Audit and Corporate Governance

Lord Leigh of Hurley Excerpts

Tuesday 23rd March 2021 Lords Chamber

Asked by

[Lord Leigh of Hurley]

To ask Her Majesty’s Government what assessment they have made of whether their proposals in Restoring trust in audit and corporate governance, published on 18 March, conflict with those in the UK Listing Review by Lord Hill of Oareford, published on 3 March.

[Lord Leigh of Hurley (Con) [V]]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I draw your Lordships’ attention to my interests in the register.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the Government’s proposals on audit and corporate governance reform will enhance the UK’s reputation as a world-class destination for business and investment. They complement the aim of the review of the noble Lord, Lord Hill, to increase the UK’s attractiveness as an international financial centre while maintaining the UK’s high standards of corporate governance and shareholder rights. The audit reform White Paper includes a specific option to exempt newly listed companies temporarily from the new requirements.

[Lord Leigh of Hurley (Con) [V]]

My Lords, in the 210-page impact assessment, somewhat extraordinarily, no monetary benefits were identified, only costs. The average FTSE 100 company’s annual accounts have some 200-plus pages that are barely read and the proposals will simply increase the number of those pages. Are we now in danger of moving away from legislation on corporate governance to legislation on corporate management by the state? Is this area not best left to shareholders to decide on? With directors to be made personally liable for management errors, is my noble friend the Minister concerned that business will simply move to be listed in a more business-friendly environment?

[Lord Callanan (Con)]

The impact assessment, in fact, includes examples of quantifiable benefits that will be refined and developed in further iterations of the impact assessment. I agree that shareholders have a vital role in holding companies to account and the White Paper gives them important new tools to scrutinise audit and corporate reporting.