| Previous Section | Home Page |
Column 1267
ethnic minorities into the Guards, then it must not send in one token figure at a time, doomed to draw all the fire. (Although no figures are available, some officers are certain that the number of black soldiers has declined in the last decade. One Green Jackets officer estimated that nearly 10 per cent. of their soldiers were black in the 1970s). Apart from the Green Jackets and the Parachute Regiment, the only infantry regiments with a noticeable number are south-eastern and Midland regiments, nearly all in the Queen's Division."That is anecdotal evidence, and one does not have to agree with every word in Beevor's book to accept that there is a continuing problem, especially in certain regiments. The Guards are the most continually referred to by objective analysts and by those who have first-hand experience of them.
The problem was most dramatically highlighted in November of last year, when a decision by the Army to deny a black soldier, Private Anderson, any compensation or redress after he had suffered racial abuse was quashed in the High Court. That was an important case, in that it established that the armed forces have no less a duty in cases of racial discrimination than has any other institution in civilian life. Indeed, they may have an even greater responsibility. The Anderson case signalled to members of ethnic minorities outside and inside the armed services that racial discrimination has no place in modern society or in the institutions established and maintained to protect and defend that society and its freedoms.
Some have argued that any institution that reflects society is bound to contain some people who suffer from the prejudices that--tragically--still exist in that society. That must not lessen the need for vigilance and prompt action against those who display such prejudices ; because if those prejudices are allowed to grow and feed on themselves, they encourage a vicious circle which can only make the problem worse.
Every act of racial discrimination in the armed forces only encourages the perception of those forces--however wrong it may be--as institutions in which prejudice flourishes. Every strengthening of that perception decreases the likelihood of ethnic minority applications to enlist in the armed forces. In its turn, each decrease in enlistment serves only to isolate members of the ethnic communities already serving, and creates the conditions for further discrimination.
So the vicious circle continues, and we end up with the figures for 1988 : only 1.7 per cent. of more than 50,000 applications for the Army came from the ethnic minorities. Only 1.5 per cent. of more than 17,000 applications for the Royal Air Force came from them ; and only 1.4 per cent. of more than 21,000 applications to join the Royal Navy came from the same source.
Furthermore, the Minister must know that it is not only a matter of applications. Among the tiny proportion who applied at all, the rate of success in applications from the ethnic minorities was significantly lower- -just over 19 per cent., as against more than 28 per cent. for white applications. This matter, which has already been brought to the Minister's attention, deserves further study. We hope that he will discuss it in this debate.
The Government have been unusually silent on a number of issues of late. The Minister has been asked several questions over the past 18 months. To be fair, the crisis, and latterly the hostilities, in the Golf may well have taken priority over those questions. That is perfectly understandable. However, as the Peat, Marwick, McLintock report made plain, the services must not only
Column 1268
do something about the problem : they must be seen to be doing something about fostering applications from and enlistment by the ethnic minorities.That report is often referred to, so perhaps it is worth seeing that comment in its context and looking at some of the
recommendations in the report. About its contention that the armed forces must be seen to be doing something, the report said : "With regard specifically to the ethnic minority community, it is the poor image of the Services on racial issues which is the single most important reason for low application rates. However, our research does suggest that there is scope to alter perceptions of the Services, particularly in relation to other employers. To achieve this change in perceptions the Services must be seen to be doing something. The external strategy must be complemented by a willingness to show the public what is being done in the internal strategy ; recommended changes to internal procedures cannot be carried out behind closed doors--they must be seen to be believed." It is important and urgent that that perception among ethnic minorities of the armed forces of the Crown is changed and changed rapidly, because if it is allowed to grow, it will inevitably become an insurmountable problem.
I have a parallel case, in which the circumstances are, I admit, different. It shows that, on one ethnic minority in one part of this kingdom, the pressure not to join the armed forces is even greater, often because it is backed by bullets. It is a tragedy that, whereas 20 per cent. of those in the Ulster Defence Regiment in the early 1970s were Roman Catholics, now only 3 per cent. are. That case is not a close parallel with the issue that we are debating, but I use it to show the vicious circle that is created if we allow to continue the perception that the armed forces tolerate or even foster within their ranks elements that perpetrate either racial harassment or racial discrimination and do not deal with it speedily and effectively.
The Peat, Marwick, McLintock report suggested a number of possible courses of action. First, for one group among the ethnic minorities--those for whom a career in the armed forces is not even a considered option--it suggested that the Government should consider changing perceptions of the services. It said :
"Such an objection will be achieved by means of a long term image building strategy targeted at young people".
That does not mean a superficial glossy approach. It means that there must be positive thinking within the services, not only about the virtues of the recruitment, enlistment and promotion of members of the ethnic minorities but about how that might be presented in a convincing fashion. It will convince the ethnic minorities only if it is genuine.
