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Mr. Marshall: Will the hon. Gentleman give a straight yes or no answer on whether he would legislate on those matters? If he would not legislate, why is he so willing to talk about them?

Mr. Bell: Talking about such matters on the Floor of the House is the essence of our parliamentary democracy. The regulations deal with aspects of corporate governance. Those aspects arise from the Greenbury recommendations, which were accepted by the former President of the Board of Trade, the current Deputy Prime Minister, who said that there would be legislation--which we are considering today. We are saying that we shall

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build on the regulations, based on the Hampel commission's recommendations and on the consultation that we have conducted in the City of London.

Therefore, the answer to the question asked by the hon. Member for Hendon, South is yes, a future Labour Government will build on the regulations, in the same terms as the regulations--[Interruption.] I can tell him that a Secretary of State in a new Labour Government will exercise the powers

"conferred on him"--

or her--

"by section 257 of the Companies Act 1985(a) and ... all other powers enabling him"--

or her--

"in that behalf"

to lay regulations before Parliament. So I not only give the hon. Gentleman a commitment that we shall build on the regulations' provisions on corporate governance, but I have told him the means by which we shall do it.

The clear proposals in our document "Vision for Growth" deal with the role of independent non-executive directors and with shareholder democracy. In response to the hon. Member for Hendon, South, an incoming new Labour Government

"will also give shareholders a greater effective say over remuneration packages granted to executives by giving them a legal right to vote on remuneration packages at the annual general meeting prior to implementation, as well as the right to re-elect the remuneration committee."

The role of institutional shareholders should also be enhanced. Merely encouraging or requiring institutional investors to vote is not by itself enough. The key issue is one of transparency in voting behaviour. That is why new Labour would require institutional shareholders to draw up and publish a clear code of conduct for their voting policy and to make available disclosure of their voting records.

Mr. John M. Taylor: Would the hon. Gentleman go so far as to make voting compulsory?

Mr. Bell: We shall, of course, await the recommendations of the Hampel commission; the Minister may find his answer in those recommendations. We shall consult the commission, but any changes that we feel should be made will be made not by primary legislation but, as I have told the Minister, by delegated legislation.

The Minister touched on the next issue briefly; Baroness Miller of Hendon also touched on it in a debate on Friday in the other place. I refer to the reason why we had Greenbury in the first place, which was the so-called fat cat syndrome. There was anxiety in the public mind about the huge amounts being paid to top directors and top chairmen.

I have a friendly remark for hon. Members who may be absent tonight because they are on the hustings already. I refer briefly to a statement made last week in the Wirral, South by-election. One voter, Mr. Keith Howard of Bebbington, who is a newsagent, said in an interview in the Financial Times that he was disillusioned with the way in which the Tories had allowed fat cat utility bosses to make huge personal fortunes while small business men had to struggle to make a living. He said:

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"I voted Tory last time, but I am going to teach them a lesson in the by-election."

He added words that may be prophetic. He said:

"You never know, I might teach them a lesson in the General Election too."

The regulations are a very modest measure from a very modest Government. They are not in keeping with the changes in corporate governance, accountability and transparency for which the City of London is looking. To quote a little poem:

"Though the mills of God grind slowly, yet they grind exceeding small;


Though with patience He stands waiting, with exactness grinds He all."

On 2 May, this Government will be well and truly ground.

6.42 pm

Mr. Jim Cousins (Newcastle upon Tyne, Central): This matter is important and significant. It is disappointing that there should be so few hon. Members here to debate such an important matter. We have created a great mass of individual shareholders. New shareholders have sometimes been created as a result of privatisations; others have come about as a result of changes in the funding of pension schemes or the introduction of personal equity plans.

Investors in such schemes now take their responsibilities extremely seriously. We have the clearest possible sign of a new era of shareholder activism in which shareholders, however small their individual investment, intend to be active on matters that affect the control and governance of the company and on significant issues that affect, for example, environmental matters.

