I am grateful to have been called to participate in this debate on an important issue for companies, their corporate governance and public confidence in corporate financial regulation.
In general, much of the report is worthy of consideration. It adds to what should be an ongoing review of corporate governance procedures. However, I stress that the process has long been ongoing. It has not been started and it will not end with this report. Therefore, I take issue with the warning in the report against dangerous complacency, and with the Financial Secretary's warning about complacency in her speech to the National Association of Pension Funds yesterday. I have advised boards on corporate governance issues for more than a decade, and I declare an interest as noted in the Register of Members' Interests. I have seen an enormous change in the whole area of corporate reporting, independence and accountability, not least through the Cadbury, Greenbury and Hampel reports and the guidelines of the NAPF, Hermes Pensions Management and the Pensions and Investments Research Consultants. Therefore, I, among others, suggest that the use of the word "complacency" is clearly inappropriate.
Furthermore, I do not wish to rubbish many of the valuable points made in the Smith and Higgs reports, and I acknowledge that we have had no UK Enron, but I have been somewhat surprised at the amount of time spent so far, not only in the House but by the professions and the business community, on the overall question of corporate governance in recent months. Other much more directly relevant issues, such as the weakness of the Government's manufacturing strategy and the impact of tax and regulations on British companies, are hardly ever mentioned. Those issues have much more to do with the success of UK companies than the subject considered in the report.
Why are the Government now being so forthright on corporate governance? Perhaps we could have a debate on that. Is it to keep up with the Joneses in America, who have started from a much weaker position than we have in this country, or is it to divert attention from the Government's failings? Some Members might see the irony when I recall that the Government were recently seen kicking and screaming against Conservative proposals to split the chief executive and chairman roles on the new UK Competition Commission under the Enterprise Act 2002.
In that regard, however, as Mr. McFall made clear, the report made one very important recommendation in paragraphs 42 to 44 in its section on "Other Matters". It highlighted the lack of progress on implementation of the company law review, which was launched as far back as 1998. A thorough rewrite of the Companies Acts is more urgently required than an update of the combined code on corporate governance.