VINCE Cable will today respond to public anger that those responsible for crashing Britain’s economy have never been held to account by announcing new laws aimed at bringing “rogue directors” to justice.
The Business Secretary will use his keynote speech at the Liberal Democrat party conference to attack the “small, rotten core” of company executives who have damaged their employees and the wider economy through their reckless or immoral approach.
It follows widespread outrage over the conduct of the senior directors at RBS and HBOS, including Yorkshire bankers Andy Hornby and Sir James Crosby, in the years leading up to the economic crash. Mr Cable said earlier this year he would examine the case for banning the men from serving as directors in the future.
Today he will announce a range of new measures including a ban on foreign directors who have been banned from running firms in their own countries from taking charge of companies in Britain.
He will also extend the time available to investigate complex cases of director misconduct; and introduce special corporate training for banned directors who want to run a company again.
“For too long, a small rotten core has got away with either a slap on the wrist, a ban from working in their own industry or at the most, a time-limited ban,” he will say.
“This neglects the fact that rogue directors’ decisions affect the lives of the employees they are responsible for and the businesses they deal with. That is why I will beef up the laws to ban rogue directors from running British companies, so dodgy directors face the strongest possible consequences for their irresponsible actions.”
A Government consultation on company directorships ends today, and Lib Dem sources made it clear Mr Cable is determined to act as quickly as possible. If new legislation is required, as expected, it would have to come in the next Queen’s Speech in May – the last before the 2015 election.
“On the back of a number of scandals like Farepak, nursing homes, the banking sector, it was very clear that we didn’t have the power we needed to take action against directors who act fraudulently and recklessly,” a source close to Mr Cable said.
“The damage can run to tens of billions if you get the wrong people running a big company. We want Britain to be a world leader in corporate governance.”
The source added that Mr Cable’s speech would focus on “fairness” at the bottom of the labour market as well as the top, with the announcement of a consultation on zero-hour contracts that could see new regulations before 2015.
He will also ask the low pay commission to consider ways to create a climate where it would be safe to raise the national minimum wage at a faster rate, without a negative impact on jobs.
However, his speech risks being overshadowed by speculation he is poised to support a rebel amendment in a key conference vote on Nick Clegg’s approach to the economy this afternoon.
Amid ongoing rumours about Mr Cable’s desire to succeed Mr Clegg as party leader, it is understood he is considering voting for a measure calling for local councils to be allowed to borrow large sums to embark on a massive house-building programme.
Mr Clegg yesterday delivered a firm rebuttal to Mr Cable’s suggestion that Chancellor George Osborne’s flagship Help to Buy scheme could be confined to areas where the housing market is stuck in the doldrums, to avoid stoking up a bubble in London and the South-East.
“We are nowhere near yet the peak of an unsustainable housing bubble,” the Deputy Prime Minister said.