HC Deb 17 May 1984 vol 60 cc560-9
Mr. Ashdown

I beg to move amendment No. 1, in page 1, line 9 after 'companies,' insert 'whose boards of directors shall in every case include 2 employees of the Royal Ordnance Factories elected yearly by all paid employees.'.

Mr. Deputy Speaker (Mr. Harold Walker)

With this it will be convenient to take amendment No. 8 in clause 5, page 5, line 28, at end insert 'and unless all employees who have worked in Royal Ordnance Factories throughout the two previous years have been given an opportunity to purchase shares at a preferential rate.'.

Mr. Ashdown

The Committee was under no illusion that I and my party were totally opposed to the concept of privatisation as well as to the draft of the Bill. It is our concern, none the less, to ensure that, while the Government press ahead, we should create the most healthy organisation, with the best chance of success, and able to take its place in the market effectively and efficiently. That would benefit the members of those firms as well as the strength of our defence industries and the vital services which the ROFs provide to our defence mechanism.

It is well known that the Liberal party has long believed profoundly that one of the problems with the armaments industry in Britain lies in the fact that industry, like politics in the House, as characterised by the hon. Member for Bolsover (Mr. Skinner), who intervenes from a sedentary position—

Mr. Dennis Skinner (Bolsover)

I do not mind being challenged when I am speaking, Mr. Deputy Speaker, but I have been sitting here quietly.

Mr. Ashdown

If that is so, it is the first time that the hon. Gentleman has kept silent while I have been speaking.

That alliance has long believed that British industry is weaker and less effective because, like the House and British politics in general, it is founded on class conflict and confrontation. We have long believed that the two significant reforms of industrial democracy and profit

sharing, which we could introduce, are vital to overcome that problem and to lay a successful foundation for the industry.

I hear the hon. Member for Crawley (Mr. Soames) speaking from a sedentary position. I must tell the House that a few moments ago he asked me to be brief because he wanted to dine, which was more important than taking part in the debate. If the hon. Gentleman wishes me to be brief, he should keep a little quieter.

We have long believed that those two key reforms to ensure participation in industrial democracy and in profit sharing are vital for a firm and strong industrial base for Britain. That applies to the economy as a whole as much as to the privatised royal ordnance factories, however much we might oppose that move.

7.15 pm

Amendment No. 1 relates to industrial democracy, and amendment No. 8 deals with share ownership. I shall deal with them in the order in which they stand. We debated industrial democracy in Committee, when I found myself voting in support of a Labour amendment. I repeat now that our difference with the Labour party lies in the fact that it seem to believe that only the trade union movement is entitled to rights of representation on a board of directors. We stood against Labour Members when the Bullock report on industrial democracy was produced. We believe that all those who work in a company have a right to participate in the decisions that control their destiny, in which they are involved and upon which depend their whole livelihoods.

The amendment seeks to allow the work force in the new form of royal ordnance factory to elect two worker-directors on to the board of directors controlling the organisation. The right hon. Member for Llanelli (Mr. Davies) said in Committee that he supported that concept. He said: If workers are going to have 10 per cent. of the shares, why not let them have a representative on the board? … Why should not the employees be in the same position as anybody else who is going to sit on the board. They have great experience in this matter; they have something to contribute; they have shown great loyalty to the organisation, and they will continue to do so; even though they might object privately to privatisation they will show great loyalty, and their loyalty could be rewarded by putting two employees on the board. They can make a contribution at that level. I would like to see that." —[Official Report, Standing Committee D, 16 February 1984; c. 200–1.] I could scarcely make a more eloquent case for the amendment.

Mr. David Winnick (Walsall, North)

Yes, the hon. Gentleman could.

Mr. Ashdown

Perhaps I could, come to think of it. Unhappily, whatever glowing support the right hon. Member for Llanelli has for the concept, he avoids speaking out alone, or almost alone, in the Labour party, for others express different views. I note that—I was going to say the hon. Member for the NUM — Mr. Arthur Scargill, writing in a pamphlet called "The Myth of Workers Control", published in April, said that workers' control under capitalism is a contradiction in terms … only achieved through the process of collective bargaining and class conflict … workers on boards of directors inevitably become part of the institution of the board room" — —-I ask Labour Members to take particular account of this statement— in much the same way that Labour politicians often become 'constitutionalised' in capitalist parliamentary institutions. I hope that that statement sends a shiver down the right hon. Gentleman's spine as he worries about the possibility of Mr. Scargill and his hordes disagreeing with him and instituting some form of re-selection.