The report makes a series of other recommendations. I hope that the Minister will be able to tell us--the Gulf war notwithstanding--how far the Government have got not only in considering them but implementing them. For instance, so as to address perceptions of racism in the services, it is suggested that the purpose of such a campaign would be to show a more positive side of the experiences of ethnic minority service personnel.
There are always risks in such a strategy. A few years ago, it became necessary to have a more positive image of women in the services. That campaign walked the tightrope between the widely held view outside that every woman who entered the services was a butch lesbian and presenting the image of women inside the armed forces in such a way that the forces could not be accused of sexism.
Column 1269
We understand that such issues have to be treated with considerable sensitivity, but they must be taken head on and dealt with. We believe that the report was right when it stated that the services have considered what to do in the long term in allaying the fears of ethnic minority parents. It was recommended that advertisements in the ethnic minority press should be aimed specifically at parents. It was said that that would be an appropriate way to start the procedure. An extremely important recommendation involved the training of trainers and of recruiters. I hope that the Minister will respond to all these matters so that we may learn what advances, if any, have been made.We want to know whether additional training will be given to recruitment officers on the recruitment of members of the ethnic minorities. Will recruitment advertising be reorganised so that it presents a more attractive and more positive image to members of the ethnic minorities? Above all, what concrete steps are the Government taking to deal with racism within the armed forces? These questions need to be answered because the moral issues that are involved are sufficient grounds for taking speedy and effective action to deal with the problem that has already been identified.
Even if the grounds of principle were not sufficient--I believe that they are--practical considerations such as undermanning and future recruitment are in themselves sufficient to compel any responsible Government to take action. We pride ourselves on being a multicultural and diverse society whose very diversity enriches society as a whole. We should expect no less from the armed forces, which we ask to protect our society.
3.31 am
The Minister of State for the Armed Forces (Mr. Archie Hamilton) : It has been an interesting debate. I am glad that the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott) has presented me with the opportunity of making clear the Government's position on members of the ethnic minorities within the armed forces.
The hon. Lady referred to the United States armed forces and their position on members of ethnic minorities. As I am sure she knows, they have a policy of positive discrimination for minority groups, including women. I think that she accepts that positive discrimination conflicts with the principle of equal opportunities. It could be said that positive discrimination is illegal under our race relations legislation. That does not stop the encouragement of under-represented groups, however, and we are doing everything that we can in the Ministry of Defence to encourage members of the ethnic minorities to come forward.
The hon. Lady talked about the bullying of certain individuals. I am sure that she knows that there were problems of bullying in the armed forces in the past. They were problems which had to be dealt with firmly down the chain of command. The cases that come to mind did not involve the bullying of members of ethnic
minorities--blacks--within the armed forces. White soldiers--one presumes the less adequate ones--were hounded by their comrades. We have been dealing with the problem and stamping it out. There is a tendency in regimental life for certain individuals to be picked upon. It is not exclusively
Column 1270
a matter of whites picking on blacks, and, as I have said, we have been taking measures to ensure that bullying does not happen. The hon. Member for Motherwell, North (Dr. Reid) made the point, which has recently been brought home to us strongly, that war does not discriminate and that when it comes to death and injury, there is no colour bar. It was certainly brought home to me when I visited Woolwich hospital recently and saw some of the injured. There was one young black man from the Royal Regiment of Fusiliers. He was from one of the Warrior vehicles which was attacked. As the House knows, a number of people died in that attack and others were injured. The hon. Member for Motherwell, North quoted from a book. I accept that he had reservations about the description of the skinhead element within the armed forces. When we saw members of the armed forces on television recently in the Gulf coverage, there was no evidence of a skinhead element. People were full of admiration for all ranks, who showed themselves to be extremely professional, reserved and controlled. The description of "skinhead" would have conflicted totally with the impression that the British people got of our very professional armed forces. I think that the public generally looked on them with pride.I welcome the opportunity to set out the Government's policies on ethnic minorities in the armed forces. We firmly support the principle of equal opportunities for ethnic minorities and have taken steps in many areas to put that principle into practice.
As the House may be aware, the armed services are subject to the Race Relations Act 1976. They are fully integrated,
non-discriminatory organisations, and no form of racial discrimination is tolerated in either recruitment or subsequent employment in the armed services. Any member of the armed services who feels that he or she has been wronged in any way has the right to submit a complaint under the redress of grievance procedures provided for in the services discipline Acts. I assure the House that all such complaints are taken very seriously and are thoroughly investigated. If complaints are proven, appropriate action will be taken against those involved.
