Thurlow, a Lord Chancellor in the 18th century, who said that the problem with the corporation was that it had
“no soul to be damned and no body to be kicked”.
In that phrase, he captured the problem of holding companies to account through the courts and legal system, and the problem of the human beings who own and run companies. Even where companies are found guilty of environmental degradation, it is difficult to hold individual directors or executives to account, unless one can demonstrate that they were directing minds.
I have been following the hon. Gentleman’s points with considerable interest, and I also regard him as my hon. Friend. Things have moved on a great deal since the 19th century. It is ironic that tomorrow morning, at 9 am, a Standing Committee will sit on the Corporate Manslaughter and Corporate Homicide Bill. Therefore, there is accountability now, and there will be even greater accountability once that Bill becomes law.
And all the angels in heaven rejoice when one sinner repenteth. The fact is that that Bill demonstrates the emerging consensus in society, which is more important than the consensus in this place. That consensus is for greater accountability with regard to corporate power, which, whether we like it or not, is central to the way we organise ourselves—it is the governing social form.
On the issue of voluntary codes on corporate social responsibility, the hon. Members for Elmet and for Hemsworth made the point strongly that companies will often give a very good story on CSR. Some consultants are making a very good living out of CSR. But beware the veil—and in some cases, unfortunately, the mask—of corporate social responsibility. As Andrew Pendleton, senior policy officer of Christian Aid, said:
“Some of those shouting the loudest about their corporate virtues are also among those inflicting continuing damage on communities where they work”.
That is why we need these amendments.
The concession is welcome because, clearly, there is a problem in the complex world of corporate power, where there are joint venture companies, subsidiary companies and all kinds of complicated relationships. It was therefore important to get the amendment on suppliers and subsidiary companies. We have had particular problems with asbestos-related cases in the past, where companies have tried to avoid accountability through Russian doll-like subsidiary companies across the globe. The underlying message in the amendments is that society predated the joint stock corporation. Those companies—which were time-limited back then—were given a licence to operate by society, and we create the conditions—the legal framework and the transport infrastructure—in which they can make their profit.
It is entirely acceptable to demand what the new clauses demand—statutory minimum environmental and social reporting standards. Companies must be accountable not just to their shareholders and employees, but to the wider society in which they operate.
I congratulate my hon. Friend the Member for Hemsworth (Jon Trickett) on the sensible and coherent way in which he introduced a very important debate. I also congratulate the hon. Member for Putney (Justine Greening) on the style of her maiden Dispatch Box speech. Unfortunately, it demonstrated the essence of the new Conservatives’ policy, which is to agree with Labour proposals, attack the Labour Government, and have no ideas of their own. It is also clear that the hon. Lady has no conception of the iterative process over the past eight years that has engaged business and, indeed, all other stakeholders, in a creative and constructive process. As I know from the comparatively short period during which I have been involved, it has been far more than consultation; it has been very full engagement.
Many of my hon. Friends wish to speak, so I shall keep my remarks very brief.
The speech of my hon. Friend the Member for Hemsworth touched on issues in which I have taken a passionate interest for many years. The only public meeting that I held at the time of the last general election was on the theme “Poverty is political”, linked to the need to tackle poverty worldwide. I have been involved in fair trade issues for many years, and ministerial experience has taught me a great deal about how to make sustainable development a reality.
Freedom from ministerial responsibilities allows me to take part in the debate, and to say frankly and openly what I think about the issues. I want a business environment in which the long-term interests of a company include consideration of its responsibility to people and to the environment, but I cannot support new clause 1 because I do not believe that it will have the desired effect. I agree with my hon. Friend about the ends, but great care must be taken with the means.
My hon. Friend spoke of protecting the public interest and of the need for a light touch. He observed that corporate social responsibility was now taken seriously—and it is, because the environment has changed. I support the Government amendments because they respond to an aspect of our debates on these issues, but the new clause would introduce a serious bureaucratic burden without achieving the desired results. Surely we should all want the whole of business to be both successful and responsible, and the new environment of enlightened shareholder value encouraged by the Bill will have a major impact in that regard. The balance of success and responsibility is built into the Bill very carefully. In my view, the hon. Member for Cambridge (David Howarth) is wrong: a tick-box mentality is more likely to result in a PR tool than to encourage a positive change in the environment.
The Bill embodies other important principles, such as “Think small first”, which has been seven years in the making. The new clause has good intentions, but in practice it embodies the principle “Think bureaucratic first”. It introduces a danger—companies will be advised by lawyers and they will play safe, not in protecting sustainable development, but in bureaucratic activity, producing more paperwork rather than public benefit.
