Contribution
The right hon. Gentleman made a very interesting speech with a series of interesting analogies, and I have noted those and the points that he made. As I have said, I will track this particular court case and its conclusions. I always try to make myself available when hon. and right hon. Members want to discuss particular issues that are pertinent to my brief, and as things unfold, I make that offer to the right hon. Gentleman too.
I should stress again that only the courts can really decide on the application of contractual terms. It is absolutely right that affected businesses seek independent legal advice on the particular circumstances of their situation. As the right hon. Gentleman will be fully aware, legislation cannot prevent wrongdoing. It can deter and it can punish, but only after the event. It is important for companies, obviously, to conduct business fairly. We already have rules that encourage this, whether in relation to criminal offences of fraud, audit requirements or prompt payment reporting, which my Department has begun to strengthen and on which we will publish further proposals shortly.
I am sure the right hon. Gentleman will agree that investors and the public expect and deserve access to truthful reporting from our most important businesses on their finances and related issues. This is critical for trust, and ultimately it is critical for economic growth. That is why, through the audit and corporate governance reform Bill, we are developing legislation to uphold standards and the independent scrutiny of companies’ accounts while ensuring real accountability for company directors.
Section 172 of the Companies Act 2006 already requires company directors to frame regard in their decision making to a wide range of stakeholder interests. That includes the impact of the company’s operations on the wider community. It also requires directors to have regard to the desirability of the company maintaining a reputation for high standards of business conduct. This requirement applies to a company’s business transactions, including the treatment of franchisees. Large companies must report annually on how their directors have complied with these requirements. Taken together, the section 172 duty helps to provide assurance that companies are run responsibly and that directors are mindful of the impact of their decision making beyond the company and its shareholders.
The right hon. Gentleman touched on the additional regulation of franchises and the wider franchise model. As he will know, this Government are dedicated to implementing an ambitious regulatory reform agenda. In March, we published our action plan for regulation, outlining changes to streamline rules and regulations to support growth. While that plan includes a clear commitment to cut regulatory administrative costs for business by 25%, it also includes a commitment to strengthening accountability for regulators. That includes simplifying their duties to ensure that the regulatory environment focuses on growth, investment and, crucially, transparency.
Our modern industrial strategy also includes an ambitious package of regulatory reforms that will support our growth-driving sectors and the wider economy, but as we stated at its launch, that is not the end of the journey; it is just the beginning. Where there are changes that we can make to increase the UK’s economic resilience and channel support to the most productive parts of our economy, we want to continue to work with Members across this House to implement them.
In conclusion, let me thank the right hon. Gentleman and other hon. Members who have participated in the debate. Franchise regulation is a complex and difficult issue and, as I have said, this particular case has raised concerns across the House. As I promised, I will continue to look closely at how the case develops and ultimately what conclusions are reached. I am happy to continue conversations about this case and its implications outside the Chamber.
Question put and agreed to.