EU: Company Law

– in the House of Lords at 7:51 pm on 2 July 2007.

Alert me about debates like this

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative 7:51, 2 July 2007

rose to ask Her Majesty's Government what studies have been made of the impact of the provisions of the eighth company law directive on the competitive position of the City of London.

My Lords, I hope that the noble Lord, Lord Evans of Temple Guiting, will forgive me for saying that I very much hoped to be the first to welcome his colleague the noble Lord, Lord Truscott, or one of the other Ministers to their new role. They are Ministers for no longer the DTI but the rather inelegantly named DBERR, or Department for Business, Enterprise and Regulatory Reform. It is regulatory reform that is central to my remarks this evening. I know that, although this is pretty detailed and technical stuff, the noble Lord will deal with it with his customary calm, expert and dispassionate approach.

I want to raise concerns about the provisions of the eighth company law directive, which must be implemented by 29 June 2008. I appreciate that the title "eighth company law directive" does not exactly send the parliamentary pulses racing. Nevertheless, these directives contain, sometimes well hidden in the rather leaden prose favoured by Brussels bureaucracy, decisions that can have grave implications for British competitiveness. Nowhere is that truer than in those affecting the UK financial services industry and the City of London. I am afraid to say that all too often this Government have been a bit casual and too ready to accept uncritically what is spoon-fed to them by Brussels.

As an example, last year during the Committee stage of what is now the Companies Act 2006, we on these Benches argued strenuously that the sections in that Act making it a criminal offence, and not as hitherto a civil offence, to fail to comply with provisions regarding takeover documents represented a gold-plating by the DTI of the takeovers directive, a gold-plating that we further suggested was not going to be matched by other EU countries. Not so, said the noble and learned Lord, Lord Goldsmith, the then Attorney-General, replying for the Government. Far from it; the proposals were the minimum required. Because at that stage the directive was not yet in force, we could not tell how individual EU countries would comply. Now, 18 months later, we can tell and, according to the paper that was kindly circulated by the department, very few countries have sought to criminalise and none of those is one of the UK's major competitors.

Another example is the insurance mediation directive, which was published in December 2002 and supposed to be in force before 15 January 2005. According to the City research series, only the Netherlands among the UK's major competitors has a comparably strict regulatory regime. The French regime is much less proactive, while the German regime is still not yet in place, even two and a half years after the due date.

Tonight, I wish to raise another regulatory imposition that the Government blithely appear to be prepared to accept. I have said that the eighth company law directive is in its final run-in to implementation. While most of the directive deals with auditor training, supervision and so on, and is uncontroversial, hidden away in Articles 41, 45 and 46 are two provisions that will affect listed companies and as such have implications for the competitive position of the London Stock Exchange.

The first of these in Articles 45 and 46 concerns what are known as third-country auditor provisions. The basic premise is that the auditor of any company that issues securities on a regulated market—not including AIM—in an EU member state should be subject to an equivalent minimum level of regulation, even when the company whose securities are being listed is incorporated outside the EU. Noble Lords will note the element of extraterritoriality in those provisions. Equivalence can be achieved in one of two ways: first, if the third country where the auditor is located has equivalent systems on quality assurance, oversight and so forth and that third country agrees to offer reciprocal arrangements to the EU; or, alternatively, through direct regulation by the EU audit regulator.

Consider the position of a company located in an eastern European country outside the EU that wishes to list on the London Stock Exchange. Its accounts are audited by one of the big four firms, but the partnership of the big four firm in that particular country is an independent partnership under the big four "umbrella". If so, those accounts will not be acceptable unless the country—not the firm—in question demonstrates to the EU that it has equivalent supervisory systems for auditors and that it will offer reciprocal opportunities to the EU. If the above cannot be achieved, the only solution is for the company to have its accounts completely reaudited by a firm within the EU, which is a costly, time-consuming and duplicative exercise.

It does not take much imagination to see from this example that this gives rise to many technical, organisational and indeed diplomatic niceties, including the issue of territoriality. It is no wonder that some have described this as a potential EU Sarbanes-Oxley. Articles 45 and 46 of the directive may therefore, as a result of the law of unintended consequences, have a similar impact in London to Sarbanes-Oxley in New York. Very few financial centres in the EU other than the London Stock Exchange have many listings of companies from outside the EU, so most EU country Governments are indifferent to these measures. It is London that will suffer most.

