EMOLUMENTS OF TOP MANAGE MENT (DISCLOSURE AND REGULATION) BILL (Hansard, 26 February 1965)

§ Mr. Peter Shore (Stepney)
I beg to move, That the Bill be now read a Second time.
The basic aims of the Bill, as those who have read and studied its provisions will agree, make possible a serious study of the emoluments of those who occupy very important positions in industry by an impartial and effective council, assisted by a specialised research unit. The Measure enables that council to issue advisory opinions which, I hope, will carry a great deal of weight among those to whom they are directed and, in certain circumstances, it makes possible a degree of regulation of these rewards.
The Measure concerns a relatively small group of people. It defines the area of companies to which it is directed, which, as hon. Members will see, is comprised of the so-called quoted sector of public companies and the larger public enterprises. I do not have information as to the precise number of people who will be affected by its provisions, but my guess is that they will total about 20,000. It may be said that that is a small group. Certainly, but it is a very important one, because these are the men who, as a function of their important position, make critical economic decisions which affect our lives to a great degree.
The people in this group decide broadly the pattern of investment in the economy. They decide price levels, the growing pattern of wages and salaries throughout the economy and they determine basically how much we expect to import and export. There is no question of the immense importance of this relatively 786 small group of people and I would have thought that one was pushing at an open door in asking for very much more information about what they are paid, what kind of incentives work upon them, and what influences can be brought to bear so that their activities and decisions conform closely to what may be accepted from time to time as the public interest.
That is briefly, and in general terms, the purpose of the Measure. Before I deal with its main provisions I will comment on the three principal aims which I consider justify the presentation of a Bill of this kind at this time. The first aim is to make possible or encourage the creation of a really sensible and rational structure of rewards at the top in the private sector of industry. There are two aspects to this question of the structure of rewards. The first is the relationship of different top executive rewards within a firm—whether the right relationship has been established and so on—and the second is the relationship between the rewards paid as between different firms.
This is a very important subject. Unfortunately, we have very little information on these topics at present. There have been some recent studies on the structure of rewards within a single firm at the top. They have not been fully published, but from accounts one has read of the British Institute of Management's Study of Executives—there have been one or two other studies—one gets a glimpse of the prevailing structure.
The B.I.M. study made last year of 50,000 executives points to one piece of evidence which is a little worrying. It points out that the average salaries of export managers are considerably below those of domestic sales managers in two very important groups of export industry—the engineering and the chemical industries. This information is more or less corroborated by a study of Associated Industrial Consultants which made this point: Industry still shows no sign of attracting the best men to export marketing by the offer of high salaries. There is no sign of any widespread movement to put men of the highest calibre in charge of foreign trade. This is indicative, but not conclusive, for the evidence is simply not available on which one can base a firm judgment, about the ground for concern about the structure of rewards for top management within particular enterprises.
787 This is only part of the worry. The other area of concern is the structure as between firms. Here again, there is inadequate evidence to work on, but there is some material available. The Companies Act allows for a certain disclosure of collective board room rewards in industry. Anyone who takes the trouble to study the occasional tables which appear in the financial Press of the average boardroom rewards of firms in different sectors of the economy will find it difficult to discover any rationality in the different rewards paid as between one firm and another.
It is astonishing. One would have thought that firms with a splendid growth record, or with great success in exports, would show or declare the highest average emoluments for directors. Not a bit of it. On the contrary, many of the firms in industry which have the best record are well down in the tables and others which are not at all successful in terms of exports, or which have no particular claim to merit in terms of growth, are right at the top of the table.
I would hesitate to say what the criterion for reward at the top in industry should be—whether top rewards should be related to export performance; whether they should be related to the size of a firm; whether they should be related to growth in productivity; whether there ought to be some limitation on the number of directorships that people hold. All these are clearly tremendously important and serious questions. I do not set out to answer them. Indeed, it would be absurd for me to try, and I suggest that it would be absurd for hon. Members to try.
However, what is surely worth while is to set up a body especially equipped and able to do so. This is one of the main aims of the Bill. Anyone who says that this is far too complicated a job and that it cannot be done should remember that it is done in the public sector. There has to be a structure of rewards in the public sector, both within particular nationalised industries and between them. No one will pretend that it is an easy thing to do, but if there is a will to do it it can be done. Today, major private firms, particularly the larger and more modern companies, employ management consultants. They use job evaluation techniques to attempt to determine what the reward should be—for 788 everyone except themselves. This is a very odd and anomalous situation.
I say that it should be done for this reason. Industry has had its successes during the last few years, but overall I do not think that anyone in the House can be complacent or feel that we have had a general success in industry and in the performance of the economy. Surely what we are all looking for here are new instruments of policy which will enable us to influence the incentives of large firms so that they will do the kind of things which we know are necessary in the public interest. A few moments ago I mentioned exports. At the moment, they are a very high priority. I suggest that it would be a useful new instrument of policy if we were able to influence boardroom rewards so that there was a direct incentive to firms and to those in command of firms to export more. This is precisely one of the things which could follow from this Measure.
That is the first reason why I think that such a Measure is necessary. There seems to me to be a second and, in many ways an even more compelling, reason for wanting such a Measure. This is the very serious gap that seems to have developed between rewards at the top in the boardrooms of private industry and the rewards at the top in both the nationalised industries and in almost every other sphere of activity. I sometimes call this problem, for shorthand purposes, "the Dr. Beeching problem". The House will recall that Dr. Beeching was brought into British Railways to be Chairman of this obviously very important nationalised industry. He was brought in at a salary of £24,000.

§ Mr. Douglas Dodds-Parker (Cheltenham)
Less tax.

§ Mr. Shore
I will come to that later.
At that time that was twice as much as any board chairman in the public sector. Dr. Beeching was not even the top man in I.C.I. He was merely No. 6 or No. 7. I use this simply for illustrative purposes, but it is a fair enough point.
This is not just a case of board chairmen. I have done a little research into the average rewards in the public sector. There are very great differences indeed between the average boardroom rewards 789 in the public sector and the average rewards of directors in the private sector. I will no: weary the House with a mass of figures. The Gas Council board is the highest paid, on average, in the nationalised industries. It is the highest paid, because it includes the chairmen of area boards. The reward averages about £9,000 a year for each member, taking part-time as well as full-time members.
The reward for Coal Board members is just over £7,500. The average reward for members of Electricity Boards is about £6,700. The average reward for members of the board of B.O.A.C. is about £4,000. The reward for members of the board of British Transport Docks, which I should have thought was a rather important undertaking, in the light of the recent criticisms of the docks, is £2,000. The average reward for members of the Transport Holding Company, which is concerned with vast activities of British road services, is £2,500. These are the averages.
I will not produce a great mass of figures on the other side, but I assure hon. Members that these rewards, by private sector standards, are derisory. The rewards paid in the public sector and in nationalised industries are quite derisory compared with the private sector where the rewards are three, four, five or six times as much. It is frequently said that the reward for the chairman of a large public company is of the order of £40,000 to £50,000 a year, and it is well known that the average reward received by directors of many of our larger public companies is £20,000 to £30,000 a year.

§ Sir George Sinclair (Dorking)
Would the hon. Gentleman help me? I am not quite sure whether he is trying to compare like with like and suggesting that the members of these public boards with their salaries of £9,000 a year would be asked by any sensible Government to take on the job that the previous Government asked Dr. Beeching to do?

§ Mr. Shore
I do not think that that question is relevant to my argument.

§ Mr. Francis Noel-Baker (Swindon)
Will my hon. Friend clarify one point? When he gave the average salaries for board members, was he including the part-time people?

§ Mr. Shore
In both cases I was including part-time members. I wish to be quite fair about this. I am trying to establish a few points on which I hope we can agree before we go on to disagree about other matters.
I have mentioned this discrepancy between salaries paid in the public and private sectors, in nationalised industry compared to private industry. The public industries really set the going rate for the whole public sector. It is not that they themselves are one sector to be compared in isolation with the private sector. The nationalised industries are, on the whole, the better part of the public sector in terms of pay. In the Civil Service we find that the rewards are considerably lower than those that are paid in the nationalised industries.
I have mentioned salaries and I am sure that in the minds of hon. Members is the question, "What about taxation? Surely, taxation makes a big difference." I want to be fair about this. It does make a difference, and the effect of taxation on these rewards is greatly to cut down the very large pre-tax differences in salary structures. Nevertheless—and I ask hon. Members to consider this—the differences even after tax are quite considerable. Take the £6,000 a year nationalised industry board appointment. It leaves a family man, after Surtax and Income Tax, with a net salary of £4,400 a year. If we go to the highest rewards in the public sector, on a salary of £12,000 a year one gets a net salary of £6,850. If we go to £25,000 the net salary goes up to £8,800. At £40,000, the net salary is £10,500. I agree that these are much smaller differentials post-tax than pretax. Nevertheless, they are significant and this must be expected to exercise a pull on people in public employment.

§ Mr. Stratton Mills (Belfast, North)
Would the hon. Gentleman address his mind to the point that on all salaries over £15,000 a year the Surtax rate goes up to 10s. in the £ which, together with the new Income Tax rate of 8s. 3d. in the £ in the new financial year, will mean that on income over £15,000 the Exchequer takes 18s. 3d. and the recipient receives 1s. 9d.?

§ Mr. Shore
We are not in conflict on the facts. I am quoting from the Surtax 791 tables in the latest Inland Revenue Report, and the information that I have given about post-tax incomes and pretax incomes at these different levels is correct.
I want to turn to another aspect of rewards which seem to me to be discriminatory in favour of the private sector. That is the whole range of benefits known as "perks." I am not going into a long disquisition on these "perks" but I suggest that these are very substantial benefits indeed. I do not think anyone has made a serious study of what they amount to. The only study that I can recall was one conducted by an economist of some distinction, Mr. Dow, almost 10 years ago. He came to the conclusion, after serious study, that expense accounts totalled over £500 million a year, that they amounted to 30 per cent. of all new cars bought on company account, that 10 per cent. of all drink was bought on company account, 5 per cent. of all food in restaurants and one-quarter of total travel. These are very considerable benefits indeed.
When one comes to particular people at the top in industry one has to rely on the odd explosion in the Press to get some idea of the situation. We all remember the case of Sir Bernard Docker. The interesting thing about Sir Bernard, who was the chairman of a rather small public company, Birmingham Small Arms, was that he had a salary of £20,000, directors' rewards of £3,000, a pension contribution of £9,000 and an expense account of £11,000. This is a very large income which had nothing to do with the basic salary.
I would not like the House to think that this sort of thing has stopped since the departure of Sir Bernard Docker. I noticed recently an interesting case of one of our major printing companies, Purnell and Sons, Ltd. In this case a director had his expense account disallowed. He had no less than £60,000 expenses over four years disallowed by the Inland Revenue.
There is, I believe, a very big difference between the public sector in relation to fringe benefits and the private sector. The private sector is far more generous about these things. I remember reading the Report of the Royal Commission on the 792 Civil Service, one aspect of which dealt with benefits for civil servants. It dealt particularly with expense accounts and "perks" like motor cars. The Royal Commission recommended that when a top civil servant, the head of a department, was called out from his home in the country to London on urgent national business over the weekend, it might be a good thing if he had the use of an official car. There is a world of difference between that kind of approach in the public sector and the very lavish and generous approach to the motor car needs of directors and executives in the private sector.
I come now to what seems to me to be very important consequences of these discrepancies. One important consequence of these discrepancies between the public and private sector rewards is that there is a drain of talent from the public to the private sector. I will not weary the House by documenting the facts, but if anyone likes to look at the Herbert Report on the Electricity Industry, in 1956, and the Fleck Report on the National Coal Board, in 1955, he will find the whole point established. The effect of lower board salaries in relation to competitors in private industry was to deny the public boards promising new recruits and to subject them to the constant threat of men being pulled out into the private sector.
The pattern of these awards—and this particularly applies to fringe benefits—is that they tend to immobilise talent. We are in a society where we need to encourage mobility. We hear from the N.E.D.C. that we need to have transferability of pensions and that we want people to be moving from the public to the private sector. This is very important. Surely the House will accept that the frontiers of the public and private sectors will not be as rigid in the future as they have been in the past and that we shall need movement in and out of people of great ability. The great case against many of these "perks"—though not all of them—is that they are aimed deliberately at tying people to the firm by a pension scheme and very often a share option scheme and this is quite contrary to what we want. That is my second basic reason for the Bill.
I come to the third reason for wanting to propose a Bill of this kind. It relates 793 to the current search for a national incomes policy. We in the Labour party have always taken the view that a condition of success in getting an incomes policy is that it shall be seen to apply not just to wage and salary earners, but to all people, however important and exalted, who work for their living. It seems to me that it is quite useless for us to say to teachers, doctors, bus drivers and dockers, "You must try and show some restraint in your claims for income" unless we are seen to be asking the same restraint of those who occupy, at a very much higher level of reward, key positions in industry.
It might be argued, also, that a special reason for wanting an incomes policy applied at the top is that the rewards at the top determine to a great extent the rewards underneath. I assure the House that I have had experience of working in an organisation in which rewards at the top seemed to me rather frozen over the years. This, I should have thought, had rather an unfortunate effect. There is no doubt that if one can establish a ceiling it has a considerable influence on the whole level of rewards below. Thus, it seems to me in those circumstances that it would be anomalous to leave the highest incomes out of the quest for a national incomes policy.
What is the situation at present? We do not even know what people are getting, let alone whether they are conforming to the requirements of a national incomes policy. Incidentally, do not let us get the idea that an incomes policy will simply say, "Exactly the same for everyone". It will not. It must have exceptions. There must be exceptions, according to the economic requirements and the problems which arise, particularly in industry. It seems to me, therefore, that we should be just as prepared in top rewards in industry to allow for exceptions as we are to allow for exceptions in industry generally when we are seeking a national incomes policy.

§ Mr. Ian Lloyd (Portsmouth, Langstone)
Does the hon. Member include in the term "we", when he said that we do not know what people are getting, the considerable knowledge possessed by the Inland Revenue of a whole range of these incomes, including fringe benefits, and so on, which all of us have to return?

§ Mr. Shore
The Inland Revenue, of course, knows a vast amount about these 794 things, but, very properly, it is its job not to disclose this knowledge. It would be a violent departure from past practice and I do not think that the hon. Member would want or expect that the Inland Revenue should disclose and make public all the details brought before it.
To finish with the main arguments which I put forward for the Bill, I want to introduce greater economic reality in the structure of rewards, I want to do something about this growing gap between public and private rewards, and I want to bring rewards at the top in industry within the purview of a national incomes policy.
I now turn to the main provisions of the Bill. It takes us many steps forward to meet these problems.

§ Mr. Peter Emery (Reading)
I am grateful to the right hon. Gentleman for giving way. [HON. MEMBERS "Hon. Gentleman."] I agree. The hon. Gentleman has not been promoted to the Front Bench, though perhaps the aim of the Bill is in that direction. Before he deals with the Clauses, will the hon. Gentleman deal with his second argument, where he talked about the gap between the private and the public sector? It would appear from his arguments that the whole object is to level down remunerations in the private sector. This is the attitude which the hon. Member's whole speech appears to convey.

§ Mr. Shore
I am extremely grateful to the hon. Member for giving me the opportunity to make it abundantly clear that mine is not a negative attitude to this matter. I put the very serious point to the House that if one tries to devise any means of testing the relative importance of the responsibility of people who command the nationalised industries compared with equivalent private industry we might apply, for example, the test of net assets which is a very good one. By that standard the responsibilities of those at the top in the coal and electricity industries, for example, are far greater than that of any private firm in the country.
Assuming that we reach agreement on this, what are we to say if we find that in the private sector the rewards are five times as great? We can come to one of two conclusions, either that the private sector is over-paid or that the public 795 sector is underpaid. I am not setting up as a judge of this. Why should I? This is precisely why I want a serious higher incomes council and an emoluments research unit to try to establish what is right and what is rational. It seems to me that in a sense hon. Members must have been missing the whole point of my argument.

§ Mr. William Molloy (Ealing, North)
None so blind as those who will not see.

§ Mr. Shore
To return to a brief description of the Bill, the first part is concerned with disclosure, and this time individual disclosure. I do not want to spend much time arguing the case for this. Far too much of industry has what I would call a Victorian attitude towards discovery. Company affairs are treated as the Victorians used to treat their bathing costumes—that they ought to be very decent and all-covering.

§ Mr. David Ennals (Dover)
Just as the Tory Party treats its party finances.

§ Mr. Shore
I am grateful to my hon. Friend for that analogy.
There is no reason at all why we should not have individual disclosure. I looked up the Cohen Report on Company Law and I was gratified to find that my friends in the trade union movement, in their evidence, were then demanding individual disclosure of emoluments. If there is any doubt of the practicality of this, hon. Members should look at the American practice. The Securities Exchange Commission has been requiring precisely this information for more than 30 years and this has not led to any great problems. Obviously, if there is to be serious discussion whether some kinds of emoluments are excessive we must be able to compare individual emoluments as well as salaries.
We also ask for a change in the regulations affecting expense accounts so that we can have disclosed not only what expenses are allowed for Income Tax purposes, but also those which are not allowed. This is very important. When the question of disclosure was last discussed in the House, on 1st July, 1947, an Amendment to the Companies Bill to this effect was moved by an obscure Labour back bencher at the time—I think that his name was Callaghan—proposing 796 that this distinction be made between different kinds of expense accounts. I have always regarded this as an admirable idea, and I hope that it will be adopted. So much for disclosure.
Disclosure to whom? The purpose is to have a serious study of the structure of rewards. Therefore, it cannot be just disclosure to shareholders in company reports. This would be silly. The purpose, therefore, is to make disclosure to a Higher Incomes Council. Hon. Members will have noted the proposed nature of the council. There would be incorporated in its membership one or two people on the new National Incomes Board which has been set up by my right hon. Friend the First Secretary of State. We also make sure that people of experience in large industry, private and public, shall be members of it. One can argue about the details of such a body, but the basic purpose is to have on it people who know what the problems are and who can bring experience and intelligence to bear on them.
We hope to fortify this council with what I regard as the highly acceptable proposal of an emoluments research unit. Perhaps I have a slight propensity for favouring research departments and units, but, nevertheless, in a matter of this kind it is important that there should be such research. After all, we are simply following in the path of such well established bodies as the pay research units in the Civil Service and elsewhere. So much for serious study.
What is to be done once the Higher Incomes Council has made its serious study? In the first place, it will issue advisory opinions. I hope that these advisory opinions would have a considerable influence upon those to whom they were directed. I take it that I have no great difficulty in carrying most hon. Members with me thus far. [Laughter.] I am surprised at the reaction of hon. Members opposite. I have asked for disclosure and for a body which is capable of issuing advisory opinions. I am only now coming to what I thought was the more controversial, if only mildly so, part of the Bill, the part which deals with regulation.
This is a very tender and sensitive area, and I well understand the immediate defensive reactions to such a proposal 797 which have already been shown not only here but in the Press. I thought very carefully about whether to have any proposal for regulation at all. I concede that part of what I want would be achieved if the other parts of the Bill were accepted. Nevertheless, I consider that regulation is necessary.
I have hedged the regulatory part of the Bill round with many safeguards. There would be no attempt at regulation until there had been much information gathered and many studies made. Second, there could be no regulation until an advisory opinion had been issued and until a year had passed after such opinion had been issued. There would be the third safeguard that it would be up to a Minister to accept or reject any such proposal. This seems to me to give a great guarantee against arbitrary use of such an instrument.
If the arguments which I have put so far have any weight at all, they must lead inevitably to a proposal for regulation in the last resort. If we are really concerned to use an incomes policy at the top as a means of stimulating what we consider to be desirable economic activity, there must be an element of regulation to make it viable and effective. In dealing with the kind of emoluments which tie the individual and root talents in a particular company, we must take an axe and cut the roots so that the particular person is free and able to move wherever his talents are most required in the national interest.
I come now to the question of the possible use of regulation on the level of incomes at the top. I think that I can put the case for this in a few words. The case for regulation at the top arises from the special way in which rewards at the top are determined. How do the great mass of our fellow citizens have their rewards arrived at? For the vast majority, the process is one of collective bargaining. They ask for more, but there is always someone to say "No", and they get what emerges out of this sort of conflict in the process of collective bargaining.
Next, there is the great number of people in the public sector, 5 million or more—town clerks, Members of Parliament, Ministers, civil servants, people in the nationalised industries—all of whose 798 rewards are, after expert study, determined by Parliament itself. Third, there is the much smaller group of people whose rewards are genuinely determined by a free market, people who sell their talents. One thinks of barristers, for example, who sell their talents, sometimes for very high rewards indeed. Nevertheless, it is a genuine market situation.

