Corporate Insolvency and Governance Bill

Baroness Northover Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Baroness Northover (LD) [V]]

My Lords, I commend the Government on the range of measures they have taken to try to ensure that viable businesses do not go under in this pandemic, and that individuals are able to retain their jobs. Nevertheless, as my noble friends and others have made plain, these proposals have been put forward at speed, and in such circumstances there can be unintended consequences. The Bill was rushed through the Commons but already in this Second Reading noble Lords have flagged a range of important questions, not least distinguishing proposals which relate to this crisis and those intended to have long-term effect.

One very troubling feature of the pandemic is the evidence that better-off firms are taking advantage of the Government’s crisis measures. These firms may have every legal right to do so, but that does not mean that this was what the schemes were intended for. We can see this in the take-up of loans. Thus, as the Times put it on Friday 5 June, “Billionaires and global giants” have taken almost £17 billion in “cut-priced” loans. JCB, owned by the billionaire Bamford family, has taken £600 million.

Governments and central banks have been quick to provide support across the world. In the United Kingdom, the top 10%, who own 47% of private pension wealth and 66% of financial wealth, look to have been almost entirely protected from the downside of this crisis. Some 120 companies among the FTSE 350 are now higher than they were before the crisis. Asset owners have potentially been bailed out, giving firms an opportunity to lay off employees and make cost savings in a way that would normally be impossible. Inequality looks set to escalate.

The Government may intend the best by schemes such as the proposals being examined here, but the more resilient may be better able to take advantage of such measures. My questions are therefore about accountability. What impact assessment have the Government made of the proposed changes? What scrutiny will be brought to bear on companies? Even AGMs can be online. How will companies be held to account, either by those closely associated with them, or by the Government? What protection can be put in place to ensure that companies do not use these temporary arrangements to sack employees or to reduce their rights, especially their pension rights, as the noble Baroness, Lady Drake, and other noble Lords have emphasised?

Like the noble Lord, Lord Hodgson, I recall the very constructive cross-party debates over what became the Companies Act 2006. My concern as a DfiD spokesperson at that time was in regard to corporate social responsibility, particularly as regards environmental impacts and supply chains in developing countries. Can the Minister tell me what consideration has been given to such aspects of corporate social responsibility? Supply chains in developing countries are under huge pressure, as he will know. Will we see rigorous corporate reporting and a requirement to build environmental, social and governance principles into the decisions made by companies covered in this legislation? I look forward to the Minister’s response.