Some may think that this is a trivial matter involving few companies and fewer countries. However, the facts are these. The Commission estimates that 220 audit firms from no fewer than 63 countries will be affected. More parochially, the London Stock Exchange has said that there are 320 international issuers on the exchange, with an equity market value of £2,611 billion, or £2.6 trillion. In addition, there are 6,000 international debt securities, which may also be affected. Technical this matter may be, but trivial it most certainly is not.

Secondly, I turn to the provisions of Article 41 concerning audit committees. This is of a lesser order of importance, but nevertheless it is a significant pointer to the attitude and approach adopted by the EU. Article 41 will place a statutory requirement on all listed companies to have an audit committee. Nearly every UK listed company already meets or exceeds this requirement under the provisions of the Combined Code on Corporate Governance. Those that do not have such a committee have to provide a reason for not having one under the "comply or explain" provisions of the combined code. If investors do not like the explanation given, they can choose not to buy the shares or, if they are already shareholders, they can choose to sell their holding. What are we achieving by accepting this clause? The short answer is nothing. In fact, we may even be going backwards, because a statutory role may be regarded as likely to increase the personal liability of the individual director, which may in turn reduce the pool of able men and women who are prepared to assume those responsibilities. That cannot be in the interests of UK plc.

I am very much looking forward to being reassured by the Minister when he replies that the Government have looked into these matters and have everything under control, although in the light of their record to date I will take some convincing. I hope that the Minister will not fall back on the tired arguments that we cannot do anything about the issues now—we have really had enough of doors being slammed after horses have bolted—or that we will defer any difficulties by lengthening the transitional period so that implementation of the provisions is deferred by several years. That would be a complete dereliction of duty on the part of the Government.

First, transitionals do not solve the problem; they only defer it, thus often making it worse, because of the intervening uncertainty. Secondly, transitionals can be implemented only with the consent of member states, thus introducing an element of EU-wide horse-trading. Since few EU Governments have any interest in this matter, for reasons that I have explained, it is hard to see much being achieved. Finally and most significantly, transitionals can be introduced only where the Commission has made a formal finding that a third country's regime is not adequate. It will be instructive, to say the least, to watch the reaction in, say, the United States or Japan when those countries are told by the EU authorities that to qualify for transitional status they will have to accept that their existing supervisory regime is not adequate.

To conclude, the clock is ticking down fast. Many non-EU countries are very concerned; that is as it may be. What should concern us and, in particular, the Government is the impact on the competitive position of the City of London. As I said at the outset, this is quite technical stuff and it is probably a bit unfair to leave the noble Lord, Lord Evans, to face this bit of fast bowling. However, I hope that when he reports back to this newly named department he will remind it that the last two letters of its new acronym stand for "Regulatory Reform". This eighth company law directive would be a good place to start to show that the department really means business.

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry 8:01, 2 July 2007

My Lords, I first declare an interest as a chairman and director of listed companies in the UK, the full details of which are set out in the Register of Lords' Interests. I am also a former chairman of the audit firm, KPMG International. I congratulate the noble Lord, Lord Hodgson, on introducing this short debate on the eighth directive, which is of great importance and will be of significant impact if the implementation is not got right.

I sought to try to understand why the eighth directive was what it is and why it came into being. I studied some of the various utterances of the commissioner, Frits Bolkestein, over the gestation time of this directive. Among the reasons that I could distil were, first, that it was a way of giving us better corporate governance within the European Union and more effective audit performance—which are to be applauded—and to make the EU a more competitive place in the capital markets, thus attracting more inward investment in capital markets. Another aspect was a need to avoid the extraterritoriality of Sarbanes-Oxley. Originally, this directive was postulated as a way of preventing Sarbanes-Oxley crossing the Atlantic. Sadly, it has failed, as we all know. We must learn lessons from Sarbanes-Oxley, as the noble Lord, Lord Hodgson, said—and I will come back to those in a moment. Was the directive a response to Sarbanes-Oxley as a way of imposing our own extraterritoriality within the EU or to deal with offshore centres—again, a matter of great interest to us—bringing them up to the same standards that we expect within the Union? A final reason was to regulate the EU market, thereby restoring investor confidence.