It is time that Labour Members made their position on this clear. Do they honour the rhetoric of the right hon. Member for Llanelli in support of worker democracy and the election of people to represent the work force in the board rooms of the royal ordnance factories? I suspect that of the few hon. Members here, still fewer will support the amendment because, once again, the call of the train home has proved stronger than the call to test their principles. I believe that the voting figures will show a far greater proportion of the alliance parties to be present than Members of any other party.

At the eighth sitting of the Committee, the Parliamentary Under-Secretary of State was somewhat disparaging, saying that the boards must pull together and suggesting that worker representation would somehow be divisive. He completely ignored the fact that the industrial confrontation which afflicts Britain, destroying competitiveness and efficiency, has been dealt with in West Germany and other European nations by precisely this means.

When it suits them, of course, the Government trumpet about worker democracy. They say that they have gone some way along the lines proposed in the Vredeling initiative by requiring companies over a certain size to report on employee involvement and participation. On 1 May the Secretary of State for Employment actually made a virtue out of the Government's proposals and their espousal of the concept of the employee participation. I see the hon. Member for Crawley looking at his watch again. If he will keep a little quieter, we may get through this a little more rapidly.

The Secretary of State for Employment said that we have already legislated in one respect of the Vredeling directive in requiring every company—this requirement is not restricted to companies over a certain size—to publish in its report and accounts its activity and involvement in communication. That requirement was placed in the 1982 Act. My hon. Friend the Minister of State and I will be monitoring extremely carefully all company reports and accounts to ascertain how the involvement is being pursued. — [Official Report, 1 May 1984; Vol. 59, c. 182.] The Government made a virtue of their involvement with that initiative, omitting to mention that it was the result of a defeat in the House of Lords on an amendment put down by noble Lords who supported the Liberal party and the SDP. It was as a direct result of that defeat that the Government took the first steps towards industrial democracy.

I commend to the Minister the following words, spoken in this House on 21 January 1974: It is time that we on the Government side did some bridge building by acknowledging that capitalism, if it is to survive, must undergo some major changes … we cannot persist with the notion that the man who has worked for a company for perhaps 20 years, whose savings are in the pension fund, who has built his life around the factory at the end of the road, whose chances of finding another employer are probably thin, and who has served his company faithfully, is not a member of that company, while the man who, without seeing or knowing the company or knowing the product, but thinking that it might be good for a take-over bid, rings his broker and buys some shares, is a member of the company. That cannot be right. If it ever was right, it cannot be right now … I believe that the employees have a right to representation on the board and at the annual general meeting of the company. They have a right to that … The gulf between managers, employees and owners has to be closed."—[Official Report, 21 January 1974; Vol. 867, c. 1278–79.]

Those were powerful words indeed, spoken in the debate in 1974 by the present Secretary of State for Trade and Industry. I can put it no more clearly myself. I hope that the Minister today will follow the rhetoric of his right hon. Friend and accept that initiatives of this kind can do much to build a bridge between one side of industry and the other and to lay the basis for a decent and proper organisation for the new royal ordnance factories so as to ensure their success and provide for appropriate industrial relations.

Mr. Skinner

In talking about following one's own rhetoric and practising what one preaches, will the hon. Gentleman call upon those Liberal and Social Democrat Members who between them have 15 directorships and consultancies to consider whether they should be serving on boards and picking up brass when the policies on worker democracy which he describes are not being carried out? Should they not resign?

Mr. Ashdown

I fully recognise the mischievous intent behind that intervention. The point at issue is simply this. No doubt they will argue their Liberal principles on those boards and seek to bring about precisely this kind of worker democracy. They may not be able to carry the day, but I know of no Liberal Member of Parliament, past or present, who did not both espouse these beliefs and seek to put them into operation whenever possible.

