HC Deb 19 July 1967 vol 750 cc2296-325
Mr. Neave

I beg to move Amendment No. 34, in page 18, line 13, to leave out Clause 18.

Mr. Deputy Speaker (Mr. Sydney Irving)

With this Amendment the House may also discuss Amendment No. 35, in page 18, line 16, after 'employed', insert 'over 21 hours per week'.

Amendment No. 36, in page 19, line 5, leave out from 'not)' to end of line 6.

Amendment No. 37, in page 19, line 6, at end insert: 'but shall exclude remuneration paid in respect of overtime'.

Amendment No. 38, in page 19, line 9, leave cut '100' and insert '200'.

Amendment No. 39, in page 19, line 9, leave out '100' and insert '500'.

Amendment No. 40, in page 19, line 9, leave out '100' and insert '1,000'.

Amendment No. 326, in page 18, line 17, after 'year', add: 'and persons shall not include sub-contractors or persons paid by sub-contractors'.

And Amendment No. 313, in page 19, line 16, at end insert: 'and persons shall mean employees working over 21 hours per week'.

Mr. Neave

The Clause has provoked a great deal of critical comment in various quarters. It was suddenly slung into the Bill after discussions took place last September at the National Conference on Productivity. It calls for information about wages and the average number of persons employed by companies to be included in the directors' report. Such information has nothing to do with company law. This type of information is kept by companies in their manpower records, but these records vary from company to company. Companies will be put to enormous trouble to obtain the information required. The extraordinarily complex subsection (3) will have to be dealt with by company secretaries and others and will add to the manpower troubles they already experience on the clerical side.

It is worth reading the subsection, because there are one or two points I wish to raise on it. It states: (3) The number to be stated under subsection (1)(a) above shall be the quotient derived by dividing, by the number of weeks in the financial year, the number derived by ascertaining, in relation to each of those weeks, the number of persons who, under contracts of service, were employed in the week (whether throughout it or not) by the company and adding up the numbers ascertained and the number to be stated under subsection (2)(a) above shall be the quotient derived by dividing, by the number of weeks in the financial year, the number derived by ascertaining, in relation to each of those weeks, the number of persons who, under contracts of service, were employed between them in the week (whether throughout it or not) by the company and its subsidiaries. I have read it as well as I can, but it is completely ridiculous to say that this type of information should be included in a Bill concerning the disclosure of certain important items by companies. It is not a matter of company law. We want to know, first, why the Minister of State told us in Committee that agreement had been reached and that it was strongly supported, after the productivity conference in September, by the C.B.I. and the T.U.C.

Perhaps the T.U.C. supported it, but the Minister is under a delusion in thinking that the C.B.I. at that time supported it. It had certain discussions about inter-company comparisons, but it did not want this provision, as it appears in the Bill. I want to make this clear because it has given this information to several of my hon. Friends. The C.B.I. does not think it right that this provision should be included in the Bill.

At this productivity conference, inter-company comparisons were among the subjects discussed, as were comparison techniques and the use of manpower, but was this subject discussed in connection with the Bill? It is not right to say that one party agreed to it in that sense because the Minister of State, on 13th June, said that this matter had been delayed for inclusion in the Bill in order to obtain general agreement. Has general agreement been obtained on this matter? I do not think so. It is a matter about which there should have been some agreement and full consultation, because it is of importance to every company in the country and involves a great deal of detailed work.

My information is that the C.B.I. was not among those agreeing or among those whose agreement was sought. Will the right hon. Gentleman tell us what the position is? The Clause has been drawn in a way which may not provide the results which the Government wish to achieve. It is very likely that specially prepared manufacturing statistics will have to be made by companies, because their systems of keeping manufacturing records are not always done in the same way.

In general, the provision involves a great deal of unnecessary work. It is very complex. It refers to people under contracts of service and on weekly rates, but now that a great many companies are going over to payment by cheque, on a monthly basis, what happens? This is an example of the sort of thing that is put into the Bill for reasons which we have not been given. Is it because the intention is that information should be disclosed enabling the Government to make comparisons between firms? What connection has this with the incomes policy? We are completely in the dark as to the purpose of the Clause.

It will require a full explanation before industry is convinced that it should be burdened with this additional set of figures. There are many statistics which one supposes can be obtained from the Inland Revenue and the Ministry of Labour. Why is this burden on firms necessary? If the Government want statistics like this, would not a survey be better than averaging complicated details about quotients?

Other Amendments seek to lighten the loan with regard to the numbers of employees, but surely this should apply only to full-time workers. If overtime and non-cash benefits were included, the job would be enormous. I am a director of a company which employs several thousand people, and I discussed what this would involve. The right hon. Gentleman must not underestimate the burden which will be imposed by a Bill which is supposed to reform the law regulating disclosure to shareholders. If companies have to disclose all these items and carry out all these requirements, they will have no time for management and productivity. It will add greatly to the cost of manpower, particularly clerical manpower.

Mr. Hall-Davis

I support my hon. Friend the Member for Abingdon (Mr. Neave) and agree that the Clause will involve a great deal of work for companies—far more than the Government appreciate. Has the right hon. Gentleman consulted companies about the number of man hours and the type of administration which will be involved? This Clause will cause more work than any other in the Bill. Few companies have completely centralised wage payments. We have heard much about payrolls handled by computers, but it will be some years before this is general, particularly when the value of benefits in kind must be taken into account.

Therefore, the Clause is justified only if the resulting information is really useful. The Minister of State commended the Clause as having emerged from the Lancaster House National Conference on Productivity in September last year, and it is strange, therefore, that it was slipped into the Bill fairly late in Committee. Perhaps there was a high-level discussion among Ministers at which someone asked whether anything had emerged from the conference. There was then one of those ghastly silences which sometimes occur in the face of such indiscreet questions and the right hon. Gentleman was charged with giving some evidence of the value of the conference—

11.45 p.m.

