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Lord Sharman: My Lords, will the Minister reflect on my suggestion that dividend distribution policy should be based on a solvency test, which is a simple test: can you afford, in cash terms, to pay the dividend? It is not a structural test, it is a solvency test: can you afford to pay it? That is what is done in the United States.

Lord Sainsbury of Turville: My Lords, we will certainly reflect on that. There are perceived difficulties with that approach, but we will certainly reflect on that and then propose any changes using the proposed reform power in the Bill.
 
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I now turn to the reform power, which is clearly a major issue in the Bill and an extremely difficult one. It may be useful to go over the underlying rationale for the proposed company law reform power. As I said, it is usual these days in technically complex areas of law to leave the detail of the provisions to subordinate legislation, but company law has grown over the centuries and many of even its most detailed provisions are written in primary legislation. That creates a challenge when updating the law to reflect a changing business environment. Although it may be relatively easy to secure parliamentary time for a Bill where a change of the law is essential, it can be more difficult in cases where the proposed reform is useful and desirable but where existing law can, at a pinch, limp along as it is.

An interesting example of that is the 1989 court case known as Aveling Barford, which cast doubt on when a company can make an intra-group transfer of assets at book value. The Bill removes those doubts. That is an example of where it has taken a long time to get parliamentary time.

We recognise that the power that we have suggested raises important issues. We have designed it as a super-affirmative power, incorporating stringent conditions as to how it can be used, including extensive requirements for public consultation and parliamentary scrutiny. To a large extent, those requirements reflect the existing arrangements of the Regulatory Reform Act 2001 and are intended to provide demonstrable and effective safeguards surrounding what can undoubtedly be seen as a very wide and novel power. Notwithstanding those safeguards, important concerns have been raised. As I said, the Delegated Powers and Regulatory Reform Committee and the chairman of the Constitution Committee raised a number of such concerns and make some powerful arguments. Those committees always, rightly, command the greatest respect in this House and it is important that we reflect on their comments and those that the noble Viscount, Lord Bledisloe, made this afternoon. We consider them seriously; I assure the House that the Government are doing exactly that.

I believe that the underlying rationale behind the proposal remains compelling. We very much want to achieve an effective and constitutionally appropriate mechanism for necessary changes in future. I hope that we will be able to find such a way through, which can command the support of the House. I have already found today's debate hugely informative and I look forward to further debates that I am sure we shall have at the Bill's next stage.

I remark on two points that were raised in connection with that. The noble Lord, Lord Sharman, asked whether reform powers will require affirmative resolution and whether consultation will be wide. I can confirm that, in addition to the special period for parliamentary scrutiny in which we envisage that Special Committees of both Houses will scrutinise proposals in detail, the Bill also provides for affirmative resolution of orders. I also reassure the noble Lord that full statutory consultation will be necessary before a proposal is made, involving representative interests likely to be substantially affected.
 
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My noble friend Lord Clinton-Davis raised the question of the Government needing to take account of consultation before bringing forward a company law reform order. The Minister will need not just to take account of consultation but, as is clear from Clause 785, to summarise the outcome and what account has been taken of it in the document, which we would have to lay before Parliament.

I think that I dealt with the question of consolidation in my opening speech and explained why that is rather a mythical goal to be striving for. We could take the capital maintenance regulations of the 1985 Act and consolidate them in the Bill. That would change some of its wording, which people do not want to see—particularly in view of the fact that, almost certainly, a new Bill will have to come forward with capital maintenance regulations. So, even if we consolidated it briefly now and made people look at some new legislation, we would then simply have an unconsolidated Bill as soon as we brought in the capital maintenance. I cannot see that this is a particularly profitable way to do it. When we push people on this issue we find that everyone is in favour of consolidation, "but not in my lifetime". That is a perfectly understandable proposition. But, when it comes to the crunch, you have got to make a decision, and we think we are reflecting what people really want to see.