Gibbon has warned us that laws often fail to prevent what they forbid. I suggest that bureaucratic regulation often fails to achieve the desired outcome. There can be perverse, unintended consequences. What enlightened shareholder value does is allow more citizen engagement in how companies operate. Those of us who care about issues such as sustainable development and fair trade, and wish to combat exploitation, surely want an environment in which the citizen campaigner is complemented by the citizen consumer. We can now go into a shop and see half a dozen different fairly traded coffees, which was not the case a few years ago. We also want the citizen shareholder to have an impact. What we want is not a tick-box environment, but intelligent engagement by companies. That is where I agree with the hon. Member for Putney. The Bill retains “true and fair” as the accountancy standard, for instance, which is extremely important.
I believe that enlightened shareholder value will allow organisations in the Corporate Responsibility Coalition—those who want to campaign for trade justice, environmental protection and the rest—to continue an intelligent engagement with business that has helped to increase responsibility in terms of sustainable development and international accountability in the United Kingdom, while at the same time making the UK a better place in which to do business. Surely there are lessons to be learned from our success in recent years in encouraging small companies to promote entrepreneurship.
There may be things that companies should do to a greater extent in order to carry out their responsibilities, but some of them should be contained in employment, environment or health and safety legislation rather than a Bill that is concerned with the vehicle—the company. Moreover, there is nothing to prevent companies from reporting in a way that is not required by law if that proves useful to shareholders for reasons of transparency. It would be good for their reputations, demonstrating that they were working responsibly.
Let us continue the partnership between Government and business and, indeed, the organisations that have campaigned for improvements. Let us think small first. Let us work on the application of enlightened shareholder value, which is making the UK a good and progressive business environment. Let us not go down the heavy-handed bureaucratic route that I fear is being proposed, although not intentionally, in the new clause and amendments.
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, I hope, 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.
I am sorry, but we are running out of time.
This cost has the huge benefit of creating a level playing field for competitors to give an accurate picture of how revenue and profits have been achieved. That, in turn, will affect the perception of their product or service to customers and investors alike. It is a virtue on which the company literally can trade. I therefore respectfully request hon. Members to support new clause 1 and new clause 75.
I shall speak briefly in support of new clauses 1 and 2, but I also want to speak to some other amendments tabled by myself and my hon. Friends. They further the same principle of keeping companies accountable by reporting—in other words, by asking them to say what they have done in certain areas. The sort of reporting envisaged in amendments Nos. 801 and 820, which we are proposing, cannot be subject to the usual Tory accusation that while companies spend millions on public relations, telling us what they have done, any expenditure on reporting to tell us what they have done is likely to put people out of work and cause companies to flee to some other jurisdiction. The amendments escape that criticism.
Amendment No. 801 tackles a basic issue, on which I would have hoped the Department of Trade and Industry had collaborated with the Inland Revenue and Treasury, as they both want to restrict the use of transfer pricing to launder profits into other jurisdictions either for avoiding tax or for money-laundering purposes. It is an important fact that FTSE 100 companies have 1,500 subsidiaries through which profits can be laundered. Indeed, 60 per cent. of world trade goes through multinationals. Bearing that in mind, something has to be done about transfer pricing, and amendment No. 801 actually does it.
There is considerable concern about this problem in the United States, where several inquiries have been conducted. UNESCO has also had some inquiries. From tax inquiries and congressional hearings in the US, it has emerged that the more flagrant examples of transfer pricing include, for instance, importing plastic buckets from the Czech Republic at $972 each, fence posts from Canada at $1,800 each and a kilo of toilet paper from China at $4,121. That shows how trade is used to launder money out of one jurisdiction into another. Lower prices, going the other way, include prefabricated buildings to Trinidad at $1.20 per building and bulldozers to Venezuela at $387. In that way, tax obligations in one jurisdiction can be avoided and money can be laundered through to another jurisdiction, so it is important that we know what is going on.
The Treasury and tax authorities are now grappling with the problem. They are already tackling royalty payments by IBM, and Vodafone is currently locked in a transfer pricing discussion. We should get companies to declare what transfer pricing policies they are using and to report at constant market prices so that we know what is being done. It is public information and not a great burden on companies. Indeed, Henderson Global Investors, one of the largest institutional investors, has openly called for transfer pricing disclosures so that investors can know where the money is coming from, what is happening to it, where the profits are being generated and where tax has been paid. As I say, it is an important piece of investor information.
