It’s an honour to deliver the keynote speech at the opening event of the 16th London Global Convention on Corporate Governance and Sustainability.
I am grateful for the Institute of Directors, India, for inviting me to speak.
Welcome, everyone, to the House of Lords.
I confess that I had more than one motivation for accepting the invitation to speak this evening.
On the one hand, this is a brilliant opportunity to speak with leaders of industry and government here, from India and across the world.
To shape the future of corporate governance.
And to support trade links between some really key parts of the world.
On the other hand, I can’t help thinking of what it might do for my career, given that one speaker from a past convention has just gone on to become Prime Minister.
Who knows what the next 12 months now hold for me?
On a more serious note, it looks like inviting Theresa May to address a previous convention was an enlightened choice indeed.
Because this summer Theresa May opened her campaign to become Prime Minister with a promise to make the most far-reaching reforms to corporate governance in the UK for a generation.
I will, of course, say something about those plans, which I hope will give this year’s convention much to think about.
I also want to talk about Britain’s role in the world following our vote to leave the EU, particularly focusing on the opportunity we now have to forge even better trading relationships with India and south-east Asia.
Reforms to corporate governance
But I will start with the reforms the British government wants to make to corporate governance in this country.
And I’d like to say, first, that this is a government that is serious about business.
That is why we have already slashed business regulation.
That is why we have cut corporation tax to just 20%; the lowest in the G7.
And we will cut it to 17% by 2020.
And that, too, is why we’re building a world-leading transport system.
In recent years these changes have helped make the UK the fastest-growing economy in the G7, and one of the strongest major advanced economies in the world.
But the British government cannot take all the credit for these economic achievements.
The hard work has been done by British businesses – many of them small businesses – who with spectacular success have fought from recession to recovery.
Yet as Theresa May has pointed out, among the success stories there are also signs of a need for change.
Consider the role of the non-executive director.
It’s a vital responsibility
Non-execs need to be independent minded, able to ask the difficult questions, think about the long-term, and defend the interests of shareholders.
But too often they are drawn from the same narrow background as the executive team.
Another area in which we want to change things is by tackling irresponsible behaviour, particularly in the field of pay.
In the last 18 years, executive pay has trebled.
Yet it’s not at all clear that businesses are now three-times better run.
The UK has long been regarded as a world-leader in corporate governance.
We combine high standards with low regulatory burdens.
But there is a view that we might not be doing enough to ensure that company boards are taking employee and consumer interests into account, planning and investing for the long-term, and aligning executive pay with performance
So we are going to look at how we can improve things.
We will be looking at making annual shareholder votes on executive pay not just advisory but binding; ensuring fuller disclosure of bonus targets; strengthening the employee and consumer voice at boardroom level; and the role of non-executive directors.
And then there’s tax.
Businesses succeed because they have the support of civil society: education, transport, legal systems and other amenities.
It’s therefore wrong when companies shirk their responsibilities to pay back into the system that allowed them to succeed in the first place.
So we’re going to crack down on corporate tax avoidance and evasion.
These proposals don’t mean we’re taking an anti-business turn.
Instead, they’re further evidence that we’re a government takes good business seriously.
We want businesses to continue to thrive.
And in the long run, that only happens when businesses are run properly.
New trading opportunities
Of course, we also recognise that corporate governance is only ever a means to an end, never an end in itself.
And that end is the security, and prosperity, of all of society.
Prosperity for employees, for our economy, and for our trading partners too.
In fact, some of this country’s greatest business success stories are the product of our trading relationship with India.
And Britain already invests more in India than any other country in the G20.
Following Britain’s vote to leave the European Union, our ambition is that Britain can now grow its trading relationship with so much of the rest of the world, including India and south-east Asia.
And as a transport minister, I am particularly interested in the great opportunities that come as we continue to invest in our transport network
With a £100 billion infrastructure programme up to 2020, and lots more to come in the years that follow, I know that there’ll be many, many opportunities for the latest British expertise to be put to use across India and south-east Asia – perhaps in new, tunnelled railways.
Our Crossrail project is currently the largest construction project in Europe, and it’s proven that we can do the biggest, most technically challenge infrastructure projects on time and on budget.
Or there’s the new high speed rail network were about to start constructing from London to Manchester and Leeds in the north.
There’s a huge opportunity for Britain, India and other countries in the region to pool interests and talents for benefit to us all.
So thank you for listening this evening.
It’s been a pleasure to meet you all.
And as this convention unfolds over the next few days, I and many others will be following with interest.
I wish the 16th convention all the very best.