§ Mr. Christopher Rowland (Meriden)
Does my hon. Friend really believe that barristers work in a free market?

§ Mr. Shore
Perhaps I should not argue about that now.
In addition, there are the small businessmen, whose companies may be incorporated or unincorporated, but who, also, it seems to me, are in a genuine market situation. In all these cases, when people seek to advance their own earnings and standards, they meet a resistance which arises from the nature of their work situation.
In the large corporations, on the other hand, there is no such built-in check. It is lacking because of the nature of the managerial revolution or semi-revolution which has taken place in the larger companies in industry, a revolution which has been variously described, but under which shareholders' control has been broken, fragmented into a thousand different pieces, as ownership has become more widely dispersed. The people who have come into the boardroom have, increasingly, moved up from the top rungs of the managerial ladder, people who, very often, are not themselves large shareholders. They are in the unique and happy position, in which, no doubt, we should all like to be, of being able to determine their own worth. They do not have to engage in collective bargaining. Their rewards are not determined by Parliament. They do not have as it were, to sell themselves in a market. They are in a position to say how much they are worth.
One may take two views about this. One may, perhaps, be astonished at their modesty as regards their own rewards, or, on the other hand, one may think that there is a natural tendency to over-value or to attach rather too much importance to a person's worth. I leave that question to the House, to the Higher Incomes 799 Council, eventually, and to my proposed emoluments research unit.
In this situation, if we are not to have regulation, what are the alternatives? In my view, one alternative would be to enter upon a process of competition in rewards at the top between the public and the private sectors. I ask the House to reflect for a moment on what this would mean, if the public sector and the nationalised industries were really to try to compete with private industry on the basis of comparability of responsibility and reward. The principle of comparability of reward has spread everywhere else, or is spreading, as between the public and private sectors, and it would spread to the top. If this were to happen, we should let loose a tremendously inflationary process in the economy.
The other alternative, if we are not to have regulation, would be to accept a permanent inferiority for the public sector. That would be extremely undesirable. I quote some words from the Financial Times which put my point extremely well: Of course, company directors and executives are most valuable members of the community, but is the most brilliant businessman more valuable than the surgeon who saves his life on the operating table? Does the surgeon say, I cannot give of my best without special inducements '? What about other professional men and civil servants, the men who are striving to make nationalised industries economic, the leaders of the Armed Services, trade union executives, retired people, and so on? Can these people do what directors and executives can—virtually vote themselves tax-free income? I want to be fair. Those are the words of Mr. Harold Wincott, a respected journalist, and he was dealing particularly with stock options, but I have given that quotation because it seems to me that his words have a much more general importance and significance.

§ Mr. Stratton Mills
The hon. Member is entitled to argue that it is desirable or undesirable, but not that it is inflationary if at the top rate of taxation over £15,000 the tax rate leaves the recipient with 1s. 9d. in the £.

§ Mr. Shore
I have already dealt with that point.
I hope that I have convinced the House that this is an important and serious 800 Measure. To my mind, it is far from being a frivolous one. The structure of reward at the top in industry is one of the most important matters that we could consider. In many ways it is a subject which deserves a very much more experienced advocate than I am. Nevertheless, I hope that the Bill will find favour with the House.

§ Sir Henry d'Avigdor-Goldsmid (Walsall, South)
It is only right to begin by congratulating the hon. Member for Stepney (Mr. Shore) upon his initiative in bringing forward the Measure, which I am sure expresses his deepest convictions, upon the extremely lucid way in which he has expressed himself, upon the great confidence which he has shown in dealing with interruptions from both sides of the House, and upon making what all must agree was a very good House of Commons speech. [An hon. Member: "It was too long."] There is a certain licence on Fridays.
That is by no means to say that I find myself in any measure of agreement with his words. What struck me as curious was looking at the names of the sponsors of the Measure. We know the hon. Gentleman by repute as the draftsman of the Labour Party manifesto. He is a man of some standing in that field. He is supported by the hon. Member for Swindon (Mr. Francis Noel-Baker), who has given much of his attention over recent years to Greece, for very good and honourable and in no way derogatory reasons, but I do not think that he has paid much attention to British industry.
The hon. Member also has the support of the hon. Member for Dover (Mr. Ennals), whose brother I have had the pleasure of fighting against at elections. I am sure that the hon. Member is a most valuable member of the House, but his interest has been primarily, if not almost entirely, in foreign affairs up to now. The fourth sponsor is the old wizard of Ebbw Vale, the hon. Member for Ebbw Vale (Mr. Michael Foot), whom we are sorry not to see present. I am sure that his remarks would have given pungency and point to the speeches that we shall hear in favour of the Measure. Indeed, we heard him yesterday.
801 The hon. Member for Stepney appeared on a B.B.C. programme on 26th February. I see from the transcript which I have received, which is a bit confused, that he is on record as saying that he thought the Bill would shine a strong, clear light into a very dark and secret place. That obviously meant that he thought this gave him a very attractive and proper subject for a Bill. But does it?
There are two main points about the Bill. The first is the question of the disclosure of directors' earnings. The second is their ultimate regulation by the Higher Incomes Council which the hon. Member proposes to be set up. As to the first point, it is to me a matter of completely academic interest for no enterprises with which I have ever been associated ever thought it even remotely in their interest to pay rue a salary approaching £10,000 a year, and I cannot conceive that they ever would. If I stayed long enough and the intentions of the Labour Party were developed, no doubt I should get a higher salary here, but I do not regard that as germane to the Bill.
Now as to the disclosure of directors' earnings. It was not very greatly emphasised by the hon. Gentleman that all companies disclose the aggregate of the payments that they make to their directors. This comes under Section 196 of the Companies Act, 1948. The matter was considered by the Cohen Committee, which, although it received evidence in favour of the disclosure of individual payments, came down in favour of the disclosure of the aggregate amount of directors' emoluments split between services as directors and managers and rejected the disclosure of the emoluments of individual directors, stating that the shareholders would not be in a position to estimate the value of the services of an individual director without detailed information as to the duties that he performed. Whereas by comparison of the total remuneration of the directors with the results of the company they could form a rough estimate as to whether they were getting proper value out of the services as a whole". That was the conclusion of the Cohen Committee, and it would seem to make the most manifest good sense. Without publishing a very great deal of information which is not relevant to a normal company account, it would be impossible for the shareholders to judge which of the directors were being over- or under remunerated. 802 So much for the disclosure by companies.
Now I come to the question of the Inland Revenue. This was rather skated over by the hon. Member. The Inland Revenue not only collects information—though it keeps a seal of secrecy over an individual account—but also tabulates and summarises the information. A good many summations of Inland Revenue information are available, therefore, and I suspect that answers to the questions which have been asked here might eventually be available from the Inland Revenue, of course without disclosure of individual cases.
In this connection, I should like to draw the attention of the House to Form P11D which all companies have to complete in respect of every director and employees earning more than £2,000 a year. The form is a very long one and goes into immense detail. It begins with the heading: Expenses Payments made and Benefits, etc., provided by Employer and Item I is "General Expenses Allowance" which is the amount of any round-sum allowance. Secondly, we come to travelling and subsistence. This is divided between fares, meals and hotel expenses, excluding travel between home and the normal place of employment, and payments given for travel between home and the normal place of employment from which tax has not been deducted under P.A.Y.E.
Item 3 deals with cars. There are a number of headings under this one. The first concerns whether the car is loaned or hired by the employer and provided for the use of the director or employee. The company has to reveal the annual value of the car and to give the running and overhead expenses borne by the employer—insurance, chauffeurs' wages, petrol and repairs, etc. The second category deals with a car owned or hired by the director or employee and this includes a subhead for allowances to him in respect of the use of the car. Yet another subhead concerns the purchase price, depreciation or hire.
Then there is an entry—item 4—for entertainment. This is followed by another about living accommodation provided for the director or employee. That contains a very great deal of detail. Item 6 deals with subscriptions; item 7 covers 803 private medical and dental treatment; item 8 deals with the education of the director's or employee's family; item 9 concerns goods and services provided free or below market value, unless supplied under discount facilities equally available to employees generally; item 10 deals with work carried on at the director's own home or property or assets; item 11 concerns wages and insurance of domestic or personal staff.

§ Mr. Robert Cooke (Bristol, West)
Before my hon. Friend leaves the subject of other expenses and benefits, may I ask whether or not he has noticed the sporting facilities—shooting, fishing, horse racing and so on—which are included? Every single detail has to be disclosed.

§ Sir H. d'Avigdor-Goldsmid
I was not aware of the horse racing but certainly of the shooting and the fishing. Item 14 concerns cars, property and furniture. Item 15 requires information about other expenses and benefits. Indeed, it all makes my mouth water. I would like to feel that there were companies generous enough to give me special allowances under all these headings.
The fact is that, having received all these multifarious payments, the director has to go and settle with the Inland Revenue. The hon. Member for Stepney will be aware of the Schedule E expenses rule. This is contained in Schedule 9 of the Income Tax Act, 1952, which lays down that all expenses other than travel expenses must have been … wholly, exclusively and necessarily … incurred in the performance of duties and travel, in turn, must have been "necessarily" incurred. I should like to think that the item about fishing could be looked upon as being "necessarily" incurred.

§ Mr. Ian Mikardo (Poplar)
The point is that all this information that the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) has been describing is known only to the person who compiled it and to the Inland Revenue Inspector. It is for the purpose of seeing whether the tax payments are genuine. That will not fulfil the purpose of the Bill, which is directed to a different objective.

§ Sir H. d'Avigdor-Goldsmid
I am obliged to the hon. Gentleman, who is 804 experienced in these matters. That information is within the knowledge of the Revenue and is later available in summarised form.

§ Sir H. d'Avigdor-Goldsmid
The hon. Gentleman shakes his head but his knowledge on this is no greater than mine. I suspect that, if any substantial sums were allowed for expenses in respect of the grouse moors, steps would be taken to prevent such expenses, and, the Revenue being what it is, I have no doubt that this result would be quickly achieved. What I am saying is that here we have a very large and complicated statement of account which provides all the information we have been hearing about, which is at the disposal of the Revenue and which can, in summary form, be transmitted to the Government to take what action they think necessary.
It seems perfectly clear that the object of this Bill, particularly Part II of Schedule 2, is not to disclose evidence to the Revenue, which already has it, and to the Government, who will get it eventually from the Revenue, but to the shareholders.
I want to come now to the question of shareholders. This is really something that has to be settled. First, most shareholders believe that their directors look after their company to the best of their ability and carry out the duties for which they are engaged. There is a small minority who regard a shareholding in a large public company as a way of making trouble. It seems to me that the publication of information about payments allowed by the Revenue as expenses is simply furnishing ammunition to people like disgruntled former employees, former directors who become shareholders solely to ask questions at annual general meetings, following them up with a great deal of Press publicity, as to details of payments made to directors which have been allowed by the Revenue as expenses.
This would seem to vitiate the object of the Bill, which says that the Government need the information for an important purpose. But it is quite irrelevant to think that this should be disclosed in such great detail in the company's own accounts. As I say, an aggregate of such payments to directors is already disclosed in company accounts as published, and
805 the Cohen Committee advised that this was the best possible criterion for shareholders.
The categories of information which the Bill would cause to be disclosed are, indeed, fewer than the ones that large companies have to return to the Revenue. I see no reason why there should not be just as many, although I think also that they would serve about as little purpose. The obvious result would be merely to give information to the shareholders which they could use to make the lives of directors a misery. I see no object in that.
I see no reason for the assumption that boards of directors are self-seeking bodies. They are paid to look after the interests of shareholders. They are a relic of the time when the directors were mainly the owners of the company. That is no longer the case, in the main. Today, directors are probably minority—perhaps, indeed, quite small—shareholders in the company and their duty is directed to the public interest and to the shareholders. The assumption that they all act in an entirely ruthless and selfish fashion when arranging their own salaries—their own "perks" as the hon. Member for Stepney called it—simply has no justification.

§ Mr. David Ennals (Dover)
Is it not true that, if the information was revealed, there would be much less danger that people would think that there was any jiggery-pokery?

§ Sir H. d'Avigdor-Goldsmid
The hon. Member for Dover is suggesting that if all the facts were revealed, there would be less danger of people thinking that there was jiggery-pokery, but the sort of people who go about thinking that there is jiggery-pokery everywhere would not be satisfied with the facts as revealed.
This is an interesting Measure because of whom it comes from. The hon. Member for Stepney was one of the draftsmen of the Labour Party election manifesto and in that manifesto he said quite clearly: Labour's income policy will apply in an expanding economy to all incomes". The wrong word is the word "expanding". The suggestion is that incomes are to expand, but it should have been, "Labour's incomes policy will apply in an 806 expanding economy to reducing some incomes". That would have been a fairer way of phrasing it. People who write election manifestos are not on oath, but they have to answer for their words afterwards.

§ Mr. Francis Noel-Baker
The hon. Baronet has been talking about the sponsors of the Bill. He appeared to make two imputations against me and perhaps he will clear them up at this point. One was that my family associations with Europe and my own personal endeavours in E.U.B.O.E.A., about which he knows something, because I have discussed them with him and with a charitable body with which he is connected, somehow interfere with my duties in the House. The second was that I was not qualified to have an interest in the Bill. I repudiate both suggestions, which were made in very courteous words. The hon. Baronet has not often been in the House at Question Time or at other times when I have pressed these matters, but if he looks up HANSARD he will see that I am interested in subjects closely connected with this. He will have heard about the Advertising Inquiry Council and other matters of that sort. On reconsideration, he may like to withdraw both suggestions, which might not look very good in HANSARD tomorrow if he does not withdraw.

§ Sir H. d'Avigdor-Goldsmid
I have a personal regard for the hon. Member for Swindon and I remember being in the House when he spoke on a Friday for no less than two hours. I would be the last to imply that he was not energetic in carrying out his duties. I know his close interest in E.U.B.O.E.A. and the very valuable work which he has done in connection with it. However, he is not an industrial expert in the sense of the hon. Members sitting around him. That is the only point I was making. It is noteworthy that in a party with many industrial experts it was not the industrial experts who had rallied to the hon Member for Stepney who brought in the Bill. If the hon. Member for Swindon feels that that is a reflection on him and would still like me to say more about him, I will do so.

§ Mr. Francis Noel-Baker
I should not like to prolong the hon. Gentleman's interesting speech. I accept what he has said and I am very grateful for it.

§ Sir H. d'Avigdor-Goldsmid
The discussion on the Bill has come down to a discussion about the difference between the public and private sectors of industry, and this is an issue which will not be settled across the Floor of the House on a Private Member's Bill on a Friday morning. This is a process which is devolving. I thought that it was a good move when we made Dr. Beeching the head of the railways at a salary comparable with those paid by private industries. I am sure that that is the way in which we have to look at it. It must not be a case of levelling down but of levelling up the public sector rewards. We have complete sanctions against earners of salaries and enjoyers of these benefits through the surveillance of the Revenue and the tax system. The differences in financial rewards in business between the public sector and the private sector are not so out of line as the comparison of gross salaries made by the hon. Member for Stepney would imply. The difference in net salaries is not so great.
In other countries, Russia for example, the authorities are now coming over to the idea that the heads of industry should receive certain rewards. I am certain that the rent of a dacha and the fees at a cadet school, which are the rewards of the leaders of Russian industry, are not matters of public disclosure and comment. The hon. Member for Poplar (Mr. Mikardo) knows more about Russia than I do.

§ Mr. Mikardo
Perhaps I do and I have a great regard for the hon. Baronet. Is he now advocating that we should base the pattern of our commerce and industry on the example of the Soviet Union?

§ Sir H. d'Avigdor-Goldsmid
I am grateful to the hon. Gentleman for his regard. The point is that we have the advantage of a mixed economy. That example is beginning to be followed by countries which up to now have had a single economy. In a mixed economy we must try to make the rewards attractive.
We talk of the brain drain, but there is no material which it is harder to keep in this country than the sort of ability which makes for successful business 808 enterprise. It is exportable in a very small suitcase indeed. We have to think of comparability. We are dealing in international and not national values and we have to consider the effect on our own economy of the sort of niggling which the Bill would introduce.
I very much hope that the Bill will not be given a Second Reading, although I am grateful to the hon. Member for Stepney for introducing it and for giving us the opportunity for what I am sure will be a valuable discussion.

§ Mr. David Ennals (Dover)
I am very glad to have the opportunity to follow the hon. Baronet the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). I am certain, as he said, that my brother would have wished to have been following the hon. Baronet, had he been more successful. He spoke of the lack of suitable qualifications of those supporting the Bill, but, even if he were right, the Bill itself would not lose any merit for that, and I hope that it will not lose any merit by my advocacy this morning.
I congratulate my hon. Friend the Member for Stepney (Mr. Shore) on the Bill and on its presentation. The hon. Member for Walsall, South said that it was not a subject for a Friday debate, but I believe that at the end of the day it will have been an extremely valuable Friday debate. How often has it happened in the House that ideas put forward by private Members on a private Members' day have found the ear of the Government and come to fruition! I hope that this is what will happen.
The hon. Baronet seemed to think that the only people who ought to be concerned with the Bill were industrialists. I do not accept that. Contrary to the views of the right hon. Member for Wolverhampton, South-West (Mr. Powell) and many other hon. Members opposite, I believe that the task of achieving an incomes policy is one of the most vital on which the Government have embarked. In saying that, I should like to pay tribute to the energy and diligence of my right hon. Friend the First Secretary, the leaders of industry and the trade union movement for the declaration of intent and for the second stage in trying to achieve this vital objective.
809 This is a matter which affects us all, the whole future of our country, our economic growth and our competitive ability in the world. This is not a subject affecting only those who are top management. An incomes policy affects everyone in the country, and, therefore, I have as much right to speak on it and to support the Bill as the hon. Baronet has to speak against it, or as any other hon. Members to express their opinions.
We can achieve the fulfilment of this very difficult, delicate task of an effective incomes policy only under certain conditions. The first is that we must have an expanding economy. We cannot nave an effective incomes policy if we have contracting production. We are not to have an incomes review body which will supervise the gradual reduction of income. Therefore, the Government's policies for the expansion of our economy are essential. My hon. Friend the Member for Stepney referred to the opportunities which the Bill may offer for export incentives. This is an extremely valuable point.
The second condition is that we cannot achieve an incomes policy unless all aspects of income are considered. This was the great error of the previous Government and of the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who thought that we could achieve it on the basis of a pay pause and of dealing with one section of the community in a different way from other sections. We recognise that if we are to achieve success in our incomes policy, it must deal with all incomes and emoluments, whether of top management or of the lowest paid workers. The Bill is an attempt to bring all sections of our population within the concept of an incomes policy.
The third condition—and this was dealt with by my hon. Friend the Member for Stepney—is that if we are to achieve an incomes policy there must be some keeping in step between the public and private sectors. As my hon. Friend rightly pointed out with facts and figures, this is patently not the case today. The hon. Baronet the Member for Walsall, South said that we have a mixed economy and the advantages of a mixed economy. But we also have the problems of a mixed economy. He would agree that we do not want two 810 warring spheres, two competing sectors, in our economy, and that one should be complementary to the other.
Surely no hon. Member opposite wishes us to return to a totally private enterprise economy. If the Conservative Party is concerned with the national interest, with public as well as private enterprise, we must have a basis of cooperation. As has been said, we want the exchange of people between private enterprise and public enterprise. This is something to which, I believe, the Government will make a great contribution.
The proposers of the Bill are not arguing the case against high rewards for high service. We recognise that in the private and public sectors there are positions of high responsibility requiring great ability and experience. If we are to see people getting to the top, they must have appropriate rewards for their work. The same must apply in both public and private enterprise.
The question which I ask of those who may oppose the Bill is why should top management object to the public disclosure of their income? Those in the Armed Forces, policemen, prison warders, nurses, firemen, Members of Parliament, colonial civil servants, civil servants working in this country, local government officers, town clerks, research secretaries of the Labour Party, overseas secretaries of the Labour Party, the general secretary of the Labour Party, all have their incomes disclosed.
I do not know the emoluments of the officials of the Conservative Party they do not indicate them to us. I cannot understand why it should be thought right and proper that one section of the community, as hard working as another, should be quite happy that their emoluments are known and another section should say that there is something wrong about it. Is there something to hide?

