Previous Section Index Home Page


4 Dec 2006 : Column 74

Mr. Sutcliffe: I am trying to argue that there would be the opportunity to combine corporate manslaughter with existing health and safety legislation. My hon. Friend will know that it took a great deal of care and consideration to get the Bill into its present shape. I know that he and my hon. Friend the Member for Eccles, on behalf of trade union groups in the House, have been pushing the trade union agenda for individual liability. I fully understand that, but in my opening remarks on this set of amendments, I asked the House to have regard to the practicality of what we are trying to achieve. My point is that individual liability is catered for under existing legislation, so the Government are not persuaded that we need to move down the route of individual liability in relation to corporate manslaughter.

6.45 pm

The aim is to make sure that the legislation works and can create an arena for change, as my hon. Friend the Member for Aberdeen, North (Mr. Doran) said. I hope that it will be a deterrent, and it is important that we use it to make sure that companies change their cultures. I explained to the Committee that I wrote a letter to the then director-general of the CBI, Sir Digby Jones, asking him what a rogue employer was. It took a good few months to get a response, and I had to chivvy him, saying, “I’ve not had a response to my letter.” It is unusual for Ministers to have to chivvy people for not responding to their letters. He eventually responded, and he said that the definition of a rogue employer was someone who did not pay the national minimum wage.

We have moved on from that point in the debate, and in the consultation that took place, the Bill was supported by people in the business community who know that there are rogue employers. As hon. Friends have said, all of us can identify such employers in our constituencies. We are trying to make sure that the culture changes, and that health and safety is a key element. We talk about corporate social responsibility, we look at what companies put in their marketing strategies, and we consider how they treat their employees and communities, but health and safety should be considered alongside those things.

Ian Stewart: In line with what the Minister says about the definition of rogue employers, does he agree with the statement made by Sir Digby Jones that, when it comes to directors’ responsibilities, corporate manslaughter should be given equity with offences relating to finance, the environment and even food production, all of which could result in custodial sentences?

Mr. Sutcliffe: I am aware of my hon. Friend’s point, which he raised in Committee, too. He knows why we do not think that such a measure would be appropriate at this time. In an earlier contribution, he asked me to outline where we were on corporate probation and reparatory orders, and he asked what we wanted to do about naming and shaming. I am happy to reconfirm our position on all those points, and I may get the opportunity to do so later— [Laughter.] Well, I am always optimistic. I put it on record now that we are considering corporate probation and naming and shaming, in respect of the filing of accounts at
4 Dec 2006 : Column 75
Companies House. We are also considering the use of annual reports, and the naming of directors in reparatory orders, to make sure that work is carried out. I hope that that shows my hon. Friend and other hon. Members that we have listened to what was said in debate.

Ian Stewart: I thank my hon. Friend for giving way; his patience is immense. May I press him just a little further? He has not referred to cases in which a court decides that a named individual, appearing on behalf of a corporation, is guilty. Would that person have to report back to a court, or to a body such as the Health and Safety Executive?

Mr. Sutcliffe: As I understand it, the court would make the order, and it would identify a responsible individual who is to respond to the courts. I was asked to look at those issues in greater detail, and I am prepared to do so. We are working on those details. Unfortunately, through no fault of the Committee or any hon. Member, although we are trying to move the issues forward, time has caught up with us now that we have reached Report and Third Reading. I shall look to develop the themes that my hon. Friend has raised while we make progress with the Bill, which I hope will go to another place this evening.

Mr. Grieve: I am sorry to have to chide the Minister a little—I have not done it much this evening—but it is regrettable that the time available for Report will clearly be massively insufficient. The Bill was carried over, so if the Minister required more time to deal with outstanding issues before Report and Third Reading, there was absolutely no reason why the Government could not have provided it.

Mr. Sutcliffe: I accept that point. [ Interruption. ] No, certainly not. I reverted to my former career in the Whips Office to understand why we are where we are. We certainly had ample time and opportunity in Committee to discuss the issues. I am trying to explain our motivation, as there is genuine willingness throughout the House to tackle the issue. We have certainly not divided on party political lines in our debates on the Bill, and all right hon. and hon. Members want to introduce a measure that works.

James Brokenshire (Hornchurch) (Con): The Minister helpfully said that he would look at the issue of registration at Companies House and the point about company accounts that we highlighted in Committee. Will he examine the requirement that public companies make announcements on the stock exchange, because it may be necessary to prepare prospectuses and documents for public fund raising? Will he therefore give the House an assurance that he will examine the public disclosure requirements connected with the Bill?

Mr. Sutcliffe: I am happy to examine all the options. Indeed, it was suggested today that I look at public procurement by companies that have been convicted, and consider whether or not we can take action. I have to qualify everything that I say, as we must examine
4 Dec 2006 : Column 76
these things within the available time scales, notwithstanding the reminder from the hon. Member for Beaconsfield that the measure is a carry-over Bill. I will endeavour to examine the issues in detail, and respond to the House appropriately.

Rob Marris (Wolverhampton, South-West) (Lab) rose—

Mr. Sutcliffe: I shall give way to my hon. Friend, but then I wish to make progress.