Mr. Jay

That is refuted by the fact that I referred to it clearly on Second Reading.

Mr. Bruce-Gardyne rose—

Mr. Deputy Speaker

Order. It is not the practice to have two interventions at the same time. Mr. Hall-Davis.

Mr. Hall-Davis

If what the right hon. Gentleman said is the case, obviously he found it harder to translate it into useful legislation than he had expected.

The right hon. Gentleman referred to a comment in The Times Business News of 13th June. I do not think that that comment showed the penetrating and well-documented approach that many of the articles in that publication have shown recently. The reason that The Times Business News over-estimated the value of the provision is that they thought that companies would have to give details of the total work force. The weakness of the provision, in fact, is that those are the very details which will be lacking.

The Minister has given us his latest thoughts—I was about to say "second thoughts", but in view of his intervention I will say "latest thoughts"—on the Clause, and I hope that he will have further thoughts and leave it out of the Bill. I hope that, despite the views of a productivity conference and the comments in the Press, we are still capable in the House of forming our own assessment of the value of legislation, and in this case it was strongly felt on both sides of the Committee that the value was very little. It is practically worthless as a source of useful information and it will be positively harmful in its effect on industrial efficiency.

I am amazed that the Government have not paid more attention to the fact that it will be damaging to their incomes policy. The Minister of State said in Committee that the origin of the Clause does not lie in the incomes policy, and I was not surprised that he said so, because one certain effect of the Clause will be to increase the upward spiral of wages. The result of the delving for information and the tedious collection by head office accounts departments of the information required will be to serve up to the public this information agglomerated into two figures—the number of workers and the total remuneration paid by the company or group in the year. Those who are not concerned with the finer points of statistical analysis—which means the majority of employees in the company at all levels—will ask themselves only one question as a result of this information, "Is there a firm in my industry where the average pay is higher than in my firm?" If they find that there is such a firm, they will say, "Let us press for a pay increase". It will be as simple as that. I regard the Clause as a spanner in the works of the Government's voluntary prices and incomes policy and an obstacle to its success which the Government themselves have gone out of their way to erect.

What is the value of the Clause to those genuinely seeking information? I am sure that the degree of consolidation and aggregation involved in the presentation of the figures is so great that any useful information will be submerged in a mass of unrelated figures. That is all the more ironical in a Bill which in Clause 6 seeks to secure a break down in the presentation of directors' remuneration, in Clause 8 seeks to secure a break-down in employees' remuneration, certainly of the more highly paid employees, and in Clause 17 specifically requires the separation of information in respect of turnover and profitability for companies where different classes of business are carried on.

I will take as an illustration the sort of company with which I have some direct personal experience. This type of company carries out manufacturing, wholesaling and retailing activities. About a third of its total employees are engaged in retailing, many of whom work on a part-time basis. What is the value of aggregated figures for employees and re- muneration which do not indicate how many are part time and what proportion of the remuneration relates to part-time workers?

There is another damaging weakness in the manner in which the information is to be presented and we should be failing in our duty to examine the Bill if it was not mentioned. There will be no indication of the amount of remuneration which has been paid in respect of overtime. Unless that is disclosed a company whose employees work long hours regularly to supplement their earnings may appear to the people examining the figures in as favourable a light as a company whose employees achieve comparable earnings in a standard week aided either by superior technology, heavier capital investment, or more efficient management techniques.

I call attention to two comments in Report No. 36 of the National Board for Prices and Incomes on Productivity Agreements. On page 3, paragraph 10, referring to the productivity agreements that it was charged with investigating, the Board says: On reviewing their operations most of the undertakings signatory to the agreements referred to us or to similar agreements came to the conclusion that they were using overtime not as a means of dealing with emergencies but as a regular arrangement; and as much to provide an acceptable pay-packet as to meet the requirements of the job. This situation, they felt, should be changed, primarily because this acceptance of overtime implied a loss of control by management over the pace at which the work was undertaken. I emphasise the phrase, … a loss of control by management … On page 66, referring to a particular productivity agreement, but which I believe has very general application, it says: Earnings therefore depended heavily on regular overtime, which both management and workers accepted at least in part as a means of adjusting take-home pay to locally acceptable levels. Acceptance by management and employees of regular overtime as a means of providing acceptable take-home pay is directly contrary to the requirements of industrial efficiency and to the employees' own interests. Yet the Clause almost goes out of its way to sustain such attitudes rather than seek to encourage their abandonment. For these reasons, I believe that the Clause will cause much work and provide little information of value.

Finally, to be helpful to the President of the Board of Trade, I have asked myself, if the Government were to agree to delete the Clause, is there a means open to them to obtain the kind of information which would be useful and which they say, in my view wrongly, the Clause will serve up?

My hon. Friend the Member for Gloucestershire, South (Mr. Corfield), in one of his many apt comments on the Clause, said: It would be much better if the right hon. Gentleman went back to the Chancellor of the Exchequer or the Department of Economic Affairs or wherever his bright ideas come from and said. 'Think about it again. We will take powers if necessary to get these statistics when we want them, but let us have them in a form which is useful and not in this way in a Companies Bill, which is not a vehicle for this sort of thing'."—[OFFICIAL REPORT, Standing Committee E, 13th June, 1967, c. 1376.] The President of the Board of Trade already has a vehicle to give him information in a useful form in the Statistics of Trade Act, 1947. I suspect that he is one of the few Members of this House familiar with it. This Act gives him a much more flexible instrument to obtain the information which he considers would be of value, and he could obtain it from the type and size of company which he felt, at any given time, could best provide it. I shall not quote it, but I refer the President of the Board of Trade to Section 1 and the Schedule to that Act, which specifically meet the requirements he is seeking, though ineffectually, under this Bill. Lest that might be thought to be resurrecting some antediluvian Measure of 20 years ago, I remind the right hon. Gentleman that it was used in the Science and Technology Act, 1965, when its provisions were invoked to give the Minister of Technology power to obtain information of the sort being sought here.