§ Mr. Ian Lloyd
Surely a logical consequence of what the hon. Gentleman is saying is that all returns of taxation by every individual should be made public and, indeed, deposited at the county hall for everyone to see.

§ Mr. Ennals
The last thing that we would suggest is that tax returns should be made public. But the basis of job incomes should be made public. The 811 gradation of people's incomes, whatever their job or status, should be advertised when they are appointed, and should be made known. What is so dishonourable about that?

§ Mr. Ian Lloyd
Would the hon. Gentleman include all investment income in this category? If not, how would he deal with this anomaly?

§ Mr. Ennals
That has not been suggested in the Bill, and it is not relevant to the debate. I am asking whether there is anything to hide. I do not believe that for most people there is anything to hide at all. If there is nothing to hide, nothing should be withheld from the public or shareholders.
I was most surprised to hear the hon. Baronet the Member for Walsall, South suggest that it would be right for those in top management to conceal their emoluments from their shareholders. This seems an extraordinary argument. If we argue that to frustrate troublemakers—and often troublemakers are honest people who want to ask questions and to obtain information—management should conceal the basis of their emoluments, what other things should we encourage them to conceal? Is it suggested that the reports of the company directors are simply intended as a white-washing exercise for the year's operation? I am not suggesting it. I do not know whether that is what the hon. Baronet had in mind, but it certainly smacked of it.
We know that there are some people who have things to hide. I propose to deal for a moment, as my hon. Friend the Member for Stepney did, with expense accounts. I do not suggest that there is anything wrong about firms giving expense allowances to leading and lesser members of their staff, whether they be boards of management or employees, for certain things which are essential for business. The survey conducted by Mr. Dow, of the National Institute of Economic and Social Research, 10 years ago gave the figure of £500 million on business account expenditure. It cannot now be less than £700 million, though there is no proof for this figure. The list read out by the hon. Baronet showed that expense accounts and company facilities are used to provide people with tax-free "smokes", drinks, clothes, telephones, 812 homes, servants, cars, medical care, club subscriptions, holidays, entertainments, shooting and fishing—

§ Mr. Robert Cooke
Would the hon. Gentleman concede that the point of this list, which was introduced by my own party, the previous Government, was to establish beyond all doubt that all these expenses, if they existed, were checked and every single one of them itemised?

§ Mr. Ennals
They were itemised, but not publicised. If it is essential for people to go shooting and fishing, and to night clubs, I suppose that the opportunity must be given to prove that it is honestly in the interest of good business. In 1959, the Economist carried out a survey of the night clubs in London. It said that most of the bills were paid on the basis of firms' expense accounts. It drew this conclusion: Only Exchequer largesse, paid directly from tax-free expense accounts, keeps the night club industry ticking at all. It may be that the hon. Gentleman will get up and say that it is essential to maintain the integrity of the night club industry so that we can expand our economy.

§ Mr. Robert Cooke
May I ask the hon. Gentleman whether in all his life the hon. Member has never been in a night club?

§ Mr. Ennals
Of course I have been in a night club. I must say, however, that since I became a Member of Parliament I have not had any opportunity of going to night clubs; I have been too busy. But, on the rare occasions when I have been to a night club, could anyone imagine that my previous employers were prepared to allow it as a basis of expense claims? The hon. Gentleman's understanding of the Labour Party is totally revealed by his question.

§ Mr. Robert Cooke
The hon. Gentleman will recall that some of his hon. Friends are on record in the national Press as having complained to their Chief Whip that they simply could not get to a night club in the evening because they were detained here.

§ Mr. Ennals
This is very interesting, but perhaps we should now get back to the point with which I was dealing.
813 I have not said, nor have any of us on this side, that people should not go to night clubs. What we ask is: should people go to night clubs on the basis of business expense accounts and without the payment of Income Tax? If so, are we, as Members of Parliament, able to submit such expenses to be charged against Income Tax?

§ Mr. Stratton Mills
I think that the hon. Gentleman has missed the point. It may well be that those in the Labour Party's overseas service are not familiar with the form read out by my hon. Friend, but the point in giving the details asked for in this form is to enable every item to be checked—and I know that many people can speak of this from their own experience—by the Inland Revenue. And every single item must be justified, or tax paid on it.

§ Mr. Ennals
All that can be proved is that the money was spent for that purpose, but not that it had to be spent for that purpose.
I do not say that all business expense accounts are wrong, but I do say that there should be no secrecy or concealment. If it is essential, as I believe in many cases it is, that expense should be incurred for lunches, entertainment, and so on, there should not be any secrecy or concealment about it. Further, such expenses should not take the place of legitimate taxable income. I believe that the Bill will strike a blow at tax evasion and tax avoidance, both of which constitute a serious leak in the country's purse at the present time. As my right hon. Friend the Prime Minister said on television on Wednesday evening: If one-tenth of the knowledge and the ingenuity and expertise that goes into sidestepping the tax inspector went into exports, we would have no difficulty in solving our problems.

§ Mr. Stanley Orme (Salford, West)
Would my hon. Friend agree that if what he now advocates were done a large body of experts—chartered accountants—would be free to go into productive industry rather than continue in what might be called the present type of misappropriation in which they are engaged?

§ Mr. Ennals
My hon. Friend has put a very interesting point.
814 I have been encouraged by the fact that the British Institute of Management—a very responsible body in this field—has said that it sees nothing wrong in principle with the Bill. It sees some difficulties in carrying it out, and I readily admit that in the Standing Committee I shall be happy to see Amendments made to improve the machinery. I would not stand by every Clause, but it is encouraging that the Institute should have said that.
On the other hand, I was surprised that the Institute of Directors should have said: It could not have been worse timed. It comes at a time when the rest of the world is looking for signs of reviving spirits in Britain. The Institute of Directors has got it wrong. We want to see a reviving spirit in Britain. We want to see the economy expanding. We want to see private industry boosting its products and expanding its exports. We also want to see enterprise in the public sector. Above all, we want to see the public and the private sector moving forward together as one nation.
It is that spirit we are trying to get. It is for that spirit that the Prime Minister was appealing on television the other night. My right hon. Friend then added: A full day's work for a full day's pay. Good money, yes, but it must be earned. It must be earned and, in my view, what is earned must be publicly accounted. I have great pleasure in supporting the Bill.

§ Sir Frederic Bennett (Torquay)
The hon. Member for Stepney (Mr. Shore) made a fair but not altogether convincing effort to show us that he was seeking to draw serious attention to what he thought to be a serious problem, but the speech of the hon. Member for Dover (Mr. Ennals) has left us under no such delusion. His speech flew the flag we have seen from the very beginning, which has "Prejudice" flaming across it in large yellow letters. Every word he spoke made it clear that he was not interested in comparing public rewards with private rewards but only in creating as much prejudice as possible, and seeking to do what had previously been denied—concentrating on levelling down rather than on levelling up.
815 If we are talking of the real purpose behind this Bill as being to bring the rewards of public industry more into line with those in the private sector, all the information that is needed is to hand, and if hon. Members opposite think that the rewards of public industry are not sufficient, I share that view. There is no need for a Bill that concentrates on envy and prejudice in order to achieve such a purpose.
What is the use of talking about expense accounts and the rest if the purpose of the Bill, and its only purpose, is to bring public rewards more into line with private rewards—

§ Mr. Shore
That was not the only reason put forward. I gave three substantial reasons in favour of this Bill.

§ Sir F. Bennett
I paid the hon. Gentleman the nicest compliment I could in regard to his introduction of the Bill, but I say that whatever were the one, two or three reasons put forward, I am more than satisfied that the real purpose of the Bill is to introduce an element of prejudice and distortion under the pretence of trying to remedy an evil. Much has been said about the rewards of private industry, and the perquisites, the fringe benefits received by those in it—

§ Mr. Ennals
rose—

§ Sir F. Bennett
Let me just finish what I am saying. Not a word has been said about the fringe benefits in the public sector. Is it really suggested that those in public life at present get none of these so-called fringe benefits?

§ Mr. Ennals
rose—

§ Sir F. Bennett
I will give way when I am ready—not before.
Let us look at our own affairs before seeking to appear in white sheets. I have not noticed any remarkable lack of Members of Parliament and Ministers ready to take advantage of entertainment opportunities. It is almost impossible to book a room downstairs for weeks and months ahead. Is it suggested by us—precious hon. Members in white sheets—that we always pay for our own meals there? When I find difficulty in parking in the New Palace Yard because of the presence of all those big black Humbers, is it seriously suggested that there are not 816 fringe benefits of much the same type as those enjoyed by businessmen? I will give way now to the hon. Member for Dover—I think he will have a stroke if I do not.

§ Mr. Ennals
The hon. Gentleman has been asking a number of questions, and I thought that he might like an answer. I did not repeat every point made by my hon. Friend the Member for Stepney (Mr. Shore), as my speech would have been rather longer in that case, and the hon. Member would not have welcomed that. Had the hon. Gentleman read the Bill carefully he would have seen that it dealt with the public and the private sectors in identical and equal terms.

§ Sir F. Bennett
I did not realise that Members of Parliament and Ministers were included. If they are, I should like in a later speech, perhaps, to have my attention directed to the relevant part of the Bill—[Interruption.] Apparently the Bill does not include them—

§ Mr. Stratton Mills
Is not my hon. Friend aware that the greatest tax-free "perk" in Britain today is the residence known as No. 10 Downing Street?

§ Sir F. Bennett
Yes—as well as the tax-free allowance, but I did not want to bring that in. The fact is that Members of Parliament must stop pretending to be in white sheets when all that this Bill intends to do is to create prejudice—[HON. MEMBERS: "Oh."]
Now if I may turn to one or two of the specific points which the hon. Gentleman made in introducing this Measure I would remind the House that he said at one stage of his speech that the best criterion he could find for judging the size of the reward would be the total capital assets. A little earlier he had said that he did not think the size of the concern so important as its performance in production and exports. It would be nice to know exactly which of these two criteria he intends. I presume, without being in any way anti-nationalised industries, that at present one could hardly praise them for making the maximum contribution to exports or profitability. Admittedly, they have very high capital assets but their investments are mainly directed towards gilt edged, and if a managing director were to have nothing to do except collect his dividend slips 817 month by month as they come along that would not be the best criterion for saying that a high salary should be paid to the managing director. The hon. Gentleman ought to make up his mind whether he is thinking in terms of total capital assets being the criterion or whether he is thinking in terms of export performance and profitability.

§ Mr. Shore
I think I can help the hon. Gentleman there. It would be silly of me to come along and say emphatically what I think the criterion should be, if it were one single criterion. It should not be a single criterion. That is precisely why we need a body to establish what are the proper criteria.

§ Sir F. Bennett
It may well not be so easy to say what a single criterion should be and there might possibly be two or more criteria, but cannot be opposite ones. What is certain is that we cannot logically take capital assets and say that therefore the nationalised industries should rate very much higher, and yet at the same time say that the private sector should only rate highly for emoluments when making a major contribution to exports.
One of the basic problems, which was only briefly touched on by the hon. Gentleman, is to look at the high salaries in relation to the rate of taxation. It is very misleading simply to mention these high gross salaries precisely because they look, unless one does study the tax tables, absolutely enormous—when one reads, for instance, of a salary of £30,000 or £40,000. The hon. Gentleman did talk in one case of a net difference only of £2,000 a year and in another case only of £4,000 a year as between the net rewards of a senior executive in a nationalised industry and other industries. That brings them much more closely into line, but the hon. Gentleman devoted only a very small part of his speech to that point, and yet it is these very high salaries gross, before taxation, which are so misleading to people at present, and the hon. Gentleman knows that perfectly well.
I turn to the effect of levelling down, which, as I say, is the only possible purpose of the Bill, making life more difficult for businessmen. That will be the effect of the Bill, and it will also accomplish more brain drain than we are having or have had up to now.

§ Mr. Mikardo
rose—

§ Sir F. Bennett
I cannot give way again at the moment. I have already given way three times, and there are a lot of other hon. Members who want to speak.
We are steadily losing people overseas. When one reads in the paper about their reasons for going one sees that it is very rarely that they say they go to earn higher salaries. They say they go to get the better facilities which are offered abroad. However, when one then sees the salaries they will get across the Atlantic one begins to think that those salaries might have had some slight impact on their thinking. A friend of mine recently, a scientist at Cambridge, was getting through his various fellowships and consultancies a figure of about £22,000 gross a year; but after tax he was left with only one-quarter of that. A comparable post in New York brought in 60,000 dollars a year gross, out of which was left two-thirds, or 40,000 dollars a year after tax. Whatever the rates of tax may be as set out in the tables, the fact is that in America people are given large allowances which we do not get here, so that for doing the same sort of job here one is left with one-quarter of the gross salary while there one retains two-thirds of the gross salary.
These are the sort of things we ought to be thinking about today much more seriously than the differences between one industry and another here.
We should think how we can reward top management in either private or public enterprise rather than creating a totally misleading impression in the public's mind by citing high gross salaries without regard to what is left after tax. If we can do that a more serious purpose will be accomplished than has been so far.
As I said at the beginning, I notice that this Measure is apparently directed at private and, it seems, some public enterprise, but not including ourselves, or Ministers, and if there are going to be total emoluments and fringe benefits as well, I think we ought to be very careful in our white sheets about this, because the Inland Revenue is much more rigorous in regard to businessmen than it is to others. I do not know how many Members of Parliament at present in this House think out their annual expenses as carefully as if they had to fill out 819 form P11D instead of a much simpler form supplied by the Fees Office, but I think we ought really to be a little more honest with the public and realise that this does conceal the fact that the Inland Revenue at the present time is very stiff with the directors of private enterprise, and could hardly be more stiff than it is—quite rightly, and I make no complaint about it—and that if an extremely close scrutiny were applied to Members' accounts perhaps the hon. Members would not have spoken as they have.
Take the question of the free expense lunches. I have more than occasionally had to take an overseas customer out to lunch. If anybody thinks that that is always an amusing or gay occasion he is naïve, since nine times out of ten it is an extremely boring and difficult occasion. Again, many business trips abroad are a great deal more enervating and worrying than C.P.A. trips by hon. Members who take them to increase their education.

§ Mr. Ennals
The hon. Member will not want to mislead the House, and I am certain he will realise that no one on either side has given any indication at all that there should not be expense lunches or other forms of entertainment or that they are not perfectly legitimate. The hon. Gentleman does not want to mislead the House, does he?

§ Sir F. Bennett
I cannot keep on repeating that almost every word the hon. Gentleman spoke, whatever may have been his purpose, was in fact calculated to create prejudice in this respect and his remarks were clearly designed towards that end and to make this smear attack on one section of industry in this country.
It does not help what the Prime Minister was trying to do in his challenge on television the other night. I can hardly be regarded as being an admirer of his, on television or off it, but the Prime Minister was, so far as one could see, determined to try to get the various elements in this community to work together. If hon. Members opposite think that they have made a contribution this morning to that end, all I can say is that I am quite sure that their right hon. Friend at 10, Downing Street does not.

§ Mr. Francis Noel-Baker (Swindon)
I find myself in a dilemma in knowing how properly to comment on the speech of the hon. Member for Torquay (Sir F. Bennett), because I think that any fair-minded Member of this House, or anybody else following with attention the arguments deployed by my hon. Friends, would have realised that this is a very serious subject which deserves close attention and that they spoke of it in that way, keeping prejudice, if any, to the minimum.
I think that the hon. Member's intervention summarises his attitude to the whole problem, and I am very sorry that the debate has been lowered by the violent prejudice and distortion of the hon. Member. Really, he was not treating the House to a serious speech at all. I very much regret his tone, because I think that my hon. Friend the Member for Stepney (Mr. Shore) has done a very great service to the House and the country in treating a serious subject in a serious way, and, with extensive knowledge, having done his homework extremely well, in initiating a useful and timely debate.
I would only say to the hon. Gentleman the Member for Torquay that among the other defects of his speech was this, that he did not appear to have read the Bill at all. If he will look at Clause 1 he will see it is made perfectly clear to whom it applies. It is spelt out in the simplest language, and if he thinks that this kind of provision should be extended to other highly paid salaries and earners, to members of the legal profession, for example, then he has only got to bring in a Measure of his own of a similar kind.
It might well be a good thing if the earnings of some leading legal figures were more widely known, but when the hon. Gentleman starts talking about Downing Street, the earnings of politicians, and so on, it shows that he has missed the whole point, because what half the Bill is asking for is disclosure, and what is clear about the emoluments and "perks"—poor and small though they are—of hon. Members, and of members of the Government, is that everybody knows what they are, and this is what we are asking for in the private sector.

§ Sir F. Bennett
rose—

§ Mr. Noel-Baker
I will allow the hon. Gentleman to interrupt me once, although a he did not allow me to intervene when he was speaking.

§ Sir F. Bennett
I thank the hon. Gentleman. I allowed four or five interventions during my speech, especially by those hon. Members who had already spoken.
Disclosure does not apply to individual expenses of the categories of persons to whom the hon. Gentleman referred. He knows that. It applies only to salaries. Surely he is not saying that the individual allowances of Members and Ministers are known? Of course they are not. They are private, and ought to remain so, in the same way as they are in every sector of industry.

§ Mr. Noel-Baker
It cannot be suggested that there is any mystery about the salaries of Ministers, or about the facilities put at their disposal.
I again congratulate my hon. Friend on raising this subject, because I think that it is extremely relevant to the economic situation in which we find ourselves at the present time. One of the depressing things in the speeches made on this subject, both inside and outside the House, by hon. Gentlemen opposite—we had an example of this, which led to an unfortunate municipal situation, in the suggestions made by the right hon. Member for Wolverhampton, South-West (Mr. Powell) about the way in which industry ought to co-operate with the Government—is that the prejudices of hon. Gentlemen opposite seem to have blinded them to the fact that we are on an economic precipice.
The gravity of the economic situation which the Government inherited is something which everybody in this country—politicians, workers, managers, directors, whoever they may be—has to take with utmost seriousness, otherwise we shall find ourselves in a calamitous situation. This is the moment when every manager and worker in the country, whether in the public or the private sector, has to make the maximum effort, and when rewards at all levels have to be related to work and to output.
The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) asked what 822 was my interest in this matter. There are a number of reasons for it, but one is that I represent a constituency which contains one big public enterprise which, in my view, has been treated abominably for the last 13 years, and that is the Swindon Railway Workshops. Swindon also contains a number of big and important firms, such as Plesseys, Pressed Steel, and others, who are doing a very important job in our national economy and in the export drive, and with whose managements I have striven to maintain close and cordial relations, and to understand the problems facing them and their work people.
I want to see in my constituency, as in the country, co-operation and partnership between the public and private sectors. I want to see interchange between personnel in the public and private sectors. I want to see the best men getting the best jobs, and the best suited getting the most responsible jobs in both sides of industry. That is why I am interested in the Bill.
I am particularly convinced by the argument put forward by my hon. Friend on the first part of the Bill dealing with disclosure. I do not understand the Victorian piano-leg attitude of hon. Gentlemen opposite. Is it not a matter of public interest that the emoluments of directors should be known? Is it not a matter of public interest that people should be able to compare the salaries paid to people at the top of private enterprise, with those paid to people at the top of the public sector? Why should there be this mystery about salaries paid and about the finances of private firms? What would hon. Gentlemen opposite say if similar attempts were made to hide and to disguise payments made in the public sector? What would they think if that were to happen in the airline corporations, the railway industry, and so on?
I wish to make a brief reference to what the hon. Gentleman said about the House of Commons, and about the Dining Rooms downstairs. The way in which private business enterprises, public relations firms, and some parts of the advertising industry have been getting at Members of Parliament in recent years is a matter of serious concern. This is why in the previous Parliament I put down Questions and tried to raise some 823 discussion about the disclosure of the business interests of hon. Members.
Our rules about disclosing interests are inadequate to the present situation, and I think that it would be a good thing if the private business interests of hon. Members on both sides of the House, my own included, were generally available to the public.

