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Ms Hodge: I congratulate my hon. Friend the Member for Oxford, East (Mr. Smith) on his speech, which was excellent and reasonable. It is difficult to understand how anyone could not be moved by such reason. This would be a sad day if Conservative Members were moved by party interests rather than national interests in rejecting this small move to bring to public account an issue that has caused such outrage in the community at large.
As my hon. Friend the Member for Monklands, East (Mrs. Liddell) said, the Prime Minister is on record as saying at Prime Minister's questions that he believes that it is the Government's responsibility to reduce inequality. The new clause strikes at the heart of that obligation.
The hon. Member for Beaconsfield (Mr. Smith) reiterated what many other Tory Members have said--that everybody has benefited from the efficiencies gained from privatising public utilities. Were there efficiencies to be gained, there is no reason why they could not have been gained while retaining those utilities in the public sector. If they were not attained, it is because of the Government's inefficiency and it reflects their mismanagement of those important sectors of the economy. It has nothing to do with privatising the public utilities.
The Labour party wants an economy that is run in the public interest. Two essential features of such an economy are fairness and openness, both of which are severely undermined by the scandal of discretionary share option schemes in the privatised utilities, particularly when
Column 1446low-paid workers are being offered paltry wage increases. We have had considerable interest recently in demonstrations by health service workers about the 1 per cent. pay increase that has been guaranteed nationally. Everybody's sense of social justice--
Mr. Deputy Speaker: Order. The hon. Lady must address the majority of her speech to discretionary share option schemes. Other allusions are acceptable, but so far the minority of her comments have related to the new clause.
It adds insult to injury when people cannot even hold those responsible for such huge gains made through discretionary share option schemes to account for their actions. That is the purpose of the new clause.
We have already witnessed a massive unfair pay explosion among the bosses of the private monopolies. For example, last year the board of National Power awarded itself a 25 per cent. increase in remuneration, which was in stark contrast to the 4 per cent. average increase for its employees. The gap between the pay of people in the boardroom and people on the shop floor is even more stark. A comparison of last year and the year before privatisation shows that the total remuneration package for the highest- paid directors of the privatised utilities rose by an average of 321 per cent. In three of the privatised utilities, the directors gave themselves rises of more than 400 per cent. The boss of North West Water heads what I consider to be the roll of shame with an increase of 619 per cent. Share option schemes are another side of the same coin. Some £500 million was paid out to just nine directors of PowerGen and National Power last year alone. That is an average of more than £500,000 each, which would be enough to pay for an extra 30 staff in a hospital or more than 100 full- time places in a good nursery school. Have we got our national priorities right? In addition, a further £18 million is yet to be cashed in by the very same directors and chief executives. Last year alone, the chief executives of PowerGen and National Power earned more than £1 million each in pay and share options, and they are set to make a further £1 million each in the coming year. It is a scandal of momentous proportions.
The greatest scandal of all is National Grid, as this year alone its chairman could make an astounding £2 million, almost £1.8 million of which is immediate share option profits. That is in a company that is yet to trade properly. With such handouts, the Government are giving private ownership a bad name.
Those are just a selection of the abuses being committed by the private utilities. We object not to rewards for excellence, entrepreneurship or enterprise but to the fact that the bosses of those private monopolies vote themselves handsome packages whereas their employees are forced to tighten their belts and consumers must make ends meet. More often than not, they are not new people who have been attracted into those industries since privatisation but the same old faces who are making a quick buck because there is nobody around to stop them doing so. That is the unacceptable face of capitalism. The new clause simply seeks to make this area a little more transparent and open it up to public scrutiny. Parliament has a duty to monitor the operation of those
Column 1447share option schemes. Furthermore, I cannot see the argument against taxing share options as income. People have a right to know what is happening, how much a small number of very well-paid people are earning and what potential revenues are being lost to the public purse by the Government's refusal to tax share options as income. The new clause simply provides a new opportunity to put that information in the public domain.