In April 1987, we introduced a system of monitoring the ethnic origins of all formal applicants and entrants to the armed forces. The results of the first year of ethnic monitoring indicated that there was significant under- representation of ethnic minorities among the applicants to the services. The statistics were mentioned by the hon. Lady and by the hon. Member for Motherwell, North. Overall, the ethnic minorities amounted to only 1.6 per cent. of applicants, whereas estimates from the labour force survey indicated that they formed some 5.6 per cent. of the total Great Britain population in the 15 to 24 age group, from which most applicants to join the services are drawn. The proportion of entrants to the armed services from the ethnic minorities was 1.1 per cent., showing that the success rate of ethnic minority applicants was lower than that for white applicants.
The armed forces share the same problem as the police, to whom the hon. Lady referred. The Metropolitan police find that the number coming forward in the metropolitan area is about 3 per cent., against a total estimated minority population in the London area of 14 per cent., so there seems to be a difficulty in the police as well as in the armed forces.
Column 1271
We were very concerned that the ethnic minorities were under-represented among applicants and entrants to the armed services. In order to help us to improve the position, we commissioned a study by independent consultants into ethnic minority recruitment to the services. The study was mentioned by the hon. Lady and by the hon. Gentleman. I informed the House of the outcome of the study in January 1990, and I made clear at the time that we had accepted all but two of the consultants' 23 recommendations. Although the consultants found that the attitudes of young people from the ethnic minorities towards employment were not markedly different from those of their white counterparts, they were less likely to consider a career in the armed services. There were a number of reasons but, regrettably, the fear of encountering racial discrimination was cited in many cases.Clearly, action was needed to improve the image of the armed forces as a career among young people from the ethnic minorities, and many of the consultants' recommendations were directed to that aim. A central feature of their proposals was to give positive encouragement to applications from members of the ethnic minorities. To project a more welcoming image in our recruiting literature and advertisements, we have improved the wording of our equal opportunities statements and have increased the representation of ethnic minority service personnel in our recruiting and advertising literature.
The training courses for recruiting staff now include a session devoted entirely to ethnic minority recruiting. The objectives of those sessions are to promote a more positive attitude towards ethnic minority recruiting, to increase the recruiters' knowledge and awareness of the ethnic minorities by discussing the various cultures, customs and religions, and to act as a forum for discussing problems relating to ethnic minority recruiting that the recruiters may have encountered.
A number of initiatives have been taken to develop contacts with ethnic minority communities. Presentations have been given to ethnic minority community and religious leaders. The Army, in conjunction with the north- east London college, is developing a course which aims to orientate candidates to the Army and improve their chances of passing the necessary tests and interviews. The Army is also taking part in a joint initiative with the Department of Trade and Industry to identify potential candidates and train them up to Army entrance standards.
The consultants found our selection procedures thorough and objective, and fully in conformity with the code of practice of the Commission for Racial Equality--but they recommended that we carry out a more detailed form of ethnic monitoring to help identify any special problems encountered during the selection process. This we are now doing.
We allocated some £600,000 specifically to ethnic minority recruitment in the current financial year. Those funds have been used by the Navy and the Army to purchase mobile career information offices which will be used in areas of high ethnic minority population. They have also been used to advertise in the ethnic minority press, and to produce recruiting leaflets in ethnic minority languages in order to explain the benefits of a service career to the parents of potential recruits. We shall again be allocating funds to ethnic minority recruitment in the next financial year.
Column 1272
The consultants emphasised that a dramatic increase in the number of recruits from the ethnic minorities could not be expected in the short term. We appreciate that it will take a sustained effort on our part, over many years, to achieve a significant increase in ethnic minority applications, but the initiatives that I have described have already done a great deal to start that process moving.We only monitor the ethnic origins of applicants to the armed forces. That is an anonymous, self-classification system. We do not keep records of the ethnic origins of serving personnel by rank or otherwise. Promotion is by merit regardless of race.
The hon. Member for Hackney, North and Stoke Newington said that there should be more monitoring of those already in the services. I am sure that she agrees that that would have to be done on a voluntary basis, and one might find that service men and women were not prepared to describe their colour or other characteristics.
Ms. Abbott : I take the hon. Gentleman's point, but in respect of monitoring by regiment, the Select Committee felt strongly that the only way to prove that the Guards were not discriminating was to monitor by cap badge.
Mr. Hamilton : The result is that certain regiments would then be picked upon, and so forth. The difficulty there was mentioned by the hon. Member for Motherwell, North. We want significant numbers of representatives of ethnic minorities going into the brigade of Guards together. It must be very difficult for individuals who end up in a regiment of the brigade. It would be better if we could organise it so that, rather than a lone person, groups went through together so that they could give support to each other.
