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Mr. Gardiner: Does my hon. Friend agree that there is a parallel with the change in the legislative and regulatory environment in local government from compulsory competitive tendering to the best-value regime that this Government introduced? Previously, local authorities were obliged simply to look at the cheapest price for delivering a service, whereas they can now assess "value" much more widely. Does not the Bill seek, in many respects, to do the same for business? A business should not simply consider the cheapest price at which it can produce its product in a given area but the overall value that accrues to the consumer, and to society in general, as a result of its interventions.
Mr. Dismore: Again, my hon. Friend makes a cogent point. That is the nub of the debate. We want companies to look more broadly at the wider range of stakeholders and people who may be affected by their operations.
We have had such laws for a very long time. The Health and Safety at Work etc. Act 1974 gives companies duties towards the general public. Here, we are asking companies merely to tell us what they are up to, and then perhaps market forces, paradoxically, will do the trick.
Mr. Pound: I do not have my copy of the Register of Members' Interests to hand, although I know that my hon. Friend knows it by heart. Does he agree that many right hon. and hon. Members who rightly list their directorships, in certain cases in companies dealing in tobacco, for example, might set an example to the House
and to the nation by insisting on this form of disclosure, and in the absence of legislation for it, perhaps even arranging to do so themselves?
Mr. Dismore: My hon. Friend makes an interesting point. I am a member of the Standards and Privileges Committee, but I do not know the register inside out. We consult it only when we are investigating someone.
It is amazing that the only representative of the Conservative party here today is the shadow Minister, and the same goes for the Liberal Democrats.
Mr. Gardiner: He is not a shadow Minister.
Mr. Dismore: Whatever he is, he is sitting on the Front Bench. Perhaps he will clarify what he is doing here.
Gregory Barker (Bexhill and Battle) (Con): I am a member of the Opposition Whips Office, and as such a shadow Minister.
Mr. Dismore: Perhaps the Liberal Democrat spokesman can make a similar declaration.
Mr. Keetch: As the Liberal Democrat shadow Defence Secretary, I have an important interest in defence matters in this debate, which is why I am listening attentively to the hon. Gentleman.
Gregory Barker: May I also add that, as a member of the Environmental Audit Committee—
Madam Deputy Speaker: Order. The hon. Member for Hendon (Mr. Dismore) must respond to the first intervention before taking a second one.
Mr. Dismore: Thank you, Madam Deputy Speaker.
The Conservative representative has clarified his position as a shadow Whip. Perhaps he can whip in some of his colleagues today, and in particular those who have the shareholdings that have been referred to by my hon. Friend the Member for Ealing, North (Mr. Pound). Perhaps then they can answer for the companies of which they are shareholders and, I suspect, directors, and defend them at first hand in relation to both the Bill and the issues that have been raised today. I suspect—my hon. Friend may be able to supply the detail shortly—that some of them may be a little worried about the Bill, because it may expose them as directors of companies involved in nefarious practices in the developing world.
Gregory Barker: As well as a shadow Whip, I am a member of the Environmental Audit Committee, so this is a subject that I am especially interested in and sympathetic to, but I caution the hon. Gentleman that, at his instigation, we have tested who is in the House today, and it transpires that only six Labour Members were prepared to go into the Lobby, versus 16
Conservative Members, so it ill becomes him to speak about Members not being here, especially as he has destroyed a very good Bill.
Madam Deputy Speaker: Order. I hope that, rather than responding to that intervention, the hon. Gentleman will continue with the debate on the Bill.
Mr. Dismore: Thank you, Madam Deputy Speaker.
The hon. Member for Hereford (Mr. Keetch) spoke about the interest of the defence industry in the Bill. He may wish to make a fuller contribution later, but I invite him to say a little more now.
Mr. Keetch: The defence industry clearly has an interest in the Bill, and I should point out that, as the Register of Members' Interests confirms, I am a non-executive director of two companies based in my constituency, neither of which has activities outside the United Kingdom. Indeed, one of them does not even have activities outside Herefordshire.
