Previous Section Index Home Page

Company Law (Operating and Financial Review)

The Minister for Industry and the Regions (Alun Michael): The Chancellor announced on 28 November that the Government had decided no longer to require quoted companies to prepare an Operating and Financial Review, in addition to the requirements of the EU Accounts Modernisation Directive.

I am today laying regulations which repeal the requirement on quoted companies to prepare an Operating and Financial Review for financial years starting on or after 1 April 2005. They will need to include a Business Review as part of the Directors' Report, in compliance with the EU Accounts Modernisation Directive requirements. This is in line with the Government's general policy not to impose regulatory requirements on UK businesses over and above relevant EU Directive requirements. I am today publishing guidance on the regulations.

We are committed to improving strategic, forward-looking narrative reporting by companies, and to enhanced dialogue with shareholders based on such reporting. We believe it is important for companies to report on non-financial issues relevant to the development and performance of the business, including, for example, environmental matters and human capital management, and they will need to do so under the Business Review requirements. The Business Review will need to cover principal risks and uncertainties as well as giving a balanced and comprehensive analysis of the business.

The contents of the Business Review cover much of the ground covered in the Operating and Financial Review, but in less prescriptive form. The depth of analysis required is proportionate to the size and complexity of the business. A small company (namely one which satisfies two of the following: turnover of not more than £5.6 million balance sheet total of not more than £2.8 million; not more than 50 employees) need
15 Dec 2005 : Column 177WS
provide no such review. Also, the Business Review does not have the additional audit requirement specified for the OFR.

Companies that have been preparing to produce an OFR will be able to use that work to produce their Business Review. In addition, many companies have been producing a voluntary OFR for some years, and may wish to continue doing so using work that they have done toward the mandatory OFR. Or they may use that work to improve the quality and depth of their Business Review.

The Government also believe that disclosures—both mandatory and voluntary—are only part of the picture. On their own, disclosures are insufficient to generate responses by businesses to the legitimate concerns of civil society. Dialogue with and pressure from stakeholders, including the public, NGOs, shareholders and Government, is vital for achieving this outcome.

In order to have the maximum impact, it is important that the requirements for narrative reporting are properly calibrated, and neither impose an excessive compliance burden, nor push companies into a "tick box" or "boilerplate" approach to disclosure.

As regards enforcement of the Business Review requirements, the Financial Reporting and Review Panel has the legal authority to review a company's Directors' Report, for financial years beginning on or after 1 April 2006 and, if necessary, go to the court to compel a company to revise its report.

The Company Law Reform Bill contains provisions relating to the Operating and Financial Review. We intend to bring forward amendments to remove the need for a quoted company to produce an Operating and Financial Review. In future such a company will have to produce a Business Review. I am today inviting views from interested parties by 15 February before we bring forward appropriate amendments to the Bill.


Night Flying Restrictions

The Parliamentary Under-Secretary of State for Transport (Ms Karen Buck): On 10 June 2005 I launched stage 2 of a two-stage consultation process about setting the night restrictions regime at Heathrow, Gatwick and Stansted to run to October 2012, The consultation paper explained that we intended to continue the present night restrictions regime for a further year from 30 October 2005 until 29 October 2006.

We stated that, during that year the current regime should continue unchanged. The consultation document then invited comment on whether the specific movements limits and noise quotas to apply for summer 2006 should be the same as those for summer 2005. I also announced that the movements limits and noise quotas for winter 2005–06 should remain the same as those for winter 2004–05.

After careful consideration of the responses on this subject to the stage 2 consultation on night flying restrictions which we launched in June, we have concluded that the movements limits and noise quotas for the summer season 2006 should be the same as for summer 2005.
15 Dec 2005 : Column 178WS

The reasons for adopting this approach remain as set out in the consultation paper and were not disputed by those responding to the consultation.

We are continuing to consider carefully the full responses on the other issues outlined in the recent consultation exercise and will make an announcement in due course on the night restrictions regime to apply from 29 October 2006.

The consultation also invited comment in a range of issues including the length of the night quota period (currently 11.30pm until 6am), the specific movements limits and noise quotas, proposals for environmental objectives and specific noise abatement objectives and possible noise insulation schemes or criteria in respect of night disturbance.

Although there was relatively little comment on the specific point about the summer 2006 movements limits and noise quotas, there was been a greater response about other issues raised in the consultation. We are continuing to analyse those responses and carry out the associated assessments including a full Regulatory Impact Assessment.