One of the recommendations of the consultants' report that we did not accept was that ethnic minorities should be guided towards regiments where there were other ethnic minorities already. On the whole, we felt that that was difficult to achieve because we do not know where the numbers are. I suspect that there is, de facto, a tendency for the home county regiments-- the Queen's Division, and so on--to have a higher percentage of blacks than other regiments might have, and I suspect that that gives a certain amount of reassurance to those who then join those regiments.
I share the view of the hon. Member for Hackney, North and Stoke Newington about how unsatisfactory the position of the brigade of Guards is. On the other hand, there are great difficulties for people who are in the van of any movement to increase ethnic minority representation in the Household Division.
Dr. Reid : Perhaps I may ask the Minister for clarification, as I think that I agree with what I think he said first--that there are dangers, or at least discomforts and extra stresses, involved in sending isolated people from ethnic minorities to pioneer in particular regiments. I then understood the Minister to say that he also discounted sending them to regiments where there were already a number of members of the ethnic minorities. So where does that leave us? Is the sending of groups of members of ethnic minorities into regiments where there is not a large presence being actively considered?
Mr. Hamilton : Returning to the consultants' recommendations, we did not accept that ethnic minorities should be directed towards regiments which already had a
Column 1273
number of blacks within the ranks as we did not know which regiments had. Having said that, what happens de facto is that members of the Queen's Division, for instance, recruit from areas around London where the black population is higher than in other parts of the country, so I suspect that blacks end up going to regiments where there are already a number of them and that is the way it maps out. That is the way it happens naturally, but we are not in a position to know precisely what the numbers are in each regiment.That brings me back to the matter that I was discussing with the hon. Member for Hackney, North and Stoke Newington. I am not sure that even if one carried out a voluntary census, throughout the ranks of the armed forces, one would get a satisfactory result. If it were done on a voluntary basis, it would depend on people filling in forms, and saying whether they regarded themselves as black, white or whatever.
Ms. Abbott : The Minister is very tall--is he, by any chance, an ex- Guards officer?
Mr. Hamilton : Yes, I certainly am. As I said to the hon. Lady earlier, I am not at all satisfied with the position in the brigade of Guards now. On the other hand, there are great difficulties associated with changing that situation. As I said earlier, in an ideal world--I am not certain in my own mind how one would organise this--we ought to be thinking in terms of a number of blacks going through the training process together, into a brigade of Guards regiment, because it must be hard for individuals. I shall deal with Guardsman Stokes later, if I may.
We have taken the view that in-service monitoring would be damaging and racially divisive among the close-knit communities of the armed forces. The service community is unique in a number of ways, and the practices of other employers are not necessarily relevant ; furthermore, there is no evidence of support for ethnic monitoring among ethnic minority service personnel themselves. Those interviewed by the consultants during their study into ethnic minority recruitment were opposed to in-service monitoring, and as a consequence the consultants did not recommend it.
The hon. Lady mentioned the case of Stephen Anderson. Following Lord Justice Taylor's judgment last November, a rehearing of the case is now in hand. A board of inquiry has investigated all the facts relevant to the case, and is expected to report soon. The Army Board will then reconsider the case, taking full account of both the judgment and the board of inquiry report. All factors will be taken into account, and full consideration will be given to the issue of compensation. We are currently considering what changes may be necessary to service procedures for handling redress-of- grievance cases, in the light of Lord Justice Taylor's judgment. No decision has yet been made.
The hon. Lady also mentioned the case of Guardsman Stokes. I find this slightly confusing. The hon. Lady said that Guardsman Stokes was a credit to his family, and
Column 1274
indeed he was. He was also a good and enthusiastic soldier and a keen athlete, and he was very well liked in his regiment. The Army would have been delighted if he had decided to sign on for further service, but many soldiers decide to leave after completing a three-year engagement, and that is what Stokes did. Although he was encouraged to reconsider his decision and stay for a further three years, the decision to leave was his alone.It is important to note that Stokes made no complaint about racial abuse at any time during his service, nor--notwithstanding stories in the press--did he subsequently lodge a formal complaint with the Army authorities. Any such complaint would, of course, be investigated. If there was any question of racial abuse against Stokes, which is what the hon. Lady is now claiming, he has let down all his black colleagues in the armed forces by not registering a complaint. If he wants such complaints to be investigated, he should present them. If he does nothing, nothing can possibly be done to help him, or others who may be suffering from racial abuse. He was popular in his regiment and, as I have said, I am a bit confused about the case--if there was racial abuse, why have we not heard about it before? It was also suggested that Guardsman Stokes was not allowed to go on a physical training course. He thought that that was evidence of discrimination against him. However, he became eligible to go on the course during the last year of what he had decided would be a three- year term of service. Given the expense involved, the Army is on the whole somewhat reluctant to train people who do not intend to stay in the Army afterwards. By that time, Guardsman Stokes had made it clear that he was in for only three years. If he had said that he would like to stay for six years, the Army would have been more than happy to send him on the course.