I do not have time to speak to all the amendments—to the House’s great regret, I am sure—but I want to deal with another amendment in detail.
Perhaps the hon. Member will bear that in mind as the debate continues. Let us get on with it.
The next group will have to be voted on at 3 pm as well, and the principle is exactly the same—the publication of information by companies so that markets and the authorities know what is going on. That applies to amendment No. 820, which deals with the publication of the highest and lowest annual earnings by employees, the number of UK-based workers and the gap between male and female earnings. All the years of pressure to equal up pay and to take action against low pay have not succeeded to the extent that is socially necessary.
If we require companies to report on what they are doing, it may well prove a way of bringing pressure to bear on them in the face of a glaring scandal. There are massively high pay levels at the top in comparison with exploitation and low wages at the bottom. Between 1997 and 2004, the average FTSE 100 chief executive’s total annual pay rose by 80 per cent. to £1.7 million. Pay at the bottom did not increase in anything like the same way, so the gaps are becoming ever more glaring. The only way to deal with the problem is to let people know what is going on and for companies to report on what they are doing. If companies want their enterprises to be run as a body, co-operating in order to advance the company and achieve greater shareholder value, they should be proud of their pay record and proud of what they are doing to provide incentives for their lowest-paid workers, particularly women.
Unfortunately, I do not have time to deal with all the amendments in the group, but many of them deal with a growing trend, discernible in America, whereby companies want to report on their achievements. Massive public relations campaigns are taking place and millions of dollars are being spent in America on publishing that information, yet the Conservative Opposition in this country are niggling that any further obligations on companies will bring them crashing down around our ears, sending them into tax havens overseas and causing them to fire large numbers of workers. Those are ridiculous accusations to launch against what amounts to a simple principle of social justice and open government—that companies should be open and should be required to publish information, as Government Departments, public authorities and everybody else in our democracy has to. They are part of the fabric of society, and they must maintain their responsibilities to the fabric of society. That is my purpose in highlighting these amendments, and I hope that the Minister will make a difference when she replies to this fascinating debate.
It has been an extremely good debate, and I particularly commend the speeches of my hon. Friend the Member for Hemsworth (Jon Trickett) and the hon. Member for Putney (Justine Greening) and those of my right hon. Friends the Members for Oldham, West and Royton (Mr. Meacher) and for Cardiff, South and Penarth (Alun Michael), who in their ministerial capacities contributed enormously to the agenda. I should also have mentioned my hon. Friend the Member for Elmet (Colin Burgon). Despite my interruptions, it was great to see the hon. Member for Putney contribute from the Front Bench, and I welcome her to her role.
I want to deal quickly with the issues. Yesterday, we talked about directors’ duties under clause 173. Today, we are considering clause 423 and, as I said yesterday, the two clauses go hand in hand and form an integral part of our approach in introducing a framework for corporate social responsibility while promoting business success. I do not want to repeat what I said yesterday, but some Members here today were not here yesterday. I know that many Members have received hundreds of representations on these issues and that there is great public interest in what we are debating.
It is important to put it on record that the purpose of the Bill is to provide a regulatory and legal framework that will promote enterprise and growth and that will encourage investment and employment. As our leading British companies and businesses recognise, businesses will prosper best, will be sustainable for the longer term and will grow faster when they act in an enlightened way. Businesses do not operate in a vacuum; they operate within communities and as part of society. All responsible businesses recognise what they do and how they do it impacts on the community in which they operate and more widely in society. All responsible businesses take account of the economic, social, environmental and human rights implications and impacts of what they achieve. By improving the way in which companies report on their activities and by enhancing the transparency of that reporting, the clause will make it easier for shareholders to hold directors to account.
I am sorry but I will not give way, because time is very short.
I will deal briefly with new clause 1, new clause 2 and our amendments. New clause 1 was tabled by my hon. Friend the Member for Hemsworth. All companies, except small companies, will have to prepare a business review. Most companies, such as the Virgins and the Asdas, will choose of their own volition to incorporate many of the issues that we are debating when they prepare that review. However, we have exempted large private companies from having to comply with the fifth element of clause 423 for a particular reason—because there is a difference between the position of a private company and a public company. A quoted company has dispersed shareholders and operates in a regulated market for its shares, and we believe that that requires a greater degree of statutory underpinning for transparency and scrutiny than for companies that are privately held. However, all companies, including Thames Water, will have to report with a business review.
