Matters to Be Taken to Be Taken into Account by Director in Exercising Powers to Control Gas Prices

Orders of the Day — Gas Bill – in the House of Commons at 3:45 pm on 15th May 1995.

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'(1) The Secretary of State shall from time to time issue guidance to the Director as to the matters he is to take into account in exercising any powers specified in the conditions of a licence granted under section 7 or 7A of the 1986 Act to limit, vary or otherwise control the charges set by a licence holder for the supply, transportation or shipping of gas.

(2) Guidance under subsection (1) above shall include as one of the matters to be taken into account by the Director a reference to the extent to which the remuneration of the executive and non-executive directors of a company which holds such a licence reflects the performance of that company during the year preceding the year to which the remuneration in question relates.

(3) In subsection (2) above— remuneration" includes any salaries, fees, benefits in kind or share options; and "performance" includes increased efficiency in the carrying on of the activities to which the licence relates and improvements in the standard of service to consumers.'.—[Mr. Nigel Griffiths.]

Brought up, and read the First time.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

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

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

With this, it will be convenient to discuss amendment No. 54, in clause 8, page 12, line 41, at end add— '(3) Standard conditions under this section shall include a duty on the part of any company which is the holder of a licence under section 7 or 7A of the 1986 Gas Act to publish annually details of the remuneration of the executive and non-executive directors of that company, including any salaries, fees, benefits in kind and share options.'.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

The new clause and the amendment deal with some of the key issues that concern the public about gas and the other privatised utilities—corporate greed, boardroom bonanzas and lack of restraint, in spite of the preaching of restraint from somewhat unusual Conservative circles.

New clause 2 would give the President of the Board of Trade powers to issue guidance to the Director General of Gas Supply. The Secretary of State shall and must take some responsibility for ensuring that payments in the boardroom are not completely disproportionate to the performance of the company or the service to consumers. The present director general must be given powers to take certain actions with regard to the remuneration of executive and non-executive directors and the company's performance during the year.

The definition of remuneration in the new clause includes all those things about which we have been reading—not merely at the weekend and in all the editorials today, but in months and years past—but nothing has been done. The definition includes salaries, fees, benefits in kind and share options—the raid on the bank by far too many of those executives. Just as important, performance must include the efficiency of the organisation in carrying out its duties to the public, as well as improvements in the standard of service to consumers.

The new clause also gives the Government the power to tell the director general to take into account the level of executive pay in British Gas when fixing prices for consumers. I hope that the new clause will send a warning to the bosses of all the other utilities that Parliament will not sit back and watch them indulge themselves in the sort of boardroom greed that has brought the utilities to a level of disrepute that they have never suffered before.

4.45 pm

The new clause will ensure that those who complain, such as the hon. Member for Southport (Mr. Banks), who is not in his seat but who has written letters to the chairman of the company, are not powerless in the face of unsatisfactory replies. There must be a crisis of confidence in gas when it takes not a member of the public or even a Member of Parliament to get a suitable response from the chairman but the Minister responsible for key powers over British Gas. That in itself is an indictment.

In the past four years, the performance of British Gas has not presented a glowing picture. Pre-tax profits have declined, earnings per share have been reduced from 21.7p to 13.9p, and the return on capital has reduced from 7.3 per cent. to 5.4 per cent. Indeed, as the company states in its briefings, it has lost 60 per cent. of its industrial customers; so it is not a glowing success story, but one that should be sending shivers down the spines of all shareholders.

When I attend the annual general meeting of British Gas a fortnight on Wednesday and act as a proxy voter, I will certainly raise the sort of questions about performance that are voiced not merely by consumers but that we have heard from the now empty Conservative Benches.

What has been the response of the British Gas board to the falling level of profits and of earnings per share—the indicators that show whether a company is in a healthy state? The chief executive, Cedric Brown, had a 75 per cent. pay rise last September and, on top of that, has been awarded 437,000 executive share options, worth more than £3 a share, and now stands to pick up a bonus of 125 per cent. of his salary, which is nearly £600,000—he is a millionaire in a year.

Other board members who are responsible for scrutinising the workings of British Gas and perhaps for drawing to the chairman's attention any lapse in the company's performance have been noticeably silent. Norman Blacker, who holds 165,000 share options worth £500,000, has been silent. Howard Dalton, who holds 236,000 share options worth £700,000, has been silent. Russell Herbett, who holds 163,000 share options worth about £500,000, has been silent. Philip Rogerson, who holds 237,000 share options worth about £700,000, is another silent voice in the boardroom. Finally, Roy Gardener, the finance director who joined the company last autumn, has been silent—a silence bought at a price of £1.1 million in share options and a salary of £285,000.

In addition, all those people stand to pick up bonuses: Mr. Blacker stands to pick up £984,000; Mr. Dalton, £355,000; Mr. Herbett, £210,000; Mr. Rogerson, £310,000; and Mr. Gardener, £355,000, on top of his £1.1 million in share options and his £285,000 salary. Those bonuses, payments and share options have all been earned on the back of the company's declining performance for its shareholders. However, I am more concerned about the company's performance and duties to the consumers whom it is supposed to serve.

British Gas has made drastic cuts. If we are to believe Mr. Giordano, British Gas is the only business that can make such cuts without an impact on services. The Minister was trapped in Committee, despite, I presume, a previous briefing by Mr. Giordano that those cuts were having no impact. Given that the number of British Gas showrooms has been axed from 426 to 266 and that showrooms have been closing in high streets throughout the country, depriving people of a service that they have enjoyed for many years, it is hardly surprising that consumer dissatisfaction is on the increase. Given that showroom staff levels will have fallen from 4,000 to 1,400 by the end of this year, it is hardly surprising that the public are not getting the personal service about which British Gas was reprimanded by the Minister responsible for the charter marks.

Home service advisers are the subject of a new clause, which we shall discuss today or tomorrow, so I shall not dwell on the matter. The number of home service advisers, who help elderly and disabled people in their homes and ensure that the arthritic and the blind receive practical assistance, cannot be cut from 136 to 78 without impacting on that service in every region that British Gas serves.

This year, the emergency services budget of £9 million to trace gas leaks was cut to £1 million. Spare parts have been removed from the vans of engineers conducting emergency call-outs so that they are left with no choice but to cut off defective appliances at the risk of some unscrupulous landlord or criminal proprietor reconnecting a faulty gas heater or cooker and putting at risk not just themselves and their families but their neighbours. Such a policy contrasts markedly with the lavish handouts in the boardrooms.

If British Gas is so proud of the remuneration package that it offers its key directors, and if it thinks that their performance is at the forefront of British business and an example to everyone, why has it hidden its share options schemes from its shareholders? Amendment No. 54 makes the holder of a licence under the Gas Act 1986 liable to publish annually details of the remuneration of the executive and non-executive directors of that company, including any salaries, fees, benefits in kind and share options. On Friday, I visited one of the biggest investors in British Gas, Standard Life, and this morning I called on the Prudential, the biggest single institution that invests in British Gas. They both confirmed their surprise—I detected a shade of annoyance—at Mr. Giordano's decision to review in secret the remuneration of directors in January 1994. The fact that that was not mentioned in the annual report in February obviously came as a surprise to them, as it would to most shareholders. The fact that it was not mentioned when the quarterly returns were signed off slightly later that spring also came as a surprise. The remuneration packages were not mentioned at the annual general meeting in April, or even in September when the company signed off the second quarter's results. Nor was it mentioned when it was employing Mr. Gardener with £1.1 million of share options and a high salary.