The Government have claimed that those issues are the business of shareholders, and the hon. Member for Beaconsfield seemed to support that view. In a private monopoly that serves a vital public interest, such a contention is wrong. The Government have a responsibility to consider the interests of the general public, consumers and the environment. Shareholders could have greater opportunities to hold their utility bosses to account by electing a remuneration committee, to include people who are not on the board of directors. It could be told the pay and perks of individual board members and could vote on their remuneration.
The Government have a duty to act to safeguard the interests of taxpayers and consumers. Monopoly industries simply cannot be left to their own devices in the hope that, at some time in the future, some sort of competition will emerge.
Last week, we were lobbied by users and workers of the health and education services. The contrast between their situation and that of the people whom we are discussing tonight could not be more stark. It is a classic case of private greed against public need; of the interests of the many against the privileges of the few.
There is widespread public concern that the House and the Government have got their priorities badly wrong. The new clause provides the means of starting to undo that damage. We should start to hold the privatised utilities to public account. New clause 1 provides the foundation for doing so and I commend it to the House. 6.30 pm
Mr. Clive Betts (Sheffield, Attercliffe): I wonder whether Conservative Members will dare to venture out in the next few weeks to canvass during the local government elections. I wonder whether that possibility offers them any great opportunities or is a pleasant prospect to them.
The Financial Secretary to the Treasury might like to come to my constituency and knock on one or two doors. Perhaps he could introduce himself with the words, "I am here from the Government. I have come to help you." I am sure that one of the instinctive responses from the people he spoke to would be that they consider that the Government are extremely unfair. I am sure that the right hon. Gentleman would be offered many anecdotes to back up that instinct, but what would come out most strongly is how unfair people consider share option schemes and other pay excesses in the privatised utilities. People feel incensed about that. They feel that it is wrong and that the Government should do something about it. People are angry because their basic sense of reasonableness has been offended by such excessive pay increases and share option schemes. They are angry that directors and the like are receiving mega sums of money, which those people could not possibly dream of, unless, perhaps, they won the lottery. People are also angry that
Column 1448the Government either do not want to, or cannot, do anything about those excesses--either way, people are angry.
People are aggrieved not only because their basic sense of fairness has been offended but because those excesses carry a basic hallmark of the Government and their policies--their inability to act. Week after week, the Prime Minister came to the Chamber and said that such share options were not the Government's responsibility. He said that the Government had merely been responsible for privatising the utilities and introducing the regulations that govern them. He claimed, however, that the Government were not responsible for share option schemes and other pay excesses. Then, suddenly, one Prime Minister's Question Time, in one sentence, the right hon. Gentleman sold a dummy that sent all his hon. Friends the wrong way, when he said that he was concerned about the issue. He had claimed that it was nothing to do with the Government and all to do with the utility companies and their directors, but, suddenly, he accepted that the issue caused him concern. He did not promise any action, however, but said that the Government would await the Greenbury report. That is unacceptable.
The Greenbury committee, however well intentioned, is equivalent to the captains of industry reporting on themselves. It is no substitute for the Government taking a view and proposing some measures to deal with the matter. It is almost as though a new word has entered the English language. In future, "to Greenbury" may mean to delegate an issue which one feels uncomfortable about and about which one has no real idea what to do, in the basic hope that it will go away. That seems to be the Government's attitude. They feel uncomfortable about share options, but they have no idea what to do about them. They hope that if they refer the problem to some committee that will report some months later, the steam will go out of the issue and it will go away. In that way, they hope that they will not have to make any difficult choices.
That is not the public's reaction to share options. They are angry at the unfairness, because directors vote for such schemes for themselves. Those directors decide how much money they should award themselves. Most people do not feel that that is right, not least because the Government have created the circumstances by which directors can make such decisions. The public also believe that directors are voting themselves pay increases through share option schemes to reward themselves for doing precisely the same job as they did before their companies were privatised. That may not be true of every utility, but it is true of the water industry, whose chairmen and chief executives are doing precisely the same job, with no more competition than that to which they were subject before privatisation. Those individuals have voted pay awards for themselves.