My hon. Friend the Member for Hemsworth raised the issue of materiality, and we think it wrong to remove what is described as the “materiality” requirement in the review, as his amendment seeks to do. The provisions were drafted carefully to avoid the review becoming a box-ticking exercise. The requirements are for the review to be
“a balanced and comprehensive analysis...consistent with the size and complexity of the business”
and for quoted companies to include specific information
“to the extent necessary for an understanding...of the company's business”.
That provides flexibility in the disclosures that need to be made and enables the directors to exercise their judgment as to whether something should be included. When the directors believe information to be material to an understanding of the company’s business, we would expect them to include it in the business review.
I am tight for time, so I wish to deal with issues relating to the Government amendments and then new clause 2. On the Government amendments, I say to the hon. Member for Putney that we have listened to all stakeholders, not just business stakeholders. It was in response to the representations that we had from all stakeholders that we brought forward the amendment to the business review. Of course I will meet, as I always do, the business representatives who may be concerned about this, but our slight amendment just reflects what was in the original company law review.
I also wish to say something about what has appeared in the press today. It remains the directors’ judgment to decide what is relevant in the supply chain for them to report on. Nothing is changed by the amendment. It does not require companies to list their suppliers and it is not about miles and miles of paperwork. As clause 423 says, a quoted company will in its business review have regard to the content of the amendment
“to the extent necessary for an understanding of the development, performance or position of the company’s business”.
No more, no less. Some of the fears that the hon. Lady mentioned do not reflect what will happen in practice.
I have a great deal of sympathy for the motivation of my hon. Friend the Member for Elmet in tabling new clause 2. Hon. Members want there to be consistent reporting across companies—I understand that—so that comparisons can be drawn and so that we can see the history of an individual business’s reporting against consistent criteria. We have not gone down the road of giving standards a statutory underpinning, because we think that new clause 2 would encourage a box-ticking culture rather than encourage directors to think about the issues on which they are reporting. However, guidance is prepared by the Accounting Standards Board, and it has said that it will update and revise it. I am sure that companies will have regard to that guidance.
The argument is therefore between voluntary guidance and standards that are recognised in statute. I will closely monitor implementation of the clause in practice to make sure that it leads companies to provide meaningful and useful narrative reporting on issues relevant to the particular company. Specifically, I will ask my officials to conduct an assessment of whether our provisions are working in the way that we hope two years after the implementation of the business review provisions of the Bill. We will consult business, non-governmental organisations and other stakeholders as part of that process, and it will be open to us to return to the issue if the law does not work in the way we intend. We have the power in the Bill to add to the contents of the business review.
Finally, it is important to say to those who have been pressing for more movement on the review that I have seen the corporate social responsibility agenda develop over time. Provisions that are controversial today but are adopted by some, become widespread tomorrow. It is an evolving agenda as there is greater acceptance of the wider responsibilities of a company. I believe that companies will change and that their role in the community will change. It is on that basis that I ask hon. Members not to press their new clauses and amendments.
In the light of the Minister’s comments, and particularly in the light of the supply chain amendment, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
It being Three o’clock, Mr. Deputy Speaker, put forthwith the Questions necessary for the disposal of the business to be concluded at that hour, pursuant to Order [17 October].
New Clause 75
Requirement for audit of business review
‘The auditors must state in their report—
(a) whether in their opinion the information given in the business review for the financial year for which the annual accounts are prepared is consistent with those accounts; and
(b) whether any matters have come to their attention, in the performance of their functions as auditors of the company, which in their opinion are inconsistent with the information given in the business review.’.—[David Howarth.]
Brought up, and read the First time.
Motion made, and Question put, That the clause be read a Second time:—
On a point of order, Madam Deputy Speaker. The Opposition wish to oppose Government amendment No. 821 but, because of the programme motion, it would appear that we do not have any choice except to oppose every Government amendment listed, until the falling of the knife. Is there any way that we can vote against amendment No. 821 without having to vote against all the Government amendments?
I must inform the hon. Gentleman that the Opposition will have to vote against all the Government amendments; under the programme motion, I am bound to put all the remaining amendments in this group.
Question put, That amendments Nos. 821, 822, 712, 530 to 533, 311, 303, 340, 341, 312 to 315, 235 to 239, 824, 224, 713, 534 to 536, 240, 537, 825, 538, 316 and 539 to 543 be made:––
New Clause 16
Names and addresses of members of companies: company application
‘(1) Subject to the provisions of this section, a company may make an application under this section to the Secretary of State where the condition in subsection (2) is satisfied.
