Red Tape: profession rounds on 'flip-flopping' Chancellor

City lawyers have criticised the Chancellor of the Exchequer for 'flip-flopping', after he reversed a decision to axe the requirement for quoted companies to publish operating and financial reviews (OFRs).


Gordon Brown announced the scrapping of OFRs - which require quoted companies to produce a statement on their prospects, including in relation to social and environmental issues - at the Confederation of British Industry's conference last November as part of a drive to cut red tape. Companies would instead have to produce the more flexible business review envisaged in the EU's modernisation directive.


However, environmental campaign group Friends of the Earth branded the decision 'unlawful' and threatened to apply for judicial review. Last week, the government said a final decision on the fate of OFRs would not be made until after a consultation had taken place.


Nick Gibbon, a corporate partner in Beachcroft Wansbrough's London office, said: 'There has been a flip-flop, which is rather unedifying for companies that were trying their hardest to meet the new requirements at a time when they have got an awful lot of other things to cope with. It is an unfortunate sequence of events.'


Mr Gibbon also pointed out that the government had conducted a significant amount of consultation prior to introducing OFRs.


Berwin Leighton Paisner consultant Peter Graham said a balance needed to be struck between the amount of information disclosed to third parties about a company's position and the preparation involved. 'You can end up putting a huge burden on companies,' he added.


The consultation will last until 24 March.