§ Mr. Speaker
Order. I think that even taking the widest possible view of a Second Reading debate that seems to be rather wide of the subject matter of the Bill.

§ Mr. Noel-Baker
I bow to your Ruling, Mr. Speaker. I was merely following the point raised by the hon. Gentleman.
I do not wish to make a long speech, because the points have been adequately covered by my hon. Friend. I am satisfied with his presentation of the provisions of the Bill dealing with disclosure, but I ask the Minister to tell us whether the Government have any thoughts about introducing legislation with regard to disclosure. I do not know what the effect of the Bill will be. If the Government accept the Bill in toto, this will be satisfactory to my hon. Friend, but if not, and if there are some reservations in my hon. Friend's mind, I ask him to tell us whether the Government intend to introduce legislation dealing with disclosure.
I am not quite as happy as a sponsor of the Bill should be about the second part of it. I think that there are difficulties about the regulations suggested by my hon. Friend, and before finally making up my mind about that part of the Bill, I should like to hear what my hon. Friend the Minister has to say.
I am certain that a very useful service has been performed by my hon. Friend in bringing forward the Bill. I very much welcome his speech, and, in particular, what he said about disclosure, and I hope that we shall get a sympathetic reply from the Government.

§ Mr. Bernard Braine (Essex South-East)
The hon. Member for Stepney (Mr. Shore) advanced his argument for the Bill persuasively and pleasantly, but, quite frankly, there was nothing in his argument to commend the Bill to the House.
824 However, I do not wish to be misunderstood. I agree that it is a good thing to discuss the rewards for top management in both the public and private sectors. Clearly, there is a close connection between the quality of top management in both sectors, and the economic performance of our country, with which we here are all concerned. I agree, too, that there is a case for ensuring that managers in the public sector get adequate rewards. Indeed, if better rewards were paid to them right the way down the scale, we might get better performances from the nationalised industries.
Now I consider this to be a thoroughly bad Bill. I hope that the Government will give no encouragement to it, that it will die, and that it will be quickly forgotten. Indeed, the Bill is so bad—I shall come back to this in a moment—that I have been wondering what is the real motive behind it. The hon. Member for Stepney is an interesting and engaging personality. Quite apart from the merits or demerits of the Bill, I thought that his performance this morning was a good Parliamentary one, which will enhance his reputation. He was too a distinguished member of Transport House, and one must respect his sincerity.
The key to the Bill is to be found in the hon. Member's thinking. I recognise some of the language which he employs. Some years ago he was doing a lot of writing on this theme, and he had obviously been influenced by the thinking of James Burnham. Hon. Members will recall that Burnham, like the Marxists generally, argued that capitalism would inevitably collapse because of its inherent contradictions, but, having said this, he parted company from the orthodox Marxists. The latter see the proletariat as the chief agents of change and the chief beneficiaries of change—indeed, the chief instruments for wresting power from the owners of property. Burnham saw it differently, as the hon. Member wrote at the time. He said that we were engaged in a managerial revolution. A new class of managers was emerging. It was the managers—not the owners of property—the directors and top executives in industry who would be both the agents of change and its chief beneficiaries.
825 I am not saying that the hon. Member accepts the whole of Burnham's thesis. I do not think that he does. But the argument was that the managerial class are enjoying special advantages and that these ought to be taken away, or at least curbed. The managerial class is the enemy of the kind of society which the hon. Member wished to see established in this country. He had no doubt about it then, and I submit that the Bill shows that he has no doubt now. So the hon. Member argued that in Britain the managerial control of industrial properties was maintaining a class society, but that we can prevent managerial control leading to an excessive accumulation of advantages. The Bill is the fruit of that kind of thinking, and I congratulate the hon. Member on his very great skill in getting within the compass of a single Private Member's Bill a measure which could serve as a useful instrument in bringing about revolutionary Socialism. I once heard a Communist defined as a Socialist who had the courage of his convictions. I have paid full tribute to the hon. Member for having the courage of his Socialist convictions, and for going the whole hog, as he seeks to do in this Bill. I am not impugning his sincerity; he believes quite sincerely, and indeed passionately, in a completely controlled and regulated economy, and this Measure would be one of the most effective ways of bringing this about.

§ Mr. Robert Maxwell (Buckingham)
How is it that out of 300 hon. Members of the Opposition, only three have thought it necessary to come here to oppose what they regard as a monstrous Bill? If the Bill were all that bad, would not a great many more hon. Members opposite have turned up to deal with the reasoned arguments which have been put forward?

§ Mr. Braine
The hon. Member, who has not been in the House long, must know that it is customary, about 12.55 p.m., for large numbers of hon. Members to depart from the Chamber and to take their lunch. That is natural, it is human. Many more of my hon. Friends were here earlier. Indeed, at the beginning of the debate there were as many of my hon. Friends present as there were hon. Members opposite. No doubt there will be many more of my hon. Friends here when it comes to 826 the Division at the end of the debate, because a Division there will certainly be. What I notice is the paucity—not the quality—of the representation on the Government Front Bench, indicating, surely, a very great reluctance on the part of Ministers to be seen to be identified with a dangerous Measure of this kind.
The Bill is based on a premise that all directors and some executives—who may not actually own more than a minute share of the wealth that they control—derive unreasonable advantage from their managerial functions. I believe that it is a false premise. The game is given away in the Second Schedule of the Bill. No reference has been made to this so far in the debate, but I do not believe that anything like this has ever before appeared in a Bill presented to the House. Here is a Schedule based on pure guesswork, if not mythology, but cloaked in legal language. I am lost in admiration for the ingenuity of the hon. Member and his hon. Friends.
Is it not very dangerous to mention names? There may be actual Bernard Brown's and Julian James's and Sydney Smith's. There was, the House will recollect, a very famous Sydney Smith who was a great wit in his day. Many of his sayings must be familiar to hon. Members. One of the most amusing and telling was his statement that, "My idea of heaven is eating pâté de foie gras to the sound of celestial trumpets". It is clear from the speeches of the hon. Member who introduced the Bill and his chief sponsor that this is what the mythical Sydney Smith does every single day of the week.

§ Mr. Robert Cooke
There was a well-known Socialist literary gentleman who gave the definition of hell as "tepid champagne".

§ Mr. Braine
The number of definitions of Socialism is bewildering in its variety and contradiction.

§ Mr. Deputy-Speaker (Dr. Horace King)
Order. This is delightful, but the hon. Member must get back to the Bill.

§ Mr. Braine
I entirely agree with you, Mr. Deputy-Speaker. I was distracted by my hon. Friend the Member for Bristol, West (Mr. Robert Cooke).
827 We have heard a great deal about expense accounts. I understand that this, too, will be within the scope of the Bill. This is small beer compared with the damage done to the economic interests of the country by demarcation disputes, wildcat strikes, and stupidity on the part of both sides of industry, resulting in the slowing down of production. We all know how these happenings have led to the loss of valuable export orders and millions of pounds of exports for the country. If this sort of tax evasion is going on, if there is this misuse of resources—

§ Mr. John Hynd (Sheffield, Attercliffe)
If?

§ Mr. Braine
If it is, then it is a reflection upon the Inland Revenue. There is a difference between what hon. Members opposite say on this subject now and what some of their right hon. Friends said in opposition—and what right hon. Gentlemen now in office have to say. If there were, in fact, serious tax evasion, then the power lies in the Chancellor's hands to do something about it in the next Finance Bill. In short, this Bill could have been produced only by theoreticians who have not the faintest idea of how business and industry are run.
I come to the most serious objection to the Bill. It is quite right, as the Cohen Committee recommended years ago, that the aggregate amount paid to directors should be publicly disclosed. But if the first object is to ensure that individual emoluments of top management are made public then, I suggest, there is no need for this complex and footling Measure. Why not give power to the Inland Revenue to disclose the details already in its possession to the body recently set up under the direction of the right hon. Gentleman the Secreatry of State for Economic Affairs to inquire into the movement of prices and incomes?
Clause 9(2) of the Bill calls for exactly the kind of information for which inspectors of taxation already have power to extract. It may be that there are some elements in the party opposite, perhaps even sitting on the Front Bench, who would like to do this, but who do not have the guts to do so—who would 828 be happy to see a Bill like this sneaked through Parliament. The duty of the Government is to make plain whether they take this view. I do not believe that they do. I believe that they have too great a sense of responsibility, for such a step would be such an invasion of confidentiality and individual rights that even this unblushing Government would not dare to embark upon it.
My next objection is that the object of the Bill is ultimately to control and regulate the emoluments of top management. I want to know from the Government whether this is their intention. My right hon. Friend the Member for Bexley (Mr. Heath) asked about this question earlier this month. He was unable to put his Question to the Secretary of State for Economic Affairs, who was not here to answer on that day, so he put it to the Minister of State. My right hon. Friend asked: Can the hon. Gentleman give a clear undertaking that he will not legislate to enforce wage agreements or limit wages? The answer that he received was: I should think, yes, we could give that assurance."—[OFFICIAL REPORT, 18th February, 1965; Vol. 706, c. 1350.] That reply would seem to be in conflict with the object of the Bill. The Government should, therefore, make their position clear. I hope that they will see the pit which is being dug for them by the hon. Member for Stepney and that, in the light of the Prime Minister's broadcast the other night—which was a call to the nation as a whole and which was, generally speaking, well received by everyone, irrespective of party—the Government will make their position clear on this issue.
Why does the Bill stop at directors and top executives? Why not barristers? The hon. Member for Meriden (Mr. Rowland) came rather near to making that point in an admirable intervention during the speech of the hon. Member for Stepney. We hear about large sums being earned by leading counsel, some of them luminaries of the party opposite. Why, if we are to have a regulated and controlled economy, should the incomes of silver-tongued advocates be exempt from public scrutiny and, if necessary, proper regulation? Why not disclose the earnings of those people, along with top consultants in medicine and engineering?

§ Mr. R. E. Winterbottom (Sheffield, Brightside)
Why not?

§ Mr. Braine
The hon. Member has had the answer. My hon. Friend the Member for Torquay (Sir F. Bennett) spoke about top consultants in medicine and engineering and explained what was happening. Bearing these matters in mind, the Government will have to carefully weigh the effect of inquiries, regulations and controls of the kind mentioned in the Bill on this very small but extremely important category of workers. While on the subject, what about leading journalists, television personalities, and so on? Consider, for example, university dons, who earn two or three times as much from regular appearances on television and sound radio and from their articles in the newspapers as they do from their readerships.
If there is a case for getting the sort of information desired by the Bill from directors of companies, the vast majority of whom earn relatively small sums, and top executives—who are, by definition in the Bill, the highly paid people—why single these people out if the object is not spite and bitterness and if it is not to try to arouse the jealousy and enmity of one section of the population against another?

§ Mr. Mikardo
Having listened with great interest, and while being in agreement with much of what the hon. Gentleman is saying, may I assure him that if, during the Committee stage of the Bill, he tables Amendments to achieve the point he has been making, he will get a great deal of sympathy and possibly much support from my hon. Friends?

§ Mr. Braine
I have no intention of putting down such Amendments—

§ Mr. Mikardo
Where is the courage of the hon. Member's convictions?

§ Mr. Braine
—for the very reason I gave earlier; because I believe that the principle of confidentiality is most important. There is nothing to prevent any hon. Member from tabling Amendments. I hope that hon. Members opposite will do so and thereby widen the scope of the Bill so that the real motives behind it may be made plain to the nation.

§ Mr. Winterbottom
Since the hon. Member has been speaking about confidentiality 830 in matters concerning top executives, I take it that he would be willing to have wages involved in an incomes policy?

§ Mr. Braine
I am saying that we should all have a sense of responsibility and accept the principle that we must not take out of the kitty more than we put into it. To that extent I am in entire agreement with the hon. Gentleman. However, I must object to a Measure which is designed to control and regulate the emoluments of a very small group of people and no one else. The hon. Member for Stepney thought that about 20,000 people would be involved, but there might be a great many more. There are, for instance, several hundred thousand directors in Britain.

§ Mr. Winterbottom
Do I understand from the hon. Gentleman's remarks that he would desire the wealthier sections of the community to contract out of any possible attempt to secure an incomes policy, realising that such an attempt would do nothing but create suspicion in the minds of the less well off?

§ Mr. Braine
I have not suggested that anyone should contract out of anything. The hon. Gentleman has completely missed my point and has neglected to take account of the interventions which were made earlier. I am not talking about unearned income, if that is what the hon. Member for Sheffield, Brightside (Mr. Winterbottom) has in mind. I am concerned with earned income. Leaving aside any question of high taxation levels, I made no suggestion about anybody contracting out of their obligations. I am not making the claim that anybody should contract out of paying his ligitimate share of taxation.
I am objecting to the members of one small section of the community having the whole of their emoluments laid bare for public scrutiny when there are other categories of high incomes which are not so subjected. I am suggesting to the hon. Member for Poplar (Mr. Mikardo) that in Committee he might like to take the opportunity to have this point thrashed out.
I suppose that there is a case for saying that everything should be brought out in the open and, in this connection, I would like to know what trade union leaders earn. [Interruption.] I would have 831 thought that hon. Members opposite would be willing to argue the case for paying top management in trade unions vastly more than they are getting—possibly on the American scale—to ensure that in bodies which have enormous influence on the economic and industrial life of the country the best men are attracted and their services made available. This would have been a good subject for a Private Member's Motion, but it is certainly not a good one for a Bill and, with that in mind, I hope that the House will reject the Measure.

§ Mr. Ennals
I suggest that the hon. Gentleman tables an Amendment to give effect to his last point. On another topic, does he suggest that there is an argument for excluding what he admits is a small section? It is suggested that 22,000 to 25,000 people are involved. Does he go on to argue that the position of nurses, doctors, Army officers, policemen, civil servants and all the rest should be excluded from this? What is he saying?

§ Mr. Braine
The hon. Gentleman should not be so naïve. I did not wish to repeat what had been said by earlier speakers. I was saying that all the details of emoluments and benefits received by top management in industry, as in the case of the emoluments of professional people and ordinary working people who are subject to Income Tax, are in the possession of the Inland Revenue. One does not need this Bill to provide that information.
If the object of the exercise is to look at the whole range of emoluments and fringe benefits enjoyed by certain classes of people—after all, several millions of people enjoy more than a single basic wage—it can be remedied in a perfectly simple way. It can be remedied by the Government making provision in the next Finance Bill for the Inland Revenue to provide all that information to the First Secretary of State's Department. Then let us have the inquiry. All I am objecting to—I have every right to object to it and I think that people outside the House will see the justice of this objection—is a Bill based upon quite different motives being introduced into the House to single out one section only.

§ Mr. Francis Noel-Baker
The hon. Gentleman has made a plea for confidentiality in respect of the salaries and 832 fringe benefits of those in the private sector. I do not agree with him on that, but, if he means it, why does he not apply it—or does he apply it—to the salaries, emoluments and fringe benefits of those in the public sector, about which he and his colleagues are constantly asking Questions?

§ Mr. Braine
The hon. Gentleman is wilfully misrepresenting me. I am saying that the Bill strikes at the present confidentiality of our tax procedures. It would not enable us to get any more information than can be obtained at present through existing Inland Revenue channels. I therefore object, on principle, to the idea of confidentiality being breached in respect of one small but admittedly important section of the community. That is what I am driving at.
I think that the debate has served a very useful purpose. It has already brought to the surface many of the thoughts which were lurking in the minds of hon. Members opposite. I am reminded of the words of the King, in Hamlet: My words fly up, my thoughts remain below. Some thoughts have been dragged out, particularly those which came out in the interventions of hon. Members opposite.
I hope that the Government will take due notice of these, will give us a very clear statement of the position, and will show that they are not in any way influenced by the prejudiced and irresponsible attitude which has been adopted by so many of their supporters.

§ Mr. Colin Jackson (Brighouse and Spenborough)
I have examined the Bill with some interest. I was at first somewhat put off by its title—"Emoluments of Top Management (Disclosure and Regulation) Bill". I have always believed in short words. "Pay" would be better. One does not talk about alighting from a bus. One gets off. One does not tender the correct fare. One gives the right money. Perhaps an Amendment will be tabled in Committee to alter the Title accordingly.
I have listened with great interest to the speech of the hon. Member for Essex, South-East (Mr. Braine). I am not aware of the principal products of his constituency, but I think that herrings of many varieties, principally red, must 833 loom large there. I want to deal with the hon. Gentleman's point, if one can call it that—"miasma" would probably be a better description—about why one group of persons should be singled out for the exposure of their income in this fashion. The hon. Gentleman said that this point was already covered, in that they had to declare their income to the Inland Revenue. The point is that the Top Management Emolument Statement, details of which appear on page 11 of the Bill, would contain details not only of salary, but of share option, pension and expense accounts, and these details would be published.
The statement of one's accounts to the Inland Revenue is confidential. The basic point here is that the publishing of the incomes of top management would subject them to the glare of publicity. Many of those who do not know the details of internal Revenue declarations would inevitably ask, "Why should so-and-so in top management claim an expense account of £5,000?" If the vast mass of the people have to exist on the limited expenses which are made available, it is time that the glare of publicity was brought to bear on the kind of expense account living which goes on in a very small section of the community.
The Prime Minister has urged us to increase our exports and productivity. At the same time, however, there exists this group with yachts and company flats in London. There is the group with expense account lunches. How can the ordinary people be encouraged to work harder and produce more when this small section of the community is not in any way conforming to the general standards?

§ Mr. Braine
I am sure that the hon. Gentleman does not wish to misrepresent me. Would not he agree that large expense accounts are not limited to business men? If this be the case and if it be desirable to bring the glare of publicity upon expense accounts, whether they are justified or not, would he not agree that the Bill is remiss in not requiring these particulars to be made public in respect of everyone? Why single out one category?

§ Mr. Jackson
I am not singling out any particular category. This will apply to the public sector as well. What we want is a clear indication of the way 834 in which certain individuals, against the interests of the general community, are enjoying their expense account advantages. We wish to keep in relationship the emoluments of top management in private industry and those of top management in the public sector. The working of the Bill, by indicating the amount of reward which management in the private sector gets, will not in any way reflect against increases in emoluments in the public sector. It is not the intention of the Bill, as the hon. Member for Essex, South-East has suggested, necessarily to drag everybody down to some kind of sordid, mean level. One result of the Bill will be to provide an opportunity for there to be an increase in certain salaries in the public sector. If we are to encourage effort on the part of the whole of the community we must make sure that this small group of persons who, contrary to general principles, do not have their salaries exposed to the scrutiny and gaze of the public, should now be brought into line with the rest of the community.
On the question of fines where there is a nonconformity with the provisions of the Bill, these could well be left out. This is a matter of public concern and not private conviction, and perhaps in Committee my hon. Friend the Member for Stepney (Mr. Shore) will consider leaving out this provision.