(2) The condition referred to in subsection (1) above is that the company considers that the availability for inspection by members of the public of particulars of the names and usual residential or business addresses of the members of the company creates, or (if an order is not made under this section) is likely to create, a serious risk that a member of the company or a person who lives with or is an employee of a member of the company will be subjected to violence or intimidation (“a serious risk”).
(3) Where, on an application made by a company under this section, the Secretary of State is satisfied that the availability for inspection by members of the public of the particulars of that company’s members’ usual residential addresses creates or (if an order is not made under this section) is likely to create a serious risk that a member, or a person who lives with him, or an employee of his will be subjected to violence, intimidation or criminal activity, he shall make an order under this section (“a company member’s confidentiality order”) in relation to the company.
(4) Where the Secretary of State is not satisfied under subsection (3) he shall dismiss the application.
(5) At any time when a company member’s confidentiality order is in force in relation to a company, the name and address of any individual in the register of members of the company that is the subject of the confidentiality order, shall not be disclosed to any person who may request either company or Companies House disclosure of such names and addresses save in prescribed circumstances.
(6) The Secretary of State shall give the applicant notice of his decision under subsection (3) or (4); and a notice under this subsection shall be given within such period and shall contain such information as may be prescribed.
(7) At any time when a company member’s confidentiality order is in force in relation to a company, the company must pass on to all of its members any lawful message or documentation that a member of the company or a member of the public wishes to send to the company’s members.
(8) The company may charge a reasonable fee for sending a message or documentation under subsection (7).
(9) Where the company has become bound to act under subsection (7) and has failed to so act, an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(10) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(11) In the case of any such refusal or default as set out in subsection (9) the court may by order compel an immediate inspection of the register or, as the case may be, direct that a copy of the register be sent to the person to whom the undertaking was made.
(12) The Secretary of State may at any time revoke a company member’s confidentiality order if he is satisfied that such conditions as may be prescribed are satisfied.’.—[Mr. Djanogly.]
Brought up, and read the First time.
With this it will be convenient to discuss the following:
New clause 17—Names and addresses of members of companies: individual application—
‘(1) Subject to the provisions of this section, an individual may make an application under this section to the Secretary of State where the condition in subsection (2) is satisfied.
(2) The condition referred to in subsection (1) above is that the individual—
(a) is or proposes to become a member of a relevant company; and
(b) considers that the availability for inspection by members of the public of particulars of his name and usual residential or business address creates, or (if an order is not made under this section) is likely to create, a serious risk that he or a person who lives with him or an employee of his will be subjected to violence, intimidation or criminal activity (“a serious risk”).
(3) Where, on an application made by an individual under this section, the Secretary of State is satisfied that the availability for inspection by members of the public of the particulars of the individual’s usual residential address creates or (if an order is not made under this section) is likely to create a serious risk that the individual, or a person who lives with him, or an employee of his will be subjected to violence, intimidation or criminal activity, he shall make an order under this section (“an individual member’s confidentiality order”) in relation to him.
(4) Where the Secretary of State is not satisfied under subsection (3) he shall dismiss the application.
(5) At any time when an individual member’s confidentiality order is in force in relation to an individual the name and address of the individual in the register of members of the company which is the subject of the confidentiality order shall not be disclosed to any person who may request either company or Companies House disclosure of such name and address save in prescribed circumstances.
(6) The Secretary of State shall give the applicant notice of his decision under subsection (3) or (4); and a notice under this subsection shall be given within such period and shall contain such information as may be prescribed.
(7) At any time when an individual member’s confidentiality order is in force in relation to a company, the company must pass on to all of its members any lawful message or documentation that a member of the company or a member of the public wishes to send to the company’s members.
(8) The company may charge a reasonable fee for sending a message or documentation under subsection (7).
(9) Where the company has become bound to act under subsection (7) and has failed to so act, an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(10) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(11) In the case of any such refusal or default as set out in subsection (9) the court may by order compel an immediate inspection of the register or, as the case may be, direct that a copy of the register be sent to the person to whom the undertaking was made.
(12) The Secretary of State may at any time revoke an individual member’s confidentiality order if he is satisfied that such conditions as may be prescribed are satisfied.’.
Amendment No. 758, in clause 113, page 51, line 22 , at end insert
‘to whom the beneficial rights and obligations of membership belong’.
Amendment No. 383, in clause 116, page 53, line 35 , at end insert—
‘(5) Notwithstanding the foregoing provisions of this section, a shareholder in a quoted or publicly traded company who is an individual shall have the right to require that his home address is not set out in the register of members available for inspection or in the copy of the register supplied by the company pursuant to a request, nor in any record of the register of members supplied to the Registrar of Companies for the public file maintained by the Registrar.’.