I hope, therefore, that the right hon. Gentleman will be emboldened by the reminder that he already has adequate powers to obtain this information in a much more useful and more easily assimilable form and will drop this Clause from the Bill. If that is asking too much, I hope that he will at least think very hard about the load of work involved for companies in relation to the useful reward obtained and will accept an Amendment to fix 1,000 employees as the limit for exemption.

Mr. Temple

I am not surprised that the Minister of State has left the President of the Board to reply to this debate. This Clause has been the brain-child of the President of the Board of Trade. He was proud that he forecast on Second Reading that such a Clause would be introduced, yet it took him about five months to put it on the Notice Paper. The consequence was that in Standing Committee, the examination of it—this was at one of the few sittings which I missed—was rather cursory. The Clause was brought forward at the last gasp, without our having a chance to put Amendments down. I read the OFFICIAL REPORT of that debate, and I was not surprised that the Minister of State gave no detailed explanation of the Clause. He was not over-proud of it.

My hon. Friend the Member for Abingdon (Mr. Neave) has already referred to one glaring omission from the Clause. There is no provision for altering its effect by Order to take account of the possibility that payments of salary by cheque on a fortnightly or monthly basis will soon come in. I am astonished that it cannot be altered but is stuck hidebound to the weekly basis.

My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has drawn attention to another defect. Firms with fewer than 100 employees do not need to make a return. In the contracting industry, it is common for a great proportion of work to be done by sub-contractors. Some of the subcontractors will be large, but some will be extremely small. Those with fewer than 100 employees will not need to make a return. The returns from the principal contractor will, as regards a great deal of the work, be totally misleading on the question of manpower employed.

Why are these statistics required? They are not to be in a form which can be fed into a computer. I hark back to the Government's statement in another place, by Lord Brown, on 13th December last, that economic research is going to become an increasingly important matter in the future of our economy. We have heard that there will be overtime work and what I call short-time work. So what economic research can be based on these most misleading criteria which will emerge as a result of the returns to be made by the accountants of the various companies concerned?

12 m.

I emphasise what my hon. Friend the Member for Abingdon said about the Confederation of British Industry. The C.B.I. is considerably disturbed by the Clause and is equally exercised about the Minister of State's remarks on 13th June about the Clause that 'There has been delay in drafting it, but that was to get general agreement"— [OFFICIAL REPORT, Standing Committee E, 13th June, 1967; c. 1355.] My hon. Friend referred to firms which might have been consulted, but I have yet to find any organisation which was consulted on the Clause and was found to be in agreement. The Minister of State was quite right to admit that the Clause would involve more paper work. I am sure that it will.

I have had representations from accountants and lawyers all over the country that the accountancy profession is overworked and cannot take on more work. I know from experience with tax returns that everybody is getting behind. What is the value of that additional paper work that the Minister of State admits he is placing upon industry?

My hon. Friend read subsection (3) immaculately. He will not mind my disclosing that, when speaking to me only yesterday, he said that he was finding the Clause very difficult to understand. I told him that the more he read it, the less he would understand and I advised him to refrain from detailed study of the Clause. He has, however, made a detailed study of subsection (3), but neither of us is any wiser about its meaning.

My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) referred to the fact that overtime was likely to be worked by various people. Of course it will. In Amendment 313, I am more concerned with short-time working. I have studied subsection (3) of the Clause, 13 lines of it without a full stop. It refers to persons … under contracts of service One might think that "persons who … were employed" were only those who were under contracts of service. One knows that under the Redundancy Payments Act, contracts of service apply only to employees who work more than 21 hours a week. Therefore, in Amendment No. 313 I have sought to define "persons" in the Clause as those working over 21 hours per week". I am confused by the meaning of subsection (3). My reading is that it defines a week (whether throughout it or not)". As far as I can make out, we are discussing persons who may be working only a few hours a week. The contracts of employment referred to in the Clause have nothing to do with the contracts of employment which are to be entered into under the Redundancy Payments Act.

Perhaps the President of the Board of Trade can unravel some of those mysteries. I strongly advise the House to accept my Amendment, which would specifically limit the action of the Clause to persons who have been employed over 21 hours a week and thereby ensure that only full-time employees of the firm are referred to.

I come to a few rather more detailed criticisms of the Clause. I have had strong representations from the National Chamber of Trade. In my view, the Clause means, in effect, an estimation of fringe benefits. This has not been referred to before. It is referred to in our Amendment No. 36, which seeks to delete, in page 19, line 5, and the estimated money value of benefits received or receivable otherwise than in cash. It will be an extremely difficult calculation by any standards to add up all the fringe benefits which may be attributable to the various employees. I will admit that the President of the Board of Trade is right in assuming that this will be a bulk figure of all the fringe benefits of all the employees throughout the organisation, but when we split it down among all the employees, the full-time workers, the part-time workers—the managing director, I presume comes into this—what on earth does it amount to at the end of the day? Absolutely nothing.

Mr. R. J. Maxwell-Hyslop (Tiverton)

Is it not highly likely that luncheon vouchers, for instance, will have to be included in this? The Commissioners of Inland Revenue would be bound to take cognisance of this and impose Income Tax on luncheon vouchers.

Mr. Temple

I am extremely obliged to my hon. Friend for mentioning the matter of luncheon vouchers. I was going to refer to them. He is perfectly right in saying that the Inland Revenue would take cognisance of this matter.