§ Mr. Robert Cooke (Bristol, West)
I am glad to be able to take part in this debate. I should at the outset make my own position abundantly clear to the House, though I have done so on a previous occasion. I am not likely personally to be affected by this Bill for as far as I can see into the foreseeable future. However, I have the privilege to represent a great commercial city, a city whose whole life depends upon the efficiency and prosperity of its industry. I have represented that city for eight years in this House and for three years before that in local government. I can claim throughout that long period to have become intimately acquainted with the workings of the great world of commerce, with the methods of businessmen, and with some of the things which are alleged to happen by the sponsors of this Measure.
835 Also I can take a dispassionate outlook on the affairs of trade unions, having had all those years of experience in this House. I have listened for many long weary days to the trade union members here discussing their problems. Indeed, my knowledge of trade unionism goes back in history because the next village to my own in Dorset is the village of Tolpuddle in which trade unionism has its origins.

§ Mr. Mikardo
No.

§ Mr. Cooke
Does the hon. Member wish to intervene?

§ Mr. Mikardo
I merely said "No". The hon. Member has not got it right.

§ Mr. Cooke
The hon. Member has intervened from a sedentary position and has expressed disagreement. I have always understood that the Tolpuddle martyrs, so-called, the victims—

§ Mr. Deputy-Speaker
I hope we shall not pursue the history of the trade union movement.

§ Mr. Cooke
I have absolutely no intention of taking up the time of the House on that matter except in dealing with the intervention, and I will conclude that point by saying that I understood that these people, who were the victims of a previous Liberal Government, gave birth to the great trade union movement which exists today. I am sorry if that is wrong.
We have heard a lot about the activities of Members of Parliament connected with the sort of things that this Bill is attacking, including the suggestion that certain hon. Members spend a great deal of their time indulging themselves in free lunches, dinners, trips abroad and so on. All I can say about that is that entertainment of an ample nature in the middle of the day makes me feel positively ill and does not help me to conduct myself in this House during the afternoon. I have seen only a little of it, but, from what I have seen of these things, I have found that Members on both sides of the House seem to take part in almost equal numbers, and these functions serve some purpose just as they do in the world of business, in which they are so bitterly attacked by hon. Members opposite. It is no 836 disgraceful thing to meet people and discuss matters over a meal even of a modest nature—

§ Mr. Ennals
To what argument are you replying? I have not heard any suggestion from this side of the House that Members of Parliament should not take people out to lunch or go abroad.

§ Mr. Cooke
The hon. Member is being deliberately evasive. One of my hon. Friends at the beginning of this debate, when some hon. Members opposite were not here, said that the provisions of this Bill were not necessary because of form P11D which dealt with all the expenses about which I am speaking. It is for that reason that I have introduced my remarks by referring to these matters.

§ Mr. Ennals
I was asking about your references to Members of Parliament. I am not aware that there have been from this side of the House any allegations about Members of Parliament misusing their time or other people's money on journeys.

§ Mr. Cooke
I should be quite out of order if I were to pursue this matter at great length. However, during the time that the hon. Gentleman was outside the Chamber and when Mr. Speaker was in the Chair there was an interchange involving this very matter.

§ Mr. Cooke
The hon. Member is shaking his head, but there was an exchange on this subject and if the hon. Gentleman cares to examine my remarks he will find that I was not attacking this sort of thing. I said that it was no bad thing that expenses were allowable in such a way that it was possible for people to meet socially and discuss matters of importance. [Interruption.] The hon. Gentleman must not interrupt from a seated position.

§ Mr. John Hynd (Sheffield, Attercliffe)
If we are not allowed to say "No" or "Yes" when the hon. Gentleman is speaking, will he please refrain from referring to an argument which is completely without foundation and which has been completely disqualified by the Bill?

§ Mr. Cooke
I will, of course, come to the Bill. I am anxious to do so as soon as I possibly can. I notice that those who 837 are so anxious that we should proceed are those who have been in the Chamber for a shorter time than others, and indeed some have only just come in. Perhaps I should not say any more about this question of the activities of Members of Parliament, but I should have thought it was fairly well-known what went on and that no one in this House would wish to hide anything of that description at all. Some of the remarks which have been made in this debate on that subject have been most misleading and unfortunate.

§ Mr. Mikardo
Only one Member during this debate, of which I have heard every single word, has made any reference at all to the subject of Members of Parliament in this connection. That was the hon. Member for Torquay (Sir F. Bennett). Nobody on this side of the House had uttered one single word in the argument which the hon. Gentleman is now pretending to refute.

§ Mr. Cooke
I am glad to have the hon. Member's intervention. He will recall that when his hon. Friend was on his feet, a number of hon. Members—

§ Mr. Deputy-Speaker
Order. I am sure the whole House wishes to get on with the debate.

§ Mr. Cooke
I am grateful, Mr. Deuputy-Speaker. I am afraid that I have been somewhat sidetracked. I am sorry that I have stimulated hon. Members opposite to lead me into these digressions.
This Bill is a most extraordinary Measure introduced by some somewhat extraordinary persons. I do not propose to read out the biographical details of the hon. Members who have brought this Measure before the House, except to say that the proposer describes himself as a political economist and is undoubtedly a man well versed in the theoretical side of this problem. The hon. Member for Dover (Mr. Ennals), who has now come back into the Chamber, is, as we know, acquainted with a vast number of matters both at home and abroad. It would appear that his secretaryship of the Anti-Apartheid League and of the Spanish Democrats Defence Committee—

§ Mr. Deputy-Speaker
I must ask the hon. Gentleman to address himself to the Bill. We are not discussing the hon. Members whose names are on the Bill. If the hon. Gentleman will come to the Bill I shall be very grateful.

§ Mr. Cooke
I will turn over the page of the Bill which I was discussing and come to the Clauses which I should like to examine in some detail. The Bill has already been castigated by the hon. Member for Brighouse and Spenborough (Mr. Jackson) for its misleading Title, and it would have been better if the proposers had come clean and called it the Pay (Top Management) Bill or something like that.

§ Mr. Ennals
I thank you for giving way. You should know that the Bill does not deal with pay but with all forms of income.

§ Mr. Deputy-Speaker
Order. This is the second time that the hon. Member has used the expression "you". He must not address a Member personally. He must address him through the Chair. "You" in this context means the Chair.

§ Mr. Ennals
I respectfully apologise, Mr. Deputy-Speaker. The point I was making was that the hon. Member for Bristol, West (Mr. Robert Cooke) was mistaken in his reference to the Title of the Bill, in that the Bill does not just deal with pay but with all forms of income. That is why "Emoluments" is used.

§ Mr. Cooke
I was merely following the castigation of the hon. Member for Brighouse arid Spenborough who objected to the use of this wrong word.

§ Mr. Jackson
rose—

§ Mr. Deputy-Speaker
I have no power to stop interventions if an hon. Member gives way, but I would point out that there are many hon. Members who wish to speak in the debate and that interventions lengthen speeches.

§ Mr. Cooke
I am grateful to you, Mr. Deputy-Speaker. I understand that the hon. Member for Brighouse and Spenborough does not now wish to intervene. I should like to get on with the main burden of my speech. I regret that I have been so much interrupted so far that this has caused delay.
839 One is bound to ask a number of questions on the Bill. In my submission it has not been answered by proposers of the Measure why certain bodies of people are excluded. We have been told that Amendments can be put down in Committee. Why did not the proposers of the Bill put these bodies down when they drafted their Measure? Why are the co-operative societies excluded, as I believe they are from my reading of the provisions of Clause 2? Perhaps we can have an answer on that subject when we come to that point.
In Clause 3, on the subject of disclosure, … the Minister shall by order make provision for an annual return of top management emolument statements … May we be informed whether these will be debatable orders? What procedure will be followed? Will the House have an opportunity of debating the orders? I submit that it should, but if that were the case it would take up an inordinate proportion of the time of the House. It would seem that the whole of the time of the House would be taken up by going into minute details on matters which are better left to the Inland Revenue.
Then there is the provision for a Higher Incomes Council, a very high-flown phrase which is surely in some danger of being contracted into "Hic", for everything has a nickname nowadays. The proposers might have thought of that. This word "Hic" lends itself to ridicule. There must be some way of getting round that. We have "Nicky" and "Neddy" and I wonder what the cartoonists will make of "Hic".
There are to be seven members of the Council. Is the Council to be included as one of the bodies which ought to be mentioned in the House of Commons Disqualification Act? Is it one of those public bodies to which Members of either House cannot belong? Can we know a little more about that? The Bill mentions £10,000 as being the figure at which investigation should begin, but does the Bill not also say that the Minister can by order vary this amount, and cannot the provisions of the Bill in fact apply to any income at any level? That question has not been answered, although the hon. Member for Stepney (Mr. Shore) spoke for nearly an hour in moving the Second Reading.

§ Mr. John Hynd
Forty-five minutes.

§ Mr. Cooke
It was nearer an hour than 45 minutes, but it is not very profitable to pursue that at this stage.
The Bill contains many imponderables which perhaps could be explored in Committee, but it is the wish of many hon. Members that the Bill should never reach the Committee stage. Therefore, hon. Members opposite have been introducing it to gain the opportunity of making all sorts of wild allegations and inferences, and unless these points are examined in detail they will get away scot-free and these insinuations and innuendoes will remain. I hope for that reason that the rest of the debate will be conducted along the lines of minute scrutiny of everything contained in the Measure.
Before leaving the subject of the Bill, I should like to say something briefly about the words in the Schedule. There is no explanatory remark on the front of the Bill about the Schedules. It merely says that there are three. It would have been nice if we had had an explanation. I find most offensive the specimen Top Management Emolument Statement in Schedule 2 for "Company A". I am not suggesting that there is a Mr. Julian James who holds all the posts mentioned in the Bill, but it is abundantly clear that the Schedule and the subsequent statement have been drawn up in an utterly frivolous fashion to make a joke of the whole thing at the expense of people who are contributing by their earnings and activities to the prosperity of the country.
We have the ridiculous firm name, "Megalopolis Limited". The hon. Member for Swindon (Mr. Francis Noel-Baker), who is one of the sponsors of the Bill and is well-versed in the Greek language, perhaps had something to do with the drafting of that. Then there are "International Enterprises", "Lunar Explorations" and the "South Sea Company". I have here the charter of the South Sea Company. [An HON. MEMBER: "Read it."] I know that if I did I would be doing a disservice to the House and I would be putting you, Mr. Deputy Speaker, in an embarrassing position.

§ Mr. Deputy-Speaker
The hon. Gentleman would not be putting the 841 Chair in an embarrassing position. He would not be allowed to read it.

§ Mr. Cooke
All these matters are referred to. Hon. Members opposite have merely used the Bill as a vehicle to make all these inferences and innuendoes against people who are spending the vast majority of their time working themselves to death in the interests of the country and who have very little leisure and who, if the provisions of Form P11D, to which I will not refer in great detail, were carried out would have very little chance of enjoying any leisure at public expense. [Laughter.] Hon. Members opposite laugh. I will not weary the House by reading out the rest of that form, except to say that my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), who read out parts of it, did not do it justice. Every minute detail of every kind of expenditure is asked about. Everything has to be put down as clear as day, and the Inland Revenue will know all about it.
The hon. Member for Stepney referred to Sir Bernard Docker, but Sir Bernard Docker is as atypical of the world of business as a Member of the House of Commons who is expelled from the House for misconduct. To suggest that some of the startling revelations one reads in the Sunday newspapers about the misdoings of members of various professions from time to time are typical of those professions is grossly misleading.
The Bill is nothing but a charade, a vehicle for political pamphleteering. Indeed, the hon. Gentleman who introduced it is a most brilliant political pamphleteer, but he should confine his efforts to pamphlets and not introduce misleading Bills into the House. Private Members' time is most valuable. Constructive legislation can be brought forward on these occasions, but the hon. Member for Stepney knew jolly well when he moved the Second Reading that he had not a hope in hell of getting the Bill through Parliament. He introduced it merely in order to use our procedure as a vehicle for his political activities.

§ Mr. Rowland
Are we to understand that the House of Commons is not to be used as a vehicle for political activities?

§ Mr. Cooke
I shall not follow the hon. Gentleman into that. I merely remind 842 him that, if the hon. Member for Stepney seeks to use our time in this way, he must expect to be answered and have his attacks countered from this side of the House.
Much play was made by the hon. Member for Stepney of what I think he called an incomes research unit. He never stopped talking about research. Apparently, this research unit is to be a sort of sleuthing organisation to be established under the Bill. Why did not the hon. Gentleman have the office of the Paymaster-General somewhere tied up with his proposals? There is plenty of spare time and facilities there. The principal effect of the Bill on Government Departments, as far as one can see, would be that the Ministry of Economic Affairs would be permanently clogged with work.
It will be interesting to hear what the Government have to say about the Bill. One question has not been asked today. What do the Government propose to do about a Money Resolution for the Bill? It would undoubtedly require one. Will they give it a Money Resolution? If not, we need waste no further time on the Bill because it cannot get anywhere without a Money Resolution. That specific question must be answered before hon. Members are asked to vote on the Second Reading.
I do not wish to labour the point about the Committee stage except to point out that it is clear from what has already been said that, if the Bill ever were to go to Committee, it would be massacred by Amendments, massacred by its opponents and flooded by those who wished to make it better or to extend it. We should be spending many weary days on it right until the end of the Session. Perhaps the Committee stage could be taken on the Floor of the House.

§ Mr. Donald Chapman (Birmingham, Northfield)
With the Guillotine.

§ Mr. Cooke
The hon. Gentleman now mentions the Guillotine. What a brilliant idea. The time-table Motion would have to be debated on the Floor.

§ Mr. Mikardo
The hon. Gentleman misunderstood what my hon. Friend meant. He was proposing the Guillotine not for the Bill but for the hon. Gentleman.

§ Mr. Cooke
The hon. Member for Poplar is noted for his revolutionary 843 tendencies. I noted, also, that the hon. Member for Stepney talked about using an axe to cut through the morass of misrepresentation in this matter.

§ Mr. Chapman
Cut the roots.

§ Mr. Cooke
If one cuts the roots, the tree dies, as far as I know.
Is the Bill to go to a Standing Committee or have its Committee stage on the Floor of the House, with Government time and Government assistance, being taken alongside all the other splendid Measures which are to occupy our leisure hours for the rest of the year, Bills about land, steel, the death penalty, the Budget and so on? Will it fill up the idle evenings which hon. Members find so difficult to spend anywhere but in the House? I wonder whether those hon. Members opposite who have not come here today realise what their hon. Friends have proposed in introducing the Bill. I imagine that there will be some absentee Members opposite who would not thank their hon. Friends for introducing the Bill if they really knew what it was all about.
I conclude with a reference to the activities and attributes of some of the more robust hon. Members opposite who, after spending their lives in trade union work, fighting for what they believe, come here in their retirement to grace the benches of this House. Some of those hon. Members are decried by young and enthusiastic people like the hon. Member for Stepney. But those hon. Members give much to this place. One of the things which they give best is a robustness of language, and I think that some of those tough trade union gentlemen, after looking into the provisions of the Bill, will be able to tell their enthusiastic young hon. Friends exactly where they can put it.

§ Mr. Christopher Rowland (Meriden)
Like the hon. Member for Bristol, West (Mr. Robert Cooke), I open by saying that I have no private interest in the Bill. Having worked for three different types of organisation before coming to the House, a large private company, a large public corporation, and the headquarters of a large political party, I confess that my emoluments, although 844 they have, naturally, varied, have never come within range of the Bill's provisions. Nor, to the best of my recollection, have I ever been to a night club in this country, or even tasted tepid champagne.
I welcome the proposal for disclosure of incomes at a certain level. Some of my hon. Friends referred to the Conservative mentality as being like the Victorian mentality. In that context, one could say that this is, as it were, a "bikini" Bill. It is designed to expose, and to the public advantage.
One depressing feature of the case deployed so far by hon. Member opposite is that not one has typified enlightened opinion in some business circles. There are many people in business who are not averse to the publication of their salaries and emoluments. It is regrettable that, so far, their voice has not been heard through the mouth of the party opposite which is usually held to represent business in the House. There is a growing trend towards publicity about emoluments. One has only to study the "quality" newspapers on Sundays to see how this trend is becoming stronger.
Some hon. Members opposite have said that disclosure of salaries to the tax authorities goes far enough, but they know as well as we do that this is not what the Bill is about. The Bill is about publication to the world, not merely to the Inland Revenue.
Some people in business advocate that salaries should be known because the information would act as a stimulus to people in the organisation. This may well be true. Shareholders should know what their directors and top executives are earning. Proper disclosure of expenses might lead to some moderation in the amount of expenses claimed.
I hope that publication of salaries would have the effect of closing the gap between the public and private sectors, and I hasten to add that I should close the gap upwards rather than downwards. If I may say so to the sponsors of the Bill, they may find that publication of salaries could lead to what one might call executive wage-drift upwards rather than downwards. This may not necessarily be a bad thing, but it could be a result of the Bill and one which has not been foreseen.
845 I have two major reservations about the Bill. One will probably cheer the sponsors and the other depress them. First, I wish that the Bill's provisions applied further—to private unquoted companies. My opinion—this is shared by many people in financial circles—is that it is here that there is probably the greatest amount of tax avoidance or evasion, and here that there may well be people earning salaries which are not justifiable by any outside criterion. I should also like to see the Bill applied to salaries not merely above £10,000 but above £5,000.
Again, on the point which I have just made, it may well be that there are people, particularly in private companies£family companies, unquoted companies£earning between —5,000 and —10,000 a year on which publicity should be shed, but who will be completely avoided by the Bill. It may well be difficult to have an emolument of more than —10,000 a year in this country and not be worth it, but it might well be possible to have an emolument between —5,000 and —10,000 a year and not be worth it.
This leads me to comment about the inequities inherent in the Bill as it stands. The hon. Member for Essex, South-East (Mr. Braine) rightly drew attention to some of them. Unfortunately, he did not allow his analysis to lead to the conclusion to which I and my hon. Friends thought it inexorably led. He quoted barristers—as I had done in an earlier interjection—surgeons, "pop" singers and television stars. I know that there is a theory that these people are engaged in risky occupations and, therefore, deserve high rewards by comparison with members of boards and executives in companies who are thought to be engaged in totally safe occupations but I do not think that the distinction can be drawn anything like as easily as that.
One has only to recall what has happened in some large companies in the last few years when they have slimmed their administrative staff and overheads to realise that there is also a risk even in large companies. So I think that the risk factor does not mean that barristers or television stars should be excluded and people drawing their incomes from companies or large corporations included.
846 To mention another possibly inequity, why should civil servants not be included? I know that there is no one in the Civil Service earning £10,000 a year. This is only exclusion by figure, but at the moment these people are excluded by definition. Why should there not be a review of Civil Service salaries by the Higher Incomes Council, taking into account the security factor which civil servants enjoy? It may well be that £8,000 a year in the Civil Service is equivalent to £12,000 or £15,000 in private industry in terms of the security factor projected over many years.
Also, why does the Bill apply to boards at any level, but only to people earning more than £10,000 a year if they are not on a board? Presumably we might have a situation arising where a man not on a board earned £9,000 a year and was unaffected by the Bill but someone on a board earning £5,000 a year was affected by it.

§ Mr. Robert Cooke
According to Clause 2(1,c) the Minister can alter the figure. The Minister can cause any level of income to be investigated.

§ Mr. Rowland
I agree, but I am discussing what is in the Bill to start with.

§ Mr. Robert Cooke
That is in the Bill.

§ Mr. Rowland
My understanding is that an executive earning £9,000 a year would not be affected, but that a member of a board earning £5,000 or £6,000 or, indeed, any figure would be affected. This could lead to all sorts of administrative juggling in companies which would be undesirable and would negate the purposes of the Bill.
Another inequity arising from the wording of the Bill—I am trying to assist the sponsors in this—is that it would appear to exclude anyone earning more than £10,000 a year if he earned it from a variety of companies or organisations. As worded, the Bill seems to refer only to emoluments from one source. We have in industry now a comparatively small number of people earning more than £10,000 a year as consultants to a wide variety of companies. These are points which I should like my hon. Friends to bear in mind if the Bill goes to Committee.