It would be naive to suggest that racial prejudice does not exist in the armed forces--just as it does, unfortunately, in other areas of our society. I can assure the House, however, that the services view acts of racial discrimination as intolerable and have worked hard to eliminate such behaviour wherever it occurs. It is important to recognise that the efficiency and effectiveness of the armed forces are founded on teamwork. The trust of each member of the team in his comrades' abilities, loyalty and friendship is vital. Racism, whether institutional or individual, can have no place in the service environment and I join the hon. Lady in condemning it utterly. I take this opportunity to pay tribute to all the personnel from the ethnic minorities who, with other members of the armed services during the operation to liberate Kuwait, displayed the high standards and professionalism that we have come to expect from the British armed forces.
I hope that I have demonstrated tonight that we are working hard to increase the numbers of recruits from the ethnic minorities to the services. I know that they will be offered full and satisfying careers in a profession where individuals are judged by their performance and not by the colour of their skin.
Column 1275
Share Ownership
3.54 am
Mr. Conal Gregory (York) : It is an appropriate time to discuss the path of denationalisation, particularly when manufacturing exports have increased by almost half since 1979. Furthermore, United Kingdom economic growth has been more rapid than it has in either France or West Germany since 1979--and in the previous two decades we had had the slowest growth of the major European Community states. In addition, business investment has risen by two-thirds over the 1980s--by half since 1979 and by three- quarters since 1981. By the end of last year there were nearly 375,000 more businesses in operation than there were a decade ago. So I welcome this morning the opportunity to debate these key matters against such a good and successful economic background, and I welcome my hon. Friend the Financial Secretary to the Front Bench.
As a result of all this, the real take-home pay for a married man on average earnings has increased by a third since 1979. Much of this success lies in taking unnecessary parts of the state out of Government control where it was stifled by red tape and putting it into efficient private hands where proper expansion could apply. The number of shareholders has more than trebled since 1979. A survey in February 1990 showed that 11 million people--one in four of the adult population--owned shares.
Denationalisation subjects companies to the discipline of the market place and forces them to put customers first. A private sector company cannot survive if it does not satisfy its clients. The profit performance of former nationalised industries suggests that denationalisation has helped to improve customer service. Furthermore, employees have a stake in the success of their business, as a glance at the National Freight Corporation alone will show. Denationalised companies allow their full potential to be realised and new customers to be won.
Whenever possible, denationalisation has been accompanied by a policy of increasing competition so as to guarantee customers a wide choice of goods and services at low prices. For example, the United Kingdom has led Europe in liberalising the airways following the denationalisation of British Airways. One can recall a time when, under Labour, that fine airline was ranked lower than Ethiopian Airways.
Another example is the fact that the United Kingdom has led Europe in liberalising the telecommunications market, bringing obvious and large benefits to consumers. The denationalisation of British Telecom was accompanied by the licensing of a direct competitor, Mercury, whose success forced British Telecom to cut the prices of long-distance calls.
A further example is the denationalisation of long-distance coaches. Now such coach travel is enjoying a marked revival. Competition has helped to drive prices down, improve the range and quality of services available and make long-distance travel possible for many people such as pensioners.
Yet denationalisation has not been carried out irresponsibly. Tough regulatory authorities have been established to protect consumers where areas of natural monopoly remain. Oftel, the telecommunications watchdog, has been highly successful in this context. Under terms agreed with British Telecom, prices can now only
Column 1276
rise by 4.5 points less than the rate of inflation, and British Telecom has agreed to introduce itemised billing and pay £5 per day for failure to repair faults within two working days. Any such suggestion would have been more appropriate to April fool's day under a Labour Government. What a contrast that is with the bad old socialist days. Similar consumer rights have been enshrined in law for the electricity and water industries.I will cite some specific examples of improvements. Less than three years ago there was a less than 50 per cent. chance of having a business telephone line installed within six working days ; today, the figure is 77 per cent. Some 82 per cent. of residential telephone lines are now installed within eight working days. However, faster installation is only one of the many ways that customer service has improved through denationalisation. Any constituent walking on the street would find it hard to discover a public pay phone that was not working. A survey by the Yorkshire Evening Post in the greater York area examined that only a short time ago. It found an incredibly high proportion of public telephones in good working order. Indeed, nationally the figure is 96 per cent. in perfect working order--yet in December 1987 the figure was as low as 72 per cent.
