House of Commons Hansard Debates for 25 Oct 1989

Mr. Speaker : With the leave of the House, I will put together the two motions relating to statutory instruments.

Ordered,

That the draft Insolvency (Northern Ireland) Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.

That the draft Companies (Northern Ireland) Order 1989 be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. Patnick.]

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Points of Order

Mr. Gerald Howarth (Cannock and Burntwood) : On a point of order, Mr. Speaker.

Mr. Speaker : On a completely different matter, please.

Mr. Howarth : Last night, the hon. Member for Barnsley, Central (Mr. Ilsley) referred to the alleged grievances of the so-called mining group of Members of Parliament who sought to prolong the debate on the Children Bill as part of their dispute with the Chairman of Ways and Means about the Associated British Ports Bill. May I point out to you, Sir, that that group consisted of

Mr. Speaker : Order. The hon. Gentleman is shooting himself in the foot. This is not the occasion to be pointing out matters to me. He is raising a point of order. I have already said that this is not a matter of order for the Chair. The hon. Gentleman has heard what the Leader of the House said about it. We have a very heavy day before us ; let us see how we get on.

Mr. Howarth : Further to that point of order, Mr. Speaker.

Mr. Speaker : No, I am not taking it. I shall take the point of order from the hon. Member for Cambridgeshire, South-East (Mr. Paice).

Mr. James Paice (Cambridgeshire, South-East) : Further to that point of order, Mr. Speaker. In your earlier remarks on the happenings of last night, you specifically

Mr. Speaker : Order. I am not pursuing that matter. We have heard what the Leader of the House said about it, and as far as I am concerned, in terms of order, nothing more arises.

Mr. Tony Marlow (Northampton, North) : On a point of order, Mr. Speaker.

Mr. Speaker : So long as it is not on the matters that we have already discussed.

Mr. Marlow : It is not directly on it, but it is related. It is to do with the Statutory Instruments Committee. The point was made by my hon. Friend the Member for Southend, East (Mr. Taylor). I understand that some of this subject was covered by a meeting of a Statutory Instruments Committee yesterday at 4 o'clock. Is the report of that Committee available or not, because if it is not available, as my right hon. and learned Friend the Leader of the House is here, he might consider, in view of what you said and what my hon. Friend said, that it would be appropriate to delay any such debate until a later date, at which time that report may be available.

Mr. Speaker : The Committee did not draw the attention of the House to the statutory instrument. As to what the hon. Gentleman said, I am sure that it will have been heard by the Leader of the House.

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Emphysema Compensation

5.5 pm

Mr. Geoffrey Lofthouse (Pontefract and Castleford) : I beg to move,

That leave be given to bring in a Bill to provide compensation to coal miners suffering from emphysema.

The House will be aware that, between 1982 and 1985, I presented four Bills seeking to make emphysema an industrial disease in coal mining. I have not presented a Bill since 1985 because of the promise of the Industrial Injuries Advisory Council to investigate the report published in May 1988. I am now presenting another Bill to make emphysema among miners an industrial disease. I do not intend to present evidence that I presented in speaking to my previous four Bills, which are well documented in the Official Report . The latest ITAC report into bronchitis and emphysema was expected to give rise to more widely available industrial disablement benefit for certain disabled coal workers, but, rather surprisingly, it failed to do so. The report recommends no changes in the present system.

I have to say that I am not satisfied with the report. It still fails to consider emphysema as a distinctive disease. It ignores aspects which link it with the industrial disease pneumoconiosis, and continues to ignore vital evidence which shows a direct causal relationship between coal dust and emphysema.

Contrary to my opinion and the feelings of the House, a mistake was made by the IIAC when it decided to investigate bronchitis and emphysema. Bronchitis has industrial aspects, but it is a more universal disease ; nor is the research into its causes highly developed. Emphysema, by contrast, is an industrial disease and its research is sophisticated and advanced. It can be shown that emphysema can kill non-mine workers, but it is more prevalent in miners than others.

