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Points of Order

3.31 pm

Mr. Paul Flynn (Newport, West): On a point of order, Mr. Speaker--

Dr. Vincent Cable (Twickenham) rose--

Mr. Speaker: Order. I am taking a point of order from the hon. Member for Newport, West (Mr. Flynn).

Mr. Flynn: May I ask you, Mr. Speaker, to use your office to intervene in a matter of great importance and urgency?

Under the new Child Support, Pensions and Social Security Act 2000, the Government Actuary is obliged to lay before Parliament a report on the effect on the national insurance fund of the likely results of linking the basic pension to the level of earnings up to 2005. I have seen a letter from the Deputy Government Actuary dated 28 September, in which he wrote:

He continued:

Questions have been tabled by three hon. Members, all of whom have received similar replies--one as recently as yesterday--in which the Minister has said:

When a member of my staff telephoned the Deputy Government Actuary the day before yesterday and asked him to confirm that the report had not been submitted to the Secretary of State, the Deputy Government Actuary refused to do so. Another Member's office has been told--so the office has reported to me--that the matter will not be laid before the House until after next week's statement.

The matter is of the greatest importance if the House is to make a sensible judgment on changes in the pension, particularly changes in the basic pension and the link with it. In 1934, a Minister delayed a report to the House in similar circumstances, using the pretext of sending the report back--

Mr. Speaker: Order. The hon. Gentleman was kind enough to notify me of his point of order, but it cannot be a speech. He is making what is almost an Adjournment debate case. I will reply to the point of order now, because it is delaying the business of the House.

I have read the section to which the hon. Gentleman referred. It lays a duty on the Government Actuary to make a report, and on the Government to lay it before the House. It does not say when that must be done. If the hon. Gentleman has views on the matter, he must take it up with Ministers; it is not a matter for the Chair.

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Dr. Cable: On a point of order, Mr. Speaker.

Mr. Flynn rose--

Mr. Speaker: I shall take a point of order from the hon. Member for Twickenham (Dr. Cable). The hon. Member for Newport, West may wish to intervene on another point of order. He was a bit slow off the mark.

Dr. Cable: May I ask you, Mr. Speaker, for a ruling on a decision made this morning in Westminster Hall? Under the sub judice rule, a Treasury Minister and I were not allowed to refer to an important case involving a large number of our constituents with life insurance policies. It related to orphan assets. What is odd is that that legal case is being widely debated in the national press. Ministers have--rightly--written articles in the Daily Mail debating the merits of the case. However, I, as a Member of Parliament, am not allowed to question a Minister in the House on her speech, or on comments outside. How can we perform our role of holding Ministers to account when sub judice rules so inhibit our freedom of expression?

Mr. Speaker: Order. [Interruption.] I am going to reply to the point of order.

I am grateful to the hon. Gentleman for giving notice of the point of order. I shall establish the facts of the case to which he refers and will write to him on the matter. I do not think that there is anything to add to that. I shall look into the matter--he cannot get any better than that.

Mr. Paul Tyler (North Cornwall): Further to that point of order, Mr. Speaker. It is a very small point. I recall that the Joint Committee on Parliamentary Privilege considered this issue, and it is important to clarify the matter. Will you make a ruling and report it to the House, rather than simply corresponding with my hon. Friend the Member for Twickenham (Dr. Cable), because issues of considerable importance have been raised?

Mr. Speaker: I shall consider the hon. Gentleman's suggestion.

Mr. Flynn rose--

Sir Peter Emery (East Devon) rose--

Mr. Speaker: I shall go back to Mr. Flynn.

Mr. Flynn: Further to my point of order, Mr. Speaker. As the defender of Back Benchers' rights, can you advise me how a Back Bencher should proceed after he has raised a matter in the presence of 200 other hon. Members and the Prime Minister, asked for support and information and raised the matter with other Ministers in written questions? Who should he go to then to seek advice on information that is essential to do our job? Should he go to the Speaker, or should he go elsewhere?

Mr. Speaker: I have known the hon. Gentleman for many years and, if I were seeking to raise any matter in the House, I would probably go to him for advice. [Laughter.]

Sir Peter Emery: Now follow that.

1 Nov 2000 : Column 713

Further to the point of order that was raised by the hon. Members for Twickenham (Dr. Cable) and for North Cornwall (Mr. Tyler), Mr. Speaker. The House has been worried for a considerable time not just about the specific issue that is before you, but about the overall position of the sub judice rule, given that so many matters are already in the press and being discussed on television and elsewhere. The sub judice rule obviously had a major influence when the media did not discuss matters that were before the courts, but I now wonder how great that influence is. Could you and the Clerks consider whether there should be some new thinking about the sub judice rule and whether that could be done by a Committee of the House or yourself? There is a need to consider the matter further.

Mr. Speaker: The right hon. Gentleman has given me food for thought, but we must consider the rights of the individual; we must always worry about that.

Mr. John Bercow (Buckingham): On a point of order, Mr. Speaker. I should be most grateful to you for your guidance. Can you advise me whether the prohibition on tabling written questions that seek to extract Ministers' interpretation of treaty articles also applies to oral questions?

Mr. Speaker: The same rules apply. I hope that the hon. Gentleman understands that reply.

Mr. John Butterfill (Bournemouth, West): Further to the point of order on orphan assets, Mr. Speaker. Could we not distinguish between a matter that involves a specific case that is before the courts and a general discussion of what the public policy should be in relation to orphan assets?

