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

Certainly. As the hon. Gentleman was good enough to support it, it should undoubtedly be known as the Smith clause.

In an intervention, the hon. Gentleman told me that he did not think that the tax system should distinguish between private utilities and companies in general. I am doubtful, therefore, about the value of producing the report. The question is how we should respond to the public disquiet that we all accept exists. Should we do so through the tax system, through the regulator, or by trying to persuade shareholders to do something about the matter?

I think that Paul Foot drew an interesting parallel with trade unions in an article in The Guardian. Clearly, accountability works much better in trade unions. It is obvious that, if trade union officials tried to abuse their position in the way that it has been suggested chairmen and chief executives of some companies have, union members would not stand for it. They would take action to deal with that. A direct relationship exists there between union members, the union council, and the general secretary.

When it comes to companies, however, clearly something is wrong with the system. We talk about large shareholders and institutional shareholders, but behind those shareholders stand the ordinary people who are so concerned about what is going on.