I cut out a little snippet from the Daily Mail of 12th July, because it is relevant to this. My comment on this extract was that confusion will be caused over these fringe benefits, because this snippet referred to a car lent by the firm putting the P.A.Y.E. up. This was in respect of an employee, a Mr. Bell, who is a litho-machine minder of Howard Avenue, Halton, Leeds. I will make a quotation to highlight some of the difficulties which will occur: Mr. Bell, and his colleagues at John Waddington, the Leeds printing firm, accepted a wage cut as part of a productivity scheme in return for the loan of cars. Everyone was happy. The men had their own transport, the firm had an increase in production. That was a fringe benefit. When that matter came before the court Mr. Justice Ungoed-Thomas gave a ruling which said this was a taxable benefit.

This was one of those benefits which would have to be included under this Clause, because it was a benefit received or receivable other than in cash. But the accountants of the firm would not have known whether to include this or not, because it is extremely difficult to know such a thing. Often, it is decided only by the courts whether these things are genuinely benefits received other than in cash.

My hon. Friend referred to luncheon vouchers. The National Chamber of Trade has brought to my attention further comparatively small but nevertheless significant matters which I should bring to the notice of the House this evening. It says that very often—I know this to be a fact—goods are supplied to employees at cost price. Then, canteen subsidies are quite usual, and there is free tea. Who has not been to a works and had a cup of free tea? That would have to be added in.

There is also the matter of travel allowance. I could bring up a hundred and one other things, matters of some significance which have got to be added in and be returned under the Clause. I would give one example from farming. I think everyone knows that a high proportion of agricultural employees live in tied cottages. There is a statutory rental for tied cottages, but it is nothing like the real value of a tied cottage. Has one got to put in the real value of a tied cottage, probably about £3 a week? Or does one put in the statutory rental, the 6s. or 9s. a week referred to in the agricultural wages schedules?

I am afraid that if the Government insist on retaining these words the estimated money value of benefits received or receivable they will be making an even greater nonsense of the Clause than it is.

I refer to a possibly even more substantial criticism. Earlier this evening the President of the Board of Trade—I hope he is paying attention: he looks a bit somnolent at the moment—

Sir D. Glover

He is asleep.

Mr. Temple

We would all like to be. But the right hon. Gentleman failed to refer to the fact, until I reminded him, that in Clause 68 the Government had given way with regard to the non-showing of pension contributions of senior employees and directors, for the reasons which I gave in Standing Committee. Is the President of the Board of Trade fast asleep? Is it in order, Mr. Deputy Speaker, when an hon. Member is addressing him?

Mr. Deputy Speaker (Mr. Sydney Irving)

Whatever was happening, the President of the Board of Trade is now with us.

Mr. Temple

Perhaps it is that he was closing his eyes to concentrate to a greater extent on what I was saying. I would remind the House that the right hon. Gentleman gave way earlier this evening on the subject of the non-creditability of pensions, and in this total he is now including pensions contributions. But he has neither acquiesced nor dissented, and I assume, therefore, that pension contributions are, in fact, included.

The insurance industry is very exercised in its mind about this, because there are aspects of this matter with which it is impossible to comply; and I will come to those. There are companies with pension schemes which vary tremendously. Some have been introduced comparatively recently. There are those which cater for only a proportion of the total employees, and some are largely applicable only to women. There are a hundred and one different types of scheme and this very fact would invalidate strict comparison as between one firm and another. There are varying scales of benefit which can be obtained, but I now come to one or two very severe criticisms which are made by the insurance industry generally.

I should like to know if what we are talking about includes pension scheme benefits at all, considering that employees very rarely enjoy absolute rights to these in all circumstances. In other words, particular benefits which cannot be said to be received or receivable because the employee dies before he gets the pension, or he may leave the firm and, consequently, there is no benefit received or receivable. Does this subsection include contributions for National Insurance and Industrial Injury benefits paid by the employer? Does it include the Government subvention to the National Insurance stamp? I should like to draw the attention of the President of the Board of Trade to the group life schemes because, here, it cannot be the employees who receive anything at all; it can only be the next-of-kin. So I assume that there will be no return whatever because, by definition, although the employee makes a contribution, or one is made on his behalf, he can never benefit from that contribution at all.

There are two small items—[Interruption.]—well, I won my case earlier this evening by being pretty definite about insurance problems and, in fact, the Government accepted one of my Amendments. The right hon. Gentleman put his own name to it. What I was going to ask was whether this subsection covered redundancy payments contributions? They would have to be returned, and if one took out an insurance policy for additional accident cover, would that be included? I take out such a policy on my farm when we are doing certain dangerous work. In short, are these payments covered by this Clause?

I have highlighted some of the technical problems surrounding this matter. I re- gard the whole of the Clause as a fabulous monstrosity and I hope that even at this late stage the right hon. Gentleman will seek the leave of the House to withdraw it. However, if he cannot do that, perhaps he can accede to one or two of our Amendments.

12.15 a.m.

Mr. Maxwell-Hyslop

There are a few queries which I should like to put to the President of the Board of Trade in the hope—I trust that it is not an entirely sterile hope—that I shall get some answers before we vote on the Amendment, if that is necessary.

The first concerns subsection (3). What does "employment" mean? For instance, in every firm of which I am aware it is the habit that employees are entitled to at least two weeks' holiday a year. People in some positions in many of those firms are able to forgo their actual holiday and draw double pay instead. In other words, they are paid for being on holiday and they are paid for being there. Would that count as the employment of an additional person? Alternatively, in some firms personnel are taken on temporarily to replace those on holiday as, for instance, in a bus company; does that substitution add to the total number of people employed? The answer to that question is material because a firm in a category which is exempt because it employs fewer than 100 people can easily be put into a category which is not exempt because it employs more than 100.

When people are employed via a third party, for instance, consultants, and when they are specified by name in the contract with the firm supplying them, are they included in the total? I can conceive of circumstances in which they would actually be paid locally rather than by their own remote employer, so there may be an area of ambiguity in that respect.