I also feel that it is a mistake to consider emphysema as separate from pneumoconiosis. In some coal workers, the emphysema element of their pneumoconiosis is mild, while in others it is severe. But pathologically, emphysema is clearly part of the pneumoconiotic process. That separation has led to many of the current difficulties, and persists in the IIAC report.

Of course, no one is saying that all coal workers with emphysema have acquired it because of their occupation, but compensation is always a question of balancing two tendencies--not compensating all those who have acquired the disease occupationally and compensating too many, including some who have acquired it non-occupationally. At the moment with emphysema, the balance is very much on the side of not compensating enough miners. It is time to tip the balance, not to the other extreme, but to some reasonable middle ground. The suggestion of using the X-ray changes as an index of retained dust was sensible

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and would have avoided going to the other extreme. The reasons given in the report for rejecting that suggestion are unconvincing. I am also dissatisfied with the way the report treats miners who smoke. Statistical tools exist to compensate for smokers and to continue the idea that miners get emphysema because they smoke. It is naive to call for research on miners who do not smoke. I believe that that is done to avoid giving men justice. I am also informed that the analysis of the appendix to the Soutour and Hurley 1986 paper is misleading--possibly deliberately.

It has repeatedly been found that there is an excess of emphysema among coal workers. That emphysema has been shown to be related to lifetime coal dust exposure, by many authorities, most notably by Huckley et al, who concluded that the association between emphysema and coal dust is likely to be causal. No report or study has failed to find a relationship between coal workers and dust exposure. Bearing that in mind, we must ask why the Industrial Injuries Advisory Council found against miners.

Yesterday, I had the privilege, if that is the right word, of visiting the Royal Courts of Justice in the Strand. The family of a deceased Kent coal miner were suing British Coal for the death of their husband and father. I do not want to go into the details of the case, but experts expressed different opinions about the case. One can therefore understand the difficulties experienced by the Industrial Injuries Advisory Council.

In-depth, learned research into the disease, which has never been refuted, has been completed. It shows that a miner is 10 times more likely to catch emphysema than any other industrial injury. It is not good enough to say that there is insufficient evidence. The evidence will be investigated in the future. The practice of the Industrial Injuries Advisory Council has been to investigate every 10 years. If it takes another 10 years to investigate, most of the problem will have disappeared because those unfortunate men, many of whom cannot walk or lift a cup of tea to their lips, will have died. Since I first introduced a Bill on this subject in 1988, hundreds of miners have died. They did not receive justice.

It is essential that the House recognises the problems experienced by disabled miners and supports the Bill, which will give justice and due compensation to those men in their lifetimes.

Question put and agreed to.

Bill ordered to be brought in by Mr. Geoffrey Lofthouse, Mr. Alexander Eadie, Mr. Peter Hardy, Mr. Kevin Barron, Mr. William O'Brien, Mr. Allen McKay, Mr. Frank Haynes, Mr. Dennis Skinner, Mr. David Hinchliffe, Mr. George J. Buckley, Mr. Michael Welsh and Mr. Eric Illsley.

Emphysema Compensation

Mr. Geoffrey Lofthouse accordingly presented a Bill to compensate coal miners suffering from emphysema : And the same was read the First time ; and ordered to be read a Second time upon Thursday 2 November and to be printed. [Bill 208.]

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Orders of the Day

Companies Bill [Lords]

As amended (in the Standing Committee), considered.

5.15 pm

Mr. Jeremy Hanley (Richmond and Barnes) : On a point of order, Mr. Deputy Speaker. New clause 48 and amendment No. 303, which relates to it, are omitted from the selection list. The Committee of London and Scottish Bankers, the Law Society, Law Lords, the Association of British Insurers, the Confederation of British Industry and many others are concerned about the uncertain position of the law following the decision in re Charge Card Services and should like it to be clarified. New clause 48 was accepted by the Clerks after three or four draftings. An extremely important point of law arises that requires urgent discussion. I should be grateful if you, Mr. Deputy Speaker, would reconsider the selection for tomorrow.

Mr. Deputy Speaker (Mr. Harold Walker) : Did I understand the hon. Gentleman to say that new clause 48 is not included in the clauses on the prefatory motion?

Mr. Hanley : I am asking you, Mr. Deputy Speaker, to reconsider the selection for tomorrow.

