Lord Remnant (Con)

My Lords, as the noble Earl, Lord Russell, indicated, this group of amendments deals with a common theme of representation on water company boards but has several different facets. Amendment 22 in my name would ensure that it is for the boards of water companies, rather than Ofwat, to decide in which forum—board, committee or panel—the views of consumers should be represented. As we have heard, Clause 1 includes provisions intended to establish consumer involvement in corporate decision-making. New subsection (6) provides that this “may include a requirement for persons representing the views of consumers to be members of a board, committee or panel of” the water company. While I support the principle of strengthening the voice of consumers, this should not be through a highly prescriptive, one-size-fits-all approach. In this country we do not have different categories of director, as the noble Lord, Lord Sikka, reminded us earlier. Non-executive directors may have specialisations, but they are chosen for their wider skills and ability to make a comprehensive contribution. The noble Duke, the Duke of Wellington, just made a similar point. Those representing consumer interests may not wish or be equipped to sit on corporate boards, with all the responsibilities and liabilities that entails. It should not be for Ofwat to require that such people sit on the boards of water companies but should be left to the companies to decide which forum best suits their requirements, whether that be board, committee or panel. Providing similar flexibility was effective when companies enacted the workforce engagement mechanism under the UK Corporate Governance Code’s requirements. A very small number of companies appointed a director from the workforce, largely for the considerations I have mentioned. Some established a formal workforce advisory panel, and a greater number appointed a designated non-executive director for workforce engagement. Each company chose the mechanism best suited to its circumstances, and the system has worked well. Amendment 9 in the name of the noble Earl, Lord Russell, and Amendment 21 in the name of the noble Duke, the Duke of Wellington, extend the provisions of this clause to environmental experts. It will be for your Lordships to decide how widely to draw the categories of relevant interest, however represented, but the principle in the latter amendment of representation other than at board level is very much in line with the rationale behind my amendment. I shall listen with interest to the arguments put by the noble Lord, Lord Sikka, and the noble Baroness, Lady Jones of Moulsecoomb, for their Amendments 82 and 100 respectively. However, they would represent a radical departure from accepted standards of corporate governance and company law, so I would hesitate to support them. My earlier dose of optimism is becoming somewhat jaded. A recurring theme seems to be emerging in the Minister’s replies: everything is for Ofwat to decide. That displays a touching and, if I may venture, possibly naive belief in Ofwat deciding wisely on many matters that are not within its competence as an economic regulator. Concerns have been expressed on all sides about its past record. Surely it should be the role of this House to take more responsibility on itself and give much more direction and guidance to Ofwat on how it should exercise the significant additional powers this Bill gives it—or, as in this case, remove the key choice from Ofwat and give it to the companies, within a defined framework imposed by us.