It was not until the Financial Times published the information on 21 November 1994 that shareholders, even institutional shareholders, realised that they had been excluded from those critical decisions. We are talking not about a few employees who hold a few hundred thousand pounds' worth of shares but about those whom I met this morning, who hold more than £300 millions' worth of shares, and those to whom I talked on Friday, who hold some £290 millions' worth of shares. So it is no wonder that the matter is out of control, and a new clause and amendment are needed to ensure that such boardroom excesses are publicised.

All that cosy little arrangement was presided over by a key board member, Lord Peter Walker. He was the Secretary of State for Energy who left the Cabinet on 4 May 1990 and by June—within a month—had joined the board of British Gas. The "revolving door" did not apply to Peter Walker; for him, it was an open door to the boardroom of the very company that he voted to privatise. There was no "decent interval", as Nolan has now recommended, but just an indecent haste to join the fattest cats of them all. There are no checks on them, only cheques to them.

This may have been what the Prime Minister meant when, in response to a question in the House on 9 February, he spoke with unusual insight about peer pressure in the private sector. Perhaps he meant the peers who have left the Government and joined the boardrooms, such as the noble Lord Young, who joined Cable and Wireless having been Secretary of State for Trade and Industry responsible for privatising telecommunications, or Lord Tebbit, who was responsible for privatising British Aerospace and then joined its board. That shows the pressure of peers on the boardrooms—no restraint whatever—and why it is necessary to support the new clause.

We need regulatory pressure on British Gas, the six bosses of which have received nearly £7 million in share options, to ensure that its performance to consumers and shareholders is improved. We need similar regulatory pressure on the water and sewerage companies, the 42 bosses of which have awarded themselves £22 million in share options, and on the regional electricity companies, the 63 bosses of which have given themselves £46 million in share options.

The new clause is a model for exercising the minimum modest restraint on the directors of those utilities. It is no secret to the House that the Opposition have had their differences with the present regulators, but even those regulators should be allowed some discretion to ensure that, where boardroom salaries and share options hit jackpot and national lottery levels, the regulator can at least take a step back and ask what service is being provided to consumers and whether it merits such high boardroom salaries.

It seems obvious that, even if share values rise or remain as high, we must question the soaring number of consumer complaints, which rose by 94 per cent. in the three months from November to January compared with the same period the previous year and by 19 per cent. compared with the previous three months.

All those figures would give any other private company pause for thought. If, for instance, Marks and Spencer or Littlewoods saw the number of consumer complaints soar, even if their share prices were rising into the stratosphere someone on the board would sit back and say, "Wait a minute, we shall lose all our customers if those consumer complaints continue." So the proposals make sound economic, shareholder and consumer sense.

It is important also to look outside this place and beyond the Labour party's opinion. The concerns that the shadow Chancellor, my hon. Friend the Member for Dunfermline, East (Mr. Brown), voiced at the weekend are now echoed in all the newspapers that strongly support the Conservatives. Today's Daily Mail talks about the profits made by David Jefferies, chairman of the National Grid, who—

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I am sorry to interrupt the hon. Gentleman, but I must caution him against going too wide of the subject. The clause deals with gas and, although a passing reference to other utilities is acceptable, I now detect a widening out, which is not acceptable.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

Perhaps I will be in order if I quote a better example from The Sun, which, today, specifically mentions the gas, water and power bosses. That paper arguably influenced the election and caused the swing that led the Tories to hold on to power, just. Today's editorial, entitled "Greed, Inc." states: Gas, water and power bosses who leach millions from their cash-gushing monopolies are little better than licensed thieves.With nobody to stop them, they just keep returning to the scene of the crime and filling their pockets with extra loot.They've made fortunes out of pay, perks and pensions. 5 pm

That sums up why the clause is needed. Today's edition of the Daily Express also ran an article with the headline "Time to curb fat cat bosses". It states: The energy, ingenuity and urgency with which they have arranged to line their pockets would turn the strongest stomach. That paper, which is not a Labour one, has seen the light. In a possible rebuke to the Minister, it states: Any sixth-form economic student knows that monopolies can hardly help doing well, since they lack the competition that would otherwise squeeze profits and provide independent benchmarks of performance … the Government simply cannot afford to be passive. That is exactly why I am urging the Government to support the new clause. That paper also states: it certainly will not do for Ministers—like Industry and Energy Minister Tim Eggar—to dismiss the fuss as Labour posturing. We are not posturing, because our complaint is firmly founded on the concerns of consumers as well as of shareholders.

It is important that a message goes from Parliament to the boardrooms of utilities, to reinforce the message sent by Nolan last week, to the effect that directors cannot continue to cash in their chips at an alarming rate to enrich themselves. Twelve directors of the privatised utilities have become millionaires. Those directors cannot afford to continue in that way and ignore the true needs of their shareholders, their companies and, specifically, the needs of 18 million gas consumers.

Photo of Peter Hain Peter Hain , Neath

I support new clause 2, because, for successive months, the Government have been engulfed in sleaze involving not just the behaviour of successive Ministers, as well as of certain Back Benchers, but that of the privatised utilities. The Government have been engulfed by that sleaze because of their failure to get to grips with those privatised utilities and the way in which they are taking the country for a ride. After all, the gas bills that we pay enable the gas directors and others to enjoy the life of Riley. As has been exposed in the past year, our money has paid for the successive share options that they have given themselves and their massive salary increases, which have repeatedly rained upon us, month after month.

The new clause is a valuable vehicle because it opens the window on that aspect of Government sleaze. It is obscene that six British Gas directors have been able to award themselves £7 million of share options. They are among the top 50 directors of privatised utilities who have awarded themselves £40 million in share options. Across the board, 131 utility bosses have awarded themselves £100 million-worth of share options.

The new clause would curb that practice, which is particularly reprehensible because it is a form of insider dealing. Those directors are not agreeing to remuneration terms and salary levels that are openly declared and accountable to those attending the annual general meetings. They are stuffing share options in their own back pockets and, at the same time, determining, according to the priorities they set for their company, the value of those shares. They have effectively created a mechanism from which they benefit. That objective is quite different from the other possible business objectives of British Gas, or any other privatised utility. Those directors' performance should be judged by much more rigorous, sensible and acceptable business targets, such as the levels of investment and productivity reached. The extent to which those targets have been met might well lead to the payment of bonuses.

Investment is a critical target for any serious industry such as British Gas. Jacking up the share prices and benefiting from them through freebie share options is in direct conflict with investment, because the more share values are driven up, the higher the dividends that are paid to satisfy the insatiable thirst for higher returns on those shares, which, in turn, results from the short-termist economy that the Government have established. Those payments are made at the expense of the needs of British Gas.

The practice of British Gas directors represents a microcosm of what is wrong with the British economy. The Government have created a short-term, speculative, money-for-nothing economy. The behaviour of the British Gas directors exemplifies that. That small elite, in their privileged position, think that they can simply exploit that economy for all they are worth. The share option manoeuvre is a particularly reprehensible example of such exploitation.

As my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) has said, it is not surprising that the share option manoeuvre is part of the wider picture of Cabinet Ministers leaving the Cabinet room for the boardroom. Lord Walker helped to privatise British Gas and he has now ended up on its board. I do not think that my constituents can understand the extent to which Members of Parliament are indifferent to the sleaze that now grips them.

Photo of Patrick McLoughlin Patrick McLoughlin , West Derbyshire

The hon. Gentleman has stressed how former Cabinet Ministers have joined the boards of particular companies. If there were a Labour Government at some time in the future, what would he think about sponsored trade union members acquiring ministerial responsibility for those industries by which they had been sponsored?

Photo of Peter Hain Peter Hain , Neath

I do not think that the hon. Member has the power to invite me to take on a job.