Mr. Skinner

Cyril Smith.

Mr. Ashdown

The second key element in the amendment is share ownership.

Mr. Skinner

Richard Wainwright.

Mr. Ashdown

I am sure the House recognises that it is a long-held Liberal belief that the ownership of shares in a firm is a vital mechanism for ensuring proper industrial development and decent industrial relations.

Mr. Skinner

Ian Wrigglesworth.

Mr. Ashdown

As the right hon. Member for Llanelli said, we introduced the employee share ownership scheme into the 1978 Act. I am grateful to the right hon. Gentleman for acknowledging that that was brought in by a Liberal initiative during the Lib-Lab pact, when he was a Minister of State at the Treasury.

The right hon. Member for Llanelli said: It is only fair to say that the Labour Party is ambivalent about these schemes. I think they are beneficial, but I recognise that many of my hon. Friends have a different view … In 1978 we had a debate within the Labour Party, and there was general disagreement … The scheme was introduced, among other reasons, because of the so-called alliance at the time with the Liberal Party … It is clear that, had there not been a Lib-Lab pact, there would not have been this clause in the Finance Bill of 1978 We strongly share that view. He continued: Unhappily, however, the Labour Party once again is divided on this issue. The Labour Party's position is not clear. The hon. Member for Preston (Mr. Thorne) said: I am not sure who gained from it, but I do not believe it was the Labour Party."—[Official Report, Standing Committee A, 17 June 1980; c. 565–79.]

Mr. Skinner

They are all here in the register. Managing directors—

Mr. Deputy Speaker

Order. Sedentary interruptions are bad enough, but a running commentary is even worse. If the hon. Member for Bolsover (Mr. Skinner) seeks to catch my eye, I shall see whether he can take part in the debate later.

Mr. Ashdown

I was seeking to ignore the hon. Gentleman's inteventions, as I hope is the practice of all hon. Members, because they are pretty worthless interruptions.

Mr. Skinner

Will the hon. Gentleman give way?

Mr. Ashdown

No, I shall not give way.

Mr. Skinner

It is all in the register.

Mr. Ashdown

What is the Labour party's view on this? The hon. Member for Livingston (Mr. Cook), who we are told is close to the Leader of the Opposition, has said: My own suspicion is that we have gone far enough"— in the 1978 Act— and the clause is taking us too far. The Labour party's Green Paper, "Capital and Equity", states: Company-based schemes whether for profit sharing or for capital sharing, were found to be totally unacceptable as even a partial solution—they are, we believe, offensive to both trade unions and to Socialism. Will the hon. Member for Kingston upon Hull, North (Mr. McNamara) or any other Labour Member tell the House what is the Labour Party's position on this issue, and ensure that Labour Members' votes are cast accordingly and that they do not sit tight on the Benches when we vote.

Mr. Terry Lewis (Worsley)

Is the hon. Gentleman aware that the Labour Party document to which he referred was written principally by hon. Members who crossed the Floor of the House to join the Liberal rabble?

7.30 pm
Mr. Ashdown

I do not know whether that is true. One thing is sure, however, and that is that both Liberal and SDP Members firmly believe that these reforms are essential if we are to overcome the conflict and confrontation in British industry.

The Conservative party favours the idea of employee share ownership. I am sorry that the hon. Member for South Ribble (Mr. Atkins) is not present because, as is well known, he favours these proposals. In the debate on the Queen's Speech the former Secretary of State for Trade and Industry, the right hon. Member for Hertsmere (Mr. Parkinson), said about the work of expanding share ownership: We are determined to carry on with that work because it is what employees want and the results have been extremely encouraging." — [Official Report, 24 June 1983; Vol. 44, c. 266.] On 27 July 1983 I asked him what steps he had taken to continue the move towards share ownership. He replied: We have not gone as far as he and I wish to, but we are moving firmly in the right direction." — [Official Report, 27 July 1983; Vol. 46, c. 1176.]