Road Safety Cameras

The Secretary of State for Transport (Mr. Alistair Darling): I am today publishing an independent research report which confirms the effectiveness of the national safety camera programme over the four years from April 2000 to March 2004. I am also announcing changes which will end the current ring-fencing of funding for safety cameras, and will give much more local flexibility and accountability, both on funding and in other respects, to local authorities, the police and the other agencies who are involved in improving road safety at the local level.

The four-year research report, prepared by PA Consulting and University College London, examines over 4,000 camera sites in 38 safety camera partnership areas, covering virtually the whole of Great Britain. The report finds that safety cameras continue to be highly effective in reducing speeding, accidents and casualties at camera sites:

The report also considers the "regression-to-mean" effect. This effect arises because the number of PICs and KSIs in the period before installation of a camera may be higher than the long-term average for that location. The report finds that, at the very small number of sites where it was possible to examine this effect, a proportion of the observed reduction in PICs and KSIs could be attributable to regression-to-mean. The report concludes that, even after allowing for this finding, safety cameras are achieving substantial and valuable reductions in collisions and casualties.

I have placed a copy of the PA-UCL report in the Library. It will also be available on my Department's website.
15 Dec 2005 : Column 179WS

I am also announcing today important changes to the national safety camera programme in England and Wales. Taking account of the findings of the four year report, we have concluded that:

It is therefore now timely that camera activity and partnerships are integrated into the wider road safety delivery process. For the future we are going to give greater flexibility to local authorities, the police and the other agencies who work with them to improve road safety, so that they can pursue whichever locally agreed mix of road safety measures will make the greatest contribution to reducing road casualties in their area. As part of this process the responsibility for safety cameras in Wales will transfer to the National Assembly for Wales.

Therefore, 2006–07 will be the last year of the netting-off funding arrangements for safety cameras in England and Wales. I understand that the Scottish Ministers are also considering the future of the hypothecated Safety Camera Programme in Scotland, and will announce their decision in due course.

For 2007–08 and beyond, my department will enhance the overall level of funding for road safety provided to local highway authorities in England through the Local Transport Plan (LTP) process. For the first time a proportion of this funding will be revenue based.

The enhanced funding will be allocated to authorities in accordance with their road safety needs (using the existing LTP road safety formula) and with the quality of their second round LTP submissions and delivery record. We will also provide enhanced funding to Transport for London. My Department is writing to all highway authorities in England to provide details of this change, and inviting them to reflect this new flexibility in their LTP submissions due in March 2006.

We propose to allocate some £110 million a year for this enhanced funding over the period 2007–08 to 2010–11. As well as the greater flexibility, this will provide financial stability and facilitate long term planning. It is also a substantial increase in funding for road safety, by comparison with the latest projection of 2005–06 expenditure by safety camera partnerships in England which is some £93 million.

In considering the quality of LTP submissions, we will have regard to, among other factors, the degree of cooperation and wider collaboration between the local authority, the police force and the other relevant agencies in the area, in respect of their road safety strategy, linkages with other areas of work and their approach to tackling individual problematic locations. We want local strategies and decisions to be well-founded, taking account of the combined knowledge and expertise of all the agencies concerned, and to avoid duplication of effort. My Department will work closely with local road safety partnerships to help them produce high quality bids, and to deliver
15 Dec 2005 : Column 180WS
substantial casualty reductions. We will also encourage road safety partnerships to include a wider range of other organisations in local decision-making, and not restrict themselves only to police and local authorities.

For the final year of safety camera netting-off funding in 2006–07 we are amending the handbook of "Rules and Guidance" to reflect the findings of the four-year report. The criteria on the location of safety cameras are being changed to ensure that cameras can be used where there is a strong road safety need. The deployment criteria will take account of all injury accidents as well as the level of KSIs, look back five years rather than three; and allow camera enforcement on routes where there is a serious problem of speeding and casualties, without the problem necessarily being concentrated at one particular location. A copy of the updated handbook will be placed in the Library and on my Department's website in due course.

The handbook will also make improvements to the signing of cameras, to further assist drivers to recognise and comply with the speed limit:

We also intend to publish shortly revised guidance to Traffic Authorities on setting local speed limits, which will request authorities to review the speed limits on their A and B roads by 2011, and to give priority to reviewing the limit on any road [not just A and B roads) on which there are poor casualty histories or there is a widespread disregard for the current speed limit, especially where safety cameras are being considered. By undertaking this review, which may lead to inappropriately low speed limits being raised as well as inappropriately high speed limits being lowered, we wish to encourage motorists to have greater respect for speed limits generally.

Next Section Index Home Page