Mr. Deputy Speaker : As the hon. Gentleman knows, Mr. Speaker goes through the selection list with meticulous care. If the new clause and amendment to which he referred are not included, it is because they have not been selected. I shall have further inquiries made, but I think that that will be so.

Mr. Anthony Nelson (Chichester) : On a point of order, Mr. Deputy Speaker. May I ask for your help and guidance, in your capacity of protecting hon. Members' interests? We are about to embark on the Report stage of a Bill to which 300 amendments have been tabled. Admittedly, many of them are Opposition amendments, but the Government amendments are technical. You, Mr. Deputy Speaker, will understand that many hon. Members are faced with the serious difficulty of being unable to understand what are, in many cases, highly complex amendments at this stage of the passage of the Bill. At this late stage, officials and Ministers should not be allowed to bring before the House reams of amendments without giving the House and its Committees appropriate opportunity, and more thorough explanation, to consider them. You, Mr. Deputy Speaker, rightly protect the interests of Back Benchers. We do not have the resources or the staff to be able to investigate the proposals, many of which have major significance for the running of companies and the employment of people throughout the country. Will you, Mr. Deputy Speaker, advise us, or perhaps make a statement, about the practice that should be adopted for Bills such as this, and the extent to which any Government can bring forward so many amendments on Report?

Mr. Dennis Skinner (Bolsover) : The hon. Member for Chichester (Mr. Nelson) makes a valid point. Before you, Mr. Deputy Speaker, took the Chair, we heard about a Bill that had 400 amendments attached to it. The hon. Member for Chichester mentioned 300 amendments being tabled

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today. I have news for him : tomorrow another 500 Government amendments will be added. It appears that the Government have allowed their legislative programme to get out of control. I think that they would be well advised to drop the Bill. Some people have been talking about bringing back the Children Bill.

We understand that the Government are in a mess. We know that the Cabinet is at sixes and sevens, and that only two Cabinet Ministers wanted to hear the Chancellor of the Exchequer yesterday. The Government are in an old- fashioned mess, which was exemplified by one of their Back Benchers saying that he cannot understand the Bill that the Government have brought forward. Tomorrow will be even worse, and I believe that the Government would do beter to get rid of it altogether.

Mr. Deputy Speaker : I understand the complaints about the number of amendments and the lack of time in which adequately to debate them. These are not matters for the Chair, but doubtless what has been said will have been heard by the Minister.

Ordered,

That the Bill be considered in the following order : New Clauses relating to Part I, Clauses 1 to 4, Schedule 1, Clause 5, Schedule 2, Clause 6, Schedules 3 and 4, Clauses 7 and 8, Schedule 5, Clauses 9 to 13, Schedule 6, Clauses 14 to 18, Schedules 7 and 8, Clauses 19 to 21, Schedule 9, Clauses 22 and 23, Schedule 10, New Schedules relating to Part I, New Clauses relating to Part II, Clauses 24 to 30, Schedule 11, Clauses 31 and 32, Schedule 12, Clauses 33 to 46, Schedule 13, Clause 47, Schedule 14, Clauses 48 to 50, Schedule 15, Clauses 51 to 53, New Schedules relating to Part II, New Clauses relating to Part III, Clauses 54 to 87, New Schedules relating to Part III, New Clauses relating to Part IV, Clauses 88 to 100, Schedule 16, New Schedules relating to Part IV, New Clauses relating to Part V, Clauses 101 to 134, Schedule 17, Clause 135, Schedule 18, New Schedules relating to Part V, New Clauses relating to Part VI, Clauses 136 to 143, Schedule 19, New Schedules relating to Part VI, New Clauses relating to Part VII, Clauses 144 to 146, Schedule 20, Clauses 147 to 176, New Schedules relating to Part VII, New Clauses relating to Part VIII, Clauses 177 to 191, Schedule 21, New Schedules relating to Part VIII, New Clauses relating to Part IX, Clause 192, New Schedules relating to Part IX, Other New Clauses, Clauses 193 to 202, Other New Schedules, Schedule 22.-- [Mr. Redwood.]