Photo of Peter Hain Peter Hain , Neath

The hon. Gentleman is not being as charitable as I thought. Is he seriously trying to suggest that I as a sponsored Member—I represent Post Office interests—might be barred from taking up a post in the unlikely event of being offered such a responsibility? That is nothing like someone in Cabinet, responsible for a privatisation that handed millions of pounds in share options and other means to the board, being invited by that very board to serve on it. That is the old boys network in operation. Those people are systematically lining each others' pockets. That is quite different from the example that the hon. Gentleman quoted.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I am not sure that it has anything to do with new clause 2 either. Perhaps the hon. Gentleman would return to the point.

Photo of Peter Hain Peter Hain , Neath

I am pleased to do so, Madam Deputy Speaker. Your intervention was welcome—[Interruption.]—but not for the reasons about which right hon. and hon. Conservative Members are now happily smirking. I am happy to defend my argument, but the hon. Member for West Derbyshire (Mr. McLoughlin) introduced a red herring. Without disobeying your dictum, Madam Deputy Speaker, I should like to say that it was interesting to note the reports in the Sunday newspapers that a number of Ministers were considering pressing the Prime Minister to dismiss them early, so that they could take early retirement and get in before—

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I have exercised my judgment: the hon. Gentleman is quite out of order.

Photo of Peter Hain Peter Hain , Neath

I accept your judgment, Madam Deputy Speaker, since I have absolutely no option. I was unreasonably provoked by the hon. Member for West Derbyshire and perhaps you will bear that in mind, in mitigation.

I return to my central argument. Many of my constituents cannot pay their gas bills because they cannot even obtain a supply of gas to their homes. The Minister may be weary of my quoting that example, but many people who live up valleys in my constituency—in the Swansea valley, in villages such as Cwmllynfell and Rhiwfawr and, at the top of the Dulais valley, in Seven Sisters and Banwen—have campaigned for years for gas to be supplied up to their villages, and I have supported their campaign.

Gas has been supplied, in some cases, to places less than a mile away from those villages. British Gas has informed me that the total cost of supplying those villages with gas would be less than £3 million; yet six of its directors have received £7 million in share options—more than twice the cost of supplying gas to those villagers who desperately need it. It is a straight trade-off. My constituents do not understand, and I do not understand, how the Government can possibly defend a position whereby share options are dished out like confetti raining down at a wedding or on some similar occasion, when my constituents cannot obtain a gas supply that would cost half the sum that British Gas directors have awarded themselves in share options.

There is a straight trade-off between the creation of millionaires and the misery resulting. New clause 2 would give the Government the power to instruct the Director General of Gas Supply and ensure that that abuse—that type of insider dealing and lining of pockets by senior utility bosses, specifically of British Gas—should cease.

The gas industry is, yes, a privatised operation now; nevertheless it should, as a national champion, set high ethical standards that are respected by customers throughout the country and that will cause low-income customers especially to understand that they are in a fair society—not an unfair society rigged against them, in which millionaires continue to make money yet, if customers cannot pay their bills, their gas supply is cut off. That type of discrimination and exploitation should end. New clause 2 may give the Government a vehicle for ending it.

Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone

New clause 2 and amendment No. 54 are enormously important.

New clause 2 seeks to impose price penalties on companies where there is excessive executive pay. My hon. Friends have given many examples to show how needful that is.

Clause 54 requires companies to publish details of executive remuneration as a standard of the licence condition. It seems perfectly fair that people should have access to information about remunerative packages paid to executives of utilities.

In some of the press reports about what is likely to happen in the nuclear industry, it has been suggested that a provision similar to new clause 2 would be part of any new legislation for privatisation of the nuclear industry. Perhaps the Minister will enlighten us as to whether that is correct.

New clause 2 gives the Secretary of State responsibility for directing the regulator as to the way in which executives' salaries should be taken into account when setting maximum charges for gas supply, transportation and shipping. That gives the Government indirect power to solve the problem of excessive executive pay packages—the most prominent example being, I suppose, the doubling of Cedric Brown's basic salary at the same time as British Gas showroom staff were asked to take pay cuts.

Subsection (1) of new clause 2, makes it plain that The Secretary of State shall from time to time issue guidance to the Director as to the matters he is to take into account in exercising any powers specified in the conditions of a licence granted under section 7 or 7A of the 1986 Act to limit, vary or otherwise control the charges set by a licence holder for the supply, transportation or shipping of gas. 5.15 pm

The Minister will be aware, from the Select Committee on Trade and Industry report on the domestic gas market, that the evidence given to the Committee showed that the cost per therm of gas left little room for competition. The report showed that the cost of gas is likely to be about 21.5p—43 per cent. of the total cost per therm. Those were the figures given by British Gas. Transportation and storage was given as 22.5p—45 per cent. of the cost per therm. The supply and trading costs were given as 6p—12 per cent. of the cost per therm, which is reckoned at 50p. That leaves very little room for any changes to be brought about as a result of competition.

I think it is generally accepted that the cost of gas to all the companies likely to be involved in the domestic market will be very similar. Transportation and storage costs will also be very similar. That leaves only trading costs, in which there is likely to be a great deal of competition.

Therefore, not only is it important that consumers are given the opportunity to evaluate the performance of the companies, which may be reflected in some of the price changes that come about, but it is important that they have access to the information regarding the remuneration packages paid to the directors. That is all the more important when it is obvious that the focus of competition will be on that very small part of the cost of a therm of gas.

The powers set out in new clause 2 would allow the regulator to ensure that directors' pay not justified by performance was funded from shareholders' pockets rather than higher prices.

Relying on the future recommendations of the Greenbury committee—to which the Minister referred during discussion in Committee—is not on, because one might liken the Greenbury committee to putting the mice in charge of the cheese. The committee is made up of millionaires, many of whom draw large salaries from their business activities. If they are to make judgments about the remunerative packages to be paid in the utilities, many Labour Members will not expect the Greenbury committee to come up with dramatic or radical changes to the remunerative packages proposed for executives in the utilities.

The Government's response to new clause 2 will show the general public how serious they are about wishing to tackle the problem of directors who award themselves increases unjustified by performance. If the Government oppose the clause, they will demonstrate that the Prime Minister is unwilling or unable to give any substance to his claims of concern about excesses, and that the Tories remain the party of those who would turn a blind eye to the privatisation rip-off and corporate sleaze.

I would expect the Minister to take new clause 2 and amendment No. 54 on board. As well as being necessary for the regulator to control corporate access, amendment No. 54 is justified on its own merits. Consumers should be able to discover easily how much the directors of public utilities are paid and to assess whether it is a fair amount. Opposition to the new clause is a vote to continue to prevent the utilities from being held accountable to the public.

Photo of Ann Coffey Ann Coffey Opposition Whip (Commons)

The Government's response to the recent outrage over the profits that the chairmen of the public utilities have earned—or rather, not earned, for that is the problem—has been low level. The Government's response demonstrates how out of touch they are with what the ordinary member of the public feels about what is happening.

The public do not regard gas as a just another commodity, even though the Government have been trying hard to persuade them that it is. Gas is not seen as a commodity by the public, but as an essential service for which they have to pay out of their income. Over recent years, most of the public have suffered a cut in their income. They have to manage within a limited income. Their pay may have increased minimally, in line with inflation, but they still have to pay all their bills out of a limited income.

Gas is a service for which the public have to pay. The Government have gone to great pains to explain that the benefits of privatisation have included a decrease in the price of gas, but the decrease has affected some consumers and not others. It is not the price of the service that irritates the public beyond belief, but seeing something which belonged to them, and which was transferred to the private market for their benefit, being used by a few people to line their own pockets. That has caused public outrage.