Rob Marris: I am grateful to my hon. Friend, who has been very patient indeed. I welcome his comment that the Government will look at disqualification and the option of noting things on the register. He has discussed changing the culture, and the fact that the aim of the Bill is prevention. He referred to systemic failures. If directors could, in fact, be imprisoned, does he think it more likely, equally likely or, as I think, less likely that such systemic failures would occur?

Mr. Sutcliffe: My hon. Friend tempts me with a multiple choice question. The Bill and the cultural changes that, hopefully, it will bring about, either by acting as a deterrent or offering a legal remedy, will make directors at all levels, particularly senior directors, understand their responsibilities and the nature of what is required of them. He will have heard me say that this is no longer an adversarial matter between unions and employers—an integral part of the responsibilities of modern-day employers is ensuring the safe running of their organisations. We must achieve cultural change so that we can prosecute the rogue companies—we all know that they exist—that are responsible for serious offences by allowing practices that cause death.

I am mindful of the time, and I do not want to delay our discussion of other issues. The Department for Work and Pensions commissioned the Macrory review of regulatory enforcement, which will make an important contribution to the discussion of penalties. My hon. Friends the Members for Eccles and for Manchester, Central have taken up the issue with my right hon. Friend the Secretary of State for Work and Pensions, and they are trying to push it in relation to the Health and Safety at Work, etc. Act. I am happy to support them in any way that I can.

I have spoken at length, because the issue is crucial. The purpose of the Bill is to create a new basis for corporate liability, so that organisations that are grossly negligent and cause death cannot evade liability because of a loophole in the law, regardless of whether particular individuals committed an offence or not. That is an important achievement. There will be opportunities for further debate about health and safety management, but I hope that I have said enough to convince my hon. Friends and other right hon. and hon. Members not to press their amendments.

Mr. Dismore: I shall certainly not take up very much time. I simply wish to echo the point made by Labour Members that there are public expectations of the Bill. I think that those expectations, which date back 10 years, to the time when the Law Commission first reported on the issue, will be disappointed by the Bill in
4 Dec 2006 : Column 77
its existing form. I have been campaigning on the issue for 20 years, and when I was in practice, I encountered far too many widows and children who were victims of accidents—not just the Herald of Free Enterprise disaster and the King’s Cross fire, but what one might call ordinary accidents, in which ordinary people were killed in ordinary circumstances. Those accidents were not noteworthy but, none the less, they were the result of gross negligence by the companies responsible for them.

There is a need for justice, and for someone to answer for what happened, but the Bill in its present form does not provide. People want to be sure that things will never happen again in the same way, and we can ensure that that is the case only by making sure that the individuals responsible are held to account. We have heard a number of different formulations today—I do not claim that new clause 1 offers the best formulation—and we have heard about other opportunities, including those offered by section 37 of the Health and Safety at Work, etc. Act. Corporate manslaughter could become an offence under the relevant statutory provisions for the purposes of section 37, or that section could be extended to include imprisonment and disqualification. I am grateful for the assurance from my hon. Friend the Minister that he will continue to look at the issue, as it is essential that we find a way of bringing those individuals responsible to book. In begging to ask leave to withdraw the motion, I hope that the other place will revisit the issue and take note of our discussions.

Motion and clause, by leave, withdrawn.

New Clause 3


Liability of holding company

‘(1) In the case of a corporation which is found guilty of corporate manslaughter, any holding company of such corporation shall be guilty of an offence if the holding company failed to take all reasonable steps to prevent such corporation from committing the offence.

(2) A corporation that is guilty of an offence under this section shall be liable on conviction on indictment to a fine.

(3) An offence under this section is indictable in Scotland only in the High Court of Justiciary.

(4) For the purposes of this section the term “holding company” shall have the meaning set out in section 736 of the Companies Act 1985 (c. 6).’.— [James Brokenshire.]

Brought up, and read the First time.

James Brokenshire: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following:

New clause 5— Proceedings against unincorporated bodies other than Crown bodies—

‘(1) Proceedings for an offence under section 1, alleged to have been committed by any unincorporated association or body other than a Crown body, shall be brought in the name of that association or body (and not in that of any individual member or other person) and for the purposes of such proceedings any rules of court relating to the service of documents apply as if that association or body were a corporation.

(2) A fine imposed on an unincorporated association or body on its conviction of such an offence shall be paid out of the funds of that association or body.


4 Dec 2006 : Column 78

(3) In a case in which an unincorporated association or body is charged with such an offence, section 33 of the Criminal Justice Act 1925 and Schedule 3 to the Magistrates Court Act 1980 (procedure on charge of an offence against a corporation) have effect in like manner as in the case of a corporation so charged.’.

Amendment No. 1, in clause 1, page 1, line 11, at end insert—

‘(d) a partnership;

(e) an unincorporated association.’.

Amendment No. 22, in line 11, at end insert—

‘(d) a partnership (as defined in section 1 of the Partnership Act 1890 (c. 39)), where that partnership is subject to some or all of the provisions of the Health and Safety at Work etc. Act 1974;

(e) an unincorporated association or body, where it is subject to some or all of the provisions of the Health and Safety at Work etc. Act 1974.’.

