In March we warned that despite provisions in the law that allow for government bodies to exclude companies who have committed regulatory infringements from winning public contracts for a period of three years, firms with poor track records of compliance were still being contracted to provide public services.
Now we can report that companies who repeatedly break regulatory law are not only being handed public contracts, they are also working on government policy at the highest level. Over half of the 28 companies represented on the Prime Minister’s Business Council (PMBC) are revealed by Violation Tracker UK to have broken UK regulations since 2010.
Last week, the Good Law Project revealed that the prime minister had refused to name the companies who sat on his business council, but that the chancellor of the exchequer had already published the list of firms that were in attendance at the PMBC’s last meeting in December.
The PMBC purportedly exists to promote high productivity and growth and includes missions such as the creation of a regulatory system that ‘enables innovation’.
These buzzwords are often used in arguments for more de-regulation; the implication being that regulations hinder innovation, or in other words, workplace and environmental protections stand in the way of more growth and more profit.
It is important to note that regulations exist to protect consumers, workers and the environment from corporate harm. When companies break regulations, it is the public who pay the price.
Consumer protection offences
Eight companies represented on the PMBC have faced enforcement action for offences against consumers such as overcharging customers and mis-selling products.
Scottish Power, owned by Spain-based company Iberdrola, has paid out over £29 million for inaccurate marketing and incorrect billing.
Shell was found to have overcharged customers both in 2019 and 2022, and was fined by OFGEM alongside Scottish Power and Octopus in 2021 for not adhering to price protection rules.
Meanwhile Microsoft has twice come under scrutiny by the Competition and Markets Authority for its unclear terms and conditions including automatic renewal practices.
Both Virgin group and Scottish Power have been found guilty of consumer redress failures. Virgin group have paid out over £200 million for delaying refunds, and customers who sought redress through the energy ombudsman against Scottish Power found that the company failed to process the outcomes in a timely fashion.
Scandals
Companies on the PMBC have also been involved in some high-profile scandals; with three in the top 10 most penalised parent companies in the UK. Malpractice by financial institutions can have catastrophic consequences as seen in the 2008 financial crisis.
In 2017, Rolls-Royce paid a record fine of over £500 million for bribery.
Lloyds Banking Group, Natwest and Citigroup have been embroiled in multiple banking scandals. Lloyds has been fined over £468 million in total penalties for misconduct since 2010, Natwest over £703 million and Citigroup over £282 million.
Environmental violations
The inclusion of major polluters on a business council reported to be providing policy advice to the government is likely to be a concern when it comes to the government’s climate commitments.
Scottish Power and Shell have faced enforcement action for failing to comply with carbon emission regulations. Shell and BP have both been handed sanction notices by the North Sea Transition Authority, Shell for breaching oil production consents and BP for failing to report the progress and results of oil well tests.
Employment offences
The government is also giving a seat the table to companies with a poor record of workplace abuses.
Both Whitbread and Iceland Foods have lost multiple times at employment tribunals in recent years in cases of disability and race discrimination, unlawful deductions from wages, unfair dismissal and various breaches of contract.
The Pensions Regulator has upheld 39 complaints against insurance company Aviva, which has one of the worst records for pension plan violations on the Violation Tracker database.
With 5.5 million businesses, and over 7,000 large businesses in the UK, the government has a wide range of options to turn to for policy and industry advice. Is the government prioritising public interest in its selection of which companies sit on this elite policy council?
With the Financial Services and Markets Bill about to usher in a new era of financial deregulation, it is clear that corporate interests are succeeding in diluting the rules there to protect workers rights, consumers and the environment.
It is important for us to hold the government and companies accountable for corporate abuses. You can search the Violation Tracker UK database at https://violationtrackeruk.goodjobsfirst.org/ and follow our work on twitter @VT__UK (two underscores) to raise awareness of corporate misconduct.