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House of Lords

Tuesday, 12th October 1999.

The House met at half-past two of the clock: The DEPUTY CHAIRMAN OF COMMITTEES (Lord Ampthill) on the Woolsack.

Prayers--Read by the Lord Bishop of Chichester.

Lord Carlile of Berriew

Alexander Charles Carlile, QC, having been created Baron Carlile of Berriew, of Berriew in the County of Powys, for life--Was, in his robes, introduced between the Lord Hooson and the Lord Geraint.

Lord Oxburgh

Sir Ernest Ronald Oxburgh, Knight, having been created Baron Oxburgh, of Liverpool in the County of Merseyside, for life--Was, in his robes, introduced between the Lord Flowers and the Lord Porter of Luddenham.

Earl Cathcart --Sat first in Parliament after the death of his father.

Lord Penrhyn --Took the Oath.

Directors' Remuneration: DTI Consultative Document

2.50 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

    When they expect to introduce proposals to change company law following consultation on the Department of Trade and Industry consultation document Directors' Remuneration.

The Minister for Science, Department of Trade and Industry, (Lord Sainsbury of Turville): My Lords, the Department of Trade and Industry issued a consultative document on directors' remuneration on 30th July, which set out the Government's proposals for strengthening the current regulatory and best practice frameworks in this area. The consultation period ends on 29th October. As my right honourable friend the Secretary of State for Trade and Industry has made clear, we regard this as a key issue, and we will consider implementation of the proposals in the light of the results of the consultation.

Lord Dormand of Easington: My Lords, I congratulate the Government on producing the consultative document. However, does my noble friend recall that it has taken the work of three major committees and four years to reach the present stage? Is he aware that there is widespread support for at least some of the proposals contained in the document and

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a need for urgent implementation of some of them? Will my noble friend be rather more specific about the implementation of legislation? I realise that it is not his responsibility, but perhaps he will say what priority his department places on the matter.

Lord Sainsbury of Turville: My Lords, as I have made clear, the Secretary of State regards this as a key issue and, furthermore, he is determined to tackle it without waiting for the major review of company law which is taking place. We have set out the proposals clearly in the document. Depending on which ones we select, they will require different combinations of primary and secondary legislation or best practice. When we have decided on those proposals, we shall move forward with the appropriate measures.

Lord Razzall: My Lords, does the Minister recollect the statement by Margaret Beckett, when she was the first of the three Secretaries of State for Trade and Industry, that unless the corporate sector did something voluntarily to curb excesses in directors' remuneration the Government would intervene? Does that remain the Government's policy?

Lord Sainsbury of Turville: My Lords, I recall the statement. It remains our policy, but we shall take the required action on the basis of the proposals that we believe to be right following consultation. If legislation is required, we shall take legislative action.

Lord Mackay of Ardbrecknish: My Lords, is it not the case that the remuneration of directors should be left to companies and that the Government should not interfere--just as I presume they have no intention of interfering in regard to the extraordinarily high salaries that are paid to people such as footballers and pop stars?

Lord Sainsbury of Turville: My Lords, while it is true that many footballers are paid very well, as a whole they do not set their own salaries. It is an important point. Also, even in the case of someone such as David Beckham, there is a rather clear link between performance and payment. The Government have said that it is not the responsibility of government to determine or say what directors' salaries should be. But it is the responsibility of government to set out clearly the framework in which shareholders can responsibly exercise their rights in that connection.

Lord Borrie: My Lords, will my noble friend the Minister indicate whether, since the Greenbury Committee Report in 1995, matters have got better or worse, in terms of there being remuneration committees and proper procedures for independent directors to determine remuneration? Are they better or worse?

Lord Sainsbury of Turville: My Lords, there has been some progress in setting up remuneration committees, and some other steps have been taken in terms of making them independent. Nevertheless,

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progress has not been as quick as it should have been. The Department of Trade and Industry commissioned PricewaterhouseCoopers in May 1999 to monitor compliance. It found, for example, that, for the financial year December 1998-99, only seven out of 270 quoted companies put the remuneration report forward for shareholder approval. So while progress has been made, there is still some considerable way to go.

Lord Dormand of Easington: My Lords, perhaps my noble friend will deal with the final point that I made. I acknowledged that it is not the task of his department to arrange legislative business. However, I asked what priority his department, or indeed he himself, places on the matter. For many people, for a Labour Government to tolerate some of the obscene payments that have been made when there is still so much poverty in the country takes some believing.

Lord Sainsbury of Turville: My Lords, the Government believe that this is a key issue. As soon as we have decided which of the proposals in the document are the right ones, we shall move forward with the utmost priority. But we cannot say how we shall handle the matter until we have decided on those proposals.

Baroness Knight of Collingtree: My Lords, can we be told who are the shareholders in the BBC when it comes to settling salaries?

Lord Sainsbury of Turville: My Lords, we are dealing with the question of quoted companies. Clearly, there are many other bodies in this country which have different arrangements for settling salaries, including those of Members of both Houses.

The Countryside: Policy

2.56 p.m.

Lord Patten asked Her Majesty's Government:

    What are their policies to promote a better understanding by the urban majority of the minority of people who live in the countryside.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, while recognising acute problems in some of our rural areas, the Government do not rigidly and artificially divide the people of this country into urban and rural. People move between town and country or live in one and work in another. Our policies are designed to benefit all our people wherever they live. Increased mobility, domestic tourism, the mass media, and our programmes to improve education will all promote a better understanding of society by people in both town and country.

Lord Patten: My Lords, I thank the Minister for that reply. However, it does not clearly demonstrate that

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the Government appreciate the growing gulf--and it is not merely a matter of field sports--between people who live in the town, the overwhelming majority, and folk who live in the countryside. Will the Minister recognise that many country people fear that the Government's plans for the countryside will turn it into a theme park for urban people, and will not help to preserve the rural way of life, agriculture and all historic countryside pursuits? If those pursuits were threatened in other parts of the world, I daresay that the Government would be up in arms in protest. What are the Government's plans for the one democratic institution to which some country people feel they can genuinely relate; namely, the parish council? Is it, or is it not, the Government's intention to abolish parish councils in England, Wales and Scotland?

Lord Whitty: My Lords, on the last point, not. The Government have been discussing rural governance. However, the implications in the media last week that we have plans for abolishing parish councils are complete nonsense. I should like to place that on record. As regards the first part of the noble Lord's question, I do not recognise a substantial amount of it. I understand that a certain amount of feeling has been generated and to an extent irresponsibly fanned up regarding this Government and the countryside. We have done more for rural England than any previous government in terms of rural transport and help for agriculture and rural businesses. Any objective assessment of what we have done for rural areas can lead only to the conclusion that we care just as much for our rural population as we do for the population in our towns.

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