On his deathbed, Goethe uttered the phrase, "More light!" There has always been some confusion about what Goethe meant. Was he referring to something ontic, profound and philosophical, or to something mundane relating to the circumstances in which he found himself on his deathbed? In terms of the regulations, the issue of more light is both philosophical and practical.

I take a great deal of heart and comfort from what my hon. Friend the Member for Middlesbrough (Mr. Bell) said about the issue. He has given a clear sign that he regards the changes being made tonight as a modest and conditional advance at best, as a retreat in some important ways and as a range of matters that we shall have to revisit when we have the advantage of the Hampel report later this year. I very much welcome and take heart from that.

There have been enormous payment abuses in some of our great companies and institutions. It was as a result of those scandals and the loss of public trust in the governance of those companies that the Greenbury committee met to deal with directors' pay. That move began in the financial markets themselves.

Some of the things that the Minister has said tonight are inexplicable. How can aggregation be simpler than giving individual explanations of directors' and company chairmen's emoluments when, to arrive at an aggregate, one must have available the details of individual pay and benefits? The aggregate is a sum total. How can it be said that it is simpler to provide the aggregate and not the individual amounts, when the aggregate is constructed out of information about the individual amounts?

Mr. John M. Taylor: I remind the hon. Gentleman that the regulations will become part of the general law

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of England, which means that they will apply to small companies and to large companies. Aggregates are much easier for small companies because the valuation of pensions and share prices in small companies is more difficult than it is in large companies where that information is available. If a company is a listed company, it will have to produce not merely the aggregate but the breakdown. That seems to be quite logical.

Mr. Cousins: My reply to the Minister is extremely simple. He draws a distinction between listed companies and unlisted companies. He seeks to lead the House towards the view that, if a company is not listed, it must be small, insignificant and trivial, and that it must involve a small group of family members or a small network of people, all of whom know each other's business and who are their own audience. That is simply not the case, as the Minister perfectly well knows.

Mr. Taylor: I am not attempting to delude anyone. Company law is quite clear. Within the Companies Act 1985, there is a definition of a small company and a medium company. Anything above that, the hon. Gentleman can choose to call a large company. There is a distinction between listed and unlisted companies. If he is asking me whether there is such a thing as an unlisted large company, I will tell him that there are such companies, but not very many.

Mr. Cousins: Those unlisted large companies include Vauxhall, Ford, Virgin and Eagle Star insurance. They are highly significant companies which have a great part to play in the affairs of our country. There is one significant feature about those unlisted companies. Some of the major ones are subsidiaries of companies that have their main financial and governance base outside this country.

Mr. John Marshall: Eagle Star insurance is a subsidiary of BAT Industries, which is a British-registered company. Does the hon. Gentleman accept that the vast majority of unregistered companies are very small--normally too small even to consider the alternative investment market?

Mr. Cousins: It is true that a great many unlisted companies are small companies, but I have drawn attention to an extremely important point: some substantial, important and influential companies are not listed. A practice is growing--one of the examples that I have given illustrates it precisely--of buying in shares in order to de-list. For whatever reason--I do not intend to explore the reasons in any individual case tonight--that practice is growing and it avoids the openness and the accountability that comes with meeting the stock exchange rules.

I attempted to raise this point earlier with my hon. Friend the Member for Middlesbrough, and I now put it directly to the Minister, who I hope will respond to it. We now have many more significant examples in the utilities sector of water and electricity companies being purchased by companies located outside Britain. I do not necessarily object to that; the practice is increasing owing to the competition for share value in the markets--it has a product and a result. The rules should allow disclosure of the emoluments of individual company directors in large companies that have their main governance home outside this country.

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It is now an almost weekly event for utility companies which were originally based in this country to have their corporate governance directed by companies located outside Britain. There are already some significant examples, including Vauxhall and Ford. The least that we should do is to ensure that companies whose corporate governance is in this country cannot evade disclosure by having their base outside the country and drawing upon the corporate governance practices of different regimes when establishing what they need to disclose. The Minister has said it himself: in some important respects, our practice of corporate governance disclosure is running ahead and setting a standard of practice for the rest of the world. That is not something to be ashamed of and go back on, but something to develop and exploit.

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