Discretionary Share Option Schemes in the Privatised Utilities

Part of New clause 1 – in the House of Commons at 5:15 pm on 3rd April 1995.

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Photo of Andrew Smith Andrew Smith Shadow Chief Secretary to the Treasury, Shadow Spokesperson (Treasury) 5:15 pm, 3rd April 1995

I beg to move, That the clause be read a Second time.

I fear that this new clause will not be so uncontentious as the last one. I would be grateful if the Financial Secretary would nod across the Dispatch Box. We would be pleased to move on, once the Government had accepted it. The Minister is not making any such indication.

The new clause calls for an assessment of the costs to the taxpayer incurred in Government support for discretionary share option schemes in the privatised utilities, and for a report to Parliament before the next Budget. Our case is that such an assessment is long overdue, that the boardroom excesses of the privatised utilities are a national scandal, and that it is high time that the Government took action. I find it difficult to imagine who could possibly disagree with such a reasonable suggestion as that which we are making today—other than perhaps sonic of the beneficiaries, and some right hon. and hon. Members on the Conservative Benches.

Certainly, anyone with an intelligent experience in commerce would be appalled at any enterprise which spent large sums of money without assessing the value created. Yet that is just what the Government are doing. They are underwriting the handouts at the taxpayers' expense. We seek no less prudent supervision of matters involving the public purse.

As has been especially clear in recent months, the 13ritish people are fed up with the Government's excuses and double standards in regard to share options and the excesses of the privatised utilities. They want not mere words—such as the Prime Minister's admission that he found such abuses "distasteful"—but action. Families with ordinary incomes whose living standards fell last year and are falling now, and must pay an extra £812 in tax this year, are angry ahout the ahuses at the top.

The Government should deal with these scandals. The chairman of the National Grid Company is set to make £2 million this year; the chief executive of British Gas has been awarded a 75 per cent. increase in his basic annual salary—an extra £205,000. That is on top of the share options, amounting to more than £100 million, taken out in the privatised utilities alone last year.

The Prime Minister has said that the Government may consider acting after the Greenbury committee has reported—indeed, that they may take legislative action. Even since that statement, however, three directors of Norweb alone have exercised share options netting them a combined benefit of more than £1 million. That will do nothing to make the public feel confident that the Government have any intention of ending the excesses of privatised industries.

We have set out the action that needs to he taken. The regulation of water, gas, electricity and telecommuni-cations must be made open: there must be public hearings enabling customers to question the privatised utilities about their service to the public, and about profits and boardroom pay, before the prices are set. Regulators should have the power to cut prices in the event of "top pay" and share option abuses.