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

It is true that those companies have not been subject to the same competition as, for example, major retailers, which face intense competition, but they have been subjected at least to the pressures that come from having shareholders. As a consequence, they have become much more efficient. They have driven their costs down. It is right that management should be rewarded for that.

I agree, however, that we need to go further and to remove, as far as we can, those companies' monopolistic status. That is what we are doing with the Gas Bill, which introduces competition at all levels of the gas supply industry. We shall have the same provision for the electricity industry. Such competition will not be introduced in the water industry, which is a natural monopoly, where it is much more difficult to inject competition. I accept that, but it is important to introduce competition into the system so that management are subject to the same pressures as people in other businesses.