Mr. Dismore: I am sure that the House has heard the hon. Gentleman's declaration, and for the avoidance of doubt, I have no directorships whatsoever.
Mr. Pound: Is my hon. Friend aware that the hon. Member for Bexhill and Battle (Gregory Barker) has registered nine shareholdings in the current register, but that—
Madam Deputy Speaker: Order. We really must return to the debate currently before the House.
Mr. Dismore: I am sure that we can examine the hon. Gentleman's shareholdings in the Tea Room afterwards.
Ms Drown: I am grateful to my hon. Friend for giving way and to you, Madam Deputy Speaker, for intervening, as we were getting a little off track. That said, this is a good debate and I wish that we had more such debates. Does my hon. Friend recognise that the danger with a Bill such as this is that one adds more and more elements to it, and that it is important that regulation is not burdensome? Has he any thoughts on how we can encourage appropriate reporting without the system becoming too big, burdensome and costly to companies? A balance has to be struck in that regard.
Mr. Dismore: My hon. Friend makes a very important point. The Bill makes a useful contribution to the debate and is a good start. I suspect that it has little prospect of becoming legislation, but my hon. Friend the Member for Rugby and Kenilworth (Andy King) has done us a great service in bringing these issues before the House and at least kicking off the debate. The best way forward is for business to listen to this debate and to engage with those of us who feel strongly about these issues. It is clear from her interventions and her work outside this place that my hon. Friend the Member for South Swindon (Ms Drown) feels strongly about them.
The CBI and the large companies represented by such organisations should engage with us and start to develop some solutions. We have witnessed the failure of voluntarism, but perhaps the one or two good companies that do want to make progress could become pilots and flag-bearers for business organisations. Notwithstanding the ignorance of the reporting, if shareholders were to say at annual meetings, "We know that there is no law requiring you to act in this way, but we as shareholders are insisting that you do," we might start to make progress. In that regard, and as my hon. Friend the Member for South Swindon says, this debate is important and valuable.
I was talking about business strategies and what business gets up to. A good example is the construction of an oil pipeline or dam. As we have seen throughout the developing world, such projects are often completely rejected by local communities. However, the voices of those communities are seldom, if ever, heard. If they are heard, they are seldom, if ever, the crucial factor in the business decision as to whether that oil pipeline or dam should go ahead. Such decisions are taken irrespective of environmental, cultural or social damage.
We have discussed the idea that the operating and financial review should not be a full social and environmental report, and that only key performance indicators should be included, yet some businesses will assume that if they have done the OFR, they have done the job. Furthermore, what they chose to include in the final report would be a matter for them. Such an OFR could therefore have an adverse effect, resulting in companies disclosing less, not more. However, the Bill requires an OFR that ensures that companies report on relevant social, environmental and economic impacts and performance, thereby providing both shareholders and stakeholders with an informed assessment of companies' operations and financial positions. The Bill also sets out the matters that should be included in the OFR, and those matters that directors have a duty to consider in order to allow an informed assessment. Moreover, it provides a process for signing off the review. It determines which major companies must publish an OFR—approximately the top 1,000 United Kingdom companies—but more importantly, it allows the OFR to bring in more companies in future.
In addition, my hon. Friend's Bill will amend the basic duties on company directors to include social and environmental impacts by requiring the director to promote the success of the company while having to consider all factors of potential risk, including impacts on communities and the environment, among other matters. Where possible, directors must also reduce damaging impacts on the environment and communities.
We have had some six years of consultation on the review of company law, and we should use every opportunity to ensure that legislation includes the requirements that many of my hon. Friends believe should be implemented, as we have heard in today's and previous debates. Regulations for the operating and financial review were promised in the 2002 White Paper,
which has been followed by further consultation, and still more consultation is due when the review is published.
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