Companies (Directors' Reports) (Employee Involvement) (Hansard, 7 April 1982)

§ Mr. Esmond Bulmer (Kidderminster)

I beg to move, That leave be given to bring in a Bill to make provision for annual reports by directors of certain companies to state what steps have been taken during the year to promote employee involvement; and for connected purposes. This is not the afternoon I would have chosen to introduce the Bill. However, our ability to defend our national interest depends, to a large extent, on the success of our industry and the unity of our people. In the past our industry has not performed as well as some of its international competitors because there has not been the necessary unity of approach. It is in the search for that greater unity that I bring forward the Bill.

I believe that there is general acceptance that companies in which employees feel involved perform better than those where they do not, that people respond most willingly to the instructions that they give themselves or, at least, to those in the formulation of which they play a part and that motivation provides the cutting edge of effective competition.

In the United States, research over a long period has found that companies with profit sharing achieve more than those without it and I have no doubt that recent moves to encourage profit sharing in this country will have the same result. It therefore seems only sensible to require directors of companies to spell out what they are doing to create a situation in which the success that flows from the commitment of the work force is most likely to be achieved.

That requirement will have some obvious consequences. Not less than once a year, a board employing more than a given number of people will have to consider formally the state of its employee relations and put on the record a statement for which it may be held accountable by shareholders, the press and its employees or their representatives. It is clearly desirable that the statement should be written not in the language beloved of accountants, but in terms to which employees can respond and that they should each receive a copy.

In the course of the board's discussions on what the statement should include, certain questions are likely to be asked, including "What are we doing to meet the requirements of the law and to meet our own objectives? Are those shared by our employees? What are they asking us to do? Are we sympathetic? If not, why not? What are other companies doing? Is this or that a good idea and should we investigate it? How does our record look? What have we done in the past 12 months? What do we intend to do in the next 12 months?"

By no means every company goes through that process at present—certainly not at board level—and it is one of the areas in which non-executive directors can make a significant contribution. I believe that nothing but good can come from bringing it about in companies that do not go through that process.

Let me deal with some of the other consequences that may flow from the Bill. One of the things that stood out at the time of the Bullock inquiry was the absence of any comprehensive corps of information about what was being done in the larger companies. The Bill would rectify that situation.

957 Another revelation to some members of the Bullock committee was the diversity of company structure; and even more diverse than company structure is the way in which employees are now consulted.

We should do all that we can to encourage initiatives that have proved successful, but before considering what framework to promote employee involvement could possibly accommodate such variety as exists in British industry it would be helpful to know how companies of all sorts provide employees with relevant financial and other information about their job, their work place and their company and what opportunities are provided for discussion with employees or their representatives about matters of legitimate concern.

It would also be helpful to know how regularly meetings take place and who convenes them, what means have been developed for encouraging greater involvement by employees in the company's success, whether a profit-sharing scheme is in operation and what training is provided for employees to improve their contribution.

I believe that if we have that information we shall find that, just as there is diversity of structure, so there is diversity of approach. However, we should not believe that any one model for bringing about greater involvement by employees in the affairs of their company—as, for instance, exists in some countries on the Continent—would be right for us at the present time.

I believe that there is support on both sides of the House for the voluntary approach, but that does not mean that we should do nothing. I have little doubt that the House will at some time debate a code of practice to cover the points that I have raised and other matters. The Bill's sponsors and I believe that the House will produce a better code if 958 it is well informed about what is being done across British industry to promote greater employee involvement and that that is more likely to happen if there is a reasonable record available.

As the House knows, the European Parliament is considering these problems. It is essential that before it reaches final conclusions we should have worked out a system of employee involvement that suits our situation and not have thrust upon us a system that may not suit us. There is a need for action, but it must be well considered.

There is an old military maxim that time spent on reconnaissance is seldom wasted. I believe that my modest Bill may, in time, provide valuable information for all those concerned to improve our industrial relations and a modest stimulus to those who are not giving sufficient thought to the need to do more in their own companies. In that spirit, I commend the Bill to the House.