Queen’s Speech

Baroness Bowles of Berkhamsted Excerpts

Tuesday 27th June 2017 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, the gracious Speech this year was conspicuous by what it left out and not only for the issues that made headlines. I want to know where corporate governance and responsibility have gone. In the previous Parliament, we had a Green Paper on corporate governance, and there were interesting things all over pages 17 and 18 of the Conservative manifesto, from criminal offences for directors putting pension schemes at risk and boards taking proper account of employees, suppliers and the wider community, to legal enforcement of takeover promises and much more. These are issues at the heart of public concern and trust and, through that, productivity, and I hope they are not abandoned.

Some of these topics sit better in yesterday’s debate, but there are overlaps with the Ministry of Justice when it comes to the real nitty-gritty of making things stick legally, especially when criminal sanctions are required. The noble Baroness the Minister, who unfortunately is not in her place, will recall my submissions during the passage of the then Criminal Finances Bill about how the identification doctrine has restricted the ability to hold companies to account. The Ministry of Justice has shied away from this issue, last Session issuing a call for evidence instead of the consultation promised at the anti-corruption summit and delaying serious preparation for legislation.

Transparency International, among others, summarised the situation in its evidence. As long ago as 2010, the Law Commission called UK corporate liability laws “inappropriate and ineffective”. In 2012, the Government recognised in introducing deferred prosecution agreements that:

“Options for dealing with offending by commercial organisations are currently limited and the number of outcomes each year, through both criminal and civil proceedings, is relatively low”.


More recently, the Government stated in their July 2015 consultation on a new corporate offence of failure to prevent tax evasion:

“Under the existing law it can be extremely difficult to hold ... corporations to account for the criminal actions of their agents.”


The fact is that the criminal liability test and corporate governance do not align. We could go on introducing more individual “failure to prevent” offences, and it would be better than nothing, but the need to do that begs the question of why we go on piecemeal, always behind the curve, missing culprits.

Two recent events put corporate behaviour in focus: first, the SFO, which is an organisation worth keeping, bringing charges against Barclays and individuals and, secondly, potential criminal charges as a result of the Grenfell fire, on which I welcome a full public inquiry and associate myself with the sympathy and gratitude expressed to victims and rescue workers by other noble Lords. I do not want to probe those cases now, other than the general lessons that they point to yet again.

Many ordinary folk felt gratified that the SFO was bringing charges against a bank and senior bank executives, not because of the particulars of the case but rather from frustration that the identification doctrine and the directing mind and deliberate intent tests had conspired to make companies and directors immune as regards the financial crisis. When it comes to the Grenfell fire, issues of corporate manslaughter may be raised, and that legislation was made specifically to overcome the identification doctrine that had previously thwarted prosecutions. That legislation was yet another admission of previous failure. Is it not about time there was a universal solution to the immunity that the identification doctrine has perpetuated?

It is not better regulation to do things piecemeal. This is one issue—corporate responsibility and liability—and it needs to be fixed universally. It does not work to have permissive, comply-or-explain and self-certification regimes coupled together with an inability to prosecute for egregious failures. The more Government go light touch on regulation and corporate governance, the greater the need to plug the gaping hole in justice. Will the Government publish the responses to the call for evidence and will they take further steps towards implementing a strict liability regime?