I believe that there is general agreement about the many issues in the Bill although there are some concerns about particular matters. I also believe it is largely a technical Bill and not controversial in party terms. Nevertheless, company law represents a balance of different interests—this has been reflected in the points of difference that have been raised today—and the Government's responsibility is to provide a legal framework which reconciles these interests and provides a means of accountability for the exercise of corporate economic power and the safeguards and remedies for abuses of that power. It is an important Bill which will help to ensure that our company regulation and financial markets continue to be regarded as amongst the best in the world. I look forward to detailed debate in Committee.

On Question, Bill read a second time, and committed to a Grand Committee.

London Olympic Games and Paralympic Games Bill

8.16 pm

Lord Davies of Oldham: My Lords, I beg to move that this Bill be now read a second time.

We will hear many interesting and compelling speeches in this debate today. One voice we shall miss, however—which would have been heard but for his untimely death—was that of Tony Banks, Lord Stratford. He spoke to me before Christmas of his relief that this debate had been postponed so that he
 
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could express his very great enthusiasm for the Bill and his pride that his area of London would be the major site for the Games.

He would not only have spoken well in this debate but would have brought to our forthcoming work the real experience he gained when fronting our bid for the football World Cup several years ago. That experience would have been invaluable, communicated by his capacity for directness, his wit and his intelligence. As a former Sports Minister he had so much to offer in this work. But also, of course, he had an interest in the arts and in the general work of the House, which I know in his short time here he had grown to respect.

London won the Olympic bid because we promised the International Olympic Committee that we were able to deliver. Since July, we have made good on that promise. A huge amount of progress has already been made towards 2012. Compulsory purchase orders have been issued to acquire the land needed in east London; the first contracts have been let to get power lines underground in the area that will become the Olympic Park; an interim Olympic Delivery Authority has been created and the top management team appointed; and the London organising committee for the games has been formally established under the able leadership of the noble Lord, Lord Coe.

The IOC visited London last November and professed itself extremely happy with the progress we were making. In its view, we are currently two years ahead of the schedule of any previous host city. It was particularly impressed that we had already made such good progress with this Bill.

We could not have made that progress without the help of the Opposition parties. Their support, both for the bid and the work that we have done since, has been unremitting and I thank them for that. I am confident that it will continue—I certainly hope that it will continue—as the Bill goes through the House. It is vital that we get this legislation to Royal Assent as quickly as possible, to put the ODA on an operational footing and to begin the hard work that will be needed to get everything built on time and on budget.

The Bill does three things, all of which are essential to our success. It establishes the ODA and gives it the powers it needs to get London ready to stage the Games; it provides the powers needed to meet IOC requirements about the way in which the Games and the Olympic environment are managed; and it tailors the powers of other bodies, including the Greater London Authority and regional development agencies, where they have a role in the Olympic project.

We are also concerned, and were concerned in the other place, to give reassurance about some crucial difficulties surrounding the Bill. We wanted to give clarity and reassurance on how restrictions on ambush marketing will work and who will or will not be caught by these rules. We think we have clarified these matters through the amendments passed in the other place, but we will have time, during Committee, to examine more thoroughly what I recognise to be an interesting and challenging area.
 
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The first half of the Bill deals with the ODA. Clauses 3 to 7 establish the ODA and give it the powers, functions and duties it needs to get London ready for the Games. They include a duty to have regard for the legacy of the Games in everything that is done, and a duty to contribute to sustainable development. It is important not to lose sight of the unique selling point of London's bid, namely the legacy that the Games will bring to the United Kingdom in terms of sporting facilities and participation, and in the complete regeneration of one of the most deprived areas of London.

Clause 5 allows the ODA to be appointed as the local planning authority for the Olympic Park, on the same model as an urban development corporation. That should ensure a co-ordinated approach to the development of the park and reduce the risk of unnecessary delays to the project. The precise boundaries of the ODA's planning powers will be determined by order and of course there will be consultation on that order early this year. Clause 6 requires the ODA to have regard to security in exercising its functions; all noble Lords will recognise how important this dimension is to the successful prosecution of the Games.

