Discretionary Share Option Schemes in the Privatised Utilities

Part of New clause 1 – in the House of Commons at 5:30 pm on 3rd April 1995.

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Photo of Mr Tim Smith Mr Tim Smith , Beaconsfield 5:30 pm, 3rd April 1995

I have given way twice to the hon. Gentleman. I shall allow him to catch his breath, and perhaps give way to him again before I finish.

It is in the interests of the public and of customers and taxpayers that the report for which the new clause calls should be produced. A Government refusal to accept it would be consistent with the way in which they have mismanaged fiscal policy generally in this area and elsewhere. For example, the cost of profit-related pay went up from £25 million in 1990–91 to £500 million in 1994–95. It has become one of the largest reliefs.

When my hon. Friend the Member for Edinburgh, Central (Mr. Darling) inquired of the Chancellor of the Exchequer about evidence of the effects of such schemes on companies which operate them and on the economy, he was told: Studies on profit-sharing schemes generally suggest that they are associated with increased employee involvement and increases in productivity."—[Official Report, 22 March 1995; Vol. 257, c. 241.] The Government should be less vacuous and more specific than that. What studies are they talking about, and what are the changes in productivity? In opening up what has become a bonanza for the privatised utilities and the bosses, the Government must justify themselves and their record to the electorate a good deal better than that.

The Government could make a start by accepting our new clause. If they refuse to accept it, and our arguments on behalf of the overwhelming majority of the public, it will be further confirmation of their hypocrisy. They would never allow any fully public service to be so profligate in the management of finances as they are in respect of these executive share option schemes and their tax subsidies. They will stand guilty yet again of incompetence, because any enterprise, whether publicly or privately owned, could not prosper if it operated in the way in which the Government operate these schemes. Moreover, they will stand guilty of failing to look after the interests of taxpayers as a whole, because it is they who subsidise the few who benefit from the schemes.

It is high time that the country had a Government who properly looked after the interests of the many, instead of allowing the few to feather their nests. That is what the privatised utility bosses are doing under the schemes which the Government seem so ready to tolerate, and which they have done so much to encourage. Our new clause makes prudent sense for the public and the taxpayer.