HC Deb 22 February 1985 vol 73 cc1387-9

Order for Second Reading read.

2.18 pm
Mr. Derek Fatchett (Leeds, Central)

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

When I was fortunate enough —if that is the right term —to draw No. 18 in the ballot for private Members' Bills, I was offered different types of advice. Some hon. Members said to me, "Introduce a Bill that is non-contentious and that will gain support from all parts of the House. Then you can get a piece of legislation through and it will be remembered as the Fatchett Act. Alternatively, you can go down in a blaze of glory that will make a major political propaganda point and be forgotten by lunchtime." I decided to adopt the former course and to introduce a measure that is clearly non-contentious, that is designed to extend democracy in our society, and that should therefore gain the support of all sections of the House. It may well be that the spirit that has pervaded the House today, with two Bills making rapid progress, will also affect this Bill. It is a measure about extending democracy to shareholders in companies. It is about extending rights. Therefore, I should have thought that it was an important part of the political process in society.

I should like to deal with one or two criticisms that might be made of the Bill. Some Conservative Members might suggest that the Bill is an attack upon the funds of the Conservative party. They will call in aid evidence that in 1983–84 the Conservative party received £2,780,000 worth of donations from private companies. They will say that what I am trying to do is stop companies donating to the Conservative party. That is not my intention, but if Conservative Members feel guilty about company donations, they may come to that conclusion.

My intention is to give shareholders the right to have a say in those decisions. Surely no Conservative Member could object to that. It would simply be a case of company shareholders saying that they agreed that their company should have a political fund and be able to make donations. If we go through that democratic process, shareholders might agree to continue to donate funds to the Conservative party, although that would be surprising, judging by the value that they get for that money. In view of the way in which the country's economy has been managed over the past few years, I should have thought that it was not necessarily the best investment to make on behalf of shareholders. However, after a ballot and through the processes that my Bill sets out, the company shareholders might decide that it would be in their interests to vote the moneys to the Labour party. That would probably be a much better investment because they would have a much more sensible management of the economy, and they could look forward to their company growing and perhaps to greater dividends being paid on higher profits.

Therefore, the Bill is not an attack on funds given to the Conservative party, nor is it an attack upon companies with directors who have received honours from the Prime Minister in the new year's or birthday honours lists. One or two of my right hon. and hon. Friends have referred to the relationship between company donations and mentions in the honours list, but it would be scurrilous to suggest that directors donate to the Conservative party simply to get a mention in the honours list. There must be a much better reason for donating to the Conservative party, although as yet I have not found one that would make sound financial sense.

Therefore, the Bill is not an attack on the Conservative party or company directors. It is a modest Bill. On other occasions I have called it the shareholders' charter. It is an attempt to extend to shareholders the rights that trade unionists have enjoyed since 1913. If any Conservative Members oppose the Bill, they will be telling the country that they expect trade unions to hold ballots, give individuals the right to opt out, and have separate political funds for the payment of political donations, but that they do not expect any such controls or constraints on companies. It would be strange if there were such opposition because Conservative Members would be saying that they agreed that there should be a law for trade unions, but that there should not be the same application of that law for companies. When I look at Conservative Benches and see reasonable men — I include all Conservative Members present—I would expect them to put first the interests of the political system, not the interests of their own political party, and that what they would like is fairness in political donations so that trade unions and companies work on the same basis.

Therefore, the Bill attempts to provide rights for shareholders that they have not enjoyed previously. The Bill could have gone about that in several ways. First, I could simply have introduced a clause that said that companies could not make political donations. I could have sought to make illegal political donations either to the Conservative party or to front organisations. However, this is a modest measure, which does not attempt to be that far-reaching. I am seeking consensus.

I believe, as I am sure Conservative Members do, that it is part of our political process that the great institutions of our society donate to political parties and political organisations. Therefore, I do not want to make it illegal in that sense.

But if I did, I would have some support from companies. The chairman of Cadbury Schweppes, Sir Adrian Cadbury, may well have supported the measure. He was reported in the Financial Times on 23 January 1984 as having said: Boards of directors should consider stopping political contributions and instead pay the equivalent in higher dividends to allow shareholders to decide whether to donate. It is most unfortunate that Cadbury Schweppes did not listen to the excellent advice of its chairman. During the course of that year the organisation donated 15,000 to the Conservative party. Nevertheless, I could have taken Sir Adrian Cadbury's advice and simply introduced a Bill that said that there should be no political donations and that if shareholders wanted to donate to the Conservative party, or to the alliance, they could do so. I notice that no alliance Member is present. One of the great advantages of being an alliance Member is that the alliance has already introduced the shorter working week.

Instead, I have sought to build upon the existing institutions and the fact that companies do donate, and I have sought to allow such donations to continue. I am trying to take from companies the right that they seem to exercise through their directors at the moment without any consultation whatever with shareholders.

Let me draw attention to some of the problems that have been experienced by Gwent county council's superannuation fund. Employees of Gwent county council pay into that fund. Looking at the political map of that part of the country I suspect that many of them are, wisely, Labour party voters. Gwent county council, probably feeling some of the democratic wishes of its employees, decided that it would examine the companies in which that fund invested to discover whether they donated to the Conservative party. The council then wrote to the companies and asked whether, if they did donate to the Conservative party, they would consider the possibility of no longer doing so because the pension fund would not be in favour of such donations.

For example, the council wrote to the Sedgwick group, an organisation in which the Gwent county council had investment funds. The group replied: This is not a matter in which shareholders can be involved. That shows a great belief in democracy, does it not? I cannot imagine the General Secretary of the TUC saying that trade unionists should not be involved. The horror of Conservative Members would be unbelievable. It would be synthetic, but it would be unbelievable.

Mr. Tim Yeo (Suffolk, South)

rose—

Mr. Fatchett

No, I shall not give way.

The Hambro group, in which Gwent county council also invested, said: The board reserves the right to act in accordance with its views. That is a lovely democratic principle, is it not? One or two of my hon. Friends may say that company directors make such bizarre decisions on occasions that they appear not to act in accordance with their own views. But Hambro's belief in shareholders' democracy is so great that it says that the board of directors will act in accordance with its own views.

My modest Bill would extend to shareholders the right to a ballot. It would tell directors that they have a responsibility to consult individual shareholders before they use company money for political donations, just like a trade union. There would have to be a ballot to set up a political fund, and it would be at that point that the shareholders would choose whether they wanted their company to participate. They may say that they do not want their company to invest or spend money in that way, but that would be a democratic decision.

Who are we, having been elected by the democratic process, to deny the value and validity of that process? I cannot imagine any Conservative Members saying that they would disagree with such a decision. There will thus be a decision to set up a political fund. There will also be a right for individual shareholders to opt out of contributing to political donations. We may later wish to extend that to individual employees, who create the company's wealth, or to consumers who probably make a donation to the Conservative party every time they go into a public house. I am attracted by the idea of a non-Conservative party beer; that is a very populist issue. People could then opt out of the political levy. At present, however, the Bill extends that right only to shareholders—

It being half-past Two o'clock, the debate stood adjourned.

Debate to be resumed upon Friday 5 July.