Others hold the same view. The Institute of Directors believes that the concept has benefits for all. It published a document called "Share Ownership for Employees and Directors", in which it said: It spreads personal holding of wealth, it links the growth of that wealth to company performance and it educates all who participate in the realities of business risk, capital and profits. Is not that what the Minister wishes to see in the new royal ordnance factories? We hope that the Government's rhetoric on this matter will be carried through, and that the Bill will allow employees both to participate directly in the decisions made by firms and boards by having workers elected to the board of directors, and to purchase shares at a preferential rate before the shares are put on the market.

Mr. Brandon-Bravo

The hon. Gentleman will recall the many assurances that were given in Committee. It is the Conservative party's intention to encourage the widest possible share ownership. We should like a double commitment from a man, both of his time and skills, and of his savings, with which to buy shares. Would not the hon. Gentleman's amendment make more sense, and perhaps find more favour, if instead of saying "paid employees" it said "employee shareholders"?

Mr. Ashdown

I understand the hon. Gentleman's views. It is exclusively and peculiarly conservative to think that only those who have the money to purchase shares and own property should be elected. That concept went out in 1832. The hon. Gentleman suggests that only those who can purchase shares can be elected to the board of directors. That is nonsense. A person's livelihood is at stake whether he owns shares in the firm or not.

The Government must establish a precedent, which will be useful for other Bills that seek to privatise assets. They must make a firm commitment to give workers the right to preferential shares before the shares come on the market, and to be represented on the board of directors by direct election. That is what the amendment seeks to introduce into the Bill. I hope that Conservative Members will find something in these proposals to commend the amendment, and that the Minister will accept it.

The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee)

The amendment was tabled by alliance Members, who clearly sympathise with the Labour party view of industrial democracy, under which worker-directors only can benefit the smooth and efficient running of a company. However, it is clear that they do not agree with the Labour party about the mechanism by which such worker representation on company boards should be achieved.

In Committee we debated a Labour party amendment, which sought to place on the new ROFs' boards two worker-directors who were to be nominated by the trade unions. The hon. Member for Yeovil (Mr. Ashdown) took issue with that and preferred to see worker-directors being elected by their fellow employees. The amendment is worded to achieve that, and to allow for yearly elections.

Hon. Members may be more inclined to support this amendment because it is a more democratic means of advancing worker participation, but that is not the real point at issue. We must consider carefully whether it is suitable and appropriate for employees of a company to represent certain interests on a board where a number of interests related to the performance of a company are brought together.

There can be no objection to placing on the board a person with knowledge of the requirements and views of the employees and to making use of his expertise in the service of the company. On the present ROF boards there is one director who started on the shop floor, and two others who started at the foot of the non-industrial, scientific ladder, who have worked their way through the system.

As employee representatives, worker-directors must be expected to have at heart what are, quite properly, the sectional interests of their fellow employees. It is not difficult to foresee instances where that may conflict with the company's interests. To appoint an individual as a company director is to give him moral and legal obligations under the provisions of company law. The prime duty of a director is to promote the interests of the whole company. It must be in the interests of employees to maintain full employment at the highest remuneration, whereas it is in the interests of the employer to manage his business in the most economically efficient way. It is not, therefore, hard to envisage circumstances in which there could be a conflict of interest.

The amendment is unacceptable. The boards will be constituted with the needs of the ROF organisation as a whole in mind, and will have the appropriate expertise and background committed fully to the company. Therefore, I ask the House to reject the amendment.

I turn now to the question of employee shares and shareholdings. The Government believe in wider share ownership. If we assume privatisation by flotation, we shall encourage employee participation. The House must judge the Government by our record in that respect—on our privatisations of British Aerospace, Cable and Wireless, Associated British Ports and others. I hope that the amendment will be withdrawn, because otherwise we must oppose it.

Mr. David Alton (Liverpool, Mossley Hill)

I am sorry that the Minister said that the Government will oppose the amendment. I hoped that they would accept it, in view of their often-repeated claim that they favour the encouragement of employee participation.

I was worried that the Minister said that the need was to take into account the views and feelings of the organisation. That is the difference between Liberal and SDP Members, and Conservative Members. We should like to see the views of the workers and of all those involved in an enterprise taken into account.