The money that the directors and chairman have earned is beyond the wildest dreams of most working people in this country and seems out of all proportion to anything that people could reasonably earn by the job that they do. People have rightly asked what the chairman has done to earn so much money. The answer is not that the chairman has done anything to earn the money, but that he has got the money because he is the chairman and is able to award himself the money. The ordinary people of this country—particularly those who have been asked to make sacrifices and those who work in the public sector—do not like that system.

We can compare the earnings and the share options of the chairman of British Gas with what nurses are able to earn and what they have been asked to take in wage increases. The British public regard nurses as just as valuable as the chairman of British Gas. They see an enormous disparity between the two sets of earnings, which they believe to be inequitable and unfair. They cannot understand why the Government are unwilling to do something about that. The Government are not willing to criticise the system or to take action to ensure that the British sense of equity and fairness is not outraged.

The British people ask why, in a privatised industry, one person's contribution should be considered so valuable that he can earn an inordinate amount of money in an annual salary and become a millionaire through the exercise of share options, while other employees who contribute to that industry are rewarded with wage cuts and, in some cases, redundancy. The British people wonder why the chairman is worth so much and an employee is worth so little in comparison. In an industry, everyone contributes and everyone's contribution is valuable and worth while.

The Government's argument has always been that huge salaries are paid and chairmen receive enormous amounts of money through exercising their share options because it is important that a private utility has the best possible chairman. The Government say that they are simply following the practice of the private market. The private market may adopt that practice, but there is a great deal more competition in the private market than in the public utilities.

British Gas is a monopoly, the regional electricity companies are monopolies and the water companies are monopolies. People think that perhaps it is not so hard to manage a monopoly when consumers have no option but to buy the service being sold. The analogy between British Gas and what is happening in the private market elsewhere does not hold up. The public utilities will always be a special case because they sell essential services and they will always have to be open to regulation to ensure that they do not rip off the public through price increases. That is why we have regulation. The public know that, and they bitterly resent what is happening.

The purpose of the new clause is to give to the regulator an opportunity to look at what is happening and to relate the remuneration of the chairman of British Gas and his executives to the company's performance. There must be some sort of performance-related pay. There must be some reason to award oneself hundreds of thousands of pounds in bonus, albeit through share options. The person involved has to have done something to earn the money—it is not just manna from heaven—and it is difficult to see what has been done for such sums to be earned in British Gas.

People might understand the bonus or level of salary if they could see what it had been paid for. A number of criteria for measuring the performance of British Gas could be drawn up. They could include its performance in terms of customer care, in terms of helping low-income customers and in terms of ensuring that services are accessible to the public, its investment record and its relationship with its employees.

As my hon. Friend the Member for Neath (Mr. Hain) said, in this country too much time is spent considering companies' and industries' performances simply in terms of their share prices and their dividend yield. Criteria which go beyond that should be applied in determining the quality of a company. British Gas, the regulator or the Minister could show the lead and apply such criteria to the public utilities to set an example to the rest of British industry. It could be shown that the criteria should involve not merely short-term success, but the long-term health of an industry.

I hope that the Minister will respond positively to the amendment. In previous debates on the subject, he has said that the Opposition have been motivated by the politics of envy and do not like people to earn too much money. We do not like people being awarded too much money when they have not earned it. The important word is "earning". In this country we believe that people should earn what they receive and we believe that everyone's contribution to an industry is important.

The Minister should recognise the public sense of outrage at what is happening. Most members of the public believe that there will be a continuing inequity, and that the gap in earnings between those who do a decent day's work and those who sit in the boardroom is becoming too big. Sitting in the boardroom and good management are important, but gas fitters and the people who do the job are also important. Those people must be justly rewarded. One man or group of people should not be rewarded far in excess of other people.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I enjoyed the speech of the hon. Member for Stockport (Ms Coffey), not least because she suddenly had to correct herself a number of times during her prolonged peroration to say that the Labour party is sometimes in favour of management and sometimes in favour of high pay, as if the new Labour piece was getting into her brain and she was remembering the right words so as not to undermine her credibility with the current trend within the Labour party.

New clause 2 is extremely pernicious, for all the words uttered in particular by the hon. Member for Clackmannan (Mr. O'Neill) from the Front Bench. It would fundamentally undermine the basis of the regulatory system as the independence of the regulator is the cornerstone of the way in which regulation is approached, not just here but in virtually every country around the world.

5.30 pm

The reason for and the importance of the regulator's independence is that it removes political interference from the management of the regulated utility. New clause 2, more unashamedly than any previous amendment, seeks to reassert political control over the management of the gas industry.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

"Hear, hear," says the unreconstructed hon. Member for Doncaster, North (Mr. Hughes).

Despite all the honeyed words of the Leader of the Opposition and occasionally other Labour Front Bench spokesmen about their dedication to make industry more effective and their commitment to competition, what they really feel in their hearts is that they want political control over the management not just of the gas industry but all parts of British industry. They have not really put their hearts into a new clause IV, it is all just part of an elaborate con.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

We want to know what new Conservatives are thinking and whether new Conservatives are the same as old Conservatives, backing those with their snouts in the trough, the corporate greed and the absolute abuses that have even brought The Sun, the Daily Mail and the Daily Express on to Labour's side on this issue.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

That was a pretty feeble attempt by the hon. Gentleman. At least some of the more honourable Labour Members admitted that the Labour party wants to reassert political control of the gas industry. I am delighted to see that the hon. Member for Neath (Mr. Hain) is smiling, as that is straight down his view of where the Labour party should be.

The Opposition want to go further than reasserting political control. In the terms of the new clause, they want to do it directly by reintroducing an incomes policy through the back door. That is what lies behind new clause 2.

Neither today nor at any stage in Committee have the Opposition introduced a shred of evidence to suggest that there is any logical reason to relate price caps on the one hand to board pay on the other. The reason for that is quite clear. First, even if one takes the total remuneration package for the whole of the British Gas board, which came to some £2.3 million last year—

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

No, per year. That represents a cost of about 1p per month on each gas consumer's bill.

In addition, we heard some absolutely absurd figures from the hon. Member for Edinburgh, South (Mr. Griffiths). If he follows the precedent of the level of research to which he has risen in the debate when he attends the British Gas annual general meeting, as he has promised to do, he really will be made a mockery. He fails to understand that the vast bulk of the share options to which he referred were offered at only 9p per share below today's price on the stock exchange. The vast sums that he mentioned bear no relation to the potential or actual profit that could be exercised today.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

The Minister needs a lesson in accuracy as well as economics. The exercised price was 221p and the latest market price is just over £3—302p or 304p—so the difference is more than 9p.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

The hon. Gentleman is following his long established tradition in misusing the Short money made available to the Opposition. The vast bulk of those share options were offered at 293.5p and today's price is 302.5p. The difference in broad sums is 9p per share. That is the reality. The hon. Gentleman should at least be honest with the House and accept that those were the terms on which the vast bulk of those share options were made available to current board members.

Photo of Peter Hain Peter Hain , Neath

The Minister pooh-poohs the impact on ordinary customers of these bloated share options for British Gas directors and says that it is matter of a few pence on bills. No doubt the arithmetic proves his point. How does he explain to my constituents—who were told that British Gas cannot afford to extend supply to the Dulais valley and the Swansea valley as it will cost about £3 million—that six directors are being offered £7 million in share options? That is not a few pence, and it is a straight comparison. How does he explain the justification for that?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I must congratulate the hon. Gentleman on his persistence on that particular issue. I assume that the voracity of his local papers is absolutely unlimited, as it is the third or fourth time that he has raised the issue. First, I do not accept his figure in regard to the share options. I suspect that he has failed to take account of the price at which the shares were offered, but that is a minor point.

