Anyone who simply reads the summary of conclusions and recommendations of last year’s consultative draft Hampel Report – and very few people will do anything other than this – might be puzzled as to why Mrs Beckett and other government ministers are concerned about Hampel’s views. After all, the recommendations only cover some pretty technical and boring matters, seen from outside, nit-picking stuff about executive versus non-executive directors, audit committees, and so on.
The problem is that the real heart of Hampel does not appear in its recommendations. This concerns the role of industry. In the text Hampel offers two brutally clear notions. In the first paragraph of the report we are told that business prosperity is more important than accountability and then in paragraph 1.16, that: ‘The single overriding objective shared by all listed companies, whatever their size and type of business, is the preservation and greatest practicable enhancement over time of their shareholders’ investment’. This, we assume, represents his philosophy.
Now there is nothing wrong with wealth creation, the country certainly needs it. But Hampel does not seem to recognise that wealth creation on the one hand, and accountability and public citizenship on the other, are two sides of the same coin. Hampel just looks like profit, profit, profit all the way, and incidentally, of course, a substantial profit for directors with bonuses linked to the share price. No wonder Mrs Beckett and other ministers feel queasy. On the widest political front, Hampel seems to have got the spirit of the age comprehensively wrong. And in more detail too, for instance ministers seeking a better educated population, or tackling environmental issues, or working out a substantial role for the private sector in the delivery of public services, are starting to wonder whether company self-regulation is not, in the light of all this, simply for the birds.
Of course, it may be that Hampel and his colleagues have in fact got their hearts in the right place but, as ministers see it, they just don’t think it needs spelling out. So we are just looking at a piece of cack-handed drafting.
If that is so, then Hampel has a chance to put it right. But there must be a worry, judging from the shrill squawks that are coming out of the Hampel camp, that they are going to change nothing, that they actually mean it. If so, they are in for a nasty shock. The government will simply do what governments always do when people like Hampel get it wrong – they will put it right themselves, if necessary by legislation. And Hampel and the people he purports to speak for certainly will not like that.
Sir Peter Kemp is chief executive of the Foundation for Accountancy and Financial Management.
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