The Minister also said that we were supporting the Labour party view. When my hon. Friend the Member for Yeovil (Mr. Ashdown) moved the amendment, it became increasingly obvious that that was the last thing that we were doing. The Labour party is deeply divided on this issue, and there is no great support from Labour Members tonight. Many Opposition Members epitomise the continuing strife in British industry between the victors and the vanquished. They see everything in terms of capital versus labour, and say far too little about the need for workers and management to work together.

The Secretary of State for Trade and Industry set out his view in an article in The Guardian in September last year: There is also evidence that too many companies are still not doing enough to involve employees in the enterprise. I am often amazed at the way in which decisions which affect a man's working life are taken with little concern for his feelings—indeed with little effort to discover if he could suggest a better way, and a more acceptable way to him, to achieve the company's objectives. Liberals have traditionally been committed to involving workers far more in their enterprises, because they, due to their knowledge of the shop floor, know best about the solutions to a company's difficulties and know best about the way in which the company should be organised. As long ago as 1928 the Liberal Yellow Book stated: The real purpose of profit-sharing … is to show that the worker is treated as a partner and that the division of the proceeds of industry is not a mystery concealed from him, but is based on known and established rules to which he is a party. Eight years before that Mr. Asquith said that he looked to "a combination of workers" running their own enterprises.

The Liberal view on this has been well established for most of the past century. However, the Socialists have concentrated traditionally on worker control at the level of the entire economy rather than the individual work place, and it is that which separates us from the Labour party.

For industrial democracy Britain has become something of a backwater. In Sweden, for example, there are wage earner funds; in West Germany there has been an extension of workers' councils; in the United States employees stock ownership plans have taken off on a large scale; and in Yugoslavia there are many imaginative self-management schemes. In the previous three Conservative Budgets incentives have been given to some worker share schemes, and we recognise that, compared with the 30 schemes that operated in that way in 1979, now more than 550 companies are involved in such enterprises. However, in the United States about 6,000 companies have employees in stock ownership plans, and I should have thought that Britain would be making strides in that direction.

From this year companies with more than 250 workers must state in their reports how they have furthered employee involvement, and the Liberal party looks forward to seeing the outcome of those reports. We hope that there will be other opportunities, not just here tonight, to further the cause of employee involvement in enterprises, and employees being given a share of profits and a say in the running of their firms. For that reason, I am happy to support my hon. Friend the Member for Yeovil (Mr. Ashdown), and we shall press both amendments to a vote.

Question put, That the amendment be made:—

The House divided: Ayes 12, Noes 171.