I come now to subsection (4) and the subject of benefits received and receivable other than in cash and bonuses. For instance, if a car allowance is greater than the actual cost of running a car, presumably one is receiving a fringe benefit. That must be so by definition. Most firms, as, I believe, the Civil Service, run car allowances on crude graduations, or with no graduations. If there are no graduations, obviously someone running a car which is expensive to run will lose on the deal, while someone running a car which is extremely economical to run will actually gain from the mileage allowance.

Does the unfortunate accountant have to make the computation in every case and include it under subsection (4)? Taking the provision literally, I cannot see how it could be otherwise. Equally, I find it difficult to believe that such an absurd piece of recurring mathematics is the intention of the President of the Board of Trade. If he does not mean that, why has he not made his intention clear in the drafting?

Another fringe benefit is service housing. My hon. Friend the Member for the City of Chester (Mr. Temple) drew attention to the two values in agricultural housing—the statutory value and the market value. But what about a bank manager who has to live over the premises? A market value could be put on his house, but what is subtracted from the market value because of the service obligation upon him to live in that house rather than in a house which he might prefer?

It is well established that where it is part of the terms of engagement that an employee will live in service accommodation the assessed value of that accommodation is less than the open market rate. I have recently had correspondence with the Ministry of Health on this. How on earth is the individual accountant in an individual firm to make a sure assessment on this basis? I am not an accountant, but my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) is. I imagine that even he would be very perplexed in many cases in determining what sum he should subtract from the hypothetical market value of a house which may not be let anyway because it is over a bank.

Mr. Corfield

I do not know whether my hon. Friend is aware that most banks have a regulation that they will not have anyone other than an employee living over the bank for fear that the occupants may break in.

Mr. Maxwell-Hyslop

This gives us a double minus, which is a wholly unsatisfactory situation in which to end up.

I hope that I have served further to draw the attention of the President of the Board of Trade to the fact that the present drafting of the Clause is inoperable if it is taken literally. We are talking about a new phase of company law. If it is not to be taken literally we are ensuring full employment for the lawyers who will handle the appeals in so many cases, and before those cases are decided none of the chartered accountants will know what assessments they must make in their reports for the directors to sign and present to the general meeting.

Therefore, I think that the case against this atrociously drafted Clause—probably atrociously drafted because it was illconceived—is substantial. I hope that a consolidation Measure of this kind will not be unnecessarily sullied by its drafting and substantial woolliness to the extent already revealed in the debate.

Mr. Jay

I am provoked to intervene now because certain members of my family live over a bank, although they have no connection with a bank, and so far as I know no misfortunes resulted.

I think that some hon. Members opposite are taking rather an antiquated view of company law. If they had attended the two productivity conferences, held last September and this summer, they would know that their speeches tonight sounded very out of harmony with the views expressed by industry. One hon. Member said tonight that it was only the job of company law to make information available to shareholders, and therefore that any question of the number of people employed was entirely irrelevant. That is a very narrow, limited view.

As I see it, it is not merely shareholders who should have the information, although perhaps it is primarily for them. We also want information to be available to creditors, employees, customers, the public generally, financial journalists, accountants and those who are professional critics of the financial affairs of joint stock companies. We should look at the matter from that point of view and recognise that in the present condition and development of our economy the efficient use of manpower is one of the most important objectives of successful economic policy. If hon. Members realised that, they would agree with the views expressed from both sides of industry and many other quarters at the productivity conferences that there would be considerable value for general economic policy in having the manpower figures, just as much as figures of exports, disclosed by companies.

Mr. Bruce-Gardyne

As a number of my hon. Friends have said, the Confederation of British Industry has specifically dissociated itself from the view attributed to it in Committee that it approved of this Clause. Would the right hon. Gentleman confirm that or not?

Mr. Jay

I did not say that the C.B.I. formally approved this Clause. I said that views were expressed on both sides of industry at the productivity conference to the effect that disclosure of this kind was desirable from the point of view of economic policy generally, and that was the case. But, although we have many discussions with the C.B.I. on these matters, we do not expect it to draft Clauses for us.

Although that is the general case for including a Clause of this kind in the Bill, I agree that we can argue a great deal about what the definition should be and how far we should go in expecting this information to be given. We have examined the Amendments from that point of view, and, although I have no wish to encourage the hon. Member for the City of Chester (Mr. Temple) to make another of his very detailed, interesting and lengthy speeches, I am glad to say that the Government find it possible to accept Amendment No. 36. The effect of that would be to exclude benefits in kind, such as subsidised canteens and, free recreational facilities, from the definition of "remuneration". It would be perfectly justifiable to do that. I am happy, once again, to have responded to the hon. Gentleman's cogent, if rather lengthy, arguments.

The other substantial point which was raised was whether pension contributions were included in the information which had to be disclosed. Remuneration paid or payable to employees does not include contributions paid in respect of them to a pension scheme. Since they are excluded already, it is not necessary to introduce a further exclusion.

I am glad to accept Amendment No. 36, but on the substantial point it seems to us that from the point of view, not just of shareholders, but of all the other sections of the community which I mentioned, there is real value in retaining the general provisions in the Clause.

Mr. Temple

Would the right hon. Gentleman refer to the Amendment dealing with part-time employees and the question of 21 hours a week? I do not think he referred to it.

Mr. Jay

I did not refer to it because in that as in other cases it did not appear to us that the case had been made out for a change in the Bill. As long as the same provision is applied to all companies and the comparability over periods is the same, there would be no great gain in excluding part-time employees. It is reasonable to include them for the purpose of averaging all those employed full-time during the week.

Mr. R. Gresham Cooke (Twickenham)

However much one appreciates the minor concession made, the fact remains that this Victorian Clause might have been thought of by Sir Robert Peel and been put in the Tamworth manifesto.

Mr. Jay

Surely, then, the hon. Gentleman should accept it.

