Corporate Governance and Insolvency — House of Commons, 2018-03-20
Topic: Domestic Commerce
Laura Pidcock (Labour, Centre-left): I thank the Minister for advance sight of his statement and for making it in good time There are two substantive proposals: on clawback and on disqualification of directors. There is, however, already provision in insolvency law for clawback of assets, for example assets sold at an undervalue. There is also provision in company law for disqualification of directors due to incompetence or recklessness. The proposals set out by the Minister on clawback are extremely unclear. Can he explain how these provisions add to existing rights, rather than repeat them Secondly, there are a number of much vaguer promises. What do these mean? On giving the Insolvency Service new powers to investigate directors of dissolved companies, what will these new powers be and how would they militate against reckless behaviour? There is also the consideration of the legal and technical frameworks within which decisions are made on payment of dividends and how that can be improved and made more transparent. What does that mean? How can it be made more transparent, and how would greater transparency protect against greed and excessive payment of dividends, as we saw with Carillion? Then there is the strengthening of the role and responsibilities of shareholders in stewarding the companies in which they have investments, and, again, that is vague. What does it mean? Frankly, these are meaningless platitudes Thirdly, the Government again appear to be consulting, rather than acting. Do the Government agree that it is time for action, not consultation? They are also consulting on the Taylor review, which in itself was a consultation. What good are these consultations to people currently working in companies providing public services at risk of collapse Fourthly, the Government are certainly not known for being proactive; rather, they are always mopping up after the event. None of these problems is new. Companies going insolvent and leaving pension deficits and asset-stripping is not novel; we need only look at the case of BHS. These are problems that the Government should already have anticipated. Why has it taken the Government until now to begin to act, and why do they take only tentative steps Fifthly, we must have a bolder and more imaginative approach to corporate governance. Large companies are not the toys of directors and shareholders. They do not exist merely to make a small group of people excessively wealthy. They are the product of the hard work and effort of their workforce and suppliers, and they provide services that the public use. Short-termism is often at the heart of shareholder decisions. How do today’s proposals safeguard the long-term interests of companies, for the workforce and for the public good Sixthly, have the Government made any assessment of the viability of Interserve and any companies with public sector contracts? What steps are the Government taking to ensure these companies do not collapse? Will the Government institute project bank accounts for major public construction projects, mandate and enforce payment of public sector contractors within 30 days and set up a new model that allows them to step in when construction companies collapse, all of which Labour has called on the Government to do Lastly, how would any of these proposals meaningfully have helped the workers, pensioners and suppliers of Carillion? The amount paid in dividends at Carillion was the same as the pension deficit over the same period. Have the Government done any assessment of what more the workers, pensioners and suppliers would have received under these new plans, and if not, why not?