In the same year, 4.3 per cent. of long-distance calls were not getting through ; now it is only 0.7 per cent., and the figure is still improving. Where there was once a one in four chance of finding directory inquiries engaged, there is now only a one in 12 chance. British Telecom engineers are now clearing nine out of 10 faults within a working day. Of course, there is a great deal more to be done, but I wanted to give those specific examples of customer improvement that have resulted directly from denationalisation. Such a denationalisation programme--so beneficial to manager, employee and customer--has brought benefits to the state purse. The coffers have been increased, so that the Government have been able to cut taxes, increase spending on priority areas and reduce the national debt. Richard Pryke, a specialist in the economics of nationalised industries, undertook a careful comparison in 1982. My hon. Friend the Financial Secretary may be aware of that study, which was entitled, "The comparative performance of public and private enterprise," which was published in the July 1982 edition of Fiscal Studies . His conclusions are worth examination by the House. Pryke chose three areas for the like-with- like comparisons. First, in civil aviation he compared the performance of British Airways with that of British Caledonian. Of course, his performance comparison pre-dates the turn around in the fortunes of British Airways. Secondly, in short sea ship and hovercraft services he compared the record of Sealink UK with that of European Ferries, as well as comparing the record of BR Hovercraft with that of Hover Lloyd. Thirdly, for the sale of gas and electrical appliances and contracting, he compared the record of the two nationalised concerns--the British Gas Corporation and the electricity boards--with that of private competitors. In each case he concluded that the record of the nationalised concern was worse than that of its private-sector competitor, whether judged by profitability or by productivity indicators. Public enterprise achieved that poor result despite having certain advantages. For example, British Airways operates out of Heathrow, while British Caledonian operates out of Gatwick.
Column 1277
Two related aspects of management are criticised. First, the nationalised industries appeared to have been slow in reacting to market developments ; secondly, they seem to have been willing to continue running sections of their businesses at a loss, and have been reluctant to rationalise their operations. Pryke does not believe that the unprofitability was caused by nationalised industries having non- commercial objectives, such as running social services.Those views by a respected international economist place denationalised companies in their rightful context.
What is the range of companies that have been denationalised? The list is a long one, and I shall not tire the House with it at this early hour of the morning. However, I shall name some key companies. We can remember Amersham International, Associated British Ports, British Leyland--in which the Government held 99.7 per cent. of the shares--British Aerospace, British Airways, the British Airports Authority--now known as BAA plc--British Gas, British Shipbuilders, British Telecom, Britoil, Cable and Wireless, Enterprise Oil, Jaguar, National Bus, the National Freight Corporation, which has 10 per cent. of the United Kingdom's road haulage market, Roll- Royce, Royal Ordnance, TSB and the electricty and water authorities.
Clearly some areas have not been denationalised and perhaps this is one of the most pungent political points that I wish to make today. As I represent York, I am bound to say that the most obvious area in which denationalisation has not occurred fully is British Rail. Some parts have been brought into the private sector. Although many people think that British Transport hotels have been completely denationalised, no fewer than 11 hotels remain in state ownership, although I cannot understand why that should be. Sealink was denationalised in 1984, operating 37 ferries and 10 harbours. British Rail Engineering Ltd. is a highly successful, well-geared engineering company. Indeed, it need not necessarily remain a railway engineering company. It now offers over 20 per cent. more in salary terms to its workers in comparison with equivalent jobs in British Rail. It also offers shares in the company.
Why are the Government holding back from selling the rest of British Rail? Why have they not sold British Coal or the Post Office? Why are they holding back as much as 49.8 per cent. of British Telecom? After the successful launch last week of National Power and PowerGen, why are the Government retaining 40 per cent? Following the success of the flotation of subsidiaries such as BREL, it is high time that bodies like BR were split further. For example, the core of British Rail could be split like the Civil Aviation Authority. There could be a signalling and track authority and trains could pay to cross the system in terms of frequency, time and use. I am sure that denationalisation would be in the interests of employees and the freight and passenger customers.
On the other hand, the Opposition are committed to nationalisation. Their industry policy has not moved away from Clause Four. One of the key messages of the debate is that employees in free enterprise, denationalised companies can expect their shares to be snatched away or invalidated and their wages to fall if Labour is ever returned to power. Customers can expect to return to
Column 1278
higher prices, less flexibility and less service. People with pensions can expect a fall in the value of their holdings and hence in the dividend or pension. Lovers of state intervention and red tape will have a field day. Labour would fuel inflation with such a strategy and could finance its proposals only by a levy on industry, or by raising taxes disproportionately, or both. That would be a return to the disastrous economics of the 1960s with socialist policies of subsidies, quangos and tax allowances. After 12 years in opposition, one might have expected the Labour party to produce some fresh ideas, but sadly that is not the case.At the next election the public will remember Labour's pledge to renationalise. Labour's rather inadequate representatives try to sabotage flotations within days and hours of each denationalisation going public. What did the socialists do for the water industry when they were last in power? Did they commit proper resources to that industry? They certinly did not. Under socialist control, investment was cut by half.
