moved Amendment No. 6:
6: Schedule 1, page 37, line 6, leave out ““five”” and insert ““three””
The noble Lord said: My Lords, this takes us back over some territory we discussed in Grand Committee. This pair of amendments has the simple objective of changing the terms of office for board members from two five-year terms to three three-year terms. My arguments in Grand Committee can be summarised as follows. First, the LBRO will deal with private sector companies, and modern corporate governance allows for three three-year terms, not two five-year terms. Since it interfaces with the LBRO, the LBRO should be on the same basis. Secondly, five-year terms are inherently undesirable. A chairman or board member can do a great deal of damage in five years. Thirdly, my noble friend Lord Cope made the helpful suggestion that three-year terms made the board succession question—which he described as the balance between continuity and turnover—easier.
The argument against, which the noble Lord, Lord Borrie, was prominent in advancing, was that this is a public sector and part-time body, and it takes five years to get to know the ropes. It is a public sector body, but a very specialised one. It is established as a body corporate. It is registered with the Registrar of Companies for England and Wales. Paragraph 1 of Schedule 1 suggests that it is not to be regarded as a servant or agent of the Crown. However, it is wrong to say that it takes five years to get to know the ropes. All non-executive directors are part-time. In large private sector companies, three years is considered the right length of time and as striking the right balance between continuity and becoming complacent. The suggestion, also made in Grand Committee, that three-year reappointments unduly increase Ministers’ influence was unworthy, because if the members of the LBRO are so weak as to fall prey to this, a five-year term of office will make no difference.
The Minister suggested that he wished to use the precedent of the Serious Organised Crime Agency. I really do not think that SOCA, as a law enforcement agency, is comparable to this issue. He finally pointed out that five years was, in any case, the maximum period and that it was possible to remove a chairman or board member in less than five years. But we all know that the reality is that, once people are appointed, it involves very great agony and effort to turf someone out before the end of their maximum turn. The LBRO interfaces with private sector companies, which are set up on a ““three-by-three””, not a ““five-by-two””, basis. The LBRO should be the same. That would be better for it and will make it more effective and responsive to changes in the marketplace. I hope that the Minister will think again. I beg to move.
Regulatory Enforcement and Sanctions Bill [HL]
Proceeding contribution from
Lord Hodgson of Astley Abbotts
(Conservative)
in the House of Lords on Wednesday, 19 March 2008.
It occurred during Debate on bills on Regulatory Enforcement and Sanctions Bill [HL].
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700 c283-4 
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2007-08
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