Mr. Gresham Cooke

It is the sort of simple-minded Clause which might have been of value when comparing two saddlery businesses or the makers of simple steam engines, but it is unsuitable for the complicated age in which we live.

12.30 a.m.

I fully understand that this kind of Clause would appeal to the right hon. Gentleman, with his love of the Victorian age. He is one of the great Victorians. But industry is not at all like the vision that he has of it. It might be all right to compare two companies, both making motor tyres for example, but the diversification of the motor industry makes this complicated, and one does not have such a simple picture. A company making motor tyres has gone on to making bicycle wheels, aircraft spare parts and has a wholesale and retail department. It is a multi-purpose company, with many interests.

When one divides the remuneration between all these companies, with all types of employees added, one gets a wholly false picture. When I read in the Sunday Press that in 10 years' time, industry will be in the hands of 330 groups, I think that if we have a few more years of Socialism it will be in the hands of 230 groups.—[An HON. MEMBER: "Or maybe one."]—One can see that the simple comparisons made by the President of the Board of Trade will be quite valueless and ought to be dropped. If this other little addendum, of the benefits received, is to be added, I suppose that the central heating of offices and factories will be included too. I beg the President to look again at this Clause. It will give an awful lot of work, and will add nothing of value.

Mr. Bruce-Gardyne

I have tried to argue throughout this Bill that, in respect of public companies, it does not go far enough in many aspects of publication, while it goes much too far in the case of private companies. One of the difficulties has been that the Government are super-imposing upon the requirements of publication that can legitimately be made upon public companies a whole series of requirements which have nothing to do with company law, with the control of the interests of the shareholders or creditors, and nothing to do with the efficiency of a business.

This Clause is a classic example. The President of the Board of Trade has made a "mini-concession"—dragged out of him by my hon. Friend the Member for City of Chester (Mr. Temple), through whose arguments he attempted to sleep. However the force of them do not seem to have entirely escaped the right hon. Gentleman.

Mr. Jay

It is the hon. Gentleman the Member for City of Chester (Mr. Temple) who is asleep now.

Mr. Bruce-Gardyne

The right hon. Gentleman does not seem to appreciate that my hon. Friend has scored a victory. He has extracted from the President a concession—

Sir D. Glover

On a point of order. How can the right hon. Gentleman say that the hon. Member for City of Chester is asleep when he is not even in the Chamber?

Mr. Speaker

That is a mystery beyond even Mr. Speaker.

Mr. Bruce-Gardyne

My hon. Friend has extracted a concession from the right hon. Gentleman which make slightly less of a nonsense of a Clause, which ought never to have been in the Bill, and which certainly ought never to have been in at this late stage. We still have not had any proper explanation from either the President of the Board of Trade or the Minister of State of the reasons for including the Clause in the Bill. During the Committee stage the Minister of State in his kindly and obliging way said that the information about wages could easily be obtained by companies, but clearly he did not read subsections (3) or (4) of the Clause. Nothing that is described there could possibly be easily obtained.

My hon. Friend the Member for Abingdon (Mr. Neave) demolished this claim wholly just by reading the provision. I can only think the Minister of State had not actually read the Clause when he made this splendid and sweeping statement; but he did go on to say, with the fairness we expect of him: I quite agree that by putting the new Clause into this Bill we are asking companies to do a little more paper work, but some paper work is more useful than other paper work. I think that as was suggested in the comment in The Times Business News today, the Government should look carefully at the amount of paper work which they are thrusting upon companies and should decide which is the more important and which is the less important and proceed accordingly."—[OFFICIAL REPORT, Standing Committee E, 13th June, 1967; c. 1356.] If only they would. All the evidence we have had is that they have never "proceeded accordingly" throughout the course of this Bill. I accept that some paper work is more useful than other paper work, but the paper work which is being loaded upon companies by this Clause is of no use to man or beast.

The hon. Member for Bradford, North (Mr. Ford) seems to have retreated once more to his Trappist monastery, and I hope he will permit me, as he is nevertheless present, to quote what he said in Committee.

Mr. Speaker

Order. This was rather a long Committee. I hope the hon. Member is not going to read the whole of its debates.

Mr. Bruce-Gardyne

I would not think of reading it all, but it does seem to me to be highly relevant to the Clause we are discussing. I would have been delighted to have the hon. Member remind us in his own words that the President of the Board of Trade, on this Clause, was shot down not from one side of the Committee but from both. However, in deference to your advice I will simply quote one phrase which he used: … frankly, this type of information would have been of no use to me whatsoever."—[OFFICIAL REPORT, Standing Committee E, 13th June, 1967; c. 1365.] He was referring to the type of negotiation which he had been involved in. I cannot see that any case has been put forward that this information, of a complexity which has been demonstrated by several of my hon. Friends, of an unreliability which has been demonstrated by others of my hon. Friends, will serve in any way to improve the relative efficiency of companies or to improve the knowledge of shareholders or creditors about tie affairs of their companies.

The philosophy behind the Clause, I suppose, is that in some way we will get by this form of ear-stroking a more efficient use of labour by companies. But do not believe that this will make any contribution at all. If we want to achieve a more efficient use of labour this should be done by taxation and incentive policies and so many of the other things we discuss at other times in this House. It cannot be done by a Clause of this kind. This is a typical example of the sort of narrow-minded, busy-body approach of the President of the Board of Trade.

Earlier, the right hon. Gentleman said that a new Clause to require that a purchaser of shares without full voting rights should be told that they did not have full voting rights was outwith the terms of the Bill. Yet we have this sort of rubbish in it. What sort of selective mentality are we up against? This is a case where the gentleman in Whitehall does not know best.

Sir D. Glover

I do not criticise the President of the Board of Trade or the Minister of State but this is the sort of Clause civil servants produce because, by their nature, they require the maximum amount of information. What use is to be made of this information? Whenever such a Clause appears in a Bill, the House should bluntly ask what is intended to be done with the information obtained under it.

