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Lord Sainsbury of Turville: I have a great deal of sympathy for Members of the Committee and those practitioners in the wider business community who would like to see a more comprehensive code setting out the whole of company law legislation. However, before I set out how I think we might be able to take this issue forward, I want to make three general points.
The first is that company law will not stand still. Despite the very large number of reforms introduced by the Bill, company law will not remain unaltered for long. That is simply a reflection of the fact that as the business environment evolves, company law, most of which is in primary legislation, must be updated to meet the needs of practitioners. The second point is that even if nothing were changed the outcome would perhaps not be as bad as some people have suggested. During the Second Reading of the Bill, remarks made by the noble Lord, Lord Hodgson, stung us into action. He stated:
"It is not clear why some parts of the 1985 Act have been moved across and others not. For example, Clause 152 of this Bill repeats word for word Section 303 of the 1985 Act, the resolutions to remove a director. Others have been moved in part and so now straddle the Bill and the 1985 Act".[Official Report, 11/1/06; col. 190.]
That statement is not quite correct. There are no provisions that straddle the Bill and the 1985 Act. Where a group of provisions remain in the 1985 Act, the approach of the Bill has been to amend these as necessary in situ. Where the policy area is being generally restated in the Bill, the approach has been to
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restate all of the associated provisions even if they have not been amended. Therefore, when examining any discrete group of provisions, practitioners need to look at only one piece of'legislation. In particular, we have as far as possible included in the Bill those provisions to which small business pays particular regard.
My third point is that there are practical problems in producing a consolidation. As noble Lords know, responsibility for consolidation resides with the Law Commissionand it decides on priorities and timing. The resultant Bills then go through a special procedure both here and in another place. There is inevitably some rearrangement, and certainly re-numbering. What is left in the 1985 Act and other Acts would need to be inserted in the most logical places. The process is extended. For example, the 1985 Act consolidation took five years. Self-evidently, to achieve a user-friendly result, the subordinate legislation and the cross-references in other legislation need to be consistent. Necessarily, they have to relate to the arrangement and numbering as it exists for the time being. It would be highly undesirable to commence the Bill and then change all the numbers, cross-references elsewhere and subordinate legislation a year or two later. At the same time, I do not believe that any noble Lords would wish to defer the significant savings for business associated with this Bill by waiting for a consolidation.
However, I want to reiterate that I have every sympathy with the underlying approach of the amendment. I am conscious that the proposal to remove Part 31 of the Bill, which we have now agreed, means that we will have no general purpose mechanism for reforming and restating company law as a whole in the future that might have given us a means of ensuring that what is left in the 1985, 1989 and 2004 Companies Acts is in a coherent form. I am, therefore, happy to go away and consider to what extent it will be possible to take up some of the provisions that are currently being left in the other Companies Acts and place them in this Bill. I cannot at this stage make a commitment as to how far it will be possible to go, but I certainly hope that it will be possible for many of these provisions to be placed in the new Bill, thus taking it a step or two closer to becoming a complete code of the relevant legislation.
Some areasinvestigations, for examplemay better be kept separate and perhaps consolidated on a free-standing basis in due course. When company law Bills contain nearly 1,000 clauses, there is a case for saying that there are some other areas that may better be kept as separate areas in separate Billsand we will look at that. In making this suggestion, I am mindful that this is already a very substantial Bill, and I suspect that this Committee and others in Parliament would be reluctant to see amendments introduced that substantially added to the requirement for scrutiny during its passage. However, to the extent that any new clauses were merely restatements of the existing legislation, and subject to assurances that the new clauses made no changes of substance to the law,
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which I am sure we in government would want and would be expected to give, any burden may not be great.
The noble Lord requested that a plain English guide be produced. I agree that it is important to do what we can to help small businesses and their advisers in particular to understand their duties and rights. We intend to use the Companies House website and its communications mechanisms to provide guidance. We will work with small business representatives and others to ensure that it is appropriately targeted.
Lord Hodgson of Astley Abbotts: I am grateful to the Minister, particularly for his sympathetic final remarks. We look forward to seeing how those expressions of intent translate into reality as the Bill passes through this and the other place. I remind him of that old country saying, "Fine words butter no parsnips". We shall look for some action as well. However, I am grateful to the Minister for his sentiments.
This is the last amendment that I shall move on this Billmy noble friend Lord Freeman will move Amendment No. A274so it would not be right for me to sit down without saying a word of thanks to the noble Lord, Lord Sainsbury, to his colleague, the noble Lord, Lord McKenzie, who is not here today, to the noble and learned Lord the Attorney-General, and to the noble Lord, Lord Evans, who has made a fleeting but welcome appearance today. I thank also the officials behind him, who have dealt with our many inquiries and probings with infinite patience and tolerance and who have only occasionally slapped me down through a speaking note.
Lord Sharman: I associate myself with the noble Lord's remarks about the Bill team and the noble Lords opposite. This has been a long but constructive Committee. I am pleased to have worked with them.
(1) The Secretary of State shall commission an independent review by the Comptroller and Auditor General of the overall impact of this Act and lay the review and his observations and proposals in relation thereto before Parliament no later than three years after Royal Assent, such review to include an assessment of this Act's effect or influence on
(a) enhancing shareholder engagement and a long-term investment culture;
(b) ensuring better regulation, with especial consideration for small businesses;
(c) the ease of setting up and running a company;
(d) provisions for future company law reform; and
(e) the regulatory and monetary benefits to business."
(2) In addition, the Comptroller and Auditor General will be instructed to conduct a review of the estimated costs and benefits as contained in the Initial Regulatory Impact Assessment of the Bill, in order to determine if the assumptions made were fair and reasonable at the time."
The noble Lord said: I shall be brief, because this is an epilogue which harks back to an issue that I raised on Second Reading. It is important that, as parliamentarians, we consider the mechanisms to review the impact of legislation and look back on the assumptions made about its costs and benefits. This is a probing amendment to which I do not expect any substantive answer, but it would be helpful if the Minister would in due course consider, either by way of letter or direct communication, the department's thoughts on my concerns.
The amendment relates specifically to page 9 of the regulatory impact assessment, which colleagues may have had a chance to look at. Dated November 2005, it outlines plans for a post-implementation review. That is to be welcomed. More generally, the amendment addresses the discipline of looking back on the cost-and-benefit forecasting assumptions, judging with the benefit of experience whether they were correct and refining them for the purposes of a possible companies Bill in the future. We can all learn from the process. All governments of whatever colour have sometimes made heroic assessments of the costs and benefits, so I am not blaming this Government or past governments, but seeking to improve the process.
The Comptroller and Auditor General, in his capacity as head of the National Audit Office, may not be the correct officer to conduct that review. I believe that the department's post-implementation review may cover subsection (1) of Amendment No. A274, which deals with the broad issues. However, there is no mention in the post-implementation review plan of looking specifically at the regional cost-and-benefit forecasts. To remind the Committee, the total maximum benefits were assessed at £350 million per annum as a maximum figure, with the total costs being minimal.
I conclude by suggesting to the Minister that he consider in due course publishing a summary of the post-implementation review when it is published and making it available to Parliament, and specifically to include a review of the assumptions made initially of the financial costs and benefits when that review is concluded and a summary published. As I said, I do not expect a response this evening, but simply an acknowledgment of the points I have made and a willingness to consider them. I beg to move.
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