DISCLOSURE OF INFORMATION CONCERNING CONTRACTS OF EMPLOYMENT OF DIRECTORS (Hansard, 19 October 1981)

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

The House will want me to be brief on this clause, and I shall be. I do not expect any change of attitude from the Under-Secretary who, I imagine, will reply to the debate. We feel as strongly about the matter now as we did in Committee, but we shall not want to press it to a Division.

I am disappointed that both the Minister and the officials at the Department have not seen fit to change their minds or even to modify their views on this matter. It has been raised in the other place. It is an issue about which many of us, on both sides of the House, in differing ways, have been greatly concerned over a period of time.

We have put to the Government three points that are specific, restricted and clearly defined. It seems to me in logic that if we are in favour of openness as opposed to secrecy, and we keep returning to these two irreconcilable and incompatible concepts that thave permeated our debates, the Under-Secretary has no argument to put to us.

Let me take the first point yet again. It has been put to the Government in the other place on two separate occasions. It was put by my hon. Friends and myself to the Government in Committee upstairs.

The Government can resist paragraph (a) only if they explain why a contract involving six years' service as opposed to six years of services is so much less significant that it does not have to be included in the company's accounts. I do not see any problem of limitation in the sense that there is an arbitrary limit. We are talking about services as opposed to service and a duration of time.

There was no argument from the Minister in Committee and none from the Government in another place. We are left with an unsatisfactory situation which no doubt will go through on the nod at this late hour.

I said in Committee that there was no one to equal the Minister for recitation. On Report we have had regurgitation. There is no one to beat him for playing a straight bat—except, perhaps, we have to remember that Boycott is still there to give him some competition. All of that, mixed measures and all, does not make up for bad briefs and bad decisions.

Let us consider yet again the question of a director who is to be reappointed and whose main functions are abroad. 139 Why should not his remuneration be published? What is there to hide? The fact that we refuse to make the information available will give rise to the sort of suspicion that will prompt investigative and other journalists to make inquiries. Paragraphs (b) and (c) are closely interrelated.

The only argument that the Minister has given is the one that he falls back on time and again—that it might be prejudicial. Have the Government ever thought that it might be beneficial to take a risk and to say that people have to declare? I said that at one time I had been a financial controller when such matters had been declared to people with direct executive responsibility but when those people were not directors of the company.

It is futile to continue to press this point tonight. We shall not press the matter to a Division, but I hope that on this occasion at least the Minister, if he does not have something new to say, will refrain from any further recitation or regurgitation. We do not want a repetition of that. Unless he has something new and positive to say, I hope that he will be brief. These are serious matters, though we may treat them with a certain degree of levity at this time of night.

Directors' contracts are things that should be public, and they are things that rightly belong to shareholders. This is of direct interest to shareholders, not just employees and the nation generally. Shareholders have a direct financial involvement that is of crucial importance. We look for something other than the repetition of threadbare arguments.

§ Mr. Eyre

I shall try to be brief, because I have such a disappointing reply to give to the hon. Member for Coventry, North-West (Mr. Robinson). I recognise that the subject matter of this new clause must be one to which Labour Members attach considerable importance, since an amendment on identical lines was tabled in Committee. I clearly recall the debate on 9 July with the hon. Member. A similar clause was also tabled in another place.

Leaving out a great deal of the next part of my brief, I say that in our view there are good reasons for retaining the two types of disclosure. It is quite normal to expect an executive director to have a contract of service, for example, to determine his emoluments, while it is also reasonable to preserve the details of a director's remuneration from the unjustified inquisitiveness of others. The scrutiny provided for in section 26 of the 1967 Act and the availability for inspection by shareholders of copies of the relevant contracts in our view successfully reconcile these two inevitably somewhat conflicting objectives.

A contract for services with the company in which the director has a material interest, for example, to provide consultancy services, is, however, more uncommon, and such a contract could point to a conflict of interest in a way that a contract of service would not. Such contracts for services should therefore be disclosed in as open a manner as possible—for example, in the accounts, as section 54 of the 1980 Act provided—so that all those dealing with the company can be aware of any possible irregularities.

New clause 40 would, on the other hand, involve widespread duplication of disclosures. Contracts of service would be disclosed in the accounts, while copies would have to be kept for the inspection of shareholders. This would involve companies in an unnecessary 140 duplication of effort and therefore useless expenditure, and would expand the notes to the accounts with a large amount of information concerning directors' conditions of employment, etcetera, which the shareholders can already find out by inspection at the registered office.

We conclude that to impose this extra burden on companies would serve no useful purpose. The exemption from disclosures, under section 26 of the 1967 Act, of overseas contracts of service has also been criticised on the ground that shareholders should have the right to examine such contracts in the same way as they can examine contracts of service for work in this country. After careful study, and taking into account the difficulties that might be created by full disclosure of overseas contracts, we consider that political or commercial embarrasment, not only for the companies concerned but for the Government—this balance was hallowed in the 1967 Act—could arise if such full disclosures were required for entirely conventional means of providing for a director's employment.

I apologise to the hon. Member for Coventry, North-West for having bored him stiff. However, I have had to repeat the reasons for the decision. They are sound, although I realise that they are unacceptable to the hon. Gentleman.

Question put and negatived.

Further consideration of the Bill, as amended, adjourned.—[Mr. Budgen.]

Bill to be further considered tomorrow.