All, or maybe some, of those reasons have merit and, therefore, I give this directive a cautious welcome. The high ideals of what it seeks to achieve are generally to be encouraged; but at this point it is important to pause for a moment to consider what happens when you get it wrong. You cannot look for a better case study in getting regulation wrong than what happened with Sarbanes-Oxley. Sarbanes and Oxley are eminent senators who put their Bill together in the United States as a knee-jerk reaction to financial scandals. It moved away from what we have known for years in this country of principles-based, light-touch regulation. The amount of time, money and effort that registrants on the US exchanges had to expend to comply with the initial approach of Sarbanes-Oxley, which was incredibly detailed and very rules-based, has driven capital seekers away from their marketplace in significant numbers. It is no accident that Hank Paulson at the US Treasury is putting great pressure on those who regulate to withdraw a lot of the detail to get the cost of compliance back down.

The danger is that we do exactly the same with a directive like this. Let us look at what appeals in this directive. First, a single audit framework to create a competitive audit market across the EU is to be applauded. Secondly, if, in implementation, we can stick to principles-based standards and independence and get away from mandating rules, we will maintain a light touch in the regulation for which this country is well known and at which it has been successful. Essentially, when you distil what is in this directive, there is a lot that you could say is taking a UK template and applying it to the European Union. That is great if that is what we do. The notion of independent regulation based on the home country model, as it were, will minimise cost and it ought to drive improvements in audit quality. Finally, the requirements for transparency are to be encouraged.

Given all those aspects of the directive that we see as positive, where are the problems? As with many great ideals, the devil is in the detail and I will give just a few examples—different from those given by the noble Lord, Lord Hodgson—where I think that there are significant difficulties in the detail. First, the application of the directive is far too wide. The Government must seek to exempt small and medium-size firms from the regulations. I speak with particular knowledge of the cost of compliance. The cost of compliance with this directive, if it applies in its totality, to small and medium-size firms will make them unable to engage in the market.

Secondly, a number of the definitions within the directive are either far too wide or, at best, far too imprecise. I have seen three people look at article 23 which deals with the provision of non-audit services, and I have been given three different interpretations, ranging from a complete prohibition on an auditor doing anything at all for an audit client—the French model, which does not appeal to me—to something that says that it is only what we have in the UK and that there are certain things that an auditor should not do. We cannot allow that to be used within different member countries in different ways—and I shall return to that issue in a moment. Article 36, regarding the dismissal of auditors, is another example of an imprecise definition. What do "proper grounds" constitute? The article states that you can get rid of an auditor only if you have proper grounds. Does the fact that you disagree with him about his fee represent proper grounds? I can assure noble Lords that, in the eyes of many directors, it does. Finally, touching on the point made by the noble Lord, Lord Hodgson, mandatory audit committees are a bit silly. The one thing that works very well is "comply or explain". It works well in the UK and it will work well within the European Union.

A final example is that we need to be wary of the notion of other member countries gold plating in a way that provides them with protection over their own affairs. I will give two examples. In France, the Code de déontologie, which is at variance with the eighth directive, actually extends extra-territorial service restrictions, adopting the French model of nothing other than audit services. I believe that the UK and the EU should challenge that. In Italy, mandatory audit rotation of firms, not partners, has been maintained. This has been proven not to improve quality; it has added cost and restricted competition within that market. There is no question about that. Italy is also trying to impose extra-territorial service restrictions. Again, I believe the Government should look at this closely.

It is my understanding that the Department of Trade and Industry has consulted widely on this, so I do not suppose that any of my remarks will come as a great surprise to the Minister. I urge the Government to take heed of the responses, particularly those on the detail; otherwise, a great opportunity will be lost. In summary, as I said at the outset, I give this a cautious welcome.

Photo of Lord Razzall Lord Razzall Spokesperson in the Lords, Trade & Industry 8:11, 2 July 2007

My Lords, I thank the noble Lord, Lord Hodgson of Astley Abbotts, for bringing forward this issue. It may be technical, but as I so often point out on these occasions, it is a great pity that none of those on the Cross Benches—which are full of people who express themselves as having expertise in subjects like this when they wish to have Lord or Baroness in front of their name—seem to find the time to come when they have the opportunity to exhibit their expertise. As I have often said, my noble friend Lord Sharman, though not a Cross-Bencher fortunately, is an example to everybody in how this House ought to bring people with his expertise to have this sort of debate.