§ Mr. Stephen Hastings (Mid-Bedfordshire)
The hon. Member is wrong again. Clause 2(1,c) applies to: emoluments amounting to £10,000 or more in any one year but earlier the paragraph states that: the company either alone or in conjunction with any holding or subsidiary company pays or agrees to pay". Surely that covers the hon. Gentleman's point.

§ Mr. Rowland
I had observed that point. I thought that it met my criticism, but it does not. It refers to subsidiary or holding companies within one organisation and not distinct companies. I am grateful to the hon. Member for having buttressed my point.
I am making criticisms which, I trust, will be taken as in support of the Bill. However, I want to make another general criticism which I think could be held to be against the Bill in its totality. My hon. Friend the Member for Brighouse and Spenborough (Mr. Jackson) expressed doubt, as I do, about the desirability or possibility of actually regulating top incomes. There is much to be said for a Higher Incomes Council which would express opinions, might well advise and could advocate restraint. There is no harm at all about the play of publicity and discussion in this field. But regulation is a very different matter indeed, and there are three reasons why we must tread very carefully in this respect.
First, there is a principle. I will not say that if principles are to be infringed these are not the section of the community most able to withstand such infringement, but there is a principle involved. It is that of deciding to control at one point in the economy, and at only one point, and at a point which is determined by the Bill, or, in future, by the Minister, what salaries shall be. All incomes, from top to bottom, are important in terms of the total national economy, and it is difficult in principle to decide that at one point only shall there be control over what incomes shall be. It would be a very good trade union principle to advance.
I know of no trade union leader—in this sense the Institute of Directors is a trade union—who could accept that there should be, by order of a Minister or this House under certain provisions, a 848 maximum figure fixed for any salary. That is the point of principle.
The second point is administrative difficulty. If we go ahead with regulation, I envisage the football being kicked back and forth between the Higher Incomes Council and the Minister under Clause 9(4). We might have a Minister in power who said, "We should pay more than you are recommending", or there might be one who said, "No, it should be less than you are recommending". The chances of identity of view are statistically probably quite slight. The effect of this going back and forth—and it is unclear whether the process would be under the public gaze—would be great administrative difficulties.

§ Mr. Orme
Surely this situation appertains throughout the whole of industrial negotiations. Why should the higher income group be excluded from publicity when every other section of wage or salary earners has its claims dealt with publicly?

§ Mr. Rowland
I have already said that I am in favour of publicity for higher incomes, but I am unclear, having read the Bill, about what would happen if the Higher Incomes Council stated that an export director of a large company should only be paid £x a year and the Minister said that it was not enough and that the man might quit or the company might try to evade it. This would add to the administrative problems.

§ Mr. Robert Cooke
rose—

§ Mr. Rowland
I shall not give way to the hon. Gentleman. I do not want his assistance.
There is another question of administration. It is that of singling out who should be given higher incomes and who should not. The Bill's sponsors have mentioned export managers. In some ways that proposal is admirable, but I do not see how one can say that only the export manager in a company whose total export performance depends on production and research shall, as it were, have a "plus factor" laid down for him.
Regulation could, of course, lead to evasion, or certainly the thought of evasion.
Incidentally, I am not sure what is meant by saying that the Bill should not apply to Northern Ireland. I have visions 849 of companies paying their salaries in Northern Ireland, which might be good for the economy of Northern Ireland. One could have a situation in which a company might say, "We do not accept the figure laid down by the council and we are going to evade it in some way or other". That would be a most undesirable situation and would increase still further the administrative difficulty.
The third reason for my doubts about regulation of remuneration is that we in this House already have that power through our tax powers. Hon. Members have tried, as it were, to use this point as an argument against publicity about salaries but, of course, there is a valid point involved in this context. As a nation, through this House, we do determine what people get after tax. We have power to control in that sense. To that extent, regulation through a different medium is, in a sense, unnecessary. I therefore have very considerable doubts about not only the principle but—even more important—the actual practice of regulation.
Finally, I believe, despite what hon. Members opposite have said, that we may be able to look back to this debate as a further step towards the creation of a more open and a better informed society. I think that this is highly desirable. Indeed, in this sense, the growing public appreciation in the last two or three years of the value of the experience and abilities of a man like Dr. Beeching has been a healthy phenomenon. I believe that the chances of a broad measure of support would be greater if, at this stage, the powers to regulate were not pressed. Indeed, I would say that it would be a reflection on hon. Members opposite if they did not feel that they could go this far.

§ Mr. Stratton Mills (Belfast, North)
I apologise for having missed part of the speech of the hon. Member for Meriden (Mr. Rowland), having been out for something to eat. The whole House will agree that he made many pungent comments in the last few minutes. I particularly enjoyed the speech of the hon. Member for Stepney (Mr. Shore). It was excellent. I did not agree with it, but he presented the case most skil-fully and I add my congratulations.
850 On reading the Bill, I had two reactions. The first was that it had been drafted by a highly intelligent lunatic, but the more I thought about this the more determined I became that this could not be the case, because anyone who saw the skill with which the hon. Member drafted the Labour Party election manifesto, in which he created an impression of action without commitment, would certainly not wish to question his sanity.
My second reaction was that this was a hoax, a highly sophisticated Fabian joke, an impression of an extension of the George Orwell society of 1984. The more one listened to the argument put forward for the Bill the more reinforced I became in my view that it was not intended that we should take this exercise very seriously.
Indeed, I look forward very much to hearing the Government's reaction. It has been noticeable that, throughout the debate, no Treasury Minister has been present and I understand the Minister of State, Board of Trade, is to reply. I find it very difficult to determine his Departmental responsibility in this and it would be much more helpful to have a Treasury Minister replying.
Another thing which occurred to me—one of the contemporary tragedies of politics today—is that although there are many able members in the present Cabinet, not one, I think, has business experience. This is not only bad for the Labour Party, but for the country as a whole. Perhaps industry is to some extent to blame in this. I hope that, when the Government go into opposition again—which will not be very long—industry will see its responsibilities for helping in their education by giving members of the Government, when they leave office, the opportunity to go into industry to join boards of directors, and to learn the economic facts of life by hard experience.
I do not often agree with the hon. Member for Buckingham (Mr. Maxwell), or the hon. Member for Poplar (Mr. Mikardo), but they, at least, know something about private enterprise and business, about taxation and the Inland Revenue. In the American phrase, at the end of the week they have had to "meet a payroll" and their contributions, and the 851 contributions of other hon. Members opposite like them, with business experience, is most beneficial.

§ Mr. Mikardo
I am grateful to the hon. Gentleman for his complimentary remarks about me. Perhaps he would like to know, since he is urging business to give experience to the Labour Party, that, although I have never qualified for being dealt with under the Bill, there have been three or four occasions on which I was made offers which would have qualified me for the Bill. But all of those offers were conditional on my giving up the Labour Party.

§ Mr. Stratton Mills
I was paying a compliment to the hon. Member.

§ Mr. Deputy-Speaker
Order. These personal confessions are very interesting, but I hope that hon. Members will get back to the Bill.

§ Mr. Stratton Mills
I follow what the hon. Gentleman has said, it is a great pity that more hon. Members opposite, while remaining firm Socialists, have not had the opportunity of a business commitment.
I am struck by the comparison between the salaries in the higher reaches of business in this country and those in the United States of America. I have with me the Daily Mail Income Tax book, which enables me to make some calculations about Income Tax and Surtax. This shows that the tax rate, Surtax and Income Tax, on the slice of income over £15,000 a year in Britain after the Budget to be presented in April will be at least—and we have not yet heard the Chancellor of the Exchequer—18s. 3d. in the £, a really penal rate of taxation.
Making the calculation for the year 1964–65, a person earning £15,000 a year who has the massive salary increase of £5,000 a year to £20,000 a year, pays on the extra £5,000 tax at 17s. 9d. in the £ of £4,322—on the assumption that he has no dependants, and the differential for dependants makes very little difference at that high rate. Out of that increase of £5,000 he is left with a spendable income of £678. Under the Chancellor's new proposals for an extra 6d. in the £, in 1965–66 he will have a spendable income out of that £5,000 of £533.
852 I hope that this reinforces the point that the very high salaries of which one reads are gross salaries and that the "take-home" income for those in these higher reaches of industry is comparatively small. The penalty of high taxation at this rate is damaging to enterprise and is certainly misleading as to the real rate of the salary.
I have made the calculation for a person whose salary goes up by the enormous increase of £50,000, from £20,000 to £70,000 a year. At the end of the day, his spendable income out of the £50,000 increase is less than £5,000 and his net income out of £70,000 is only about £13,000. That is a very considerable sum, but it bears no relation to the income which he is publicised as having.
I was also struck by the attempts to deal with the problem of evaluating the services of top management. The hon. Member for Stepney admitted the difficulty, but tried to deal with it by the only method of evaluation possible. Is it practical? How do you value the services of Sir Isaac Wolfson as compared with the head of the London Cooperative Society, Mr. Deputy-Speaker? What is the basis for saying that the salary for one shall be £x and the salary for the other £y? There is the same problem when one values a Renoir, or a Sibelius symphony. Are we to say that so many hours at work by Sibelius at so much an hour will be valued at £x? When one moves into that kind of evaluation one is faced with really impossible difficulties, and, despite his well presented argument, the hon. Gentleman was not able to meet that point.
I was amazed by the speech of the hon. Member for Dover (Mr. Ennals). Again, it was merely testimony to the lack of experience in tax matters among so many hon. Members opposite. The form P11D is as thorough and as diligent as ever was the Spanish Inquisition and certainly the variety of questions to determine the details of expenses is very wide.
The point of asking these questions by the Inland Revenue is not purely so that the facts will be on record. It is so that the Inland Revenue can probe every item to see whether it is justified in that company and for that person. For example, 853 if a company was putting down the cost of a flat in Park Lane, the Revenue would probe very carefully to see whether the flat could be justified, or whether it would be cheaper for the management to use an hotel and pay hotel expenses.
The same is true of travel. Is the travel justified for that company? That can be carefully probed if there is any question in the tax inspector's mind. The same is true of motor cars. It will be within the knowledge of many hon. Members that the Revenue will ask, if a motor car is included in the company's accounts, how the car is used, what proportion is for private and what for company motoring, and, in some cases, it will ask that a log-book should be kept. Many hon. Members have greatly underestimated the power to deal with expenses which the Revenue has and they also greatly underestimate the extreme diligence of the Revenue in searching out the person trying to get away with an unjust claim.
The hon. Member for Stepney argued the necessity for publicity for salaries in the upper income grades. He put his case well, but we are left in the dilemma of not knowing where to stop. One could probably make an equally convincing case for saying that every person's Inland Revenue papers should be open to inspection by the public for a fee, yet that would be a case with which I would strongly disagree, regarding it as an entirely unjust interference in the liberty of the individual. We are faced with the problem in this type of Domesday Book survey, of not knowing where to end. I do not know the answer, but it is nothing like what has so far been suggested.
I was also interested in the criteria mentioned in Clause 7(3). Many criteria are suggested to help the council decide management salaries, but the word "profit" does not appear. One of the most important things in an industrial country is a growing rate of profits. One should pay special tribute to those companies and those managers who, by their enterprise, have been able to increase profits. I regret that that criterion is not included.
I end by considering the Bill as a whole and the speech of the hon. Member for Stepney. I ask whether the Bill 854 will help profits, will it help growth, will it help productivity, will it help exports and will it help the creation of new wealth for this country. The answer is overwhelmingly "No, Sir." I would describe the Bill as a "nosey parker's charter" and for that reason I oppose it.

§ Mr. Donald Chapman (Birmingham, Northfield)
I have my reservations about the Bill and I shall come to them in a moment, but if anything would impel me to vote wholeheartedly in favour of it, it would be some of the speeches from hon. Members opposite today. I would except the hon. Member for Belfast, North (Mr. Stratton Mills) and the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), if I may do so without being patronising, but some of the other speeches from hon. Members opposite have been a disgrace. They have been at a deplorable level of debate and have not faced any of the issues which my hon. Friend the Member for Stepney (Mr. Shore) has tried to examine.
The catcall all the time has been about creating prejudice, creating envy and creating jealousy. This has been the cry against every social reformer throughout the centuries when he has tried to look at some item of economic or financial affairs which needed the searchlight of inquiry and judgment afterwards. The level at which some of these remarks have been made today would only impel anyone, even with the strongest reservations, into the Lobby in support of the Bill.
I come to my own reservations about the Bill. The general conception should, in fact and in practice, first be covered by the incomes review machinery which my right hon. Friend the Secretary of State for Economic Affairs is to set up. May I put it this way to my hon. Friend the Member for Stepney? If we have an incomes review body which examines only the lower levels of remuneration, neither the trade unions nor anybody else will have very much faith in it. It must have the power and the duty to examine remuneration at all levels. I should have thought that one of the reasons why my right hon. Friend has got the trade unions to support him in this new endeavour is that he must have made it clear that big as well as small 855 incomes will come within the ambit of the new review body's work.
A number of hon. Members have referred to the law as it stands—Section 196 of the Companies Act, 1948—under which companies must publish every year the amounts paid to directors, including emoluments. I would say to the hon. Member for Belfast, North that I am a company director, so he need not worry too much about my knowledge on this point. I do not think that Section 196 is adequately enforced. If it were, and if the results of what is published could be collated, analysed and considered by the new incomes body, I should have thought that the main object of my hon. Friend in introducing the Bill would be met. The information would be made available, and there would be commentary on it to say how far the material uncovered was within or without the national interest.

§ Mr. Shore
I agree with my hon. Friend up to a point, but I put it to him that we are dealing with a very specialised group of rewards and with a very important level of reward. Therefore, there is a case for having a special body which will consider all the circumstances rather that add to the many tasks which will have to be fulfilled through the general machinery established by my right hon. Friend the First Secretary.

§ Mr. Chapman
I will not cross swords on this matter. It is a very difficult one on which to make a decision. I am willing to be persuaded by my hon. Friend. I have listened to all the speeches, and I shall certainly listen to the winding up speech of my hon. Friend. If I am convinced that they are right and that I am wrong, I will vote for the Bill.
I come to another reservation of mine about the Bill which is totally different and which has not been mentioned. My view and hope is that a major part of the Bill will be overtaken by events and will become unnecessary, or largely unnecessary. One of the Bill's purposes—and do not let us mince words about this—is to uncover the expenses racket in the higher levels of income. I feel so strongly about this matter that I shall be extremely disappointed if my right hon. Friend the Chancellor of the Exchequer does not deal with this racket 856 in his Budget. If he does it on lines which I will set out in a moment, there will, perhaps, be less need for the sort of machinery of collation and examination which my hon. Friend is asking to be set up by the Bill.
What is the expenses racket which the Bill seeks to expose and which, I believe, could more quickly be dealt with by the Chancellor of the Exchequer? We know the figures of expenses claimed. Reference has been made to Mr. Dow's research in the middle 1950s He said that about £500 million was being claimed in expenses against tax. What is the figure likely to be today? I will make perhaps a better guess than my hon. Friend. The expenses claimed under Schedule E, according to the latest Inland Revenue Annual Report, amount to £245 million. That compares with £148 million seven years ago. The first comment that I would make is, look how my hon. Friend's case on the racket is reinforced by the extent of the climb of these claims in the last seven years. In the last 10 years, expenses claimed under Schedule E have just about doubled.

§ Mr. Ian Lloyd
In real terms?

§ Mr. Chapman
In real terms they have gone up a very great deal. The cost of living has not doubled in 10 years. It may have gone up a great deal, thanks to the hon. Gentleman's party, but it has not gone up as fast as that.
We have no means of knowing what are the expenses claimed under Schedule D. We can only say that if they have gone up at the rate of expenses claimed under Schedule E, the combined total must be approaching £1,000 million, which is a fantastic figure for expense claims.
What does this mean? It means that we are forfeiting Income Tax and Surtax to the tune of, say, between £300 and £500 million in tax remission on expense claims. I will not make the case—it would be stupid to try to do so—that all this comprises claims which should not be allowed. Of course, much of it must be allowed. I do not deny that. But I would say that probably the Chancellor of the Exchequer could this year get at least £100 million extra taxation by simply stopping up the loopholes in the expenses racket. That, in my view, 857 is about the proportion of what is going wrong in the total claim.
What are the two or three major rackets? Difficulties arise because of the way in which expenses can be claimed under Schedules D and E of the Income Tax legislation. This is how the racket works. First, under Schedule D, any company can charge as expenses anything which it legitimately spends in the furtherance of its business activities. It does not have to prove that they were necessarily spent on its business activities. It just means that they were spent, and the Inland Revenue is bound to allow the claim.
The hon. Member for Walsall, South, says, "But the directors are fully covered because there must be completed the Income Tax form saying what is the directors' share of those expenses. Then they must separately settle with the Inland Revenue, the question of whether those claims are justified". The loopholes are two very clear ones, and I believe that the hon. Gentleman knows this. In the first place, many extravagant expenses paid for directly by companies are not afterwards allocated on the individual form to directors. Big parties, lavish entertainment, night club bills and luncheon bills paid direct are never returned as attributable to individual directors. They are swallowed up in general bills for the company and they are "perks" which are never attributed to the individual director.

§ Sir H. d'Avigdor-Goldsmid
The hon. Gentleman has been very civil to me, I acknowledge, but I must nevertheless point out that if he is referring to abuse of expenses accounts under Schedule D, this Bill does nothing whatever to remove it.

§ Mr. Chapman
The hon. Gentleman is trying to sidetrack me. I have said that I have reservations about this Bill, because I think that the right way to tackle the problem is for my right hon. Friend the Chancellor of the Exchequer to carry out the necessary reforms.
I notice that the hon. Gentleman does not dispute my diagnosis of the racket. The racket goes even further, because there is often deliberate concealment. The gardener of the managing director is on the payroll—who is to know that the 858 gardener is on the payroll in that way, and other servants, and one or two other people? There are practically no means for even a chartered accountant to check the facts, because all he can do is to accept the pay-as-you-earn returns prepared by the company's bookkeepers. That racket goes on on a terrific scale. Moreover, it would be almost impossible to check the Schedule D returns; the cost of a lavish party is shown, but what proportion of the expenditure is attributable to an individual director it is impossible to say. That item gets excluded partly for that legitimate reason, and a lot of the expenses claimed today never get shown as attributable to those enjoying the fruits of that expenditure.
The other part of the racket is this. The hon. Gentleman says that when the Income Tax form has been filled in, the individual director then says to the Inland Revenue, "I have received all this by way of emolument and help from my company. I now have to satisfy you under Schedule E that these payments were not only incurred for my company but that I incurred them necessarily". The hon. Gentleman will, I think, agree that to be the substance of his remarks.
The dilemma of the Inland Revenue Department, as has been admitted time and time again, is that it cannot proceed adequately under Schedule E because, once it is faced with a statement of expenditure authorised by the company as incurred in the course of normal business, how can the Inland Revenue disprove that the money was necessarily spent? Under Schedule D the expenditure is allowable, whether or not necessary, but how can the Inland Revenue disprove it under Schedule E as unnecessary? We all know what goes on—it is no longer a matter for argument amongst taxpayers. We know that this is the big racket that goes on. It is impossible for the Inland Revenue adequately to disallow under Schedule E what has been allowed under Schedule D. That is the great racket today, and it is losing the Revenue tens of millions of £s.
What are the possible ways of stopping these abuses, other than the means suggested in the Bill? The biggest single reform that would meet most of my hon. Friend's worries about emoluments would be at once to stop claims by individuals 859 for entertainment. If that were done, how could entertainment expenditure legitimately be allowed? It should be allowed only if the entertainment is paid for by the company; it should be subject to scrutiny by the Inland Revenue; and declared in the company's accounts. We should then impose the biggest check of all by allowing only 50 per cent. of that entertainment expenditure against tax. Such a step would clear up the entertainment expenses racket almost overnight, and I have good grounds for thinking that my view has a good deal of support in the Inland Revenue Department.
If we allowed not more than 50 per cent. of entertainment expense to be charged against tax, we would accomplish very great reform. I am not alone in thinking this. President Kennedy recommended exactly that sort of reform to the United States Congress when, according to The Times: The President recommended that the cost of business entertainment and the upkeep of facilities for entertaining be disallowed in full as tax deductions. That is the kind of procedure that many other countries are being forced to adopt, and I only hope that my right hon. Friend the Chancellor of the Exchequer will do something about it this year.
Secondly, we should disallow all initial allowances for motor cars—that is the second biggest racket. It is a concealed subsidy, and leads to high living at public expense.
Thirdly, individuals' claims for hotel and travelling expenses should be limited to standard payments. That would be another means of clearing up a great deal of trouble. People should not be able to charge huge hotel bills when, say, the civil servant—or anyone else, for that matter—is limited to a standard amount of payment. The exact amount of the standard claim could be settled by negotiation between the Inland Revenue and the firm concerned, but these astronomical figures should be brought down.
Finally, the full amount of expense claims under Schedule D should in any case be declared. The claims should be co-ordinated, and published by the Inland Revenue just as they are under Schedule E. That would give us a much better 860 idea—instead of the informed guesses I have had to make today—about the extent of the racket that is going on, and the extent to which Parliament should stop up the loopholes in the law that allow the racket to take place.
I hope that I have shown my hon. Friend very quickly the means by which a Labour Government can clean up this emoluments racket—it only needs some quite short amendments to the Income Tax law—but I think that this Bill is a little misguided in one other important sense. My hon. Friend quite rightly seeks to tackle inequality in our society but, when he comes to higher levels of income, what he should be looking at more is not the level of earned income but the level of unearned income.
My hon. Friend said that his Bill would apply to about 20,000 people, and he is quite right there; the Inland Revenue Annual Report shows that there are about 23,000 people with incomes of over £10,000 a year. What lie should be looking at, however, is the extent to which their income is unearned. For instance, more than half of those in the first bracket, that between £10,000 and £12,000 a year, have more than half of their income from unearned sources. And the case gets worse in the higher brackets—£12,000 to £15,000 per annum; £15,000 to £20,000, and upwards. I hope that my right hon. Friend the Chancellor will cultivate this fruitful field in the coming years. My hon. Friend has made much play of earned income; in the higher brackets it is much more important to go after unearned incomes. That is partly for the simple reasons we have all been talking about today, the need to encourage business men to be ingenious, to encourage the best brains, to encourage business men to work hard.
However, I do not want to pour a bucketful of cold water on my hon. Friend. I would say that I think his approach to this matter today has enabled us to have a very worth-while debate. If my hon. Friend the Minister of State recommends this Bill to the House I for one shall vote for it, and enthusiastically. We shall all have Amendments to move in Committee, but I very much hope that long before the body my hon. Friend wants can be set up under this Bill the main reason for his Bill will have been taken from under his nose by 861 very important tax reforms which the Chancellor himself could bring in very quickly.

