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

The point of producing a report that is specially geared to the privatised utilities is twofold. First, those utilities have attracted the most public concern, and have involved the most outrageous abuses. Secondly, there is an interaction, in the fiscal consequences and the consequences for the public purse, between the under-valuation of the assets of the utilities when they were sold and the benefits that the bosses have subsequently been able to extract.

The hon. Gentleman asks whether, in this as in other matters, the law relating to tax should apply equally to schemes in the privatised utilities and those elsewhere. Of course it should: we have made it clear that we consider it sensible and prudent to tax executive share options as income.

It would be interesting to hear from the Financial Secretary what reason the Government could possibly adduce for failing to present the report for which we have called. It cannot he that there are too many schemes to assess. Each scheme has to be formally approved, and there are only 5,000 such schemes covering the privatised utilities and others.

In the case of the privatised utilities, there are 12 regional electricity companies, 10 water companies, two major power generators, one gas company and one telecommunications company. Such a report should not be beyond the Government's resources in the time between now and the Budget. I am grateful to the hon. Member for Wirral, South (Mr. Porter), who nods agreement.