Share option schemes do not represent an attempt to involve executives in the ownership of a company. They are not the means by which, in the long term, executives will receive genuine rewards for the way in which they have managed their company and because that company has become more efficient. Those share options are one-way tickets, because it is not possible to make a loss. If the share price goes down, the executives suffer no loss; they simply fail to make a windfall gain. That offends people, including many in industry who may have made
Column 1449arrangements in the past whereby they took a stake in a company as managers and directors. They lost as well as gained when share prices went down and up. Those individuals sat on a company board for a number of years and were genuinely responsible for the management and running of their company as part-owners of it. They benefited or lost accordingly. Share option schemes do not operate in the same way. They are one-way bets, which result in winners only and no losers. That offends people greatly.
I am sorry that the hon. Member for Beaconsfield (Mr. Smith) is not in his place, but today he repeated the argument he made in Committee about retained profits. I accept that they are an important means of investment, but as the Opposition made clear in Committee, the problem with this country is the low level of retained profits. Share option schemes are an incentive because, although the beneficiaries may not keep them for a long time--usually they sell them quickly to make a profit--executives are keen to pay out dividends to boost share prices in the short term. In that way, those executives make their gains by selling the shares that are part of their share option scheme packages. That is what they are all about. They are not an incentive to retain profits for investment.
Reasonable people are offended when they hear about cases like that of one of my constituents, whom I saw today. Mrs. Wells, from Darnall in my constituency, lives beside a brook. In the past few months, the river served by that brook has gone into full flow several times due to heavy rainfall, and when that happens, the brook becomes an open sewer. As it flows over my constituent's garden wall, it carries with it raw sewage, which then flows past my constituent's home. That pollutes the river, creates an awful smell and attracts rats, which have even entered her home.
My constituent has asked Yorkshire Water to invest sufficient money in its next five-year capital programme to deal with the problem, but it has said that it cannot afford to do so. It has told her that it does not have sufficient money from its retained profits to afford that. In the next five years, however, what Yorkshire Water will pay in share option schemes to its directors is more than it would cost it to make a modest investment to deal with the raw sewage that passes the home of someone who lives 50 yd from a major shopping centre. That is unacceptable. It is another reason for people's outrage and why they believe that share option schemes are grievously unfair and action is needed to tackle them.
The Labour party has made a number of basic proposals to deal with the problem, and that the Government could adopt if they were minded to. We have argued for greater disclosure. It is all right for Conservative Members to say that shareholders are told about share option schemes, but why were we treated to the performance of Cedric Brown before the Select Committee on Employment? He had to have his pay package extracted from him as if having teeth drawn without anaesthetic. He did not want to give that information and others have been embarrassed by what he said, because he was too up front. The name of the game has been to vote pay packages through in such a way that companies hope that no one notices what is going on. Nasty questions will thus be avoided. There must be a better system of disclosure.
Column 1450The Cadbury proposals must be extended, so that separate remuneration committees, made up of those who do not stand to benefit, vote for share option schemes. Basic reasonableness must be introduced into the system. It should be a basic tenet of the operation of such share schemes that the people who benefit from them do not vote for them. Go and ask the public about that. I do not believe that anyone would find one person in a hundred who felt that that proposal was unfair. Why do the Government not do something about that?
Why are not the schemes taxed as income? Conservative Members say that there is only £6,000 of untaxed income. Many people who live in my constituency do not earn £6,000 a year, let alone £6,000 of untaxed income. For many people, £6,000 is a great deal of money. When Conservative Members say that it is only £6,000, they badly misjudge public opinion.
Why should the regulator be worried about share option schemes? We have clearly demonstrated that they are linked to prices, profits and investment. They make up one package, and the Government have to adopt an opinion of the whole. The regulator has been given powers, which we believe need to be extended.
The new clause is fundamentally mild and moderate. As my hon. Friend the Member for Barking (Ms Hodge) said, it is reasonable and moderate. We have not asked for all the things that we have said need to be done. We ask only that a report be made to the House to let the House know precisely what is going on and what is the impact of those schemes; whether, in total, the Exchequer and the British public gain or lose from those schemes.