New Clause 1

Political gifts

The following section is inserted in Part VII of the Companies Act 1985--

"234B. The directors' report shall be approved by the board of directors and signed on behalf of the board in so far as it relates to the matters specified in section 234 above and Schedule 7 to this Act, except for political purposes. Such contributions shall be reported as an annex to the directors' report such annex to be left unsigned and expressed in the form of a proposal for ordinary resolution to be approved by the company in general meeting.".'.-- [Mr. Gould.]

Brought up, and read the First time.

Mr. Bryan Gould (Dagenham) : I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker : With this it will be convenient to take amendment No. 1, in clause 1, page 1, line 9, at end insert and

(c) inserting a new provision to modify the presentation of company accounts so as to allow shareholders to consider contributions for political purposes separately from other business in general meeting.'.

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Mr. Gould : May I begin by welcoming the Under-Secretary of State for Corporate Affairs to his new job and to the Bill? As the hon. Member for Chichester (Mr. Nelson) said, he has arrived at a crucial moment, because the Bill is about to break the unfortunate record established by his Department in respect of the Insolvency Act 1986 and the Financial Services Act 1986. If my hon. Friend the Member for Bolsover (Mr. Skinner) is right in predicting that hundreds of new amendments will be tabled, that unhappy record will be broken with some comfort.

In welcoming the Under-Secretary, I venture on the debate with some trepidation, because I recently read in the newspapers that this occasion is to be used by the Minister to launch a most ferocious attack on me. The reports appear in dreadfully blood-curdling terms, and I understand that I am to be portrayed as the bogy man, red in tooth and claw, and as someone with whom to frighten all right-thinking people. The only comfort that I take is that I see myself--perhaps I am mistaken--as a most unlikely bogy man, but, when I see the Minister sitting opposite me in all his meekness and mildness, I feel that he is a rather improbable hatchet man.

The only reason that I feel that degree of trepidation, however, is that, again, the self-same reports tell me that the precise weapon with which it is intended to attack me is a book which I recently published. I should be delighted if the hon. Gentleman wishes to draw attention to the book, but I assure the House that any arrangement that the hon. Gentleman may have made with my publishers to provide further publicity to the book really has nothing to do with me. I can certainly do little about it. But if he will insist on boring hon. Members with frequent references to my book, I plead not guilty to that imposition. The responsibility must be entirely that of the hon. Gentleman.

The book refers briefly to principles of limited liability in similar terms to those which I used on Second Reading. I fear that those who expect to find great revelations in the book will be sadly disappointed--if, that is, they have bothered to familiarise themselves with the proceedings on the Bill so far. However, the book does not deal with company donations. That is the subject of the new clause and, therefore, this brief debate. I assure the House that, for the moment at any rate, we are safe from the dreaded attack about to be launched by the hon. Gentleman.

The new clause is an exact replica of the amendment passed in another place when the Bill began its passage with their Lordships. It is by no means a perfect provision. Opposition Members understand that it suffers from some defects, but we believe that it was worth tabling the new clause in this precise form simply to encourage the House to take a similar view of this issue to the one that was taken by their Lordships. If the Government are willing to accept the principle that lies behind the new clause, I have no doubt that the technical problems could be corrected by an appropriate amendment or new clause when the Bill returns to the other place.

The defeat which their Lordships inflicted on the Government in the other place was rightly hailed as a great political victory--indeed it was--but it was also a great victory for common sense. The debate, vote and conclusion on that occasion demonstrated that anybody who bothered to look at the arguments--their Lordships considered the arguments very carefully-- would realise the thinness of the Government's objections to what was being proposed. Accordingly, their Lordships inflicted

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defeat on the Government. Predictably enough, the Government reversed that decision in Standing Committee, but, although they mustered the votes, it cannot be said that they won the arguments. The arguments remain exactly as they were when the matter was debated in the other place, and they are arguments which would convince everybody other than direct supporters of the Conservative party.

Mr. Tim Smith (Beaconsfield) : It was not a Government amendment ; it was my amendment, and the Committee agreed it.

