The Economic Secretary to the Treasury (Ed Balls): The Treasury has been working closely with the DTI and industry in developing a regime dealing with liability in damages for damage suffered by reliance upon certain financial disclosures to be made under FSA disclosure rules implementing the Transparency Obligations Directive (2004/109/EC).
After the Governments decision to establish a statutory regime for liability in damages to third parties in respect of disclosures under the Transparency Directive, industry made representations to Government that the establishment of this regime, added to other developments in law and regulation, could have serious and unwanted repercussions for issuer liability for disclosures made other than under the Transparency Directive (for example, in response to the FSA disclosure rules). The Government therefore consulted with key stakeholders over the summer. Responses confirmed that, while an extension of the statutory regime was in principle desirable, this is an extremely complex area in which it is vital that the Government get their policy right.
extend the scope of the statutory liability regime for financial disclosures to preliminary announcements of the results covered by the existing provision in the Bill;
clarify the liability of company directors and other senior officers;
change the territorial coverage of the regime to ensure the liability regime covers all issuers for whom the UK is home member state as well those issuers for which the UK is not home member state but whose securities are traded on a regulated market situated or operating in the UK; and
provide a power in the Companies Bill to enable the Treasury, by secondary legislation subject to the affirmative procedure, to make further provision with regard to the liability of issuers of securities admitted to trading on regulated markets in respect of reports and information issued to shareholders and to those markets.
In relation to the last provision, it will be important for the Government to be able to act quickly to resolve uncertainties in the law relating to the liability in damages of issuers if this is found to be required. For this reason, the Bill, as passed by the House of Commons, gives the Government the power to make
further provision about liability for published information. In view of the significance of these proposals for the future of financial markets in the UK and the breadth of the power proposed, the affirmative procedure has been chosen.
To inform the Governments decision on the further changes to the law for issuer liability, if any, that are required, the Government have decided to conduct a formal review of the liability of issuers in respect of damage or loss suffered as a consequence of inaccurate, false or misleading information disclosed by issuers or their managements to financial markets (including to their own shareholders or bondholders) or of failure to disclose relevant information promptly or at all. This will take into account both existing regulatory obligations and penalties, including criminal penalties, and the potential for liability in damages under existing common law jurisprudence. It will also need to look at the position in other EU member states and more widely in the jurisdictions of other substantial financial services markets. Professor Paul Davies QC, the Cassel Professor of Commercial Law at the London School of Economics, has agreed to conduct this review. Detailed terms of reference will be published shortly.
If the review recommends that the Government should introduce a statutory regime for liability in damages of issuers in respect of financial disclosures or that changes should be made to any regime that exists following the enactment of the provisions currently in the Companies Bill, the Government will, when it publishes its response to the review:
consult fully on the Governments response to the reviews proposals;
publish a full regulatory impact assessment of these proposals; and, subsequently
bring forward legislation for the new regime.
The Secretary of State for Trade and Industry (Mr. Alistair Darling): The European Commission presented in January 2006 a proposal for a directive on the exercise of voting rights by shareholders in EU companies whose shares are traded on regulated markets in the EU. My Department is today launching a formal consultation on the proposal. The consultative document will be placed in the Libraries of the House and will be available on the DTI website.
The directive aims to enhance shareholder rights and corporate governance, with the purpose of improving capital flows, lowering the cost of equity capital, and helping to make companies more competitive.
This proposal is one of the measures put forward in the Company Law Action Plan of May 2003. The exercise of shareholder rights across borders is important to improve governance, market confidence, and the opportunity for cross border investment. Our objective is to agree a directive that improves standards across the EU in such a way as to benefit both companies and investors. Our objective for this directive is to agree an approach which improves
standards across the EU to the benefit of both companies and their shareholders, without imposing unnecessary costs or bureaucratic restrictions, and taking full advantage of the opportunities of modern communications technology. We believe that the right approach is to set out clear principles but to leave flexibility in the way that individual Member States and companies apply them.
The UK has the largest and leading equity market in Europe, and the most dispersed shareholder structure. Consequently, the regime of shareholder rights is well developed and shareholders in UK listed companies, whether or not they are based in the UK, face no significant barriers to exercising their rights; but we can still improve, and it is important that we play our part in improving the exercise of shareholder rights across the EU.
The process of voting at company general meetings differs widely across Member States, and is often a complex procedure. It is further complicated when shares are held across EU borders. The European Commission believes that existing EU legislation does not deal effectively with cross-border voting problems. We agree, and we support the proposal for a directive in this area.
This directive introduces measures to make sure that investors get the information they need, and that they can always exercise their rights at general meetingseven when they are not able to attend it in person, as is often the case where investors are not based in the same EU member state as the company whose shares they hold. The consultation that my Department is publishing today asks a wide range of questions about the scope of the directive and suitability of the measures proposed. We welcome views from all stakeholders with an interest in this important topic.
The Minister for Industry and the Regions (Margaret Hodge): There are now 4.3 million businesses in the United Kingdomthe highest number ever recorded. There are 600,000 more businesses, and employment in small and medium sized enterprises has risen by over a million since 1997.
Our small business sector continues to become more dynamic, and our business environment is now one of the best in the world for starting and growing a business. The World Banks Doing Business 2007 report ranks the UK sixth in the world, and ahead of all other EU member states, in terms of the ease of doing business.
The Government are determined that the environment for businesses and entrepreneurs builds on this competitive edge. It is therefore vital that Governmentnational, regional, localunderstands, and responds to, businesses needs, and takes stock of the way we support them.