An important issue highlighted by the noble Lord, Lord Hodgson of Astley Abbotts, is that this directive is most important for the United Kingdom because we are clearly now the financial centre of the world. We must be very careful to ensure that a directive that applies to Estonia—I am not sure why I am picking on Estonia; I tend to tease Lembit Öpik, but that is probably not appropriate in this august Chamber. Why not? We can be cheeky, can't we?—does not damage our position as the pre-eminent financial centre of the world.

Following my noble friend Lord Sharman, the relevant department—I have not yet got the acronym, but it used to be called the DTI

Photo of Lord Razzall Lord Razzall Spokesperson in the Lords, Trade & Industry

My Lords, it is the DBERR, is it? The DBERR has gone out to consultation. I assume it is taking over the consultation that the DTI started. As I have often said, the Department of Trade and Industry under this Government has been very good in the consultation. Very effective consultation has taken place and the Government have certainly, in this area, often listened to the representations that have been made. There is particular concern here about the consultation—I am making a general point. It is my understanding that we are well ahead of other member states in the consultation exercise; that is inevitably the case as we are the financial centre of the western world.

It is important, however, that that consultation exercise should not lead us into a too firm and restrictive form of regulation; huge detail is going into the consultation exercise. If I may take just one phrase out of the CBI response to consultation, it is that clearly the UK is way ahead in its regulatory approach. A cautious approach, however, will inevitably lead, unless we are careful, to a stricter solution. The point that my noble friend Lord Sharman made is that it would be very dangerous if this consultation exercise, and implementation of the directive, led us to go beyond the general principle of "comply or explain" that works so well in UK at the moment. That is a phrase that all regulators in this area should take on board. The second point that the noble Lord, Lord Hodgson of Astley Abbotts, touched on—I know having talked to him that he expresses concern about this—is the impact of the directive on non-UK companies being listed in the United Kingdom.

I am very puzzled by this issue, because two extreme views have been expressed in recent months. First, Paul Boyle, the chief executive of the Financial Reporting Council, says that he is astonished that few in the City have woken up to the impact of the EU directive governing the use of foreign auditors by companies seeking to list on European exchanges. He suggests that the 200-odd non-EU companies listed on the Stock Exchange will be in danger of having to be delisted because of the import of these regulations. However, Adam Kinsley, the director of regulation at the London Stock Exchange, said that a suggestion that foreign companies would be forced to delist was scaremongering.

When the Minister replies, it is important that he indicates whether he believes that Paul Boyle or Adam Kinsley is correct. As a Minister, of course, it is not necessary for him to say whether it is scaremongering. Are the Government concerned, however, that the impact of these regulations will be a reverse Sarbanes-Oxley, and cut off the supply of US companies currently listing in the United Kingdom, or are they satisfied that this will not happen? I suspect that the answer will be because the big four will do all the audit anyway, so they will be able to manage the process—that is maybe a cynical response. Will the Minister indicate whether he believes this represents a threat, if implemented, particularly to US companies listing in London? As a result of Sarbanes-Oxley, and because a lot of their executives like to live in our halcyon climes, there is a big drive that very much benefits London as a financial centre.

Photo of Baroness Wilcox Baroness Wilcox Shadow Minister (Women), Trade & Industry 8:18, 2 July 2007

My Lords, I thank my noble friend Lord Hodgson of Astley Abbotts for giving us the opportunity to debate this directive. European directives are, unfortunately, not the most eye-catching pieces of legislation. As he commented, company law is not doing much to make this one the exception.

Nevertheless, this directive will have an effect, and it is by no means certain that that effect will be beneficial. As my noble friend clearly laid out, with considerably more expertise than I can claim, this directive will quite possibly remove one of the great competitive advantages that helps to make this country's capital a global financial centre. The US seems poised to rethink some of the more onerous parts of the Sarbanes-Oxley regulations. The UK cannot therefore rely in future on the excessive regulation of its competitors to ensure its financial health. We must make certain that our regulatory burden is enough to ensure good practice but no more.