Mr. Speaker: My understanding is that that distinction is recognised under the rule.

1 Nov 2000 : Column 714

Companies Act (Amendment)

3.39 pm

Mr. Dafydd Wigley (Caernarfon): I beg to move,

As this is the first time that I have had the opportunity to address the House since your election, Mr. Speaker, may I congratulate you on it and pass on every good wish for the future?

As this may be the last time that I present a Bill to the House, may I say how important a subject I still believe greater industrial democracy to be?

I entered the House 26 years ago directly from manufacturing industry. At that time, as now, the contribution of the employee was at least as great as that of capital to the survival and success of any company.

When a business goes to the wall, a shareholder may lose £10,000, and that hurts. The employee loses his or her whole livelihood, yet the whole structure of company law gives rights to those who own the capital but virtually no rights to those who do the work.

The responsibilities of company directors are, in practice, overwhelmingly towards the so-called "members" of the company. That means the shareholders. In the final analysis, any responsibility towards the work force is tenuous and unenforceable in law. The Bill's objective is to redress the balance, particularly in circumstances arising from a company takeover.

Before I go into the detail of the Bill, I cite two instances to support the need for change. Twenty years ago, in my home town of Caernarfon, one of the two large employers in the area was a company called Bernard Wardle, which made PVC products, mainly for the motor industry. There was a takeover. Although the Caernarfon plant was both viable and profitable, it was closed and the work was moved to other factories owned by the new holding company. That work filled spare capacity in those other plants.

The work force at Caernarfon were thrown on to the industrial scrap heap at the whim of the directors of the predator company. Three hundred people were made redundant. The tragedy is that so little has changed in the past 20 years: the factory still stands largely unoccupied, and some of the work force still have not found permanent on-going employment. The structure of company law that allowed such a travesty to occur is still largely in place. That is one case from two decades ago whose shadow remains over my home town--a shadow cast by those absentee directors who cared not one jot for the work force's future.

All directors do not behave in that way. As always, a change in the law is needed to safeguard against worst practice. However, more enlightened directors who want to safeguard the position of employees need to be protected in law if they so act.

A more recent case is still in progress: the takeover of Hyder plc, the main water service provider in Wales. It has recently been subjected to a contested takeover battle. I do not pretend for one moment that the Hyder case is analogous to that of Bernard Wardle, although it could be. Hyder has substantial debts, not least because of the windfall tax and the price regime laid down by

1 Nov 2000 : Column 715

the regulator. Two companies were involved in rival takeover bids for Hyder this summer. Without going into the merits of the two bids, the effect of the auction was to push up the offer to shareholders. The valuation per share went up from £2.60 to £3.65, which reflected a total cost to the buyer increasing by £160 million.

The bottom line is that that money must be recouped. The price charged for water is fixed by the regulator, so the only way of recouping the money is by cutting costs. That means a reduction in staff, a worse service to the customer, less investment in the infrastructure or the environment, or a combination of all three of those elements.

Concern was expressed by the National Assembly for Wales, across party political boundaries, that an excessively generous deal for the shareholders could lead to massive job losses in Wales and a worse service for the consumer. Indeed, the water services could be transferred from Wales, with both the customer and the work force paying the price.

I hasten to add that that has not happened yet, but it could still happen. If it does, there will be holy hell to pay in Wales. As you know, Mr. Speaker, water is quite an inflammatory subject in Wales. If our worst forebodings come to pass, the fault will lie not just with directors of the companies who might take such a decision--the very structure of company law, which has been enacted by the House, will be to blame. In our infinite wisdom, we have placed a responsibility on company directors to safeguard the well-being of the shareholder, but we have not enacted an equivalent responsibility to safeguard the well-being of the employee.

There are words in law that appear to cover that, but, in practice, they give no protection. I refer to the legislation that I wish to amend by virtue of the Bill. Section 309(1) of the Companies Act 1985 stipulates:

That sounds all fine and dandy, but immediately following section 309(1) is section 309(2), which states:

"The company" means the shareholders. Thus there is no legally enforceable duty to the employees. The Government were expected to undertake a company law

1 Nov 2000 : Column 716

review, which would have introduced a stakeholder law. There has been a review, but so far it has led to nothing. It is more than a year since David Wheeler resigned from the company law review because his concept of a third way was firmly crushed.

There are arguments for taking a genuinely pluralist approach to the issue, which recognises the role of all stakeholders, including workers and employees, and for what is quaintly called "enlightened shareholder value", which provides little change from the current position and is the line that the Government seem to support. When David Wheeler resigned, he said:

The time has come for the House to catch up with the reality of the 20th century and the structures of industry before we go much further into the 21st century. My Bill would amend section 309(2) of the Companies Act 1985 so that it states:

That would cut out the words "and the company alone" and would specify that responsibility must be exercised, particularly during takeover bids.

Hon. Members of all parties support the Bill, and I urge the House to allow it a First Reading, thereby conveying to all employees that the House regards them as full and equal partners in the new industrial age. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Dafydd Wigley, Mr. Kevin Barron, Mrs. Margaret Ewing, Mr. Paul Flynn, Mr. Ieuan Wyn Jones, Mr. Richard Livsey, Mr. Elfyn Llwyd, Mr. Andrew Mackinlay, Mr. Lembit Öpik, Mr. Andrew Rowe, Rev. Martin Smyth and Mr. Simon Thomas.

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