We have already had a clear demonstration that the Government are incapable of acting on the issue. Are they now also incapable of providing information about it? Or is it not their capacity that is in doubt, but their desire to produce a report on that issue? Are they so embarrassed about it that they want to avoid further debate? If that is the case, people will not judge them kindly for their disgraceful attitude towards the issue. The Government should be prepared to produce a report and let the people know precisely what is going on.
Mr. Sutcliffe: This issue is not about greed, envy or even political advantage, as the hon. Member for Wirral, South (Mr. Porter) suggested. It is about fairness and equity. Every Conservative Member who has spoken has recognised that the problem exists, but none has come up with a solution.
It will be interesting to hear the way in which the Financial Secretary to the Treasury replies to the debate. I hope that he will not push us to one side and tell us to wait for the Greenbury recommendations. I hope that he will tackle the issue because, if the regulator cannot consider the matter, the only organisation that can consider it is the Inland Revenue, via the tax system, and that is where the Minister's responsibility lies.
It is patently unfair that executives of privatised utilities make large sums when they are devoting no more effort to their work than they did when they worked for public utilities that benefited everyone. When those public utilities were privatised, the Government said that they would be privatised for the greater good and that many people would benefit. That was not the case. In that respect, we have witnessed the classic unfairness that has become a trademark of this Government.
Column 1451The Government recognise the problem. They say that the money does not matter, but those people have benefited to the tune of £150 million. The hon. Member for Milton Keynes, South-West (Mr. Legg) said that 36,000 people in British Gas also have share option schemes. They do, but those share option schemes are usually "buy one, get one free" schemes, in which people have to invest their own money and take the risks. The executives have taken no risks and made no investment.
I hope that the Financial Secretary, who is very eloquent and who has been eloquent in Committee, will give the answer for the Government. It is no good the Prime Minister recognising that there is a problem but not suggesting a solution. Let us have it. Will the Government tell us what they will do about those abuses, or shall we hear nothing from the Government, as we forecast? That is patently unfair. It is not a party political issue. People throughout the spectrum are upset about those abuses, and it is about time that the Government did something about them.
Mr. Ian Pearson (Dudley, West): I extend a warm welcome to my hon. Friend the Member for Walsall, North (Mr. Winnick) and assure him, as a fellow Member of Parliament for the black country, that the anger and disgust felt about discretionary share option schemes among the private utilities is as strong and severe in Dudley, West as it is in Walsall.
Let me say at once that the directors of private utilities have done nothing illegal. All that they have done is to join the club, albeit with gathering haste in some cases. I suppose that it is the modern equivalent of the key to the executive washroom. It is the key to the executive dosh room of cosy remuneration committees, offering sybaritic salary perks to directors for what they should be doing anyway, which is acting in the best interests of their companies. We have to draw a distinction between legislation pertaining to the privatised utilities and legislation relating to companies that are subject to the full forces of market competition, but what is basically at fault is some very lax legislation as regards Inland Revenue-approved executive share option schemes. Those schemes offer a perk because, rather than income tax, capital gains tax is payable on share options, which can be deferred almost indefinitely. Those schemes also offer an extremely generous treatment whereby share options up to the level of four times inflated salaries can be awarded to directors and senior executives.
Only the few benefit. We have heard talk about 36,000 people in British Gas who benefit from share-linked option schemes. The directors of British Gas who benefit from share-linked option schemes--they obviously have far greater schemes than any of the individual employees--have benefited to the tune of about 50,000 shares. Contrast that with their discretionary share options, whereby they have been awarded 1.3 million shares. That shows the scale of difference between properly organised share incentive schemes and executive share option schemes, which are a one-way bet and a perk to directors.
One fact that has not been fully discussed in the debate but that has merit is that discretionary share option schemes can provide some benefit to consumers who have
Column 1452pensions that are invested in those companies, and who therefore benefit from the increase in the share price. That has been mentioned by some Conservative Members.
