Draft Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018

Alan Whitehead Excerpts

Thursday 25th October 2018 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I am just getting over the title of the statutory instrument this morning; I concur with the Minister that they are beginning to set new records in sub-clauses and brackets. Perhaps we should keep a running tally, for reporting purposes, of the length of the titles of statutory instruments.

The essential element of this statutory instrument is what companies should do to report their emissions, energy use and various other matters. I completely concur with the Minister that reporting arrangements provide sunlight as a disinfectant. It is right that a scheme should allow that to happen. There was a previous scheme that allowed that to happen under the original carbon reduction commitment. The CRC arose from the Climate Change Act 2008; in its design, it not only required reporting but had a trading element, which was sub-traded between companies. It allowed an extension of the trading arrangements alongside reporting arrangements, which had originally been envisaged in the Climate Change Act for larger companies.

The CRC was systematically whittled away by various measures as it progressed: first by the end of the trading arrangements with companies; secondly by the element of the CRC that not only provided for reporting but for reporting league tables to be produced by the Environment Agency, to allow comparisons of companies’ performance. As the Minister has said, it also provided direct sunlight on to those companies’ activities by comparing them with others.

The third whittling away was the complete closing down of the CRC. It will finish in the 2018-19 reporting period and will be the end of the CRC as a whole. This replacement arrangement for the reporting elements of the CRC is very welcome, but it is the least one might expect following the closure of the CRC. Yes, in introducing additional requirements to the climate change levy on smaller companies the Government have introduced an element of revenue-neutral arrangements for trading, but the arrangements are a welcome successor to the reporting arrangements under the CRC. To some extent they extend those reporting arrangements, as a substantial number of non-quoted companies will now be included. Some 11,000 companies will be required to put these directors’ reports in their company filing.

The problem that we still have is that there appears to be nothing in this particular SI that requires or indicates what will be done with that material once it appears in directors’ reports. At the very least, I would expect spreadsheet reporting, perhaps through the Environment Agency, of collated versions of those company reports. At the very best, I would expect a new league table of those performances, using that data and reporting nationally. There is nothing in the SI that suggests that that will be the case, so the sunlight is apparently somewhat filtered.

A person can get the comparative material coming out of those companies’ reporting, but only if they trawl through every single directors’ report and sit there with a towel on their head for weeks on end trying to put those into line. The original CRC reporting and league table reporting substantially resolved that problem and was widely welcomed when it was originally published.

The slightly alarming backdrop to that is that league tables are theoretically available for company reporting from 2010 to 2012 under the original CRC arrangements. However, were someone to look them up, they would find that they do not exist. They have been deleted. There is not very much sunlight at all so far as historic CRC reporting is concerned. I warmly welcome the introduction of the reporting arrangements, but can the Minister tell me what her Department’s intentions are concerning the presentation of the material in collated form by Government? Better still, can she tell me whether there are any arrangements in hand or proposed for producing, as was the case with the original CRC, some form of league table presentation of those results? It may be that there are separate intentions that are not represented in this SI. If there are, I would very much like to hear about them this morning.

My final request is for the Minister to arrange to ensure that those original CRC league tables are restored to the public record. That would be a good idea because it is not satisfactory that they have been deleted, as they appear to have been. I would be grateful for the Minister’s assistance in getting those back into the public domain.