Amendment No. 384, in clause 117, page 53, line 38, leave out ‘five’ and insert ‘fifteen’.
Government amendment No. 222
Amendment No. 683, in clause 9, page 4, line 28, at end insert—
‘(d) a statement setting out and verifying the identity of the initial shareholders.’.
I congratulate my hon. Friend the Member for Putney (Justine Greening) on her succinct and expert introduction at the Dispatch Box. She gave an excellent presentation and her experience showed through in the quality of her remarks.
We move on to the rights of shareholders and non-members to inspect and require copies of the register of members of a company. Although we believe that the Government have made good progress on protecting shareholders, we would like the Bill to be bolstered further. The initial Bill that was presented in the House of Lords contained little on the matter. However, after several thousand shareholders in GlaxoSmithKline, the pharmaceutical group, started to receive threatening letters from animal rights terrorists, Lord Sainsbury, on direct orders from above and urged on by a chorus of vocal peers, suddenly promised on Report to reconsider the Government’s position before Third Reading in the Lords, when amendments were indeed tabled and slipped into the Bill.
We have been demanding increased protection for shareholders for several years. The Government rejected amendments that we tabled to the Serious Organised Crime and Police Bill that would have achieved that, so we are pleased that the matter is being addressed. My hon. Friends and the public wish to ensure that shareholders are protected from violence and intimidation.
We have been round the houses on this in our six or seven weeks in Committee. I understand that the hon. Gentleman is interested in the matter as a constituency issue, principally because of Huntingdon Life Sciences. Does he agree that he is perhaps not the right person to front this debate—maybe the hon. Member for Putney (Justine Greening) should be doing so—because he is in danger of confusing a constituency problem about which he is rightly worried with measures that would have a broad-ranging effect on companies legislation affecting business as a whole, to which I hope to refer later?
I am pleased that the hon. Gentleman has given me the opportunity to put on record the fact that, although Huntingdon Life Sciences is in my constituency and I have been following its ongoing problems with animal rights terrorists, that introduction to the subject has probably given me an expertise that other hon. Members might not have, not least because I have seen at first hand what can happen and have spoken to the police and the companies affected—not only HLS, but dozens of its suppliers. I would say that my experience helps my cause, rather than gives me a problem. I appreciate that the hon. Gentleman was an investigative journalist in his previous career and some of his remarks might come from that perspective. However, I would not say that it is any worse to make them because of that. Perhaps that balances out the situation.
In any event, this is about more than protecting companies that practice animal testing, although that is the matter on which I have direct experience, as I explained to the hon. Gentleman. This is about the kind of environment that we offer for people who invest in business in this country. Just as the protection of the person must be a priority for the Government, the protection of companies and their shareholders must also be a priority. Without that protection, business will simply pick up and go.
I point out, with some irony, that several speakers in the Lords debate and several journalists have made out that the GSK letter incident was a new and dangerous development. That was not the case. Attacks on shareholders have become an established theme of anti-corporate activism. Although direct action, sometimes slipping into terrorist activity, is emanating from animal rights activists today, the same methods could be used tomorrow by other groups. If drug manufacturers, animal testing companies and furriers are affected now, meat importers, road builders, handbag manufacturers, furniture makers or mining companies could be affected tomorrow.
I emphasise the fact that countering criminal activity using shareholders’ registers goes much further than dealing with extremists. Another significant example of such activity is the growth of foreign-based so-called boiler rooms. They harvest the personal details of individuals from members’ registers and approach those shareholders to try to persuade them to buy investments that are often worthless, regularly by implying that there is a connection with the company concerned.
A court case recently revealed that fraudsters had been using registers to steal shares from overseas investors. The Financial Times reported in May that the company secretary of Balfour Beatty wrote to the company’s 20,000 shareholders after receiving a significant number of complaints. I received a separate letter from Balfour Beatty that outlined the company’s concerns about the situation. Diageo wrote to 110,000 shareholders after similar calls were made to its members.
I have a great deal of sympathy with the point that my hon. Friend is making, but I have a reservation about new clause 16. As far as I can tell, if the Secretary of State decided to grant the request of the applicant, there would be no process whereby his decision could be reviewed, say by judicial review. Does my hon. Friend think that, if new clause 16 were accepted, it should have an appeal mechanism against the decision of the Secretary of State?