The SBS is estimated to be saving business at least £85 million annually. It has tackled a wide range of
issues: reinvigorating the Enterprise Insight campaign and firmly establishing our national Enterprise Week; bringing together on line for business more than 50 Departments and agencies under the internationally acclaimed www.businesslink.gov.uk portal; starting a pioneering website: www.supply2.gov.ukto make it much easier for small businesses to supply to the public sector; successfully launching the first phase of Enterprise Capital Funds to help the development of high-growth small businesses; and modernising the Small Firms Loan Guarantee.
It has championed the introduction of just two annual commencement dates for new legislation affecting business; and local Business Link operators have doubled their customer base, and achieved high levels of customer satisfaction which have been maintained following the transition from national to regional management.
It is essential that the SBS delivers results that matter to business and keep the UK internationally competitive for business. I have decided that the SBS should become a smaller, sharply focused policy unit that will have close links with business and with other parts of Government, including in particular HM Treasury. It will also lead time-limited projects like its current business support simplification programme. Its focus will be on the issues where Government action can influence the business environment; and on support for our entrepreneursthe people who make the difference in firms large and small.
The SBS will advise Ministers on enterprise policy across Government, and on ways in which policies can be small business-friendly. It will retain specialist expertise in key areas, including: business support policy; small business finance; specific enterprise policy issues including increasing entrepreneurship among women and ethnic minorities; and research, statistics, analysis and performance evaluation.
On behalf of Ministers, it will have policy responsibility for the Governments investments in a range of business supportincluding Business Link, Enterprise Insight, and access to finance funds. It will maintain its strong international links on enterprise, especially with other EU member states and with the United States.
The SBS will not deliver servicessupport programmes should wherever possible be run close to customers, regionally or locallyand it no longer needs the status of being a next steps executive agency. From April 2007, it will operate as a policy unit within the DTIs Enterprise and Business Group.
The current arrangements for publicly funded support schemes for businesses in England also need to be streamlined. At present they are confusing for business, and often not the best use of public funds. Much has already been done within my Department and our Small Business Service to simplify support arrangements. The number of separate schemes has been reduced from well over a hundred to just six.
The SBS will continue to lead the major programme to simplify the many schemes and programmes that are funded elsewhere in Government, and regionally and locally. The Governments aim, announced in Budget
2006, is that the number should be reduced from over 3,000 to under 100 by 2010.
I pay tribute to the unstinting advice and support that Ministers and the Small Business Service receive from the large number of business owners and others who give their time and advice generously. The Small Business Council, the Ethnic Minority Business Forum and the Small Business Investment Task Force all help to shape the Governments thinking on business issues. It is important that the small business voice into Government is strong and coherent, and there is scope for the current arrangements to be simpler. I have therefore asked the Small Business Service to work with these groups, and with the main business representative organisations, to consider how the voice of business people can most effectively reach into Government in the future.
The Minister of State, Department for Transport (Dr. Stephen Ladyman): In my answer of 25 July 2006, Official Report, column 1291W to a written parliamentary question (UIN 84849) from my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), regarding Passenger Carrying Vehicle Delegated Examiners, I stated that there are 74 bus companies which have delegated examiners testing for them. Of these, 70 have a substantive examiner, while the remaining four use examiners from a sister company.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): I am pleased to announce that, following advice from the Meteorological Office, the annual review of the Cold Weather Payments scheme has now been completed. Amending regulations were laid on 10 October and will come into force on 1 November, in time for the beginning of the winter period.
One of the weather stations used in the scheme last winter, Coltishall, has closed and a new replacement weather station has been introduced at Weybourne to provide data for the scheme. Three postcode to weather station linkages have been changed on the advice of the Meteorological Office following representations made by hon. Members.
The Secretary of State for Work and Pensions (Mr. John Hutton): I am pleased to be able to inform the House that we have decided to exempt payments made in respect of asbestos related diseases by subsidiaries of Federal Mogul from the Departments Compensation Recovery Scheme.
The Compensation Recovery Scheme is aimed at ensuring that injured parties are not compensated twiceonce through the compensation payment they receive from the employer or insurer and again through the benefits system. The scheme also helps ensure that compensators fulfil their own obligations and are not subsidised by the taxpayer. Benefit paid out for the same accident, injury or disease for which the compensation is being made is normally recovered from the compensator by the Department for Work and Pensions.
Federal Mogul has become insolvent under the United States of Americas insolvency legislation. As a result of this it is not in a position to meet, in full, its liabilities to its employees arising from asbestos related diseases. A trust fund has been set up to meet part of these liabilities. However, employees are only likely to receive around twenty pence of every one pound they are due. The unprecedented step to exempt this particular trust recognises the unique position in which former employees of Federal Moguls UK subsidiaries (Turner & Newall and associated companies) have found themselves.
Exempting the trust from the normal compensation recovery rules means that more money will be available to meet the needs of the victims and their families who have been affected by these diseases. All the funds in the trust will be available for compensation payments on top of benefits paidwe feel it is important to ensure that their already reduced compensation payments are not reduced further. The cost to the Government is estimated to be £10 million over the next three years.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt):
On behalf of my right hon. Friend the Secretary of State for Work and Pensions, the BFI inspection reports on the following councils were published today: London Borough of Ealing council, Gravesham borough council,
Herefordshire council, Portsmouth city council, Southampton city council, West Lothian council. Copies have been placed in the Library.
The BFI reports detail a range of strengths and weaknesses in the housing benefit services provided by
councils and make recommendations to improve the security and efficiency of benefit delivery.