Hon. Members on both sides of the House must recognise that there is tension between the interests of two groups of people. On one hand, consumers whose pensions may be invested in share option schemes may benefit because directors are given an incentive and are focused on improving share performance. On the other, consumers may suffer from the consequences when certain companies are run in an aggressively short-term profit-maximising way in a deliberate attempt to boost the share price and thereby increase directors' income. That is one of the reasons why a report is very much needed, because there are potential benefits as well as the extreme costs of executive share option schemes of which we are all aware.
It is important to recognise the practical difficulties when Conservative Members speak of the need to enfranchise the people who stand behind shareholders. The shareholders of most of the private utilities are very much the shareholding institutions. I do not know how I, as a personal pension plan holder before I came to the House, could talk to the person who sold me a pension and say, "By the way, can you talk to someone who can talk to someone who can ensure that, at the next annual general meeting, you vote against those discretionary share options?" Similarly, I do not think that the House of Commons Members' pension scheme can exercise any reasonable legitimate influence on those companies at annual general meetings. The hon. Member for Beaconsfield (Mr. Smith) has a good idea in trying to enfranchise those who stand behind shareholders, but I can envisage no practicable means by which that can be exercised.
Mr. Tim Smith: As an example of what already happens, we already have ethical investment and unit trusts. An individual can choose to invest in one of those trusts because it has, for example, made a policy decision not to invest in tobacco companies, drinks companies or whatever.
Mr. Pearson: I am well aware of ethical investment trusts and I have been pleased to note that their share fund performance has in many instances outperformed those of unit trusts that invest in a broader spectrum of companies without imposing those narrow criteria. I do not think that the hon. Member for Beaconsfield is seriously suggesting that shareholder pressure can operate in a broader sense against executive share option schemes, other than in those limited ethical considerations.
The simple fact is that a report is needed badly to investigate why directors of privatised utilities need executive share options at extremely lucrative levels to do what they should be doing anyway--acting in the best interests of their company--and why, as my hon. Friend the Member for Stoke -on-Trent, South (Mr. Stevenson) said, it can be right and reasonable that a director needs a £700,000 package to make him improve his performance when his staff are expected to accept a 3 per cent. wage cut to encourage them to increase their performance. That cannot be right.
Column 1453the utilities. That part of the debate has been rather narrow. They have argued that consumers and taxpayers have been disadvantaged. If one stands back and looks at the policy as a whole, that is demonstrably not the case.
To begin with, let us take, for example, the interests of taxpayers. When we came into office, taxpayers were losing about £50 million a week through funds invested through the nationalised industries. From the industries that we have privatised, we are now getting £50 million a week coming in, so there has been a massive turnaround in the fortunes of the nationalised industries. The figures which concern the taxpayer totally dwarf some of the figures mentioned in this debate. Before 1979, by and large, prices for consumers were going up and, by and large, they are now going down. The case on which new clause 1 is founded--that there has been some disadvantage to taxpayers and consumers through privatising the utilities--simply does not stand up to any examination at all. What I found more worrying about the speeches of Opposition Members, with the exception of that from the hon. Member for Monklands, East (Mrs. Liddell), was that nobody touched on the principle of whether it was worth trying to link the fortunes of a company and its shareholders with the interests of senior executives. I believe that there is a case for bridging the gap between employers and shareholders by promoting executive option schemes and the hon. Member for Monklands, East recognised it. The whole tone of the debate was critical of the principle of share option schemes for senior executives. To put the matter in some perspective, the average value of shares covered by executive share option schemes is £22,000, not the exorbitant figures mentioned by some hon. Members. The hon. Member for Oxford, East (Mr. Smith) began by demanding action. If one looks at new clause 1, one sees that it would not produce any action at all, it would produce a report. I shall say in a moment why I do not believe that that report is necessary. I was pleased to hear that, instead of using the figures that the shadow Chancellor, the hon. Member for Dunfermline, East (Mr. Brown) has sometimes used, the hon. Member for Oxford, East used the figure of £60 million as the cost of executive share option schemes and abandoned the more extravagant claims which we have sometimes heard. The hon. Gentleman accused the Government of subcontracting their policy on this matter to the Greenbury committee--we are certainly not doing that-- and he then subcontracted most of his speech to Paul Foot.