Division No. 306] [7.42 pm
Alton, David Maclennan, Robert
Ashdown, Paddy Mitchell, Austin (G't Grimsby)
Campbell-Savours, Dale Penhaligon, David
Corbett, Robin Robinson, P. (Belfast E)
Cox, Thomas (Tooting)
Freud, Clement Tellers for the Ayes:
Kennedy, Charles Mr. Simon Hughes and
McCrea, Rev William Mr. Archy Kirkwood.
Aitken, Jonathan Bottomley, Mrs Virginia
Alexander, Richard Braine, Sir Bernard
Alison, Rt Hon Michael Brandon-Bravo, Martin
Arnold, Tom Brown, M. (Brigg & Cl'thpes)
Baker, Rt Hon K. (Mole Vall'y) Bryan, Sir Paul
Baker, Nicholas (N Dorset) Buck, Sir Antony
Baldry, Anthony Budgen, Nick
Beggs, Roy Carlisle, Kenneth (Lincoln)
Boscawen, Hon Robert Carttiss, Michael
Bottomley, Peter Cash, William
Chapman, Sydney Molyneaux, Rt Hon James
Chope, Christopher Moore, John
Clarke, Rt Hon K. (Rushcliffe) Murphy, Christopher
Cope, John Needham, Richard
Couchman, James Nelson, Anthony
Currie, Mrs Edwina Neubert, Michael
Eggar, Tim Nicholls, Patrick
Emery, Sir Peter Onslow, Cranley
Evennett, David Ottaway, Richard
Fallon, Michael Page, Richard (Herts SW)
Fenner, Mrs Peggy Parkinson, Rt Hon Cecil
Forman, Nigel Parris, Matthew
Forsyth, Michael (Stirling) Pattie, Geoffrey
Forth, Eric Pollock, Alexander
Fox, Marcus Powell, William (Corby)
Freeman, Roger Powley, John
Gale, Roger Prentice, Rt Hon Reg
Galley, Roy Proctor, K. Harvey
Goodhart, Sir Philip Raffan, Keith
Gow, Ian Rees, Rt Hon Peter (Dover)
Gregory, Conal Rhodes James, Robert
Griffiths, Peter (Portsm'th N) Ridsdale, Sir Julian
Ground, Patrick Robinson, Mark (N'port W)
Hamilton, Hon A. (Epsom) Roe, Mrs Marion
Hamilton, Neil (Tatton) Rowe, Andrew
Hanley, Jeremy Rumbold, Mrs Angela
Harris, David Ryder, Richard
Harvey, Robert Sayeed, Jonathan
Haselhurst, Alan Shaw, Sir Michael (Scarb')
Hawkins, C. (High Peak) Shelton, William (Streatham)
Hawkins, Sir Paul (SW N'folk) Shepherd, Colin (Hereford)
Hayes, J. Sims, Roger
Hayhoe, Barney Smith, Sir Dudley (Warwick)
Hayward, Robert Smith, Tim (Beaconsfield)
Heathcoat-Amory, David Soames, Hon Nicholas
Henderson, Barry Speed, Keith
Hickmet, Richard Spicer, Michael (S Worcs)
Hill, James Stanbrook, Ivor
Hind, Kenneth Stern, Michael
Hirst, Michael Stevens, Lewis (Nuneaton)
Hogg, Hon Douglas (Gr'th'm) Stewart, Andrew (Sherwood)
Holt, Richard Stradling Thomas, J.
Hooson, Tom Sumberg, David
Hordern, Peter Taylor, John (Solihull)
Howarth, Gerald (Cannock) Taylor, Teddy (S'end E)
Hubbard-Miles, Peter Temple-Morris, Peter
Hunt, David (Wirral) Terlezki, Stefan
Hunt, John (Ravensboume) Thatcher, Rt Hon Mrs M.
Hunter, Andrew Thomas, Rt Hon Peter
Johnson-Smith, Sir Geoffrey Thompson, Patrick (N'ich N)
Jones, Gwilym (Cardiff N) Thurnham, Peter
Key, Robert Tracey, Richard
Lang, Ian Twinn, Dr Ian
Lawler, Geoffrey van Straubenzee, Sir W.
Lee, John (Pendle) Waddington, David
Leigh, Edward (Gainsbor'gh) Wakeham, Rt Hon John
Lester, Jim Walden, George
Lewis, Sir Kenneth (Stamf'd) Waller, Gary
Lightbown, David Wardle, C. (Bexhill)
Lloyd, Peter, (Fareham) Watson, John
Lord, Michael Watts, John
Lyell, Nicholas Wells, Bowen (Hertford)
McCrindle, Robert Wheeler, John
MacKay, Andrew (Berkshire) Whitfield, John
MacKay, John (Argyll & Bute) Whitney, Raymond
Maclean, David John Wiggin, Jerry
Major, John Wilkinson, John
Malins, Humfrey Winterton, Mrs Ann
Malone, Gerald Winterton, Nicholas
Maples, John Wolfson, Mark
Mather, Carol Wood, Timothy
Mawhinney, Dr Brian Yeo, Tim
Mellor, David Young, Sir George (Acton)
Merchant, Piers
Miller, Hal (B'grove) Tellers for the Noes:
Mills, Iain (Meriden) Mr. Tristan Garel-Jones and
Moate, Roger Mr. Tim Sainsbury.

Question accordingly negatived

Amendments made: No. 2, in page 2, line 2, leave out from 'from' to end of line 3 and insert 'a successor company or from different successor companies to a company or to different companies (whether or not it or any of them is a successor company immediately before the coming into force of the scheme)'.

No. 3, in page 2, line 35, after 'taken', insert ', on the date the asset or liability is so transferred,'.

No. 4, in page 3, line 31, leave out '(a)'.—[Mr. Pattie.]

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