If firm A and firm B are producing the same commodity, but it is shown, as a result of the Clause, that firm A employs 102 people while firm B employs 100, is the Board of Trade going to tell firm A that it must sack two people because it is inefficient? What practical action will the Government take as a result of the information collected under the Clause?

It reminds me vividly of a war-time experience. Perhaps because the civil servants were not watching the promotion scales as avidly as they should have been, I finished up commanding a battalion, probably inefficiently. But every week we had to send in a form in quintuplicate, stating in the most trivial detail the running form of all vehicles in the battalion. I regret to say that, in the five years of my Army experience, we never got a vehicle replaced without the transport officer ringing up someone at the depot and saying, "We are one 1,500 cwt. truck short. Can you send another?"

Week after week, we filled in forms in quintuplicate. All the platoons and squadrons sent in forms to battalion headquarters. All these had to be correlated; every defect written in.

Mr. Speaker

In spite of that, we won the war, so will the hon. Gentleman now come to the Clause?

Sir D. Glover

Thank you for your information, Mr. Speaker. It is not often that I thank the Chair for an intervention. You say that, in spite of that, we won the war. But now we are dealing with the efficiency of British industry. As a result of this Clause, firms will have to produce information which will never be used by the Board of Trade. It will be filed away in pigeon-holes. The Board of Trade will have a wonderful file about firm A having 102 employees, firm B having 103, firm C having 104, while firm B has two pensioners and firm A one-and-a-half.

What use is to be made of this information? What action will the Government take as a result of this Clause to increase the efficiency of British industry? Supplying information costs money and takes time. If this information is not going to be used, it will be a waste of effort, intelligence and time and therefore it should not be sanctioned by this House.

12.45 a.m.

Mr. Maxwell-Hyslop rose—[Interruption.]—

Mr. Speaker

I have no power to stop interventions. We have, however, a lot of work before us tonight.

Mr. Maxwell-Hyslop

Is it not even more of a waste of time, in that the Government already have this information? They must have it to operate the Selective Employment Tax provisions.

Sir D. Glover

I would not like to carry that intervention too far. It may be so. One of the problems of modern society is that the Ministry of Labour may have information which the Board of Trade has not got. We do not live in a pure and completely efficient society. This Bill has nothing to do with the S.E.T. The information may be available in the Ministry of Labour. If it is, the firms concerned have already borne the cost of producing this information. The Bill requires them to undergo more expense to produce similar information for the Board of Trade.

I sympathise with the President of the Board of Trade and with his officers. There is always a desire in organisations to collect information. When I was running my own business, I collected far more information than I was able to use. Anybody controlling an organisation likes to collect a lot of information. In many cases, such is the pace of society, long before the information is correlated it is out of date. Long before use can be made of information as to whether one firm has a certain number of pensioners, or whether another firm issues a certain number of luncheon vouchers or provides free or subsidised meals, it will be years out of date. Firms which are now declared to be subsidising meals may not be doing so by the time the information can be used.

Mr. William Molloy (Ealing, North)

The hon. Gentleman is wasting our time, because that aspect has been accepted.

Mr. Corfield

On a point of order, Mr. Speaker. If hon. Members opposite want to go home, it is entirely up to them. We broke off our deliberations at 11 p.m. the last time we considered the Bill to suit the Government's business. If they want to go through with this business, it is entirely up to them.

Mr. Speaker

Order. I hope hon. Gentlemen will not interrupt. Let us get on with the debate.

Sir D. Glover

I understand the attitude of the Board of Trade officials. If anybody were ever foolish enough to make me President of the Board of Trade, I should collect information and, on any given question, assert that I knew more than anybody else and that I was the most erudite of persons. I repeat that this information will be out of date long before use can be made of it. This puts an additional burden on industry and commerce, and it uses scarce brains to produce this information, which brains could otherwise be doing more constructive jobs. The sum total of the Clause is not an advantage but a disadvantage to the nation. People who could be working at a new sales campaign or doing something similarly constructive will be correlating all the minor things which are asked for under the Clause, and long before the Board of Trade can use the information it will be out of date.

I hope that the right hon. Gentleman will realise that there is a fundamental reason why the Clause should not be in the Bill and will accept the Amendment.

Sir J. Foster

As the House will notice, the information is required after the end of the financial year, and when it is in the directors' report. Hon. Members know that the directors' report may be many months after the end of the financial year.

Mr. Michael Shaw

Nine months.

Sir J. Foster

Nine months and sometimes more and sometimes less. If these statistics are to be obtained for the purpose of comparison the House must realise how little comparison they will afford. First, there is the difference in time. Not all financial years end on the same date. We can have any one of 365 days in the year. Then we can have any number of months, from three to 12, before the directors report, so that even if firms do exactly the same work comparisons of this kind are useless.

Few firms do exactly the same job. There is also a variation in the number of subsidiaries. There is also a difficulty in comparing Firm A with Firm B. The President of the Board of Trade drew attention to the fact that it may be useful for journalists to compare one company with another. But there is then the difficulty that the statistics themselves will not be capable of proper evaluation.

There is the question of the average number of employees per week. If a firm employs 1,000 people a week throughout the year, it employs 52,000 a year. Another company, by a miracle, may do exactly the same work but may employ only part-time people, and may have 2,000 people employed a week, giving 104,000 a year. Another company may have a mixture of part-time and full-time workers. None of the people whom the right hon. Gentleman mentioned will know how many are employed, counting them as man-day units, because there is no known number of part-time people. The number of man-day units can be gauged only by knowing the total wages. These 52,000 people might receive an average of £20 a week, or £1 million a year in all, and this would average at £1,000, £2,000 or £1,500 a week depending on whether they were part-time, full-time, or on a mixed basis. No one can compare the efficiency of different industries, because, with bigger profits, bigger wages may be paid, or the system may be inefficient, with too high a labour content—

Mr. Temple

My hon. and learned Friend has great knowledge of the Clause. Would he not agree that, in the case of a mixed holding company, with a large number of people employed in tropical agriculture, a very misleading figure might emerge?