Our case is that the system has worked well for consumers. Consider what has happened to the caps. The regulators, by and large, have tightened the caps post-privatisation. BT started off at a retail prices index of minus 3 per cent. and it is now minus 7.5 per cent. I was grateful for the speech of my hon. Friend the Member for Wirral, South (Mr. Porter). His views contrasted with what was said by the right hon. Member for Copeland (Dr. Cunningham), who believes that the regulator should intervene and said that he wanted him to interfere, regardless of whether that makes any difference to consumers' bills. The reality is that many Opposition Members are interested only in the politics of envy, regardless of any benefit to the consumer.
Column 1454The hon. Member for Walsall, North (Mr. Winnick) made two points on which I want to touch. One of them was replicated by the hon. Member for Sheffield, Attercliffe (Mr. Betts). The hon. Member for Walsall, North alleged that those who now run the privatised utilities are doing the same work as before. That simply is not the case. I speak as someone who once worked for a nationalised industry. When industries are nationalised, Ministers and civil servants take a large number of the decisions, such as those about the size of the investment programme.
The nationalised industries were overmanned and not particularly well run. They certainly did very little exporting. So it is not the case that those who now run the privatised utilities are doing exactly the same work as those who ran them before. I was delighted, however, to see the hon. Member for Walsall, North back after a spell away. He was looking much better at the end of his speech than at the beginning, so I assume that that is some part of his therapy in which it was a pleasure to take part.
My hon. Friend the Member for Beaconsfield (Mr. Smith) rightly posed the question of why we should pick out the privatised utilities. Why single them out? They are in the private sector. There is no case in principle why they should have a different regime to other industries in the private sector.
Mr. David Shaw (Dover): My right hon. Friend will have noticed that I tabled an amendment to the new clause. Why does he think that the Opposition are moving this new clause, which hits home at the directors and executives in the privatised utilities, but ignores other directors, especially those in the broadcasting industry, such as the directors of London Weekend Television who had lavish pay-outs on their share options and then donated a large part of them to the Labour leader's leadership campaign? Is there some preference between the Labour leader's election campaign and the fact that executives may be benefiting by helping the nation?
Sir George Young: If my hon. Friend's amendment had been in order, I would, of course, have been able to answer that question. As it is, the House will just have to guess what the answer might have been. My hon. Friend the Member for Beaconsfield also rightly made the point that the shareholders bear the cost of executive share options. It is they who are agreeing to diluting their interest in the company by allowing others to buy shares in the company at a preferential price. He made the point that the consumers benefit. He also said that one should examine the role of competition as an extra dimension in bringing pressure to bear on prices. In the Gas Bill, which is going through the House, we are implementing that principle. The hon. Member for Monklands, East implied that the options were transferable to a spouse. They are not. She may have been alluding to the possibility of transferring the shares after the option has been exercised, but that is not what she said.
The House will not be surprised to hear that I cannot advise hon. Members to accept the new clause. The Inland Revenue publishes annually figures of the Exchequer costs for past years of the various tax-relieved employee financial participation schemes, including executive share option schemes. The Revenue does not break those global cost figures down between particular groups of companies and I see no good policy reason why it should.
Column 1455In any event, there is a considerable amount of relevant information in the public domain. Companies are required by the Companies Act 1985 to maintain a register, which anyone can inspect, in which details of directors' interests in the companies' shares must be recorded. Where the scheme involves the issue of new shares, the register must show the number of shares under option, the period during which the option is exercisable and the exercise price. When options are exercised, it must be also be recorded in the register. The company is also obliged by law to list in its annual report or accounts the interests of its directors in the company's shares. The stock exchange listing rules require listed companies to obtain shareholder approval at an annual general meeting for any share option schemes that involve or may involve the issue of new shares. The rules also require companies to give details to the stock exchange of all directors' share option schemes and of directors' interests in the company's shares. Much of the information mentioned in the new clause is already in the public domain. In any event, I see no basis on which the Inland Revenue could be expected to estimate the future cost of those schemes, as is required in the new clause.
