Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, whether (a) Ministers and (b) officials in his Department have had meetings with (i) business representatives and (ii) civil society organisations on changing shareholder primacy into stakeholder primacy in business in the last 12 months.
Answered by Justin Madders
The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. As part of this, officials have engaged with industry-led reports such as the Demos report, "The Purpose Dividend" published in 2023.
Section 172 of the Companies Act 2006 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. The Government believes that this allows companies to determine their purpose and priorities themselves. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe duty only to shareholders.
Details of Ministers' and Permanent Secretaries meeting with external individuals and organisations are published quarterly in arrears on GOV.UK.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, whether his Department has made an assessment of the potential implications for its policies of Demos' report entitled The Purpose Dividend, published on 28 November 2023.
Answered by Justin Madders
The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. As part of this, officials have engaged with industry-led reports such as the Demos report, "The Purpose Dividend" published in 2023.
Section 172 of the Companies Act 2006 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. The Government believes that this allows companies to determine their purpose and priorities themselves. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe duty only to shareholders.
Details of Ministers' and Permanent Secretaries meeting with external individuals and organisations are published quarterly in arrears on GOV.UK.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, whether his Department plans to consult (a) businesses, (b) trade unions, (c) investors and (d) civil society organisations on the principle of moving from shareholder primacy to stakeholder primacy.
Answered by Justin Madders
Section 172 of the Companies Act 2006 requires company directors to have regard in their decision-making to the interests of their employees and to the impact of the company's operations on the community and the environment. All large companies must report annually on how their directors have fulfilled this duty. Section 172 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe their duty only to shareholders.
The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. I look forward to considering the clauses of the Company Directors (Duties) Bill when available.
I would be pleased to meet with the Honourable Member for Newton Abbot to discuss his Private Member's Bill.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, if his Department will amend section 172 of the Companies Act 2006 to require company directors to balance the duty to promote the success of the company with duties to (a) employees and (b) the environment.
Answered by Justin Madders
Section 172 of the Companies Act 2006 requires company directors to have regard in their decision-making to the interests of their employees and to the impact of the company's operations on the community and the environment. All large companies must report annually on how their directors have fulfilled this duty. Section 172 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe their duty only to shareholders.
The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. I look forward to considering the clauses of the Company Directors (Duties) Bill when available.
I would be pleased to meet with the Honourable Member for Newton Abbot to discuss his Private Member's Bill.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, if he will meet with (a) the hon. Member for Newton Abbot and (b) members of the business community to discuss expanding the duties of company directors.
Answered by Justin Madders
Section 172 of the Companies Act 2006 requires company directors to have regard in their decision-making to the interests of their employees and to the impact of the company's operations on the community and the environment. All large companies must report annually on how their directors have fulfilled this duty. Section 172 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe their duty only to shareholders.
The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. I look forward to considering the clauses of the Company Directors (Duties) Bill when available.
I would be pleased to meet with the Honourable Member for Newton Abbot to discuss his Private Member's Bill.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, whether he plans to support reform in corporate governance from shareholder primacy towards stakeholder primacy.
Answered by Justin Madders
Section 172 of the Companies Act 2006 requires company directors to have regard in their decision-making to the interests of their employees and to the impact of the company's operations on the community and the environment. All large companies must report annually on how their directors have fulfilled this duty. Section 172 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe their duty only to shareholders.
The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. I look forward to considering the clauses of the Company Directors (Duties) Bill when available.
I would be pleased to meet with the Honourable Member for Newton Abbot to discuss his Private Member's Bill.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, if he will support the (a) passage and (b) principle of the Company Directors (Duties) Bill.
Answered by Justin Madders
Section 172 of the Companies Act 2006 requires company directors to have regard in their decision-making to the interests of their employees and to the impact of the company's operations on the community and the environment. All large companies must report annually on how their directors have fulfilled this duty. Section 172 enshrines in statute the "enlightened shareholder value" principle, which recognises that the long-term success of a company depends in part on the ongoing consideration of wider stakeholder interests. This contrasts with the "shareholder maximisation" principle underpinning directors' duties in some other jurisdictions, in which directors owe their duty only to shareholders.
The Government welcomes suggestions on how to ensure companies consider wider stakeholder interests alongside the needs of stakeholders. I look forward to considering the clauses of the Company Directors (Duties) Bill when available.
I would be pleased to meet with the Honourable Member for Newton Abbot to discuss his Private Member's Bill.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, whether he has made an assessment of the potential impact of changes to corporate governance law on economic output.
Answered by Justin Madders
Non-financial reporting information is a vital part of the UK’s corporate governance framework. The Government has committed to review non-financial reporting in order to reduce burdens on business and has already made legislative changes that will save companies £240 million per year.
This work is ongoing and the Government will publish a further consultation later this year.
The Department supported the Financial Reporting Council in revising the UK Stewardship Code. The new Code reduces reporting burdens and early estimates suggest that signatories to the Code may be able to reduce reporting volume by 20-30% while maintaining reporting quality.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, whether he plans to review the (a) use of personal data in supermarket loyalty schemes and (b) the potential impact of those schemes on equitable pricing.
Answered by Justin Madders
In 2024, the Competition and Markets Authority (CMA) undertook a review into loyalty pricing in the groceries sector, publishing their findings in November 2024. The CMA found that shoppers who are members of a loyalty scheme can almost always make a genuine saving on the usual price by buying loyalty priced products. This should give shoppers confidence that they are not being treated unfairly.
The CMA analysed around 50,000 grocery products on a loyalty price promotion and found very little evidence of supermarkets inflating their ‘usual’ prices to make loyalty promotions seem like a better deal.
In addition, shoppers without a loyalty scheme membership are generally paying the same price during the loyalty price promotion as they do in the weeks both before and after loyalty price promotions. However, the CMA found several loyalty priced products which were significantly more expensive than the cheapest price available at other supermarkets at that time, so there is value in shopping around.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the Department for Business and Trade:
To ask the Secretary of State for Business and Trade, whether he is taking steps to prevent consumers who do not opt in to supermarket loyalty schemes from being charged higher prices.
Answered by Justin Madders
In 2024, the Competition and Markets Authority (CMA) undertook a review into loyalty pricing in the groceries sector, publishing their findings in November 2024. The CMA found that shoppers who are members of a loyalty scheme can almost always make a genuine saving on the usual price by buying loyalty priced products. This should give shoppers confidence that they are not being treated unfairly.
The CMA analysed around 50,000 grocery products on a loyalty price promotion and found very little evidence of supermarkets inflating their ‘usual’ prices to make loyalty promotions seem like a better deal.
In addition, shoppers without a loyalty scheme membership are generally paying the same price during the loyalty price promotion as they do in the weeks both before and after loyalty price promotions. However, the CMA found several loyalty priced products which were significantly more expensive than the cheapest price available at other supermarkets at that time, so there is value in shopping around.