It is not surprising that the only Labour Member to attend this debate has only just entered the Chamber. Nevertheless, I welcome him.
Mr. Bob Cryer (Bradford, South) : I am here for the next debate.
Mr. Gregory : The socialists may try to dress up their intentions by using a marketing phrase like "social ownership," but the truth is that not one denationalised company will be safe if Labour take power.
Apart from the ballot box, one of the greatest bulwarks in our determination to ensure that Britain goes forward in a spirit of enterprise is a widening of the shareholder base and making share allocations part of the salary package. Such is the interest and enthusiasm of employees that some 84,000 people, plus 21,000 pensioners, from the 12 regional electricity companies, the National Grid Company and the Electricity Association applied for and received shares recently. Between them, they were allocated almost 160 million shares. That is true capitalism at work.
Perhaps the most telling statistic that I could give the House is that a driver or fitter who invested £1,000 in 1982 at the time of the employee buy-out of the National Freight Corporation could be sitting on £70,000 value today. Nothing could be clearer than that message for every trade unionist in the land. A vote for socialism would actually erode common sense and the value of their savings. Those who are worried about taking the plunge into the private sector need look no further.
Britons have invested many times more in their homes than in equities in the post-war era. It is time to redress the balance and encourage greater share participation. It is clearly important to change national attitudes. For example, we need more comprehensive reporting by pension funds and investment schemes. I well appreciate the quip made in some Sunday finance columns that getting information out of the pension funds is almost as difficult as trying to investigate the finances of the Vatican. I shall not encroach upon that, but pension funds are generally a reluctant audience. The tax treatment of direct share ownership should be changed. It would be apt to give an annual tax-free allowance to those investing directly in a United Kingdom company. The Confederation of British Industry task force suggested that it could be £100 a month--a modest but sensible proposal for my right hon. Friend the
Column 1279
Chancellor of the Exchequer. Furthermore, we need to change the personal equity plan regulations to allow more than one plan manager in any one tax year and to increase the annual limit to £10,000. We need to introduce a lump sum PEP scheme to encourage investment of inherited funds and pension lump sums.We must both reduce the time period before employees can become shareholders in their own right and provide a greater incentive to retain shares once their options have been exercised or transferred to the employee. With respect to profit-sharing schemes, the shares acquired under the Inland Revenue profit-sharing schemes should be transferable into a PEP without having to be sold and repurchased. That would avoid taxes and charges. The period for which the shares are held by the share trust before they are transferred could be reduced from five to three years.
Accounts and other circulars to shareholders should clearly be distributed to all participating employees. It would be helpful if when shares became transferable a statement was sent to all employees of the capital growth and the dividends received on shares since allocation. Furthermore, institutional investment committees should not restrict the numbers of shares purchased for the benefit of employees under profit-sharing schemes. If share purchases are to be made easier for individuals, we need to look at the saving and follow the recommendation of TAURUS, the International Stock Exchange system for electronic recording of ownership and transfer of shares, so that they can be passed on to the private investor.
A share maintenance service is needed for the private investor at no additional cost. At present there is a lack of liquidity in the stocks of smaller companies, which could and should be investigated by the ISE. There should perhaps be separate orders with a driven market for smaller company stocks. We may well see the development of retail stockbrokers closely involved with companies which wish to seek the help of private customers.
As I reach the end of these thoughts, I pay a special tribute to my hon. Friend the Member for Esher (Mr. Taylor), who hoped to participate in the debate but has not been able to do so. The Government have encouraged employee share ownership in successive Finance Acts and tax reliefs, and with important concessions in the Companies Act 1989. Politically, the value of employee share ownership to the worker, to the company, to the economy and to society is now well established. There is more employee identification with a firm's need for profitability and its return on capital. There is more motivation for the work force to assist the development and efficiency of the company. There is less tendency to engage in labour disputes and more realism about pay negotiations. There is a lower staff turnover through loyalty and a greater sense of involvement of the company in the community in which it operates, as I saw frequently with Rowntree Mackintosh before it became part of Nestle in York, and as I have seen since then when it has been under Swiss ownership.
It is admitted that many of the benefits will be realised only if the companies concerned adopt participatory management techniques. If not, the sense of involvement that the work force have through shareholding may remain rather latent. That should apply whatever percentage of the company is held by employees.