§ Mr. William Clark (Nottingham, South)
In the speech that we have just heard the hon. Member for Birmingham, Northfield (Mr. Chapman) has given a lot of advice to his right hon. Friends on the Front Bench. I should like to congratulate the hon. Member for Stepney (Mr. Shore) on the manner in which he presented his Bill, though, obviously, he will not expect me, at this early stage of my speech, to say whether I agree with him or not.
I disagree with the hon. Member in one sense. He said that the Bill is an instrument of policy—a high-sounding phrase. I would prefer to call it an instrument of control, because here, under the Bill, more and more control is to be given to the Department of Economic Affairs. Why we should think that in this country the Secretary of State for Economic Affairs—there is nothing personal in this, of course—should become even more of an economic dictator I cannot think.
Therefore, I think that the hon. Member and I do part company immediately on whether this is an instrument of policy or an instrument of control. We are not in a very good position economically now, and though I should be out of order if I were to develop that argument at this time I will say that that position mostly stems directly from the policies of the Government of the day. Consequently, to give them also an interest in top management would be absolutely disastrous for the country. In that sense I would have thought the Bill to be particularly ill-timed.
There are many questions on the Bill as such.

§ Mr. Winterbottom
rose—

§ Mr. Clark
I will give way in a moment.
Many of my hon. Friends have posed certain questions. Why under the Bill do we have only public companies and bodies corporate? Why do we? I accept the fact that there is some provision about E n extension—always assuming that it is the Minister who must decide. It is nobody else; just one man. Why 862 are not private companies included, for example? We have in this country many private companies which are extremely prosperous and contributing tremendously to our economy.
Why should those be excluded? After all, those people, if the allegation sticks, are people in top management who are getting money or expenses, call it what we will. Does it make any difference whether people in public companies or private companies do? In addition to that, what about partnerships? Partnerships earn a tremendous amount of money. Why should they be excluded from this? Then, of course, we get to the self-employed, accountants, barristers and the rest.

§ Mr. Shore
There is a great difference between the two kinds of companies. It is difficult to decide precisely where the frontier should lie, but the smaller company, which is generally a private company, is in a situation where the ownership and control can be unified. Anything we do to control it is likely to be compensated for by a simple development of the shares which are owned by the people who are its directors. Consequently, they are in a more genuine market situation. I think that the senior employees of large companies are not in this position at all. The former are in a uniquely self-determining position.

§ Mr. Clark
I do not accept that. The hon. Gentleman has condemned his own argument out of his own mouth. If his idea is to get his large incomes commission to see whether the company is in the national interest, let us look, for instance, at a company manufacturing biscuits, which has not five directors at £10,000 a year, but only three at £4,000 a year. Is the company in the national interest because it is manufacturing biscuits? It really makes no difference whether the company is in the public or the national interest from this point of view. I would not have thought there was anything in the argument the hon. Gentleman has tried to put up.
As to the question of a further extension, mention has been made of the unit trust movement. The unit trust movement, at this moment, is a very fine instrument for savings. Let us make no mistake about it, and let no hon. Gentleman be under any misapprehension about 863 how vitally important it is that we get the idea of savings spread wider and wider throughout our society. The unit trust movement is doing this job. Moreover, it is regulated extremely severely. I would invite the hon. Gentleman to have a look at the regulations governing unit trusts to see whether he has not made a mistake in suggesting they should be included. Whether there is here a hidden bar because the Government want to introduce a national unit trust and, consequently, to interfere with the private enterprise unit trusts at the moment—however this may be—is another matter.
One other criticism I have, and many of my hon. Friends have said this. Why take the figure of £10,000? Why not £5,000? Let us take the figure of £10,000, including expenses. What difference is there between a man earning, let us say, £10,000 salary plus £2,000 expenses claim, which brings him within the orbit of the Bill, and the man earning £1,000 a year with a £4,000 expenses claim?
I would think it illogical merely to take the figure of £10,000. Why has that figure been taken? Is it simply because this shows up the few people who do earn high incomes in this country? Of course, the £10,000 includes expenses, but I do not think that sufficient thought has been given to it by the hon. Gentleman the Member for Stepney and his supporters.
Then what about people who travel abroad? What about the salesmen, the sales directors, who are extremely hard working? I do not ever like to mention names in the House, but there are names which occur at once to hon. Gentlemen on either side. There are sales directors who are travelling practically from January to December selling their companies' wares. Are these people to be pilloried for their expenses in travelling around the world? Is their income to be publicised—possibly £6,000 or £7,000 a year, plus travelling expenses? Anybody who has travelled knows the expenses of travel are tremendous. It is not a question of £12,000 a year. Of course, in cold print it looks awful, but if that man had been travelling from country to country to country there would be a different aspect of it.

§ Mr. Winterbottom
rose—

§ Mr. Clark
In a moment.
What we have to be clear about and obviate is the fact that introducing a Measure of this nature means that our salesmen will have constantly to be looking over their shoulders, when they are dealing with our competitors and customers abroad, wondering whether they are achieving the £10,000 limit or not.

§ Mr. Winterbottom
The hon. Gentleman is getting very hot under the collar about nothing. Some people work in front of a furnace in a foundry for seven days a week. They have a much longer working week than commercial travellers, even those abroad, and yet their wages will be made known. Their emoluments will be published. I do not see why there should be the slightest difference between a man who works in front of a furnace to help our exports, and a commercial traveller abroad.

§ Mr. Clark
I am sure that the hon. Gentleman will allow me to develop my argument. I shall deal, not necessarily with foundary workers, but with those in the lower income level.
To give the hon. Member for Stepney credit, he spoke about the importance of exports. Everybody knows that they are important. Even the Left-wing Fabians accept that exports are important, and I should like to remind the hon. Member for Stepney that well over 90 per cent. of our exports stem from private enterprise. This may appear funny to hon. Gentlemen opposite, but exports are a vital part of our economy. Let nobody make the mistake of thinking that we can treat exports with hilarity, because on them depend our standard of living.
If we are to export, we must have top management going abroad to sell our goods. During a recent debate one of the accusations made by hon. Gentlemen opposite was that too often junior executives were sent abroad to try to sell our goods. Of course we have to send our top executives abroad. We must send the best men. I shall deal later with the accusation made by the hon. Member for Northfield about illegitimate expenses. It is unfair to criticise people who, during the course of their business, have to use money to get that business.

§ Mr. Chapman
rose—

§ Mr. Clark
I shall not give way.
The Bill talks about the percentage of profits. I accept that many hon. Gentlement opposite do not like the word "profits", but there is nothing wrong with it. Each of us has the profit motive in us, whether we be Conservative or Socialist, and I think that even the Liberal Party would support that. Reference has been made to what happens in America. American workers are delighted to work for firms which make big profits, but in this country it is regarded as immoral for a firm to make a profit.

§ Mr. Mikardo
Rubbish.

§ Mr. Clark
I agree with the hon. Gentleman, and I am delighted to hear him say that it is rubbish to say that profit is an immoral word.
If a top executive is working on a percentage basis, will he be keen to increase his income if he knows that it is to be publicised? I cannot see that it makes any difference whether a man is earning £5,000, £10,000 or £20,000 a year. If it is proposed to publish one man's personal balance, why not publish everyone's? We must ensure that we do not select only that part of industry on which our future standard of living depends.
When one is considering the Bill, one has to take into account pension contributions, education expenses, housing, flats overseas, and so on. I think that what hon. Members should ask themselves is why these fringe benefits, if I may use that term, are necessary? I think that everybody would agree—perhaps I should correct that and say that most Members would agree—that they are necessary because of our high rate of taxation.
Let us not make the mistake of thinking that these fringe benefits apply only to higher executives. Canteens are provided in factories, and I am all for them. People get luncheon vouchers, and workers are taken from their homes to the factories. I am all for these benefits, too. These are all fringe benefits. Fringe benefits have grown up since the war simply because of the high rate of taxation.
In my short experience in the previous Parliament, we had many debates about the tens of millions of pounds in expenses which are obtained illegitimately 866 or by subterfuge. The hon. Member for Deptford spoke of the economist Dow. In parenthesis I do not know whether he is any relation to William Dow, secretary of the South Paddington Labour Party, who, as will be seen from The Times today, is trying to expel the Secretary of State for Economic Affairs because he regards him as the chief architect of the disastrous policies carried out by the leadership of the Labour Party.
That is not a Tory criticism; it comes from a Labour councillor. I do not suppose that he has any relationship with the economist who, in the 1950s, computed that the figure for expenses in this country was £500 million a year. The hon. Member for Northfield has done his own calculation, and he makes it about £1,000 million. Deducting those expenses which he would allow, he feels that about £300 million of expenses should be looked at by the Chancellor in the Budget.
A criticism which I can make of the Bill arises from the list in the Schedule of fees and salaries, percentages and share options, housing, pensions, and the rest. My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) made an excellent speech about expenses, and I think that everybody agrees that it was excellent. He referred to the form P11D. The information required by that form is far more comprehensive than that required in the Schedule to the Bill. Why should we not look extremely thoroughly into expenses? It was logical for the hon. Member to ask for that. But hon. Members opposite forget that P11D is submitted by the company concerned in respect of each director or higher executive earning £2,000 per annum or more. The Inland Revenue receive form P11D. The inspector of taxes takes the company's accounts and compares them with the P11D. If there is any discrepancy between the P11D and the company's accounts, it is further investigated, and the Inland Revenue have power to disallow expenses. There is an appeal to the Commissioners of Inland Revenue.

§ Mr. Chapman
The hon. Member is being a little too naive about this. If the Inland Revenue receive form P11D, which states that there has been no expenditure on behalf of a director for 867 employees or personal service, how can they, by comparing it with the statement of wages and P.A.Y.E. as received from the accountant, prove that there was some paid help—for example, a gardener?

§ Mr. Clark
I accept the criticism of being naive, but I cannot see how form P11D has anything to do with P.A.Y.E. It has no connection whatever. I said that one must compare the accounts of the company—I did not say P.A.Y.E.—which go to the Inland Revenue in far more detail than they are filed at Bush House, with the amount of expenses. If there is a huge amount of general expenses—which include night clubs and all the other things hon. Members opposite talk about—the Inland Revenue has the right to ask how those expenses came about. Indeed, the Inland Revenue does exactly that. I can assure hon. Members opposite that this is the procedure.
In any case, why restrict this provision to shareholders and debenture holders? What about depositors in companies; people who lend money to companies? Should they not be included? Why, for example, should the council be nominated by the Minister? And who will be on the council? What is meant in Clause 4(3) by … persons who have had experience in the organisation of labour. If the hon. Member for Stepney considers this to be a serious Bill which he wants considered seriously by Parliament he should have paid more attention to certain details of it, including the establishment of the council. The Bill states that the members of the council will be paid, but will their pay and expenses be disclosed? If the terms—remuneration and so on—of the council are altered the House of Commons must be informed, according to the Bill. If so, why is the House not asked to give an affirmative Resolution to the matter? Will it simply be a matter of the Secretary of State for Economic Affairs saying to top management, "You will do this, this and that and there is right of appeal"?
My hon. Friend the Member for Bristol, West (Mr. Robert Cooke) asked what the term "emoluments research unit" meant. Some of the terms used in the Measure are high-sounding, but do not mean very much, certainly not to 868 me, and I am sure that to the public they mean even less.
Most hon. Members will agree that top management in Britain is doing a valuable job. Do hon. Members opposite really believe that the disclosure of private details will be good for the country? Do they realise that the Inland Revenue already has power to stop anything that it considers not to be right and that it exercises that power? Anyone with experience of business knows that the Inland Revenue is an extremely able body within the Civil Service. It is comprised of vigilant individuals. When hon. Members opposite say that thousands of people are getting away with this, that and the other by way of expenses they are really casting a reflection on that section of the Civil Service.

§ Mr. Chapman
Nonsense.

§ Mr. Clark
The hon. Member for Stepney said that he did not know exactly how many people would be affected by the Bill. If he studies the 107th Report of the Inland Revenue he will see that in Table 71 it states that 25,000 persons earned more than £10,000 a year in 1964.

§ Mr. Shore
The Bill applies to all people earning that amount, including company directors.

§ Mr. Clark
If we are to have a basis for considering how many will be affected by the Bill I suggest that the Report I mentioned is a good basis and that it shows that about 25,000 people were earning that sort of money. However, that number would be increased because the Bill would cover people earning £10,000 including expenses. Taking all earned income as salaries, the amount of gross income for the year dealt with by the Report was £429 million and the amount of tax paid by those top management people was £263 million.
If people in top management are to be happy in their work, not always looking over their shoulders to see what sort of controls apply to them, and so on, it would be wrong for the information required by the Bill to be made available. It would not get us anywhere at all, because the information is already available to the Government.
I should like to read some very good Tory philosophy to the House: Change is what we need and with the best scientists and technologists in the world still 869 we can get it if we use them properly give them their heads. Here is another good piece of Tory philosophy: We have got to pay for skill and expertise and use it. I hope that the whole House agrees with that, because it is what the Prime Minister said earlier this week. How can that philosophy be reconciled with trying to pillory top management into disclosing information which could be extremely misleading to the public? [HON. MEMBERS: "Why?"] Surely hon. Members on both sides will agree that to state that a person—Mr. X—earned £12,000 last year, made up of £3,000 salary and £9,000 expenses, does not give the real position of Mr. X, for the simple reason that £9,000 is possibly for travelling expenses legitimately incurred during the course of his occupation.
I have spoken for a little longer than I had expected. I apologise for that, because I understand that the Minister of State wants to wind up immediately. We must avoid getting at cross-purposes with any section of the community, and this includes trade unions, it includes management, and it includes top management. The Bill epitomises the pathological hatred that certain hon. Members opposite have for the capitalist system. The capitalist system here is, I think, working extremely well. [Laughter.] Perhaps I should have qualified that remark. The capitalist system was working extremely well until 15th October of last year. Since then, we have run into a little trouble.
I personally think that this is a thoroughly bad and vindictive Bill. What we want in this country is not to hold up the man who is getting £10,000 a year as though there is something wrong with him. What we want to do is to bend our efforts to putting more and more people in a position to earn £10,000 a year. Only in that way shall we solve our economic problems. We shall certainly never solve them by class hatred and by thinking that there must be something wrong with somebody who has more than the other man. Jealousy will not get us anywhere. The only thing which will get us somewhere is to increase prosperity all round. Let us have not 25,000 people earning £10,000 a year. I should like to see 125,000 earning £10,000 a year.