We have already discussed in Committee the particular problem that his constituents and, to be fair, the constituents of many hon. Members may have with regard to getting on to the gas grid system. I explained in detail how the provisions of the Bill will make it possible for public gas transporters other than British Gas to access the national grid and to provide a gas grid system into areas previously been isolated from the grid. I also made it clear that the change in the ability to pay effectively by instalments for the capital works associated with the gas grid should also provide vendors of the services—the public gas transporters—and consumers with possibilities which did not previously exist.

As the hon. Gentleman well knows, I cannot say that, as a result of the Bill, those communities will get on to the gas grid system, but there will be opportunities available which did not previously exist. That should at least be some reassurance to him and to his constituents. In fairness to the hon. Gentleman, he has most persistently opposed the Bill. He has always made it clear that he does not support it. I am not quite sure how he squares his opposition to the Bill with the advocacy of the interests of his constituents, when he has at least admitted that the Bill will make it easier for public gas transporters to bring gas to the fairly isolated communities that he represents. Perhaps he and his local paper should reflect on the level of inconsistency in his position with regard to the Bill as a whole.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I remind the Minister that we are not dealing with the whole Bill; we are dealing with one clause and one amendment.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I fear that I have been led down a path that I should not have followed.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I was enticed—to use the hon. Gentleman's word—by the nature of the intervention. I am grateful to you for setting me straight, Madam Deputy Speaker.

In discussing the board level salaries in British Gas and other entities, an important factor is persistently overlooked. British Gas is regulated according to an RPI minus X formula—in other words, the price at which it sells is the important factor. If the industry's costs rise above the level anticipated or above those of its competitors, the impact will be felt by the shareholders and not by the customers who have the advantage of the RPI minus X formula. The idea that somehow high salaries are awarded to board members at a cost to the customer simply does not stand up against any scrutiny of the way in which the regulatory system works.

When the level of the RPI minus X formula is reviewed, the regulator in this industry, as in others, must take account of whether she regards the level of cost in that organisation—including the total remuneration of the board—as appropriate when setting X. That normally occurs on a five-year basis, although it may be earlier in the case of gas.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

When my colleagues and I met the regulator, she spelled out very clearly that she did not even look at salaries in the boardroom. However, the Minister has implied that she examines that cost in arriving at an RPI minus formula.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

It is one of the factors that the regulator may wish to take into account when setting the formula. She may choose not to do so; it depends on the way in which she approaches the issue. If new clause 2 were to be supported, it is absolutely clear that there would be political direction of the regulator and political interference in the working of the gas industry and that, in effect, an incomes policy would operate through the back door. The hon. Member for Edinburgh, South shrugs his shoulders; it seems extraordinary that the Labour party, which the shadow Chancellor claims is in favour of competition, should take that line. That cannot be the correct way to proceed.

Photo of Mr Kevin Hughes Mr Kevin Hughes , Doncaster North

The Minister has referred to an incomes policy. It seems to me that the fat cats already have an incomes policy: grab as much as they can for themselves. Does the Minister seriously think that in excess of £400,000 is a fair salary to receive for three days' work? It is interesting that the first time that Tory Back Benchers spoke in Committee was to defend their mates, the fat cats, and their fat salaries.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

The decisions that are taken as to the level of salaries are a matter for the board and the remuneration committees. At the end of the day, the shareholders have the ultimate say about salary levels. They can exercise whatever powers they choose. As the hon. Gentleman knows, the Government have made it clear that we will consider the recommendations of the Greenbury committee. If the committee recommends legislation in this area, we shall not hesitate to legislate if we consider that appropriate. We do not rule out legislation in this area.

New clause 2 is fundamentally flawed. It involves the introduction of an incomes policy by the back door and political direction of the gas industry and it completely contradicts the broad thrust of Opposition policy as advanced by the shadow Chancellor.

Mr. O'Neill:

It would appear that it becomes a political direction for the regulator when the House decides that the salaries and the conditions of directors should be taken into account, yet it is not a political direction if the regulator is required to take account of environmental factors or social responsibilities in relation to the elderly. Those issues are not considered political, but directors' pay is. Somehow the whole regulatory function is transformed because the pay and conditions of a small group of full-time employees—with the exception of the chairman of the company—must be examined by the regulator when determining price levels.

We know that in most instances salaries can be justified to a certain extent. They cannot be justified publicly because the remuneration committee does not meet in public. As I understand it, when the salary of the present chairman of British Gas was increased above the company's limit for directors' salaries, that decision was not transmitted to the annual general meeting in the year that it was made. As a result of such a lack of transparency, shareholders are unable to establish the basis on which decisions are taken. They may be able to ask questions at the AGM, but they are not told of the rationale behind the decision in the company papers or in the final accounts.

There is no means of ensuring that shareholders are clear about why certain individuals are receiving such pay awards. The awards may be based on some kind of notional performance, but, if so, one would imagine that the stratospheric levels that have been breached by the pay rises that certain individuals have enjoyed of late would somehow be related to the company's performance. In some instances that has been true, but when producing her figures the regulator is not obliged to separate the regulated areas of business from the unregulated areas. Therefore, she is at a certain disadvantage.

There appears to be a link between profit, performance and pay. We know—no one disputes this fact—that the cost of directors' salaries amounts to about 12p per annum per household. It is not significant in terms of profits; we will not reduce prices significantly by cutting directors' salaries to zero. However, the public are concerned about a company that operates in almost monopoly conditions being able to afford to pay its directors salaries that are beyond the expectations and understanding of most ordinary citizens. What we find offensive is the manner in which pay awards are made and reported to the company's shareholders and the fact that the regulator is powerless to take account of them in calculating whether price rises are acceptable. An element of responsibility must be given to the regulator.

Major investors and people representing pension funds and the like repeatedly tell us, as they told my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) just last week, that they are concerned. We must often explain to them that, when in office, the Labour party will have to recognise the protection of the consumer and of the company, its long-term future and the significance of ensuring a steady stream of investment into the company, so that its activities can be funded by means other than purely increasing its bills. We recognise that those three objectives must be balanced and that, to a certain extent at least, responsibility for doing so rests with the regulator and with the regulatory system.

There is a lack of confidence among consumers. As publicity of the pay rises and share options given to senior British Gas executives has increased, people have said, "If they are getting such big rises and doing such a good job, how come I am not getting the service that I think I am entitled to for the whopping bills I am having to pay?" That is why, in the space of three months, the number of complaints increased by 93 per cent. and why the Cabinet has threatened British Gas with withdrawal of its charter mark.

We find, however, that the regulator can do nothing. She cannot question the manner in which the company is being run. We want her to be given the opportunity to take note of such matters. She should be required to take pay into account, not least because of the effect of a significant pay rise on the running of a firm.

If the public feel that executives are not ensuring a good service and are being paid far too much, someone must be able to blow the whistle. We know that not all investors, and not all those who will attend the AGM with their proxy votes, will be that concerned. Many of them have a vested interest in sustaining the remuneration system that affords directors of British Gas and of the companies that they represent the pay that they receive. This is about not the politics of envy but the politics of greed and the ability of a small coterie of interlocking directorships to scratch each other's backs and to ensure that they all get a bit of the action out of companies for which they have some responsibility.

It is difficult for major shareholders to get on to the board and to have an influence. Attempts were made by unions such as the National Union of Mineworkers to influence the investment policies of certain companies in South Africa. They were told that they could not do so because commercial judgments were the responsibility of investors. It was proven that sustaining investment in South Africa over the years was not the correct investment decision. The decision of investors ultimately to withdraw from South Africa was a major contributory factor in the ending of apartheid.