Clearly, the Treasury is not entirely sympathetic to qualifying ESOPs because of the tax privileges that have
Column 1280
occurred in the United States. It could be argued that some have become corporate financing tools. However, I am sure that there are devices that my hon. Friend and his Treasury team could use to ensure a more appropriate way of developing wider share ownership, partly through tax breaks, and to reduce inflation.If we see in the next pay round of British Rail, for example, not only an increase in wages, but an opportunity for employees to participate in shares, just as was done in British Rail Engineering Ltd., there will be a reduction in the demand on the British Railways Board, a lowering of the increase in ticket prices for passengers, an increase in freight costs that is below inflation and an opportunity for the company gradually to ease its way towards the market. I have referred to several possible schemes and I have given examples of many companies which have moved into the private sector since 1979. I have been clear and open to the House about the dangers that would occur in the unlikely event of our ever having a socialist Government again. I welcome the opportunity for my hon. Friend the Financial Secretary to respond to some of those positive thoughts. 4.17 am
The Financial Secretary to the Treasury (Mr. Francis Maude) : I warmly congratulate my hon. Friend the Member for York (Mr. Gregory) on securing a place in this important debate, if not on securing this place.
It is a pleasure to have the opportunity to debate one of the most important sets of issues on the economic agenda of politics. The importance of this series of issues is unquestioned except, it seems, on the Opposition Benches. One would have expected that on the issues of denationalisation and wider share ownership, on which my hon. Friend has spoken so eloquently and in such an informed way, there would be some interest from the Labour Benches. What do we see? We see the Labour Benches with but a sole occupant, the hon. Member for Bradford, South (Mr. Cryer), who was quick to point out that he was present not to have anything to do with this debate, but to secure his position in the subsequent debate. I have the pleasure of also participating in that debate.
It is surprising and disappointing that my hon. Friend and I should be conducting this debate between ourselves because I suspect that we shall find that we agree on most points. It would have been interesting to hear the Labour party's view, or perhaps today's view, on denationalisation and the ownership of shares. Does it think that that is good, worthwhile, helpful activity, as we do? It is disappointing that, when these grave and important issues come before the House, all that we hear from the Labour party is a long and deafening silence. My hon. Friend and I will have to make up the deficit between us and see what we can do to throw light on the issues.
My hon. Friend has spoken in a learned fashion on the subject of privatisation. He has gone through many of the merits of the process and has illustrated his case with a wealth of examples. Privatisation has been one of the many stunning successes of the Government's economic and social policies over the nearly 12 years that they have been in office. The policy was highly controversial at its outset ; gradually, as the process has continued, it has become less so. The Labour party has gradually moved
Column 1281
away from its root-and-branch opposition to the very idea of denationalisation to something which is at best ambivalent, a sort of muted hostility.I am sorry that the hon. Member for Bradford, South is temporarily leaving his place, because it would be interesting to hear from the sole representative of the Labour party present what the current view of the Labour party is on that great issue.
Since 1979, as my hon. Friend has said, a great many companies have been privatised--transferred from state ownership into what I would call genuine public ownership where the public own the shares in the business. More than 900,000 jobs have been transferred to the private sector. The state-owned sector of industry has fallen by more than 60 per cent. since 1979. Generally, the result has been that the industries have been subjected to much greater competition than hitherto, but even where a monopoly has been privatised, there has been tough and transparent regulation to protect the consumers while allowing private sector standards of efficiency to be injected into the business.
The total proceeds so far are some £28.5 billion before the present sale of the electricity generating companies. The performance of companies that have been transferred back into genuine public ownership has been, as my hon. Friend pointed out, startling. The pre-tax profits of British Aerospace have increased more than fivefold since 1981 when it was privatised. The profits of the National Freight Consortium are up almost 22 times since privatisation and the recent successful flotation on the stock exchange.
As my hon. Friend vividly illustrated, there are benefits to consumers. British Telecom's prices are down 22.5 per cent. in real terms since 1984. My right hon. Friend the Secretary of State for Trade and Industry, in his historic statement to the House some two weeks ago in which he announced the end of BT's duopoly, showed how the benefits of competition, of denationalisation, come through so sharply and distinctly to the consumers of the services. He announced further price reductions as a direct result of the benign policy that we have pursued. There are 17 per cent. more pay phones than in 1984--pay phones that work, compared with the position before privatisation when one's chances of finding a pay phone that worked were slight. The domestic prices of British Gas are down 10 per cent. in real terms since privatisation.
Privatisation has made companies that play an important role in the British economy more successful and has contributed substantially to economic growth and the dynamism of the British economy. That process will continue.
My hon. Friend the Member for York referred to some of the candidates for privatisation--the significant businesses still under state ownership on which the spotlight should properly fall. He mentioned British Coal and he will be aware of our pledge to privatise the coal industry.
My hon. Friend referred to British Rail, which he knows extremely well and the interests of which are close to his heart. When he makes the case for privatisation, the Government must listen with much respect because of his close constituency and other interests in the industry. We
| Next Section
| Home Page |