Sir J. Foster

I agree that it depends on the labour content of the subsidiaries, which are lumped together elsewhere in the Clause, so the evalution is beyond the wit of man.

Subsection (3) refers to people on contracts of service. What about people who are not so employed? I am not sure whether there the term is a technical one or a tautology. I know the difference between an employee and an independent contractor—a consultant would be an employee—but this cannot apply only to those on written contracts of service, since such contracts may be oral or written. What employees are not employed under either?

Mr. Corfield rose—

Mr. Speaker

Order. I would remind the House that we have debated this matter for an hour and a half and that another 29 debates lie ahead of us.

Mr. Corfield

I know that there is much to be done—

Sir D. Glover

On a point of order. I accept what you have just said, Mr. Speaker, but it was not the Opposition which brought on this complicated Bill at this late stage.

Mr. Speaker

I am making no comment in favour of either side, as the hon. Gentleman knows, but merely stating a fact.

Mr. Corfield

The right hon. Gentleman said that we took an antiquated view of company law, but this has nothing to do with company law. He said that it was out of harmony with the views of industry, but this is not a view of company law. If it is antiquated to say that, when industry is saddled with a burden, it must know what will happen at the end of the day, I plead guilty. That is a fundamental principle of good administration. There is always an argument for the collection of information. It cannot all be collected. The problem is to decide which information will be worth the effort at the end of the day. I do not believe that the Government have begun to meet this onus of proof.

As my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) pointed out, this is not a matter of company law and there is another vehicle by which this information can be obtained. The Statistics of Trade Act, 1947, can provide it in a form which will be much more valuable than anything which will emerge from the Clause. It is clear that there is no possibility, except in purely accidental cases, of comparing like with like. Firms will not produce figures which will make it possible for a test of comparability of the efficient use of labour, which is what the President of the Board of Trade claims.

1.0 a.m.

I appreciate that the Clause arises from a productivity conference, but I have yet to find anybody who can remember what they wanted and what they thought it would produce. It arose in the context of comparability between one firm and another. I prefer to be antiquated and to know what use the Clause will be—and that the Government have not told us. The Minister said that it does not matter whether part-timers are included or whether they work 21 hours or eight hours or five hours a week. But consider one of our most important industries—the hotel industry. I know that the President of the Board of Trade has little sympathy with it and that we had to fight hard on its behalf on the Industrial Development Act. It adds greatly to our foreign earnings.

There can be no greater contrast between the ways in which hotels are run than that between hotels in the Highlands of Scotland and hotels on the South Coast. In the Highlands, staff move in and are resident throughout the season. There is nowhere else for them to go. They are on full time and probably working a great deal of overtime. On the South Coast the majority of the staff are part time, and a hotel might have four times as many staff as a hotel of the same size in the Highlands. The total number of hours worked would probably be about the same. Trying to compare the relative efficiency of a hotel in the Highlands and a hotel in Brighton on that basis will give an entirely false picture.

It is nonsense for the right hon. Gentleman to say that we are antiquated because somebody at a productivity conference, probably after lunch, thought that this would be a good idea. The right hon. Gentleman said that it would be a good idea for the creditors. What on earth value is it to the creditors? He said that it would be useful for the employees. What possible interest is it to them? What interest is it to the customers? They are not concerned with it. They are concerned with the service which they get or the article which they buy. And what of financial journalists? We all know that they like the maximum amount of information and that they will produce stories, but it does not necessarily follow that the stories will have any value. I am all in favour of informed Press comment, but where is the evidence that informed Press comment will arise out of this information? It is non-existent.

My hon. Friends have made a series of admirable speeches pointing out the problems. Not a single speech has been made telling us that this Clause will be of value. Bearing in mind the amount of business we have to do, the best way to tackle the situation is for the right hon. Gentleman to withdraw this silly Clause. It was introduced at the last moment. Five months elapsed after the President's announcement on Second Reading that the Clause was on its way —and that was several months after the productivity conference. Yet they put it on the Order Paper one sitting before we had to discuss it. It is half baked. If he wishes to make progress, here is a chance for the right hon. Gentleman to show that he is anxious to accommodate us by leaving out the Clause.

As I have said, there is not one scrap of evidence that this will be of any value in comparing the efficient use of manpower, which were the words he used, or in the general economic policy, which were the other words he used. I strongly recommend to the President of the Board of Trade that the Clause be removed. If it is suitable for a Companies Bill—which I doubt—it qualifies for the second Companies Bill. If this is done then we shall make considerably faster progress with the rest of the Bill.

Question put, That the words proposed to be left out, to the end of line 44, stand part of the Bill.

The House proceeded to a Division—Mr. JOSEPH HARPER and Mr. LOAN L. EVANS were appointed Tellers for the Ayes, but no Member being willing to act as Teller for the Noes, Mr. SPEAKER declared that the Ayes had it.

Mr. Jay

I beg to move Amendment No. 170, in page 18, line 44, at the end to insert: 'and adding up the numbers ascertained'. This is a drafting Amendment.

Mr. Michael Shaw

This is a small Amendment, but we feel that an indication should have been given that these were words of my own in Committee which have been taken in their entirety and placed in the Bill. Perhaps an acknowledgement might go on the record.

Mr. Jay

I gladly give the credit to the hon. Gentleman.

Amendment agreed to.

Further Amendments made: No. 171, in page 19, line 2, to leave out 'subsection' and insert subsections '—[Mr. Jay.]

Amendment No. 36, in page 19, line 5, leave out from 'not)' to end of line 6.—[Mr. Temple.]