Amendment No. 27, in line 11, at end insert ‘(d) a business association’.

James Brokenshire: This group of amendments deals with organisations that commit an offence under the Bill. New clause 3 seeks to extend liability beyond individual companies that have committed an offence by piercing the corporate veil so that holding companies bear some liability. If a breach took place, an individual company would be liable for the offence under clause 1. On Second Reading and in Committee, we discussed whether that was appropriate, given the complex arrangements within which corporate groups operate, and whether the corporate veil should be lifted and liability should apply to holding companies of the companies that have committed the offence. We did not table a formal amendment in Committee, but it is a serious issue that deserves further scrutiny.

I have consistently said that the Bill should lead to cultural change and ensure that health and safety escalates up the agenda so that issues and events that have been rightly highlighted do not arise. If, however, they do arise, appropriate punishment should be available to give people who have lost loved ones a sense of justice. If the Bill is limited to individual companies that operate within larger groups, there is a risk that justice will not be delivered, and the cultural change that many of us wish to achieve will not be sufficiently encouraged, thus denying holding companies and parent companies with subsidiaries that carry out their day-to-day activities a greater sense of involvement in the scheme of things. New clause 3 seeks to extend that so that if a corporation whose subsidiary commits an offence has not taken all reasonable steps to prevent that, there may be further liability for which the sanction would be a fine.

7 pm

It is worth examining the case that the Minister highlighted—the Hatfield rail case, in which certain parameters for how fines would be constructed were set. The trial judge, Mr. Justice Mackay, said:

That makes it clear that the focus is on the individual defendant, not above that.


4 Dec 2006 : Column 79

As we know, groups of companies operate in sophisticated ways. I accept that the new clause may not be perfect and may require further examination, but it raises serious questions about whether it is right to limit liability at trading company level, whether that allows liability to be limited within a larger group, and whether we should extend it.

Mr. Carmichael: Can the hon. Gentleman explain his thinking in subsection (3), which makes the new clause indictable in Scotland only in the High Court of Justiciary? He will be aware that culpable homicide, in theory at least, can be policed in the sheriff court, although in practice it is nearly always tried in the High Court. There is an important point of principle involved—that is, in Scots law the choice of forum is the prerogative of Crown counsel.

James Brokenshire: I am grateful for the hon. Gentleman’s intervention. The reason for structuring the clause in that way is to mirror the substantive offence under clause 1,and to create symmetry between the primary offence that the main trading company may have committed and the holding company. A parallel between the two potential offences would be appropriate.

Mr. Hogg: This is an important debate. I declare a possible interest, in that my wife is chairman of an investment company. What troubles me about the new clause is that it seems to conflate the duties of an investor with the duties of a director of the operational company. The duties of an investor are quite different from the duties of those who operate the company.

James Brokenshire: My right hon. and learned Friend makes an interesting and important point. In the context of the offences created under the Bill, if we are seeking justice for families who have lost loved ones in a particular situation or event, it is worth exploring and making it clear where the limitation of liability for that starts and ends. He is right to highlight the role of management, which is dealt with in the Bill where the circumstances of the offence are set out, but there are other examples in legislation where the corporate veil has been pierced. In the case of a wholly owned subsidiary, the operation of the trading company and its investor are very much aligned. The separate corporation may have undertaken the act largely as a consequence of tax planning or the administration of a wider group. It is worth identifying the role that a holding company may have in those circumstances to ensure that its subsidiaries maintain appropriate standards. That is the purpose of the new clause.

Mr. Hogg: I am grateful for the serious way in which my hon. Friend is responding on this important matter. Let us take as an example a railway operating company and somebody who seeks to acquire the controlling interest in the railway operating company. The skills are wholly different, and the investing company is entitled to look to the directors of the railway operating company to discharge the duties of care that they owe to the public and their employees.

James Brokenshire: Again, my right hon. and learned Friend draws attention to an important point. That may be true in some circumstances, but not in all. The
4 Dec 2006 : Column 80
board of the holding company—the parent company—may be a mirror image of the board of the subsidiary company, so it would be strange if it were not able to look through. The crucial words in the new clause are

The question is what may be reasonable in the circumstances, and the degree of control may be relevant to establishing whether it is reasonable for the holding company to have sought further controls over its subsidiaries.

I take seriously the distinction between management and shareholder investment and shareholder control which my right hon. and learned Friend highlights. Those aspects were considered when the clause was drafted and the test of reasonableness included. The concept of reasonableness may need refining. It is important to put it on record that the matter requires further consideration. I hope that the Government will take the new clause in the spirit in which it was tabled to ensure that justice is delivered and that groups acknowledge their responsibilities. Trying to ring-fence a risk within a particular operating company is not an acceptable way of managing risk.

The other amendments in the group deal with the fundamental distinction between unincorporated associations and partnerships, which are not included in the ambit of the Bill. Clause 1(2) merely specifies a corporation, a department or other body listed in schedule 1 and a police force as the organisations that would be caught by the clause. The Joint Committee commented that


Next Section Index Home Page