Brown makes u-turn on OFRs

Gordon Brown has agreed to consult about Operating and Financial Reviews (OFRs), just nine weeks after he promised to scrap the company reporting regulations.

The chancellor’s abrupt retreat was triggered by an imminent legal action being brought by Friends of the Earth, accusing Brown of having acted unlawfully by abolishing the rules without proper consultation.

Brown announced in November that he was scrapping the requirement for all listed companies to produce an OFR, an annual report on future risks and opportunities, including environmental and employee concerns.

The move was designed to highlight the government’s commitment at cutting red tape, but it appeared to backfire, with the Association of British Insurers claiming it was “baffled, bewildered and rather disappointed”.

Duncan Brown, assistant director general at the CIPD, said at the time: “I am very disappointed and don’t understand this decision at all. It has not been thought through properly. UK businesses will be worse off and it will slow down how companies demonstrate how important their people are to them.”

Employers also complained that they had spent millions of pounds preparing for the now defunct rules, which were to be replaced by a “business review”. A consultation about those replacement rules was due to run to the middle of this month.

Now, the government has agreed to widen this consultation to allow comments on issues such as “social, community, employee and environmental matters”.

That consultation has been extended until 24 March, with the government intending to incorporate the new reporting rules into the company law reform bill currently going through parliament.

The CBI said: “We welcome the extension of the DTI review and will advance our case for the continued abolition. As far as we are concerned nothing has changed.”