I am not drawing analogies between the rate of pay for directors in the former utilities and the working of apartheid, but the same supine attitude that was adopted by people who attended board meetings of major investors in South Africa prevails today at general meetings of some of the utilities. The legitimate concerns of small shareholders and of pension fund contributors and the like are being ignored. One of the most satisfactory and easy ways to take those into account is to give responsibility to the regulator to consider remuneration when she considers price and its relationship to profit.

Photo of Ann Coffey Ann Coffey Opposition Whip (Commons)

Does my hon. Friend agree that there appears to be some confusion in the Minister's argument? He said that giving such a responsibility would give some political control to the regulator and that, therefore, he is not prepared to have anything to do with it, but then said that if the Greenbury committee makes recommendations the Government might legislate. In legislating, they would be prepared to take political control. Is it just that the Minister is washing his hands of the problem because it is too difficult?

Mr. O'Neill:

We shall just have to wait for the Greenbury committee's recommendations. Many of us doubt that it will produce very much. The Prime Minister said: we are waiting for recommendations on that, and, when necessary, when the facts are available, we shall decide what action needs to be taken, if necessary, including legislation."—[Official Report, 2 March 1995; Vol. 255, c. 1182.] We all know the genesis of the Greenbury committee. It was proposed by the Confederation of British Industry. Its members include those who have benefited from the working of the system. We will all be surprised if it will be able to be sufficiently objective to make recommendations that will satisfy everyone in the House, or at least that will require the Prime Minister to introduce legislation. Most of us believe that it is a fairly cynical exercise.

We want the Government to take this opportunity. We want the regulatory system to be revised. We have been operating under a series of regulators for about 11 or 12 years. This is the first opportunity to examine legislation on a former nationalised utility and, in the light of experience under private ownership, the effectiveness of the regulatory system. That is why we repeatedly returned in Committee to the question of how the regulatory system operates.

We have clearly identified a major shortcoming in the regulatory system: the regulator does not have to take account of the rewards that companies pay their staff when determining prices. The new clause and the amendment would allow the regulator to take account of that, in the same way as she must take account of other issues that are deemed, in most people's eyes, to be political: the environment, the level of gas supplies and the needs of the disabled and elderly, which we recognise. If those are not political issues, heavens above, I do not know what are.

Members of the public in wheelchairs chained themselves to the gates of the House of Commons because disabled people's rights were not being properly recognised in the House. That is a matter of such controversy by dint of it being political. It is nonsense for the Minister to say that, somehow, the regulator will be drawn into politics if the new clause is accepted. If it is passed, the regulator will be drawn into the real world.

For too long, the major energy regulators in the electricity and gas industries have regarded their areas of responsibility as some sort of free market adventure playground where they can work out their fantasies about perfect competition. That was the kind of thing in which, in the past, only academic economists were able to indulge on the blackboards or whiteboards in their lecture rooms. They were given large, expensive toys with which to play but they did not want to break those toys. They regarded them as being made of porcelain and felt that they should not touch then. Because the system has not been properly considered, it is working against the very people for whom the regulator is supposed to be responsible first and foremost—consumers and shareholders.

6 pm

Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone

I mentioned a reference in the press to legislation on the privatisation of the nuclear industry containing a clause similar to new clause 2. The Minister did not refute that similarity. Would my hon. Friend like to develop that point?

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. I hope that the hon. Gentleman will not develop that point. This debate concerns the gas industry, not the nuclear industry.

Mr. O'Neill:

I will not stray, Mr. Deputy Speaker. Suffice to say that, when an industry is privatised, it is difficult to legislate beyond the point of privatisation. A free-standing, independent company is established, whose articles of association are determined not by the privatisation measure but by company law and the regulatory process. The regulatory process under which British Gas operates does not take account of the pay and conditions enjoyed by its directors. The amendment would correct that shortcoming by changing the regulatory regime.

Photo of Peter Hain Peter Hain , Neath

Does my hon. Friend agree that the regulatory system is being brought into disrepute and that many customers and citizens feel that it is not protecting them because of massive abuses caused by boardroom excess, with directors awarding themselves share options and so on? People think, "This is not for me." The regulator is supposed to protect the consumer but she is turning a blind eye to greed on a massive scale.

Mr. O'Neill:

I could not agree more, and I go further. That is a problem for not only consumers but small shareholders who, having invested perhaps most of their life savings, are asking themselves, "Have I put my money in the right company? Am I doing the right thing in associating with that company?"

In previous debates on the gas industry, we pointed out that British Gas was once regarded second only to Marks and Spencer as the most popular company in the country. That position prevailed until publicity about the pay and conditions now enjoyed by its directors. There has been a transformation in public esteem for British Gas. Its activities once attracted respect worldwide. When in public ownership, it carried through the changeover to North sea gas, which was one of the biggest civil engineering exercises this country and western Europe have ever seen. British Gas played on that affection, and its directors thought that they could ride to the bank with suitcases full of money from their various remunerative perks. The only way in which such an anomaly can be corrected is if the regulator can cast her eye over the situation.

Photo of Bob Ainsworth Bob Ainsworth Opposition Whip (Commons)

My hon. Friend rightly spoke about the direct consequences of excessive executive salaries, but they have a small impact on the price paid by the consumer. Are there not other consequences, such as the effect on pay in the organisation, and the demoralising effect on efficiency, when employees see the people at the top treating themselves in the way that British Gas directors do? The indirect effects on the consumer can also be substantial.

Mr. O'Neill:

I could not agree more. The argument used to be made that it was not a bad idea to pay the bosses good wages, so that everybody else would be dragged along behind them and that would reflect on the morale of the whole operation. Another company in the energy business, Scottish Nuclear, gave all its staff exactly the same pay rise for the specific purpose of improving morale. British Gas did the opposite.

Gas showrooms were not simply high-street supermarkets but places to which consumers looked both to purchase gas appliances and to obtain advice and information on a range of equipment. If one went to a shopping mall, visited a retail outlet offering a variety of white and brown goods and asked about the energy efficiency of a particular product, it was not unusual to be directed to the gas showroom because only there was the relevant knowledge and information available. That was because gas showroom staff were trained and properly remunerated. I do not mean to speak disparagingly of other shop assistants, but British Gas showroom staff regarded themselves as people who did more than walk off the street and start work in a shop the next day. British Gas provided morale and a sense of worth that have been lost as a consequence of the changing character of its showrooms.

Of equal importance is the obscene way in which British Gas staff pay has been cut while the pay of bosses has mushroomed and gone through the roof. We are considering not just the interests of consumers and shareholders. It is in the long-term interests of the success of British Gas that the regulator has power over those people who appear completely unanswerable to anyone. I mentioned the structure of British Gas AGMs and the votes held by people who participate in them. We in the Labour movement might identify them as being not dissimilar to the old block votes. The big companies scratch each other's backs and protect one another.

The new clause is the best approach that we can suggest at this time. It may have imperfections but the Minister did not mention any. He said that the new clause was somehow political. A number of responsibilities already imposed on the regulator are clearly political, and the new clause is political because it attacks vested interests. It is about not the politics of envy but the politics of greed.

I urge my hon. Friends to vote for the amendment, which can change the character of regulation in this country, restore public faith in the regulatory system and give the regulator guidance in performing her duties—guidance that she does not seem to have at present and appears unwilling to seek. We will press this amendment to a vote, and I urge all hon. Members who believe in fair remuneration and fair reward for people working in the gas industry to accept that the new clause would achieve that, while ensuring that small shareholders in particular will be given adequate protection.