§ The Minister of State, Board of Trade (Mr. George Darling)
May I make it clear immediately that I am not winding up the debate, I am merely intervening. I shall try to be very brief. If I wanted any arguments to be given to me to induce me to support the Bill, the hon. Member for Nottingham, South (Mr. William Clark) certainly gave them to me during his speech.
I warmly congratulate my hon. Friend the Member for Stepney (Mr. Shore) on bringing before the House what is a serious public issue which ought to be aired, examined and discussed. This is a serious matter and, though I am afraid I shall have to be somewhat discouraging about the further progress of the Bill, it is right to say, allowances and expenses of top management should, in the public interest, be brought into the open. Not only did my hon. Friend perform a useful purpose, but he did so in an excellent and commendable speech. The hon. Member made several critical observations on the Bill, on which I should like to comment in detail, but, as I said, I want to be brief and I hope that hon. Members who have spoken will forgive me if I do not comment on their contributions.
I ought to explain why it is that a Board of Trade Minister and not a Minister from the Department of Economic Affairs is speaking for the Government. The reason is that disclosure of information about company affairs—that is Parts I and II of the Bill—are the key to the Bill, as has been stated, because without this disclosure the rest of the Bill would be more or less unworkable. This is a matter for the Board of Trade because it involves amendment of the Companies Act and this brings it within the ambit of the Board of Trade.
The House will be aware that legislation will have to be introduced before long to give effect generally to the Report of the Jenkins Committee on company law, including, of course, disclosure of information by companies about their finances, activities and so on. My right hon. Friend the President of the Board of Trade announced in this House on 10th December that this legislation is being prepared and will be introduced next Session. I think hon. 871 Members will understand that I cannot at this stage discuss what is or what is not likely to be in the Bill when it is published, but I can assure hon. Members, and particularly my hon. Friend the Member for Swindon (Mr. Francis Noel-Baker) who raised this matter, that the views expressed in this largely useful and helpful debate will be taken into consideration in the preparation of the new legislation.
My right hon. Friend the Member for Stepney said quite rightly, having dealt with disclosure, that the most important parts of this Bill are Parts III, IV and V dealing with the setting up of a Higher Incomes Council and the Regulations which are proposed in the Bill. On the first point, that of making studies of remuneration, everybody at least on this side of the House would agree that studies of remuneration right throughout industry and commerce, including, of course, remuneration of top management, are very much needed and should be encouraged; but, with due respect to him, I do not think we need to set up by statute the kind of council and research unit which he suggested for this purpose. I would agree that we need far more information about all kinds of incomes, and I would agree with my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) that a review and examination of all incomes should be left to the incomes review body. Despite what my hon. Friend the Member for Stepney said about this being a special case, I think it would be wrong at this stage, at any rate, to set up an additional body in this field.
Looking at the problem generally from the point of disclosure and examination, many of my hon. Friends have rightly drawn attention to the fact that rewards, salaries, wages and incomes generally in Great Britain are often completely illogical and often glaringly unfair in relation to the contributions which different classes of people make to the national well-being. Before we come even to top management, the whole range of wages and salaries is riddled with anomalies. I know that my hon. Friends and I could give a whole list of the kinds of anomalies that we come up against in our working lives and in our 872 own constituencies, with railway engine drivers taking home less than London typists, steel workers taking home less than public relation consultants—I am sorry that the hon. Member for Essex, South-East (Mr. Braine) is not here at the moment—and skilled engineers getting less than third-rate "pop" singers.
Then there is what I think is the insufferable distinction, which is a hangover from the 19th century, between what most firms still call, on the one hand, the staff and, on the other, the employees, as if a clerical worker in the office were more important or made a more valuable contribution to production and services than the skilled worker in the factory. Since I served my apprenticeship to engineering, I have always found that an offensive distinction.
This is only one reason why, we need a sensible incomes policy—to remove these anomalies and to establish the good sound trade union principle, which should operate throughout the country from top to bottom, of paying the chap the rate for the job. It will not be easy. There are difficulties in the way of operating a successful incomes policy, a policy which aims at removing anomalies and ensuring that wage earners, salary earners and management too get the rates which they ought to have within our national resources for the respective contributions they make to an expanding economy.
It is because of the urgent need for a constructive policy on incomes that I must tell my hon. Friend the Member for Stepney that the Government cannot accept or support the Bill. I could deploy a number of detailed arguments, as hon. Members have done on both sides of the House, about the machinery which my hon. Friend proposes, and the advice and Regulations and enforcement provisions in the Bill, to show how difficult it would be to operate some of the provisions, but I wish to base the Government's views on the Bill on two points. They both relate to the same thing, which is that we must help the Government to build a constructive incomes policy by mutual consent.
Hon. Members will see from paragraph 6 of the Statement on the Machinery of Prices and Incomes Policy that The Government have been encouraged by the Statement of Intent and in subsequent discussions 873 to believe that all the parties concerned will give the Board their voluntary co-operation"— that is, the National Board for Prices and Incomes— in its investigations of particular cases. The Government it would have to consider giving the Board statutory authority, however, if experience showed this was necessary. There are two points here.
First, it is quite clear that everybody in industry and in public life who is associated with this must try to make this voluntary arrangement work. My right hon. Friend the First Secretary can hardly expect to get the voluntary cooperation that he wants if he attaches to the voluntary National Board for Prices and Incomes a statutory organisation with very strict and severe responsibilities and duties over one section of incomes.
We must give my right hon. Friend the First Secretary of State's proposals a chance to be established and to produce results before we begin to impose upon it new organisations and duties, in this case even before it has started to work.
The second point is perhaps more important. The last sentence of paragraph 6, as I have said, reads: The Government would have to consider giving the Board statutory authority, however, if experience showed this was necessary. My right hon. Friend the Secretary of State has said that he hopes and expects this voluntary policy to operate successfully by mutual consent without the need to give the National Board for Prices and Incomes the statutory authority mentioned in that paragraph. I am sure that his hopes and expectations will be shared by all hon. Members. But if, because the mutual voluntary system breaks down, the Board has to be given some sort of authority, I think that it would be agreed that my right hon. Friend's hands would be tied if this Bill was passed with regard to the machinery and the powers which would then be needed.
I am sure that it is not my hon. Friend's intention that the First Secretary should not have the freedom and the flexibility for action in this field that the job at that point might require. I am sure that my hon. Friend agrees that my right hon. Friend should have the flexibility that would be needed in case he had to set up some new kind of machinery to get the incomes policy to 874 work effectively. In effect, the Bill is designed to graft something on to what my right hon. Friend has proposed which may prove to be quite unworkable if, at some point—we hope that it will not arise—the statutory arrangement mentioned in paragraph 6 is needed.
During the debate, some very well deserved tributes have been paid to my right hon. Friend the First Secretary of State for his skill, perseverance and extremely hard work in obtaining such a wide measure of agreement for the Joint Statement of Intent and the formation of the National Board for Prices and Incomes. I feel that we should not exactly be helping him if we were to put the machinery and duties mentioned in the Bill on to his plans at this stage in the development of the incomes policy which, I am sure, we all want.
It is for this reason, and certainly not for the reasons which have been advanced by hon. Members opposite, on which I reluctantly refrain from commenting, because of the time, that I have to tell my hon. Friend that the Government cannot at this stage support his Bill.

§ Sir George Sinclair (Dorking)
Mr. Speaker, this Bill is aimed at the "Top Twenty", the top 20,000 in the private sector who are responsible for a great deal of the vitality and earning power of our country's industry and commerce.
If I may, I shall illustrate what I mean by a short story, a story which comes from, perhaps, the foundation level of our democracy, a British "pub".
I was watching three or four people just along the bar from me. They were in a bit of a huddle, and out came the remark—almost like a pair of torn rugger pants out of a scrum—"Not Bowmakers, my dear fellow, Bowaters". They were members of a small investment club. They then began to discuss what firm they would next invest in. The three questions which they brought out—they allowed me to join them—were these. What is the management like? What is the strike record? Is the company under threat of nationalisation? All three were relevant questions, but the one which they posed first was, "What is the management like?"
So also, if one asks a stockbroker about how to invest money today, very 875 often the first point he will deal with will be the vitality and the success of management.
But it is at management—the top 20,000 in the private sector—that the Bill is aimed. These are the people who have to make a main contribution in ensuring that their companies make a profit. Profits are vital to each large enterprise and to the people who work in it. The enterprise must make profits and expand if those who work in it are to have continuity of employment and good wages.
If an enterprise is profitable, it pays taxes for the community. Thus, the people at whom the Bill is aimed have a great responsibility for producing taxes for the Chancellor of the Exchequer. Many of the profits are made not only in this country but in overseas trade; so these managers also help to make earnings which assist our balance of payments and improve our standard of life in this country. They are the leaders whose main contribution is in seeing that their firms make profits.
Surely it is the Government's job, if they believe in a mixed economy—and during this Government's lifetime many Ministers have said that they do—to encourage also the private sector to be vigorous and profitable. As has been said, public servants and heads of nationalised industries are not measured by the same criteria as persons in industry. Indeed, one might make a debating point and say that they could be responsible for the very large losses which the tax payers have to make good and yet they still could not be removed.
I do not make that point because I was a public servant for 25 years and know the exacting work that civil servants have to do. But civil servants have quite different criteria by which their work is judged, different responsibilities, a quite different approach to those responsibilities, a different security of career, and quite different incentives and, if I may say so, rewards.
If the public sector is still underpaid, then what should be done is not to reduce the rewards of the private sector but to pay proper rewards for really good effort in the public sector. But the Bill is not, of course, aimed at the people in the public sector at all, although one 876 hon. Member opposite who spoke would have liked it to be. The hon. Member for Birmingham, Northfield (Mr. Chapman) claims that the Bill—this was a bigger disclosure than the one in the Bill—is really aimed at what he called "the expenses racket". This was not what the hon Member for Stepney (Mr. Shore) claimed; he said that it was an instrument in support of an incomes policy.
I will go through the argument of the hon. Member for Stepney, leaving out all the flossy argument about "expenses". He talks, first of all, about disclosures of emoluments. He says that those he proposes are no more searching than the disclosures that have been normally required in the United States for a long time and have not proved a disincentive to top management. But the circumstances in the two countries are very different. The disclosures in America are, I understand, made largely for tax purposes. But, most important, they are made in a country which believes in the private sector, encourages management and pays it rewards of all kinds which make top management one of the most attractive careers there.
The universities in the United States have, long since, taken this matter up. A great deal of their teaching is concentrated on commerce and business. They have also created some of the finest management training courses in the world. The result is that they have an economy full of vitality, booming, thrusting out to new markets, where both management and labour go for maximum productivity and for their share of the results.
If America is brought in as an example by the hon. Member, I must pursue the subject further. The disclosures in the United States are not designed as material for a Higher Incomes Council. There is no such council in the United States. The disclosures in the United States are not designed for an emoluments research unit to give economists and other back-room boys, who have not themselves shown gifts for management, the opportunity of advising industry what rewards it must offer its leaders.
In the United States, there is no set of regulations to be used as the tool of doctrinaire Socialist thinking to impose public sector criteria on a quite different form of economic activity—competitive 877 industry, competitive commerce—that must fight hard abroad and at home to show profits and thereby pay the taxes to the Chancellor of the Exchequer and earn foreign exchange.
The Bill is, of course, a back room attempt to introduce Socialist interference in the top of industry. It is an attempt which, I believe, has very little Government support. Indeed, the Minister of State has confirmed that it has no support from the Government. I hope that this is not a kite—a kite, flying from the Left like a bird of sinister omen, casting its threatening shadow over the leadership of free enterprise.

§ Mr. Ian Mikardo (Poplar)
I join with those on both sides of the House who have paid tribute to my hon. Friend the Member for Stepney (Mr. Shore) for giving us the opportunity for this debate. I add my own special tribute to him for what has manifestly been a lot of hard and detailed thinking and work on the Bill and its drafting. I wish to say something about some of the points that have arisen. On the whole, it has been a good debate, although too much time was taken up with what might be called Committee points and I do not propose to comment on them.
I shall get out of the way, first, three things that the Bill is not about so that we can seriously consider what it is about. First, it is not a finance Bill. My hon. Friend has no right to bring in a finance Bill and is not trying to do so. Therefore, the complaints of the hon. Member for Nottingham, South (Mr. William Clark) and of my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman), that it did not do this, that or the other that would he appropriate only to a Finance Bill, have no foundation in fact.
My hon. Friend the Member for Northfield complained that the sponsors of the Bill had not thought about unearned income. That is a subject for a Bill about finance and taxation and not for a Bill about economic policy. All the argument about the form P11D is argument which should take place and would be highly appropriate during the 878 Committee stage of the Finance Bill. It has nothing to do with this Bill.
The second thing that the Bill does not set out to do—hon. Members opposite apparently do not understand this although the hon. Member for Nottingham, South understands very well, but pretends not to do so—is to interfere with or prevent any current normal business practices. It does not set out to stop people going abroad to export goods, from having lunches and entertaining clients or others. All it sets out to do is to ensure that what is done is fully disclosed—no more and no less.
The third thing that is not in the Bill is something which, three times, the hon. Member for Nottingham, South said was included. I have looked very hard at Clause 12, which deals with offences, because that is where it would be found if it were in the Bill. Clause 12 specifies what penalties would fall upon those who committed an offence under the Bill but, according to the hon. Member, the principal penalty they would suffer would be that of being put in the pillory or the stocks, whereas all that the Bill actually provides is that they should be fined. I thought that this harping on a man being, ipso facto, pilloried if his deeds were disclosed was the biggest give-away of the hon. Gentleman's and the Tory Party's mentality.
This was an almost Freudian give-away of inner thought, because in practice the only people who are ever pilloried by any disclosure of their activities are those whose activities contain something shady which has been disclosed, and if a chap is doing something honourable, he never fears disclosure. If a man is spending—and I know some of the people hon. Members have been talking about—most of his time at great discomfort, as I very often have to do—I do too much—rushing about all over Europe and other parts of the world trying to get some exports, and that costs a lot of money and is therefore disclosed, he has nothing to be ashamed of and would not be pilloried by disclosure.
I repeat that the only people who would be pilloried are those of whom something not very honourable would be disclosed.

§ Mr. William Clark
The hon. Gentleman will agree that in Clause 9 the 879 Minister has power to make a top emolument proposal and order. One thing the hon. Gentleman has not yet said is that although the Minister can do that in private enterprise, he cannot do it in the nationalised industries.

§ Mr. Mikardo
There are many things I have not yet said and I will not be able to say them if I keep being interrupted. I am aware of what the Bill does. Unlike some of the hon. Gentleman's hon. Friends, I have read it, but even that provision does not say anything about pillories.
The hon. Gentleman spoke at great length about a chap being pilloried because part of his emoluments was a share of the profits. Nothing in the Bill says that there is anything wrong with that or that it must not be done, and if the chap has done an honest job and contributed to the profits, he would not be pilloried by that disclosure.

Mr. R. Gresham-Cooke (Twickenham)
rose—

§ Mr. Mikardo
I have much less time than I expected and the hon. Gentleman has arrived very late in the debate, while I have been here all day.
We who support the Bill are not altogether happy with what has been said by my hon. Friend the Minister of State. Nevertheless, I think that we were all encouraged by the conciliatory form in which he put what in effect was a refusal of official support for the Bill. Listening carefully to what he was saying, my conclusion was that the principal difference between my hon. Friend the Member for Stepney and my hon. Friend the Minister of State was that my hon. Friend the Member for Stepney was a year or two in advance of our representative on the Front Bench who in a year or two's time will be saying what my hon. Friends have been saying.
When the Bill was published, I read it with one criterion in mind. It was the criterion which I apply to all legislation and all Government action connected with the economy. The criterion is whether the action will be helpful to the chaps who do an honest job of production, or export sales, or something of the kind. It is entirely against that criterion that I judge any Measure of this sort. I would 880 hope that at least the acceptance of that as a yardstick would be common ground between both sides of the House, even though our analyses might be different.
If I had thought, as some hon. Members opposite appear to think, that the man doing a good job, the good administrator, the good technologist, the good export salesman, was in the least degree being inhibited by the Bill's proposals, I would not have given them my support. The plain fact of the matter is that these chaps welcome the Bill, and I am not speaking about their views in theory, for I have worked with them and modestly tried to help them for 30 years of my professional life, as I still do every day. I was in the office of one of the country's biggest exporters on my way here this morning. For the most part they would fall outside its scope.
Nobody so much resents the abnormalities, the anomalies, the inequities and the injustices in the salaried pattern of this country, especially the managerial salaried pattern, as these middle rank technologists, managers, export managers and the rest who do the real job and who see people getting far more money with far less qualification for a function which is very often parasitical. That is why the British Institute of Management takes a view of this Bill different from that of the Institute of Directors; the British Institute of Management speaks for the chaps who manage, while the Institute of Directors speaks for those who take the profits. That is the difference in attitude.
There are these great anomalies throughout the management salary structure. One of them was disclosed earlier on today by the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), who informed us that no company he had ever been associated with had ever paid him as much as is set out in the Bill. I can tell the hon. Baronet—although he knows without my telling him—that there are plenty of people in British commerce today getting salaries much bigger than this who have less brains in their heads than he has in his boots. So he, too, is being victimised, together with all the other useful citizens, as I like to think the hon. Baronet is.
I say, with great respect, that hon. Members opposite do not understand the structure of management in British industry, and some of its intricacies. The hon. 881 Baronet the Member for Torquay (Sir F. Bennett), who had the distinction—not, I think, for the first time—of making the worst speech in a debate on either side talked of the technologists and scientists, and the chaps who do the real job staying here, whilst the high-level people affected by this Measure would go abroad. That is not true at all. The brain drain is amongst those who are well below the salary levels laid down in this Bill. It is they who are the dissatisfied people, not the top management people with whom this Measure would deal.
It is not the chaps who do the real job who have the fancy salaries, it is not the chaps who do the real job who have those long expense account lunches which I always think—I have had to suffer a few—are rather like the cylinder of a racing engine—a long bore needing lubrication. Every time one goes to one of these expense account luncheons and stays there a little late, one finds that there is always some member of a party at one table, at around a quarter to four, finishing their lunch at leisure on three or four double Armagnacs, who can be heard to say, "We shan't be able to make any economic progress in this country until the workers stop taking tea breaks."
I want to say a word or two about the distinction between the chaps who do the work and those who draw the real "gravy". When I first went to work in industry, which is a long time ago now, the most important man in a manufacturing enterprise, the man getting the most money—and the man drawing the most respect, which is just as important—was the top man on the production side of the business. That man today lies fifth or sixth in the hierarchy; he has been overtaken by the men who do the purely financial manipulations of the company.
In my starting days, the biggest man was the man who could lay out a production line in such a way that it gave the most output. Today, the biggest man is he who can lay out the company's accounts in such a way as to attract the least taxation. He is the sort of man who gets the sort of money that we hear about. These are the company "doctors", and all the rest of them. I ran into one of them the other day in a factory. He cut down a lot of the salaries of the real executives, he rescued a little 882 money for the shareholders, but the man who made the real lolly out of the operation was the company doctor. That is the sort of man who gains, and not the serious men who are producing the bacon.
We have to bear in mind that a lot of this fancy pay, these emoluments we are talking about, are not in productive commerce or in industry at all. They are outside altogether. They are often paid for activities which take up valuable resources without any return through contributing a single article of production or a single cent to our balance of payments. Some of the highest salaries are amongst advertising executives. They would make technologists turn green with envy. And what do they produce? They spend 30 times as much on sales, on advertising one another, as all our sales directors in export markets put together. They use a great deal of skill and of resources and what not trying to persuade us that each one of six detergents washes whiter than the other five, that one washes whiter than white—and they think that we are all greener than green. They try to get us to buy one product rather than any of the others when they know that there is in fact no difference between them except a difference in name, and nowadays there is not even much difference in the name, because what is not called "3d. off" is called "4d. off" and if it is not called "4d. off" it is because it is called "3d. off".
There are very big salaries paid to property company executives, and enormous salaries being paid to some public relations men. I have never been able to figure out what it is exactly they do, but they seem to me to be a sort of human deodorisers spraying a sort of eau-de-Cologne on what would otherwise be the smelly corners of our society.
Then there are the people who carry out the gambling functions of the City. I know that the City has some positive functions and does some of them well, but it is not in doubt that 95 per cent. of the activity of the manpower, men with very high salaries, in the City are concerned not with raising capital for investment or with making some useful markets or with export earnings—there are half a dozen firms of which any one produces more currency earnings than the whole of the City put together without all that paraphernalia of wasting 883 activities—but wholly with the gambling function.
There are the jobbers. We might call them bookmakers: they chalk up prices on a board in the way that a bookmaker chalks up prices on a board; they use exactly the same sort of chalk and the same sort of board as bookmakers do. Brokers are their agents. There are chaps in the commodity markets who buy and sell—cocoa, for instance, though they have never seen a cocoa bean in their lives. They are "producers" who buy things they do not want and sell things they have not got, and get paid

Division No. 64.]	AYES	[3.59 p.m.
Atkinson, Norman	Hunter, A. E. (Feltham)	Park, Trevor (Derbyshire, S. E.)
Buchan, Norman (Renfrewshire, W.)	Hynd, H. (Accrington)	Perry, Ernest G.
Butler, Herbert (Hackney, C.)	Hynd, John (Atterciiffe)	Rankin, John
Carmichael, Neil	Jeger, Mrs. Lena (H'b'n&St.P'cras,S.)	Rowland, Christopher
Chapman, Donald	Jenkins, Hugh (Putney)	Shore, Peter (Stepney)
Conlan, Bernard	Johnson, James (K'ston-on-Hull, W.)	Short, Mrs. Renée (W'hampton,N.E.)
Delargy, Hugh	Kerr, Mrs. Anne (R'ter & Chatham)	Silverman, Julius (Aston)
Dodds, Norman	Lipton, Marcus	Solomons, Henry
Doig, Peter	Lubbock, Eric	Summerskill, Dr. Shirley
Edwards, Robert (Bilston)	Mendelson, J. J.	Varley, Eric G.
English, Michael	Mikardo, Ian	Wallace, George
Ennals, David	Monslow, Walter	Wells, William (Walsall, N.)
Fletcher, Raymond (Ilkeston)	Murray, Albert	Williams, Mrs. Shirley (Hitchin)
Freeson, Reginald	Newens, Stan	Williams, W. T. (Warrington)
Hale, Leslie	Norwood, Christopher	Wilson, William (Coventry, S.)
Hamling, William (Woolwich, W.)	Oram, Albert E. (E. Ham, S.)	Woof, Robert
Hobden, Dennis (Brighton, K'town)	Page, Derek (King's Lynn)
Holman, Percy	Paget, R. T.	TELLERS FOR THE AYES:
Howarth, Harry (Wellingborough)	Pargiter, G. A.	Mr. Winterbottom and Mr. Orme.