Draft Companies (Miscellaneous Reporting) Regulations 2018

Chris Stephens Excerpts

Wednesday 4th July 2018 General Committees

[Catherine West]

Will the Minister give way?

[Chris Stephens (Glasgow South West) (SNP)]

Will the Minister give way?

[Andrew Griffiths]

I will make some progress, if I may. I think I have been quite generous in giving way.

The final part of the regulations relates to reporting by community interest companies. The Companies (Audit, Investigations and Community Enterprise) Act 2004 requires CICs to produce a community interest company report annually, including information about directors’ remuneration. The regulations clarify that small CICs must report on their directors’ remuneration. That obligation was inadvertently removed when associated provisions regarding small companies were repealed in the course of implementing the accounting directive in 2015. That was not part of the corporate governance reform package, but the regulations present a good opportunity to remedy the gap. It is uncontroversial and does not involve any change in policy—indeed, small CICs have continued to file the information.

I hope the Committee will support the regulations.

--- Later in debate ---

[Chris Stephens]

I do not know which of my questions have been put by the shadow Minister, but my key concern is that, as I understand the regulations, the UK Government plan to wait five years before assessing whether further action needs to be taken. If after the first or second year, we have not seen any change in company behaviour on pay ratios, will the Minister monitor, review and consider taking action at that stage? Five years may be too long to wait.

The shadow Minister mentioned Carillion. When I sat on the Carillion joint inquiry, I was astonished to see that bonuses for directors and shareholder dividends were given a far higher priority than the management of the pension fund. The money that Carillion was not putting into the pension fund was a key concern.

That brings me to my next question to the Minster. Many of the companies that will have to comply with the regulations have public sector contracts. If those companies do not comply with the regulations or maintain pay ratios that are a cause for concern, what would that mean for public sector procurement? Those companies are effectively making millions out of taxpayers when they get public sector contracts. Have Ministers discussed what happens if those companies do not change their behaviour?

I also wish to echo the comments on the gender pay gap made by the shadow Minister. That does seem to be growing and is a cause of concern for us all.