Mr. Gould : I read the record of the Committee's deliberations with some care. I am slightly surprised that the hon. Member for Beaconsfield (Mr. Smith) should put his head forward on the chopping-block a second time. His ministerial colleague, the present Minister's predecessor, was quite rightly criticised for sheltering behind the hon. Member for Beaconsfield, who, admirable though he is, is not a direct spokesperson for the Government. It would have been much more appropriate for the Minister to advance that proposition rather than to use a Conservative Back-Bench Member to do the job for him.

The starting point of this debate is that the matter of donations by commercial companies to political parties is one of considerable murkiness. In making that assertion, I am encouraged and sustained by the very good evidence that considerable embarrassment is felt by all parties to such transactions. Again, the best evidence for that embarrassment is the very considerable efforts made by donors and recipients--let us be clear that the only major recipient that matters here is the Tory party--to conceal what is going on. It is persuasive evidence of that embarrassment that great subterfuges are resorted to and clandestine procedures are used. Every effort is made to conceal the truth of what goes on in that murky and somewhat grubby relationship.

That is why we saw all the revelations in The Independent earlier this year about the river companies which have only recently come to light, although they functioned for many years. We are told that all that is behind us and in the past, but, at the time, we would have been assured that there was nothing in the stories anyway. We can place little reliance on assurances that none of it happens any longer. It is considered that at least three of the river companies still exist, but it is not clear for what purpose.

There is also the use of front organisations--again not a matter which can be disputed. The Conservative party finds it convenient to set up front organisations, of which British United Industrialists is the most prominent, so that donations can be made in an indirect fashion. The reason for that is clearly admitted by some of those involved. Lord Taylor of Taylor Woodrow, prominent in BUI, admitted that BUI provides a financial conduit for business men who are frightened of their names being displayed as supporters of the Conservatives. That is a clear admission that the purpose of setting up the front organisation is to deceive and to conceal what is really happening.

There are also devices such as the use of special bank accounts, for example, the so-called free enterprise account at Drummonds bank. I wonder whether the Minister will enlighten us on whether that account still functions and, if so, for what purpose. It is not only the

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donors who are shy in these matters, but the recipient--the Tory party--is extremely reticent. Tory party accounts make no mention of the substantial donations that its own members concede account for about 90 per cent. of Tory party income. There is a great deal of effort to conceal what is happening on both sides of the transaction.

There is a good reason for that embarrassment. A transaction in which commercial enterprises, usually companies, pay to a political party--in this case the Government--sums of money in circumstances in which that party in government could conceivably reward such payments with commercially important decisions favouring the donors is fraught with difficulty and will always arouse suspicion--and rightly so. Such suspicion centres on relationships which involve the award of personal honours, the award of Government contracts, the making of public appointments, and the application of ministerial permissions and sanctions of various sorts. In each case in which a payment is made and a reward is either potentially available or is actually made, the only safeguard that we have in the public interest to ensure that it is not an improper relationship is that there should be maximum openness about what is going on.

Such transactions would be bad enough if it were a matter of individuals making payments of their own money, but what is particularly worrying about company donations is that a small group of people make donations of other people's money and, presumably, expect some reward for themselves or for their company as a consequence.

A potent example of the difficulty into which secrecy and confusion can lead us is the recent sad episode of the Monopolies and Mergers Commission report on the brewing industry. When the commission made its report, the then Secretary of State proclaimed that it was an excellent report and that he was minded to implement it in full. Some of us were just a little more sceptical, not to say cynical, about that matter. We then observed a sequence of events in which great efforts were made by the major brewing firms to lobby hon. Members, Ministers and eventually, so we understand, the Prime Minister. The all too sadly predictable upshot was that the brewers had their way. The Secretary of State who had proclaimed himself so boldly at the outset was made to look foolish and craven when he abandoned the report by the Monopolies and Mergers Commission. Perhaps nothing improper happened in that relationship. However, no one observing that course of events could fail to ask whether the success which the brewers clearly expected and eventually enjoyed did not have something to do with the fact that the major brewers are bank-rollers and paymasters of the Tory party.