This Government have repeatedly stated that they intend to reduce some of the expense of unnecessary red tape and bureaucracy that has been laid upon them in the past 10 years. Indeed, it was one of the cornerstone reasons why they introduced the Legislative and Regulatory Reform Act 2006. The Government repeated their intention to protect UK companies and British business from excessive regulation, this time from overseas, when debating the Investment Exchanges and Clearing Houses Act. Unfortunately, as my noble friend Lady Noakes pointed out, that Act provided protection only from the United States, not from the EU. Action was certainly needed; the British Chambers of Commerce has estimated the extra cost that Labour has heaped on business since 1998 is £55.66 billion. Three-quarters of this has originated in Europe.

Unfortunately, the Government may be introducing legislation that is designed to unpick the damage that has already been inflicted, but they are not doing anything to stop the new costs that are still being added. The FSA has estimated that the EU's markets in financial instruments directive will cost up to £1.1 billion to implement and over £100 million a year to operate. Does the Minister have any estimate of how much this directive will cost? This directive is yet another clear example that we must start having proper regulatory impact assessment for EU legislation. It is impossible to have an informed debate about these directives, or any of the myriad pieces of EU related law that seem to pass through this House, without them.

When the Minister responds to the questions that my noble friend, those on the other Benches and I have raised, I hope that he will also be able to explain why his Government fail to undertake proper assessment of EU regulations.

Photo of Lord Evans of Temple Guiting Lord Evans of Temple Guiting Government Whip 8:21, 2 July 2007

My Lords, I, too, thank the noble Lord, Lord Hodgson of Astley Abbotts, for introducing this debate; we have had a very brief discussion. The whole tone was summed up by the noble Lord, Lord Sharman, who said that the danger in such a directive is what happens when you get it wrong. I hope that my comments will reassure noble Lords.

I start by nailing the Sarbanes-Oxley example. This is not an EU version of Sarbanes-Oxley. The London Stock Exchange has commented that although it is important to get implementation of the directive right—the noble Lord, Lord Razzall, stressed that—it is important to note that this is not a Sarbanes-Oxley.

Before I turn to some of the important points that have been made and the questions raised, I want to comment on the general context and objectives behind the new directive. As we heard, last week saw the establishment of the new Department for Business, Enterprise and Regulatory Reform. Noble Lords have stressed the importance of regulatory reform, and that message will be taken back to the new department. The department has a clear focus to promote productivity, enterprise, competition, trade and better regulation within a framework of free and fair markets.

I am sure that all noble Lords agree that these are vital for maintaining and strengthening a vibrant British business sector. We hope that the new department will provide a strong voice for business and regulatory reform within Whitehall.

The reporting and auditing framework must ensure that interested parties and others are provided with fair and accurate information. But the framework must operate efficiently and in a way that minimises the regulatory burden. Both objectives are vital to maintaining and building on the competitiveness of our capital markets and of course to their attractiveness to international investors and issuers. Another point that has emerged is a concern that this directive may have an effect on that very thing.

The potential impact of loss of investor confidence across Europe and globally is immense. It has been estimated by academic studies that the loss in stock market wealth in the US as a result of the Enron and WorldCom scandals was $38.2 billion in the first year. The Government reviewed and strengthened regulation of audit and accounting after Enron to protect against the risk of similar events in the future. But, in doing so, we were very careful to build on and preserve the strengths of our existing system and to avoid overly burdensome new regulations. We were careful to maintain the strengths of the "comply or explain" approach to corporate governance. We built on the sound achievement of the existing self-regulatory regime and enhanced the remit of the Financial Reporting Council.

At European level, the new audit directive seeks to enhance confidence in the financial statements and annual reports published by companies across the EU. The aim is to achieve this objective by strengthening the EU framework of standards and public oversight for the audit profession, in particular for the audits of larger, publicly listed companies, and by introducing new provisions for auditors from non-EU countries. I will come back to that question.

This is a "minimum harmonisation" directive, intended to establish a set of basic principles for the conduct and oversight of statutory audits conducted in the EU. The directive clarifies the duties of statutory auditors and provides for their independence and ethical standards. It introduces a requirement for external quality assurance and provides for public oversight of the audit profession, including third country auditors, and improved co-operation between oversight bodies in the EU. It also provides a basis for international co-operation between regulators in the EU and with regulators in third countries.

The UK already enjoys a high level of confidence in the quality of its financial reporting, the professionalism of our accounting and auditing community, and the general quality of governance in our public companies. Furthermore, as a result of the regulatory reforms we have already made, we are in the enviable position of already having many of the audit directive provisions in place. Implementation of many of the provisions will therefore require little, if any, change to existing auditing practice or to regulation.