Question put, That the clause be read a Second time:—

The House divided: Ayes 234, Noes 271.

Division No. 146][6.10 pm
Abbott, Ms DianeDavies, Ron (Caerphilly)
Ainsworth, Robert (Cov'try NE)Denham, John
Allen, GrahamDewar, Donald
Alton, DavidDixon, Don
Anderson, Donald (Swansea E)Dobson, Frank
Anderson, Ms Janet (Ros'dale)Donohoe, Brian H
Armstrong, HilaryDowd, Jim
Ashdown, Rt Hon PaddyDunnachie, Jimmy
Ashton, JoeDunwoody, Mrs Gwyneth
Austin-Walker, JohnEagle, Ms Angela
Banks, Tony (Newham NW)Eastham, Ken
Barnes, HarryEnright, Derek
Barron, KevinEtherington, Bill
Battle, JohnEvans, John (St Helens N)
Beckett, Rt Hon MargaretFatchett, Derek
Berth, Rt Hon A JField, Frank (Birkenhead)
Bell, StuartFisher, Mark
Benn, Rt Hon TonyFlynn, Paul
Bennett, Andrew FFoster, Rt Hon Derek
Bermingham, GeraldFoster, Don (Bath)
Berry, RogerFoulkes, George
Betts, CliveFraser, John
Blair, Rt Hon TonyFyfe, Maria
Blunkett, DavidGalbraith, Sam
Boateng, PaulGalloway, George
Bradley, KeithGapes, Mike
Bray, Dr JeremyGarrett, John
Brown, Gordon (Dunfermline E)Gerrard, Neil
Brown, N (N'c'tle upon Tyne E)Godman, Dr Norman A
Burden, RichardGodsiff, Roger
Byers, StephenGolding, Mrs Llin
Caborn, RichardGordon, Mildred
Callaghan, JimGraham, Thomas
Campbell, Mrs Anne (C'bridge)Grant, Bernie (Tottenham)
Campbell, Menzies (Fife NE)Griffiths, Nigel (Edinburgh S)
Cann, JamieGriffiths, Win (Bridgend)
Chisholm, MalcolmGrocott, Bruce
Church, JudithGunnell, John
Clapham, MichaelHain, Peter
Clark, Dr David (South Shields)Hall, Mike
Clarke, Eric (Midlothian)Harman, Ms Harriet
Clarke, Tom (Monklands W)Harvey, Nick
Clelland, DavidHenderson, Doug
Clwyd, Mrs AnnHeppell, John
Coffey, AnnHill, Keith (Streatham)
Connarty, MichaelHinchliffe, David
Cook, Frank (Stockton N)Hodge, Margaret
Cook, Robin (Livingston)Hoey, Kate
Corbett, RobinHogg, Norman (Cumbernauld)
Corbyn, JeremyHood, Jimmy
Cousins, JimHoon, Geoffrey
Cummings, JohnHowarth, George (Knowsley North)
Cunliffe, LawrenceHowells, Dr. Kim (Pontypridd)
Cunningham, Jim (Covy SE)Hoyle, Doug
Cunningham, Rt Hon Dr JohnHughes, Kevin (Doncaster N)
Dafis, CynogHughes, Robert (Aberdeen N)
Dalyell, TarnHughes, Roy (Newport E)
Davidson, IanHutton, John
Davies, Bryan (Oldham C'tral)Illsley, Eric
Davies, Rt Hon Denzil (Llanelli)Ingram, Adam
Jackson, Glenda (H'stead)Pendry, Tom
Jackson, Helen (Shefld, H)Pike, Peter L
Jamieson, DavidPope, Greg
Janner, GrevillePowell, Ray (Ogmore)
Jones, Barry (Alyn and D'side)Prentice, Bridget (Lew'm E)
Jones, Jon Owen (Cardiff'C)Prentice, Gordon (Pendle)
Jones, Lynne (B'ham S O)Primarolo, Dawn
Jones, Martyn (Clwyd, SW)Purchase, Ken
Jowell, Tessa Quin,Ms Joyce
Kaufman, Rt Hon GeraldRandall, Stuart
Kennedy, Charles (Ross,C&S)Raynsford, Nick
Kennedy, Jane (Lpool Brdgn)Reid, Dr John
Khabra, PiaraS Rendel,David
Kilfoyle, PeterRobertson, George (Hamilton)
Lestor, Joan (Eccles)Roche, Mrs Barbara
Lewis, TerryRogers, Allan
Litherland, RobertRooker, Jeff
Livingstone, KenRooney, Terry
Lloyd, Tony (Stretford)Ross, Ernie (Dundee W)
Lynne, Ms LizRowlands, Ted
McAvoy, ThomasRuddock, Joan
McCartney, IanSedgemore, Brian
McCrea, The Reverend WilliamSheerman, Barry
Macdonald, CalumSheldon, Rt Hon Robert
McFall, JohnShore, Rt Hon Peter
Mackinlay, AndrewShort, Clare
McLeish, HenrySimpson, Alan
McMaster, GordonSkinner, Dennis
McNamara, KevinSmith, Chris (Isl'ton S & F'sbury)
MacShane, DenisSmith, Llew (Blaenau Gwent)
Madden, MaxSoley, Clive
Maddcck, DianaSpearing, Nigel
Mahon, AliceSquire, Rachel (Dunfermline W)
Marek, Dr JohnSteinberg, Gerry
Martlew, EricStevenson, George
Meacher, MichaelSutcliffe, Gerry
Meale, AlanTaylor, Mrs Ann (Dewsbury)
Michael, AlunTaylor, Matthew (Truro)
Michie, Bill (Sheffield Heeley)Timms, Stephen
Milbum, AlanTipping, Paddy
Miller, AndrewTouhig, Don
Moonie, Dr LewisTurner, Dennis
Morgan, RhodriVaz, Keith
Morley, ElliotWalker, Rt Hon Sir Harold
Morris, Rt Hon Alfred (Wy'nshawe)Walley, Joan
Morris, Estelle (B'ham Yardley)Wareing, Robert N
Mowlam, MarjorieWatson, Mike
Mudie, GeorgeWilliams, Rt Hon Alan (SW'n W)
Mullin, ChrisWilliams, Alan W (Carmarthen)
Murphy, PaulWinnick, David
Oakes, Rt Hon GordonWise, Audrey
O'Brien, Mike (N W'kshire)Worthington, Tony
O'Brien, William (Normanton)Wray, Jimmy
O'Hara, EdwardWright, Dr Tony
Olner, BillYoung, David (Bolton SE)
O'Neill, Martin
Orme, Rt Hon StanleyTellers for the Ayes:
Patchett, TerryMr. Joe Benton and
Pearson, IanMr. Peter Mandelson
Ainsworth, Peter (East Surrey)Banks, Matthew (Southport)
Aitken, Rt Hon JonathanBanks, Robert (Harrogate)
Alison, Rt Hon Michael (Selby)Batiste, Spencer
Allason, Rupert (Torbay)Bendall, Vivian
Amess, DavidBeresford, Sir Paul
Arbuthnot, JamesBiffen, Rt Hon John
Arnold, Jacques (Gravesham)Booth, Hartley
Arnold, Sir Thomas (Hazel Grv)Boswell, Tim
Ashby, DavidBottomley, Peter (Eltham)
Atkins, RobertBottomley, Rt Hon Virginia
Atkinson, David (Bour'mouth E)Bowis, John
Atkinson, Peter (Hexham)Boyson, Rt Hon Sir Rhodes
Baker, Rt Hon Kenneth (Mole V)Brandreth, Gyles
Baker, Nicholas (North Dorset)Brazier, Julian