Share option schemes are intended to enable companies to motivate key executives and the aim is to improve company profitability and so to benefit all shareholders, including, as was made clear in the debate, pensioners. As I said when we debated this subject in Committee, we need to remember that the main cost of such schemes falls properly on those who chiefly benefit from them--the companies and their shareholders. They carry the principal cost, not the customer nor, indeed, the taxpayer.
Tax relief schemes can be designed to link the exercise of options directly with performance. I welcome the fact that it is increasingly recognised as best practice for companies to ensure that the exercise of options depends on the attainment of tough performance targets. A recent survey found that 90 per cent. of companies floated last year intend to set targets. Indeed, the institutional investors, the Association of British Insurers and the National Association of Pension Funds, insist that it is fundamental to the exercise of options that they be subject to a realistic measure of management performance, as that is in the best interests of the company, its shareholders, customers and employees.
My right hon. Friend the Prime Minister said a few weeks ago that bonuses and share options should be based on the performance of a company, and that stricter criteria may be required for the price at which shares are issued and for the circumstances in which they are exercised. All those matters are currently being examined by Sir Richard Greenbury's committee, whose report we await.
We have no quarrel with the idea that executives should be asked to deliver enhanced performance if they are to enjoy the benefits that share options can bring, but it is as well to remember that, unless the people at the top pull their weight and achieve good results, no one wins. If the company does not do well and the share price fails to rise, options deliver no rewards to the executives who hold them. My right hon. Friend the Prime Minister noted that the recommendations of the committee would be addressed to companies and shareholders, but he has also said that the Government would be ready to consider any proposals
Column 1456that might require legislative back-up. In short, we shall be considering further the whole question of executive
remuneration--including share options--in the light of the committee's findings.
I conclude by reminding the House that, under the last Labour Government, electricity prices rose by 2 per cent. every six weeks. Under this Government, they have fallen. The House now needs to ask itself: under which management regime do consumers really prosper? Our case is that they prosper under ours. Consequently I invite the House to reject new clause 1.
Mr. Andrew Smith: I should like to acknowledge the powerful arguments made by my hon. Friends the Members for Monklands, East (Mrs. Liddell), for Stoke-on-Trent, South (Mr. Stevenson), for Barking (Ms Hodge), for Sheffield, Attercliffe (Mr. Betts), for Dudley, West (Mr. Pearson) and for Bradford, South (Mr. Sutcliffe). I warmly welcome back to the Chamber our hon. Friend the Member for Walsall, North (Mr. Winnick). It was good to see him making a characteristically robust contribution to the debate.
Replying to the debate, the Financial Secretary spent more time attempting to defend privatisation than defending the--admittedly indefensible--abuses of executive share options. In that respect he differed from the hon. Members for Wirral, South (Mr. Porter) and for Beaconsfield (Mr. Smith), who at least acknowledged that there was a problem and that something needed to be done. They must have been as disappointed as we were not to hear any promise of Government action.
The Minister did not deal with the case that my hon. Friends have made. Action is needed on the ground of fairness, and because of our responsibility for taxpayers' money. It is especially needed in the case of the privatised utilities because of their ability to exploit their monopolies and because of the fact that their share options are a one-way bet.
Having said that the Government were not subcontracting their policy on this matter to the Greenbury committee, the Financial Secretary proceeded to do just that: he said that action would follow Greenbury. That is not good enough. I commend our new clause to the House. Let us show the public that we want to act against these outrageous abuses of share options.
Question put, That the clause be read a Second time:--
The House divided: Ayes 244, Noes 283.
Division No. 123] [7.03 pm
Column 1456Abbott, Ms Diane
Adams, Mrs Irene
Ainsworth, Robert (Cov'try NE)
Anderson, Donald (Swansea E)
Anderson, Ms Janet (Ros'dale)
Banks, Tony (Newham NW)
Beckett, Rt Hon Margaret
Beith, Rt Hon A J
Column 1456Benn, Rt Hon Tony
Bennett, Andrew F
Blair, Rt Hon Tony
Bray, Dr Jeremy
Brown, Gordon (Dunfermline E)
Brown, N (N'c'tle upon Tyne E)