There are, however, various new provisions in the directive. These include measures which will, for the first time, extend to auditors from third countries. I now turn to the points raised by the noble Lord, Lord Hodgson, about the provisions on third country auditors, and concerns reflected by the noble Lord, Lord Razzall.

Noble Lords are right to draw particular attention to the importance of these provisions and the need to ensure that detailed implementation is practical and proportionate. This is a complex, technical process involving detailed discussions with the relevant authorities in the UK, the European Commission and other member states, and, indeed, with third country authorities. We understand that these discussions are ongoing.

The provisions extend elements of the EU's regulatory system to those non-EU auditors who audit companies that issue securities on EU-regulated markets. The intention behind them is to provide investors in the UK and other EU markets with enhanced comfort that financial statements have been audited by auditors subject to minimum levels of regulation equivalent to those in the EU. These provisions are particularly important for the UK, in view of the large number of non-EU companies whose shares are traded in London—a point stressed by the noble Lord, Lord Razzall, and others. They are also important to other member states with growing international capital markets and to the economic development of the EU as a whole.

As with other aspects of the directive, these provisions have to strike a balance, providing important protections to investors while keeping regulation efficient and cost-effective for the benefit of all. It is equally important to get the balance right in how the provisions are implemented and particularly in how the flexibilities provided for in the directive are used.

Therefore, under the directive, if an auditor is subject to an equivalent regulatory system in his home country, it is not necessary to make him or her subject to the UK regulatory regime. In such cases, the directive enables the auditors' home country regime to be relied on. It is for the European Commission, acting with member states under comitology, to make determinations of equivalence. There is also provision for the Commission to provide transitional arrangements for countries which do not have equivalent regimes but which are developing their own regulatory systems along similar lines.

The Commission consulted publicly earlier in the year on its approach to these decisions. Market players and other interested parties, including the London Stock Exchange and many from the UK, welcomed the pragmatic nature of the Commission's proposal. In particular, they welcome the intention to rely, wherever possible, on home country audit regulations.

The Government, along with the Financial Reporting Council, are working with the Commission and other member states to determine the best approach in the light of that consultation. The Government and the FRC have worked closely and effectively in planning for the directive's implementation and developing a joint approach to the discussions with the European Commission and other nation states in the implementation of the provisions on third party auditors.

The FRC and the Government are keen to make sure that the detailed implementation of these provisions works effectively in practice. The FRC supports the Government's approach. The Government have consulted extensively on both the negotiation and implementation of the directive. A consultation document was published in 2004 and a wide range of interested parties commented on the proposals. Since the directive's adoption, we have worked closely with all our stakeholders and delivery partners to develop proposals for the directive's implementation into UK law.

We published a full consultation document in March setting out an approach. The consultation included a revised draft regulatory impact assessment—a request made, I think, by the noble Lord, Lord Razzall—which was updated in the light of evidence provided by stakeholders. We are grateful for the many constructive responses and continue to work on drafting these regulations. We hope to publish our response to that consultation and the draft regulation shortly and look forward to receiving any comments from those noble Lords who have taken part in this debate.

In the one minute remaining, I will deal with the matter of audit committees raised by the noble Lords, Lord Hodgson and Lord Sharman. As noted, the directive introduces a new requirement that listed companies should have an audit committee or a body performing equivalent functions. That goes beyond UK provision—where provisions on the composition and role of audit committees are set out in the combined code on corporate governance.

This code operates on a "comply or explain" basis. In a consultation document published earlier this year, the Government set out a number of options for implementing the requirement. We are also keen to stimulate debate among interested parties as the best way forward to help us deliver the route wanted by the market.

The noble Lord, Lord Sharman, asked what the dismissal of auditors only on "proper grounds" means. We agree that "proper grounds" is a broad concept. However, this is exactly the type of thing that can be sensibly assessed only in the circumstances of particular cases. The important point is that shareholders have an additional protection against auditors being dismissed where the reason is that the directors or dominant shareholders disagree with the way in which the auditors are doing their job.

I have the answers to four more questions, but have run out of time. If I may, I will write to noble Lords, sending copies to everyone who has taken part in the debate. I once again thank the noble Lord, Lord Hodgson, for introducing what has been an interesting hour or so.