Baldry, TonyBright, Sir Graham
Brooke, Rt Hon PeterHargreaves, Andrew
Brown, M (Brigg & Cl'thorpes)Harris, David
Browning, Mrs AngelaHaselhurst, Alan
Budgen, NicholasHawkins, Nick
Burl, AlistairHayes, Jerry
Butcher, JohnHeald, Oliver
Butler, PeterHeath, Rt Hon Sir Edward
Butterfill, JohnHeathcoat-Amory, David
Carlisle, Sir Kenneth (Lincoln)Hendry, Charles
Carrington, MatthewHicks, Robert
Cash, WilliamHill, James (Southampton Test)
Channon, Rt Hon PaulHogg, Rt Hon Douglas (G'tham)
Chapman, SydneyHoram, John
Clappison, JamesHordern, Rt Hon Sir Peter
Clark, Dr Michael (Rochford)Howard, Rt Hon Michael
Clifton-Brown, GeoffreyHowarth, Alan (Strat'rd-on-A)
Coe, Sebastian Howell,Rt Hon David (G'dford)
Conway, Derek Howell,Sir Ralph (N Norfolk)
Coombs, Anthony (Wyre For'st)Hughes, Robert G (Harrow W)
Coombs, Simon (Swindon)Hunt, Sir John (Ravensbourne)
Cope, Rt Hon Sir JohnHunter, Andrew
Cormack, Sir PatrickHurd, Rt Hon Douglas
Couchman, JamesJack, Michael
Cran, JamesJackson, Robert (Wantage)
Currie, Mrs Edwina (S D'by'ire)Jenkin, Bernard
Curry, David (Skipton & Ripon)Jessel, Toby
Davies, Quentin (Stamford)Johnson Smith, Sir Geoffrey
Day, StephenJones, Gwilym (Cardiff N)
Deva, Nirj JosephJones, Robert B (W Hertfdshr)
Dorrell, Rt Hon StephenJopling, Rt Hon Michael
Douglas-Hamilton, Lord JamesKellett-Bowman, Dame Elaine
Dover, DenKing, Rt Hon Tom
Duncan, AlanKirkhope, Timothy
Duncan-Smith, lainKnapman, Roger
Dunn, BobKnight, Mrs Angela (Erewash)
Durant, Sir AnthonyKnight, Greg (Derby N)
Dykes, Hugh Knight,Dame Jill (Bir'm E'st'n)
Eggar, Rt Hon TimKynoch, George (Kincardine)
Elletson, HaroldLait, Mrs Jacqui
Emery, Rt Hon Sir PeterLang, Rt Hon Ian
Evans, David (Welwyn Hatfield)Lawrence, Sir Ivan
Evans, Jonathan (Brecon)Legg, Barry
Evans, Nigel (Ribble Valley)Leigh, Edward
Evans, Roger (Monmouth)Lennox-Boyd, Sir Mark
Evennett, DavidLester, Jim (Broxtowe)
Faber, DavidLidington, David
Fabricant, MichaelLightbown, David
Fenner, Dame PeggyLilley, Rt Hon Peter
Field, Barry (Isle of Wight)Lloyd, Rt Hon Sir Peter (Fareham)
Fishburn, DudleyLord, Micheal
Forman, NigelLyell, Rt Hon Sir Nicholas
Forsyth, Rt Hon Michael (Stirling)MacGregor, Rat Hon John
Forth, EricMacKay, Andrew
Fox, Dr Liam (Woodspring)Maclean David
Fox, Sir Marcus (Shipley)McLoughlin, Patrick
Freeman, Rt Hon RogerMcMaster, Gordon
French, DouglasMadel, Sir David
Gale, RogerMaitland, Lady Olga
Gardiner, Sir GeorgeMalone, Gerald
Garel-Jones, Rt Hon TristanMans, Keith
Garnier, EdwardMarlow, Tony
Gill, ChristopherMarshall, John (Hendon S)
Gillan, CherylMarshall, Sir Michael (Arundel)
Goodlad, Rt Hon AlastairMartin, David (Portsmouth S)
Goodson-Wickes, Dr CharlesMawhinney, Rt Hon Dr Brian
Gorst, Sir JohnMellor, Rt Hon David
Grant, Sir A (SW Cambs)Merchant, Piers
Greenway, Harry (Ealing N)Mills, Iain
Greenway, John (Ryedale)Mitchell, Andrew (Gedling)
Griffiths, Peter (Portsmouth, N)Mitchell, Sir Daviid (NW Hants)
Grylls, Sir MichaelMoate, Sir Roger
Gummer, Rt Hon John SelwynMonro, Sir Hector
Hague, WilliamMontgomery, Sir Fergus
Hampson, Dr KeithMoss, Malcolm
Hanley, Rt Hon JeremyNeedham, Rt Hon Richard
Hannam, Sir JohnNelson, Anthony
Neubert, Sir MichaelSteen, Anthony
Newton, Rt Hon TonyStephen, Michael
Nicholls, PatrickStern, Michael
Nicholson, David (Taunton)Stewart, Allan
Nicholson, Emma (Devon West)Streeter, Gary
Norris, SteveSumberg, David
Onslow, Rt Hon Sir CranleySykes, John
Oppenheim, PhillipTapsell, Sir Peter
Ottaway, RichardTaylor, Ian (Esher)
Patnick, Sir IrvineTaylor, John M (Solihull)
Pattie, Rt Hon Sir GeoffreyTaylor, Sir Teddy (Southend, E)
Pawsey, JamesTemple-Morris, Peter
Peacock, Mrs ElizabethThomason, Roy
Porter, Barry (Wirral S)Thompson, Sir Donald (C'er V)
Porter, David (Waveney)Thompson, Patrick (Norwich N)
Portillo, Rt Hon MichaelThornton, Sir Malcolm
Powell, William (Corby)Thumham, Peter
Redwood, Rt Hon JohnTownend, John (Bridlington)
Renton, Rt Hon TimTownsend, Cyril D (Bexl'yh'th)
Riddick, GrahamTracey, Richard
Robathan, AndrewTrend, Michael
Robinson, Mark (Somerton)Twinn, Dr Ian
Roe, Mrs Marion (Broxbourne)Vaughan, Sir Gerard
Rowe, Andrew (Mid Kent)Waldegrave, Rt Hon William
Rumbold, Rt Hon Dame AngelaWalden, George
Ryder, Rt Hon RichardWalker, Bill (N Tayside)
Sackville, TomWaller, Gary
Sainsbury, Rt Hon Sir TimothyWard, John
Scott, Rt Hon Sir NicholasWardle, Charles (Bexhill)
Shaw, David (Dover)Waterson, Nigel
Shephard, Rt Hon GillianWatts, John
Shepherd, Colin (Hereford)Wells, Bowen
Shepherd, Richard (Aldridge)Whitney, Ray
Shersby, MichaelWhittingdale, John
Sims, RogeWiddecombe, Ann
Skeet, Sir TrevorWilkinson, John
Smith, Tim (Beaconsfield)Willetts, David
Soames, NicholasWilshire, David
Speed, Sir KeithWinterton, Nicholas (Macc'fld)
Spencer, Sir DerekWolfson, Mark
Spicer, Michael (S Worcs)Yeo, Tim
Spink, Dr RobertYoung, Rt Hon Sir George
Spring, Richard
Sproat, IainTellers for the Noes:
Squire, Robin (Hornchurch)Mr. Michael Bates and
Stanley, Rt Hon Sir JohnMr. Simon Burns.

Question accordingly negatived.