Clauses 10 to 18 deal with transport and establish the ODA as co-ordinating authority for the Olympic transport plan. Existing transport authorities will have a duty to co-operate with the ODA in order to implement this plan and to deliver Olympic transport services. The Bill provides for the creation of an Olympic route network, and the ODA will be able to issue traffic regulation orders on that network.

The ODA's role will, of course, evolve over time. It has the important job of constructing the venues and planning transport in the run-up to 2012. It will then co-ordinate transport systems during the Games, and will manage the environment around venues, so that the streets are clean and the Games are not commercially exploited. After the Games, the ODA will take a role in reconfiguring the venues, but that is its final responsibility. It will essentially be a time-limited body, focused on delivering the London Games. Clause 9 therefore provides for the Secretary of State, having consulted the Mayor, to lay an order to dissolve the ODA.

The second half of the Bill deals mainly with the measures needed to meet the IOC's requirements for what it terms brand protection. We signed up to meet those requirements when in bidding for the Games. We are therefore bound, under the host city contract, by the IOC's technical manual on brand protection. We have put a summary of the relevant sections of that manual in the Library. Clauses 19 to 30 allow for regulations to be made controlling outdoor advertising and street trading in the area around Olympic venues. I recognise that this is an issue we will wish to explore in greater detail in Committee.

Clause 31 outlaws ticket touting in connection with the Olympics. Again, this provision is brought in because the IOC requires that ticket touting be prevented. In bidding, London accepted the nature of
 
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those requirements. Of course, I am aware that other sporting bodies argue that there should be a wider ban on ticket touting. We in the department are currently working with all sectors, including sport, the arts, the creative industries and other stakeholders to gather evidence about touting practices across a wide range of areas. However, the IOC makes the Olympics a special case and we are under an obligation to meet that.

Clauses 32 and 33 and Schedules 3 and 4 provide for the protection of Olympic intellectual property. They stop businesses unfairly cashing in on the Olympic or Paralympic Games by wrongly implying that they have some form of commercial or contractual association with the Games. These restrictions are designed to protect the public image of the Games, but they also protect the public purse by maximising sponsorship income.

Existing legislation already prevents any unofficial commercial use of the word "Olympic" and the Olympic rings, and the main aim of Schedule 3 is to provide equivalent rights to the Paralympics. Schedule 4 extends protection to other, more imaginative forms of association and ambush marketing. But, contrary to some press reports, it will not place a blanket ban on using words such as "summer" and "games". Factual references to London and to the Olympics will still be perfectly legal. So will explanations of the purpose or characteristics of any goods or services. So will editorial use in media coverage.

In its final clauses, the Bill provides new Olympic-specific powers for the Greater London Authority and the RDAs to ensure that they can make the contribution that we require of them. Clauses 34 and 35 give the GLA a specific power to prepare for the Olympics because it was the Mayor of London, along with the British Olympic Association, who signed the host city contract with the IOC. So to provide absolute clarity that the Mayor is able to honour his commitments, the Bill makes it clear that he and the GLA have the power to comply with his obligations under the contract and to prepare for and manage aspects of the London Olympics. There should be no need for this power after the Games, and Clause 35 therefore provides for it to be switched off by the Secretary of State. A similar power is given to RDAs in Clause 36.

The Olympics present us with a wealth of opportunities. We need to make the most of them. In 1948, with the world still recovering from war, London put together a memorable Olympic Games when no one else was able to. For 2012, expectations will be much higher. And no one has higher expectations than the residents of east London. That was clear in their enthusiastic reaction to our victory on 6 July. We must make every effort to make the Olympic dream come true for those people and for the whole of the United Kingdom. The Bill is the first step towards success. I commend it to the House.

Moved, That the Bill be now read a second time.—[Lord Davies of Oldham.]
 
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8.27 pm


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