5.30 pm

Because suspicions necessarily and naturally arise in such cases, for some 20 years now this legislature has regarded donations to political or charitable purposes as a special category. That is why the Companies Act 1967 made special rules for that kind of donation. That is why the law remains that any donation over £200 must be reported specifically in the annual report presented to the ordinary general meeting.

Mr. Hanley : The hon. Gentleman was right to state that any donation of that sort over £200 must be stated in the directors' report. He will also know that any shareholder

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can raise the subject at an annual general meeting and may vote with a simple majority whether such a payment should have been made. Surely in corporate terms democracy is available and there is also the opportunity to embarrass directors. The matter can be raised in a proper form.

Mr. Gould : The hon. Gentleman and I have sat opposite each other in many Committees dealing with these issues. He will be aware that there were earlier occasions when I had to tell him that his interventions had come a little early. If he will exercise a little patience, I will be happy to deal with his points.

The point that I was making, which is important to the sequence of the argument, is that there is good reason for the present company legislation to make special provision because the decision to give money to political or charitable purposes cannot, in the ordinary sense, be a commercial decision. If it was a commercial decision in the sense that it was expected to produce a direct and immediate commercial consequence or benefit to the company concerned, it would clearly be improper for the very reasons that we have just discussed. The donation cannot be made for buying a ministerial decision favourable to that company. It can be made only in propriety for a much wider purpose reflecting the general political judgment of the directors concerned. However, that is not what they are employed to do. Both shareholders and non-shareholders are entitled to make such a judgment, but the directors are employed to make a commercial judgment which, by definition, is excluded. That is why special rules are provided.

We must then decide whether the current arrangements which recognise the special nature of such donations are adequate to protect the shareholder and assure the public interest that nothing improper is happening. The difficulty with the situation described by the hon. Member for Richmond and Barnes (Mr. Hanley) is that of course it is possible for a shareholder attending the ordinary general meeting to comment adversely on what has already happened. However, his only sanction is to vote against the whole report and vote it down. For the reasons that were explained admirably in another place when their Lordships discussed the issue, that is a highly unlikely course of action because it is well known that if that happened a great blow would be dealt to the company's commercial management with a consequent loss of confidence. That is why the sledgehammer provided by the current provisions cannot possibly be an effective weapon in the hands of disgruntled shareholders who want simply to express their opposition to this particular use of the company's resources.

However, in that scenario, shareholders are informed

retrospectively and too late. They are informed in a way that makes it impossible for them to do much about it. That is why we propose that the position should be improved so that shareholders have more control over a situation in which they are currently powerless.

Mr. Hanley : Where in the Companies Act 1967 does it say that shareholders must vote in favour of the whole directors' report? I understood that the matter could be raised separately by the requisite number of shareholders and therefore it can be voted upon separately.

Mr. Gould : Of course, anything can be raised and discussed separately. However, to get any effective action,

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a special resolution would have to be tabled. The only effective way of reversing what had happened would be to vote down the whole report.

The Government's arguments against the proposal in new clause 1 are totally unconvincing.

Mr. Nicholas Baker (Dorset, North) : What would be the position of directors who proceeded to make a donation against the terms of a resolution carried at an ordinary general meeting if such a resolution had been voted down, albeit if that was not a special resolution? Will the hon. Member for Dagenham (Mr. Gould) release us from our anxieties? Will we get a discount on the price of his new book? Is that the book before him?

Mr. Gould : Yes, this is my book and I am anxious to display it. It is available at the full price. It is called, "A Future for Socialism". Unfortunately, I do not have the right to sell it in large numbers, but I can recommend several excellent book shops which will sell it at its cover price.

In response to the point made by the hon. Member for Dorset, North (Mr. Baker), the problem is that no special resolution could undo what had already happened. A resolution would have to be passed instructing company directors not to make such payments in future. It would be very difficult to be sure that, as shareholders move from one company to another, they keep pace with what has happened and been reported to them retrospectively.

The Government argue that the proposals in new clause 1 affect only trivial amounts. They may be trivial to the company donors, but they are substantial in terms of financing a political party. In 1987 the donations amounted to £4 million. Indeed, there may be other donations which were not adequately reported. In 1984, a survey of 1, 250 companies revealed that 320 had made donations--243 to the Tory party and 110 to front organisations. The proportion of companies making those gifts is quite large. Taylor Woodrow, P and O, Allied Lyons, British and Commonwealth and United Biscuits are among the companies which gave more than £80,000 last year. These are not inconsiderable sums.

The Government's next argument is that advanced by the hon. Member for Richmond and Barnes--that the present arrangements are quite sufficient. The difficulty is that most shareholders are naturally not represented at an ordinary general meeting. Also, and I believe that Conservative Members are unwilling to acknowledge this, many shareholders are not individual or direct share-holders ; they are the beneficiaries of or people with interests in pension funds and insurance companies which have major shareholdings on their behalf. There are hundreds of thousands, if not millions, of people whose contributions to pension funds and insurance companies are invested without their knowledge in companies which then, without referring to the shareholders, make political donations to the Tory party. That is an extraordinarily unsatisfactory situation and we should do what we can to correct it.

Mr. Tim Smith : What evidence does the hon. Gentleman have that shareholders, whether direct or indirect, are dissatisfied with the present arrangements?

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Mr. Gould : Shortly I shall discuss the polling evidence that reveals public opinion, but the hon. Gentleman's question demonstrates what is wrong with the present situation. As a consequence of the amendment that he moved in Committee, and as a consequence of the status quo that he wants to preserve, it is extremely difficult for shareholders to be aware of, or to express an opinion on, precisely the question to which he has addressed our attention. Because we believe, in the interests of democracy, that shareholders should have that opportunity we want a change to be made.

At an earlier stage in our deliberations the right hon. Member for Braintree (Mr. Newton), then Minister of Trade and Industry, suggested that there was a remedy in the hands of shareholders in the sense that if they were dissatisfied with political donations reported to them, they could sell their shareholding and move on to another company. That doctrine is extraordinary if based on any democratic principle, and it would not even work in practice. Even if an individual shareholder followed that advice, even if he were to traipse around the stock exchange to look for companies that met his criteria and even if he were prepared to accept all the transaction costs that might be involved, he could never be sure that he had not invested in yet another company that was making the political donations to which he had originally objected. He would discover that only when he attended the ordinary general meeting. The Minister and his colleagues quickly dropped that argument and we have not heard much of it since.

Mr. Hanley : I do not want to delay the House, but surely if a prospective shareholder felt so seriously about this matter he could write to the directors to ask them about their policy.

Mr. Gould : Why does a democratic right to exercise control over what is admitted on all sides to be a specific and rather dangerous form of donation depend upon the initiative being taken by the shareholder who fears that he may or may not be aggrieved? If we establish the principle that it is right that shareholders should have some power of control over such matters, that right should be available to them, whether or not they initiate that right. In an election no one suggests that one must apply for a vote before one receives it--one receives a vote by virtue of being a citizen. Similarly, as a shareholder, one should have a vote and that right of control.

The hon. Member for Beaconsfield asked about the evidence as to the opinion of shareholders. The only evidence of which I am aware is a MORI poll that showed that 82 per cent. of the public--admittedly not shareholders in particular--favoured our proposal that shareholders should be consulted before political donations are made. The only instance of a ballot being taken of shareholders was, as far as I am aware, conducted by the National Freight Corporation when no fewer than 87 per cent. of shareholders voted against political donations being made. In the absence of any other evidence I believe that the available evidence is conclusively in favour of our proposition. If the hon. Member for Beaconsfield wants further convincing on this matter, I refer him to members of his own party. The Charter Movement, which publishes Charter News, said :

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"Over 90 per cent. of the Party's income in 1987-88 came from donations. No information is given in the accounts about these donations, which makes it all too easy"--

and all too understandable

"for our political opponents to allege improprieties, which it is then impossible for Conservative supporters to counter".

The arguments against our proposal do not carry conviction. Our proposal has widespread public support and it flows directly from democratic principle and practice. No amount of special pleading--one might almost say specious pleading--on behalf of the Tory party can displace the proposition in the new clause, which is fully supported by public opinion and which is consonant with common sense and democratic principles.

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